WORLD TRADE
ORGANIZATIONWT/DS136/R
31 March 2000
(00-1257)
Original:  English
UNITED STATES – ANTI-DUMPING ACT OF 1916
Complaint by the European Communities
Report of the Panel
The report of the Panel on United States – Anti-Dumping Act of 1916 is being circulated to all
Members, pursuant to the DSU.  The report is being circulated as an unrestricted document from31 March 2000  pursuant to the Procedures for the Circulation and Derestriction of WTO Documents
(WT/L/160/Rev.1).  Members are reminded that in accordance with the DSU only parties to the
dispute may appeal a panel report.  An appeal shall be limited to issues of law covered in the Panel
report and legal interpretations developed by the Panel.  There shall be no ex parte  communications
with the Panel or Appellate Body concerning matte rs under consideration by the Panel or Appellate
Body.
Note by the Secretariat:  This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date  of its
circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report.  If the Pa nel Report is
appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal.  I nformation on
the current status of the Panel Report is available from the WTO Secretariat.WT/DS136/R
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TABLE OF CONTENTS
Page
I. INTRODUCT ION ................................................................................................................1
II. FACTUAL AS PECTS ..........................................................................................................2
A. DESCRIPTION OF THE US 1916 ACT................................................................................2
B. DESCRIPTION OF OTHE R RELEVANT US  ACTS...........................................................3
1. Antidumping Act of 1921 and Tariff Act of 1930...............................................................3
2. Robinson-Patman Act.......................................................................................................... .3
C. INSTANCES OF APPLICATI ON OF THE US  1916 ACT...................................................4
III. CLAIMS AND MAIN  ARGUMEN TS................................................................................5
A. REQUESTS DEALT WITH BY THE PANEL IN THE COURSE OF THE
PROCEED INGS .................................................................................................................... .5
1. Preliminary Objection by The United States and Request for a Ruling by The
Panel .......................................................................................................................... .............5
2. Request by Japan for Enhanced Third Party Rights.........................................................8
B. OVERVIEW OF THE CLAIMS OF THE PARTIES AND FINDINGS REQUESTED.......9
C. THE DISTINCTION BETWEEN DISCRETIONARY AND MANDATORY
LEGISLATION AND ITS RELEVANCE TO THE PRES ENT CASE...............................10
D. APPLICABILITY OF ARTICLE VI OF THE GATT 1994 AND THE ANTI-
DUMPING AGREEM ENT ..................................................................................................18
1. The Meaning and Scope of Article VI of the GATT 1994 and The Anti-Dumping
Agreement...................................................................................................................... ......18
2. The Nature of the 1916 Act: Anti-Dumping or Antitrust Law? .....................................23
(a) The text and distinctive features of the 1916 Act .................................................................23
(b) The theoretical distinction betw een anti-dumping and antitrust...........................................29
(c) Statements by US execu tive branch of ficials........................................................................35
(d) The classification of the 1916 Act in the US legal sy stem ...................................................38
(e) Simultaneous or consecutive filings of 1916 Act claims and 1930 Tariff Act petitions
in cases involving the same matter .......................................................................................39
(f) The relevant US case law.................................................................................................... ..39
(i) The distinction between issues  of fact and issu es of law.......................................................39
(ii) Comments on the case law in general...................................................................................42
(iii) United States v.  Cooper Corp. ............................................................................................. .44
(iv) Zenith Radio Corp. v. Matsushita Electric Industrial Co. and In re Japanese
Electronic Products An titrust Litig ation...............................................................................44
(v) Helmac Products Corp. v. Roth (Plastics) Corp...................................................................52WT/DS136/R
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(vi) Geneva Steel Corp. v. Ranger Steel Supply Corp. and Wheeling-Pittsburgh v. Mitsui
& Co........................................................................................................................... ...........54
E. VIOLATION OF ARTICLE VI:2 OF THE GATT 1994.....................................................57
1. General Arguments............................................................................................................ .57
2. The Text and Relevant Context of Article VI:2 of the GATT 1994................................59
3. The Negotiating History .....................................................................................................6 0
4. The Relevance of Article 18.1 of the Anti-Dumping Agreement ....................................63
5. The Interpretation of the Footnote to Article 18.1 of the Anti-Dumping Agreement...67
F. VIOLATIONS OF ARTICLE VI:1 OF THE GATT 1994 AND ARTICLES 1, 2.1, 2.2,
3, 4 AND 5.5 OF THE ANTI-D UMPING AGREEM ENT ..................................................68
G. VIOLATION OF ARTICLE III:4 OF THE GATT 1994 .....................................................71
1. Introduction................................................................................................................. ........71
2. The 1916 Act as a Law Affecting the Internal Sale of Imported Products and the
Robinson-Patman Act as Comparable Legislation ..........................................................72
3. The "No Less Favourable Treatment" Standard.............................................................73
(a) General arguments ........................................................................................................... .....73
(b) The relevance of  trade effects.............................................................................................. .76
(c) The relevance of the absence of su ccessful invocations of the 1916 Act .............................77
(d) Element-by-element comparison of the 1916 Act and the the Robinson-Patman Act..........79
(i) The injury/pre dation standards.............................................................................................7 9
(ii) The measurement of price discri mination.............................................................................84
(iii) Offering for sale vs. actual sale as threshold requirements  for complaints .........................87
(iv) Defences available under the Robinson-Patman Act, but not expressly provided for in
the 1916 Act ................................................................................................................... .......87
H. VIOLATION OF ARTICLE XVI:4 OF THE AGREEMENT ESTABLISHING THE
WTO ............................................................................................................................ .........88
1. The Meaning and Scope of Article XVI:4.........................................................................88
2. The Relevance to an Article XVI:4 Inquiry of The Distinction Between Mandatory
and Discretionary Legislation ............................................................................................91
3. Relationship With Article 18.4 of The Anti-Dumping Agreement .................................94
IV. THIRD PARTY SU BMISSIONS ......................................................................................95
A. INDIA ........................................................................................................................ ...........95
B. JAPAN ........................................................................................................................ ..........97WT/DS136/R
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C. MEXICO....................................................................................................................... ........99
V. INTERIM REVIEW .........................................................................................................102
A. I NTRODUCTION ....................................................................................................................102
B. C OMMENTS BY THE EUROPEAN COMMUNITIES ..................................................................102
C. C OMMENTS BY THE UNITED STATES ...................................................................................104
VI. FINDINGS.................................................................................................................... .....109
A. F ACTS AT THE ORIGIN OF THE DISPUTE AND ISSUES TO BE ADDRESSED BY THE PANEL .....109
1. Facts at the origin  of the dispute......................................................................................109
2. Issues to be addressed by the Panel.................................................................................111
B. P ROCEDURAL ISSUES ...........................................................................................................114
1. Request for a preliminary ruling by the United States..................................................114
2. Request for enhanced thir d party rights by Japan ........................................................115
3. Burden of proof .............................................................................................................. ...117
C. P RELIMINARY ISSUES ..........................................................................................................117
1. Context in which the 1916 Act should be examined by the Panel.................................117
(a) Issue before  the Panel ...................................................................................................... ...117
(b) How should the Panel consider the text of the 1916 Act, the context of its enactment,
the case-law relating to it and othe r relevant pieces of  informat ion ...................................118
(i) Arguments of the parties and approach of the Panel..........................................................118
(ii) Consideration by panels of  domestic law in general ..........................................................119
(iii) Consideration of the case-l aw relating to the 1916 Act......................................................120
(iv) Consideration of the historical context and other evidence of the meaning of the 1916
Act ............................................................................................................................ ...........122
2. Relationship between Article III and Article VI of the GATT 1994 ............................124
(a) Issue before  the Panel ...................................................................................................... ...124
(b) Approach to be followed by the Panel................................................................................126
D. A PPLICABILITY OF ARTICLE VI OF THE GATT 1914 TO THE 1916 A CT.............................128
1. Preliminary remarks on the possibilit y of interpreting the 1916 Act in a WTO-
compatible manner and on its "mandatory/non-mandatory" nature..........................128
(a) Issue before  the Panel ...................................................................................................... ...128
(b) The possibility of interpreting the 1916 Act in a WTO-compatible manner ......................129
(c) Mandatory/non-mandatory na ture of the 1916 Act.............................................................130WT/DS136/R
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2. Does the 1916 Act fall within the scope of Article VI of the GATT 1994?...................130
(a) Issue before  the Panel ...................................................................................................... ...130
(b) Does the 1916 Act, on the basis of its terms only, fall within the scope of Article VI
of the GATT 1994?.............................................................................................................1 32
(i) Approach of the Panel ....................................................................................................... .132
(ii) Scope of Article VI of the GATT 1994 ................................................................................132
(iii) Examination of the 1916 Act on the basis of the scope of Article VI..................................134
Similar ities ................................................................................................................... ..................134
Specific arguments of the United States........................................................................................ .135
(iv) Conclusion ................................................................................................................. .........138
(c) Impact of the historical context and of  the legislative history of the 1916 Act ..................138
(i) Approach of the Panel ....................................................................................................... .138
(ii) Review of the historical co ntext and legislat ive history......................................................139
(iii) Conc lusion ................................................................................................................ ..........142
(d) Impact of the US case-law relating to the 1916 Act ...........................................................142
(i) Approach by the Panel....................................................................................................... .142
(ii) The US Supreme Cour t and the 1916 Act ...........................................................................143
(iii) The interpretation of the transnational price discrimination test of the 1916 Act at the
circuit co urt le vel............................................................................................................ ....144
"Dumping" as an international trade concep t applied in an anti-trust context ...............................144
The Brooke Group  recoupment test ...............................................................................................146
The interlocutory decisions relied u pon by the European Communities........................................148
(iv) Conclusion ................................................................................................................. .........149
3. Conclusions on the applicability of Article VI of the GATT 1994 to the 1916 Act .....149
(a) The 1916 Act falls within the scope of Article VI of the GATT 1994 ...............................149
(b) The 1916 Act is a mandatory law within the meaning of GATT 1947/WTO practice.......150(c) Concluding remarks on the applicability of Article VI to the price discrimination test
of the 1916 Act ................................................................................................................ ...151
E. V
IOLATION OF ARTICLE VI:1 AND VI:2 OF THE GATT 1994.............................................153
1. Violation of Article VI:1 of the GATT 1994 ...................................................................153
(a) Issue before  the Panel ...................................................................................................... ...153
(b) Analy sis .................................................................................................................... ..........153
(c) Conclu sion .................................................................................................................. ........154
2. Anti-dumping duties as sole remedy under Article VI ..................................................154
(a) Issues before  the Panel..................................................................................................... ...154
(b) Ordinary meaning of the terms of  Article VI:2 of the GATT 1994....................................155
(c) Context..................................................................................................................... ...........156
(d) Preparato ry work............................................................................................................ .....158
(e) Conclusion on the violation of Ar ticle VI:2 of the GATT 1994.........................................160
3. Concluding remarks on burden of proof with respect to the violation of Article VI
of the GATT 1994..............................................................................................................1 60
F. V IOLATION OF PROVISIONS OF THE ANTI-DUMPING AGREEMENT .....................................161
1. Preliminary remarks.........................................................................................................1 61WT/DS136/R
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2. Review of the EC claims under the Anti-Dumping Agreement ....................................161
(a) General comments regarding the EC claims under Article 1 and Article 2.1 and 2.2 of
the Anti-Dumping Agreement ............................................................................................161
(b) Violation of  Article 3...................................................................................................... ....162
(c) Violation of  Article 4...................................................................................................... ....162
(d) Violation of  Article 5.5.................................................................................................... ...163
3. Conclusion................................................................................................................... .......163
G. V IOLATION OF ARTICLE III:4 OF THE GATT 1994 .............................................................164
H. V IOLATION OF ARTICLE XVI:4 OF THE AGREEMENT ESTABLISHING THE WTO................164
I. N ULLIFICATION OR IMPAIRMENT ........................................................................................165
J. S UMMARY OF FINDINGS ......................................................................................................165
VII. CONCLUSIONS AND RECOMMENDAT IONS..........................................................166WT/DS136/R
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I. INTRODUCTION
1.1 On 4 June 1998, the European Communities requested consultations with the United States
pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (hereinafter the "DSU"), Article XXIII of the General Agreement on Tariffs and Trade 1994
(hereinafter the "GATT 1994") and Article 17.3 of the Agreement on Implementation of Article VI ofthe General Agreement on Tariffs and Trade 1994 (hereinafter the "Anti-Dumping Agreement")
regarding failure on the part of the United States to repeal Title VIII of the US Revenue Act of 1916,
also known as the US Antidumping Act of 1916 (hereinafter the "1916 Act").
1
1.2 Consultations were held in Geneva on 29 July 1998, but did not lead to a mutually
satisfactory resolution of the matter.
1.3 On 11 November 1998, the European Communities requested the Dispute Settlement Body
(hereinafter the "DSB") to establish a panel pursuant to Article XXIII of the GATT 1994, Articles 4
and 6 of the DSU and Article 17 of the Anti-Dumping Agreement.2  The European Communities
claimed that the 1916 Act was inconsistent with Article XVI:4 of the Marrakesh Agreement
Establishing the World Trade Organization (hereinafter the "Agreement Establishing the WTO" - theMarrakesh Agreement Establishing the World Trade Organization including its annexes being
referred to as the "WTO Agreement"); Articles VI:1 and VI:2 of the GATT 1994; and Articles 1, 2.1,
2.2, 3, 4 and 5 of the Anti-Dumping Agreement.
3  In the alternative, the European Communities
claimed that the 1916 Act was in breach of Article III:4 of the GATT 1994.
1.4 On 1 February 1999, the DSB established a panel pursuant to the request made by the
European Communities, in accordance with Article 6 of the DSU.  In document WT/DS136/3, the
Secretariat reported that the parties had agreed that the panel would have the standard terms ofreference.  The terms of reference are the following:
"To examine, in the light of the relevant provisions of the covered agreements cited
by the European Communities in document WT/DS136/2, the matter referred to the
DSB by the European Communities in that document and to make such findings as
will assist the DSB in making the recommendations or in giving the rulings providedfor in those agreements."
1.5 Document WT/DS136/3 also reported that, on 1 April 1999, the Panel was constituted as
follows:
Chairman: Mr. Johann Human
Members: Mr. Dimitrij Gr čar
Professor Eugeniusz Piontek
1.6 India, Japan and Mexico reserved their rights to participate in the Panel proceedings as third
parties.  All of them presented arguments to the Panel.
                                                     
1 See WT/DS136/1.
2 See WT/DS/136/2.
3 The provisions listed by the European Communities in WT/DS/136/2 as being infringed by the 1916
Act are, in the view of the European Communities, not necessarily the only violations of the mentioned
Agreements.  See WT/DS/136/2.WT/DS136/R
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1.7 The Panel met with the parties on 13 - 14 July 1999 as well as 14 - 15 September 1999.  It
met with third parties on 14 July 1999.  The Panel issued its interim report to the parties on
20 December 1999.  The Panel issued its final report to the parties on 14 February 2000.
II. FACTUAL ASPECTS
A. DESCRIPTION OF THE US 1916 ACT
2.1 The 1916 Act at issue in the present dispute was enacted by the US Congress under the
heading of "Unfair Competition" in Title VIII of the Revenue Act of 1916.4  It provides as follows:
"It shall be unlawful for any person impor ting 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 aprice 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 which they are commonly
exported after adding to such market value or wholesale price, freight, duty, and other
charges and expenses necessarily incident to the importation and sale thereof in theUnited States: Provided , That such act or acts be 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.
Any person who violates or combines or conspires with any other person to violate
this section is guilty of a misdemeanour, and, on conviction thereof, shall be punished
by a fine not exceeding $5,000, or imprisonme nt 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, without respect to the amount in controversy, and shall recoverthreefold the damages sustained, and the cost of the suit, including a reasonable
attorney's fee.
The foregoing provisions shall not be construed to deprive the proper State courts of
jurisdiction in actions for damages thereunder."
 5
2.2 Thus, the business activity which the 1916 Act prohibits is a form of international price
discrimination, which has two basic components:
(a) An importer must have sold a foreign-produced product within the United States at a
price which is "substantially less" than the price at which the same product is sold in
the country of the foreign producer.
(b) The importer must have undertaken this price discrimination "commonly and
systematically."
                                                     
4 Act of 8 September 1916.  The Revenue Act of 1916 can be found at 39 Stat. 756 (1916).
5 15 U.S.C. § 72.WT/DS136/R
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2.3 It is a condition for criminal or civil liability under the 1916 Act that the importer must have
undertaken this price discrimination with "an 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."
2.4 Another characteristic of the 1916 Act is that it provides for a private right of action in federal
district court and the remedy of treble damages for a private complainant, based on the injury
sustained by that complainant in its business or property, as well as for criminal penalties in an action
brought by the US government.
2.5 The 1916 Act is codified in Title 15 of the United States Code, entitled "Commerce and
Trade".6
B. DESCRIPTION OF OTHER RELEVANT US ACTS
1. Antidumping Act of 1921 and Tariff Act of 1930
2.6 In 1921, the United States enacted the "Antidumping Act of 1921."7  It empowered the
Secretary of the Treasury to impose duties on dumpe d goods without regard to the dumper's intent.
Whereas the Antidumping Act of 1921 was later repealed, it is on this Act that the United States'Tariff Act of 1930, as amended (hereinafter the "Tariff Act of 1930"),
8 is built.  The Tariff Act of
1930 is implemented through proceedings governed by regulations promulgated by the US
Department of Commerce9 and the US International Trade Commission10.
2.7 The 1921 Antidumping Act was, and the 1930 Tariff Act, as amended, is, codified in Title 19
of the United States Code, entitled "Customs Duties".
2.8 The United States has notified Title VII of the Tariff Act of 1930, as amended, and its
implementing regulations to the WTO's Committee on Anti-Dumping Practices in accordance withArticles 18.4 and 18.5 of the Anti-Dumping Agreement.
2. Robinson-Patman Act
2.9 Section 2 of the Clayton Act, as amended by the Robinson-Patman Act in 1936, provides in
pertinent part:
"It shall be unlawful for any person engaged in commerce, in the course of such
commerce, either directly or indirectly, to discriminate in price between different
purchasers of commodities of like grade and quality, where either or any of the
purchases involved in such discrimination are in commerce, where such commodities
are sold for use, consumption, or resale within the United States […] and where the
effect of such discrimination may be substantially to lessen competition or tend tocreate a monopoly in any line of commerce, or to injure, destroy, or prevent
competition with any person who either grants or knowingly receives the benefit of
such discrimination or with customers of either of them."
11
                                                     
6 See 15 U.S.C. §§ 71-74.
7 The Antidumping Act of 1921 was codified at 19 U.S.C. §§ 160-71 (repealed).
8 The Tariff Act of 1930 is codified at 19 U.S.C. §§ 1671 et seq.
9 See 19 C.F.R. Part 351.
10 See 19 C.F.R. Part 200.
11 15 U.S.C.  13(a).WT/DS136/R
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2.10 Section 2(f) of the Clayton Act, as amended by the Robinson-Patman Act, applies the same
principles to the conduct of a buyer, by maki ng it unlawful for a buyer "knowingly to induce or
receive discrimination in price" prohibited by other parts of the Act.12  A violation of this provision is
subject to criminal penalties and also is actionable in a private right of action, where treble damages
and injunctive relief are available.
2.11 To establish price discrimination in an action under the Robinson-Patman Act, there first must
be evidence of two actual sales at different prices, with both sales occurring in US commerce.13  Thus,
the Robinson-Patman Act does not apply to cross-border price discrimination.14  In addition, a
successful price discrimination claim requires a showing of an anti-competitive effect.  Case law has
established that, if the claim is directed at so-calle d "primary line injury," meaning injury to the price
discriminator's rivals, which corresponds to the situation addressed by the 1916 Act, the requisite anti-
competitive effect can be demonstrated through a showing of (i) pricing below an appropriate
measure of cost and (ii) the likelihood that the predator will recoup its losses in the future.15
2.12 The Robinson-Patman Act is codified in Title 15 of the United States Code, entitled
"Commerce and Trade."16
C. INSTANCES OF APPLICATION OF THE US 1916 ACT
2.13 The 1916 Act has been invoked infrequently.  Before the 1970s, there was only one reported
1916 Act court case, H. Wagner and Adler Co. v. Mali17.18
2.14 In line with the infrequent invocation of the 1916 Act, there is a limited number of judicial
interpretations of its specific provisions.19  In this regard, it should be noted that, under the US legal
                                                     
12 See 15 U.S.C.  13(f).
13 See International Telephone & Telegraph Corp. et al. , 104 F.T.C. 280, 417, citing E. Kinter, A
Robinson-Patman Primer, 3rd ed. (1979), p. 35.
14 In answering a question of the Panel regarding, inter alia , whether the Robinson-Patman Act applies
to imported products, the United States notes, however, that imported goods that have become a part of
domestic commerce may be subject to the Robinson-Patman Act.
15 See Brooke Group Ltd. v. Brown & Williamson Tobacco Corp ., 509 U.S. 209, 222-23 (1993)
(hereinafter " Brooke Group ").
16 Also located in Title 15 are the Sherman Act (15 U.S.C. §§ 1-7, to be found at 26 Stat. 209 (1890)),
the Clayton Act (15 U.S.C. §§ 12-27, to be found at 38 Stat. 730 (1914)) and the Federal Trade Commission Act(15 U.S.C. §§ 41-58, to be found at 38 Stat. 717 (1914)).
17 F.2d 666 (2d Cir. 1935).
18 In response to a question of the Panel regarding whether the 1916 Act was applied before the 1970s,
the United States confirmed its understanding that there was only one reported 1916 Act case before the 1970s.The United States also notes, however, that not all filed cases lead to reported decisions.
19 Those interpretations can be found in the following - final or interlocutory - court decisions: H.
Wagner and Adler Co. v. Mali , Op. Cit.;  In re Japanese Electronic Products Antitrust Litigation , 388 F.Supp.
565 (Judicial Panel on Multidistrict Litigation, 1975) (hereinafter " In re Japanese Electronic Products I ");
Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd. , 402 F.Supp. 244 (E.D. Pa. 1975) (hereinafter
"Zenith I "); Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd. , 402 F.Supp. 251 (E.D. Pa. 1975)
(hereinafter " Zenith II ");  Outboard Marine Corp. v. Pezetel , 461 F. Supp. 384 (D. Del. 1978);  Schwimmer v.
Sony Corp. of America , 471 F. Supp. 793 (E.D.N.Y. 1979);  Schwimmer v. Sony Corp. of America , 637 F.2d 41
(2nd Cir. 1980);  Jewel Foliage Co. v. Uniflora Overseas Florida , 497 F. Supp. 513 (M.D. Fla. 1980); Zenith
Radio Corp. v. Matsushita Electric Industrial Co., Ltd. , 494 F.Supp. 1190 (E.D. Pa. 1980) (hereinafter " Zenith
III");  In re Japanese Electronic Products Antitrust Liti gation (Zenith Radio Corp. v. Matsushita Electric
Industrial Co., Ltd.) , 723 F.2d 319 (3d Cir. 1983) (hereinafter " In re Japanese Electronic Products II ");
Western Concrete Structures Co. v. Mitsui & Co., 760 F.2d 1013 (9th Cir. 1985);   Isra Fruit Ltd. v. Agrexco
Agr. Export Co. , 631 F. Supp. 984 (S.D.N.Y. 1986);  In re Japanese Electronic Products Antitrust Litigation
(Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd.) , 807 F.2d 44 (3d Cir. 1986) (hereinafter " In reWT/DS136/R
Page 5
system, the judicial branch of the government is the final authority regarding the meaning of federal
laws, such as statutes passed by the legislative branch, i.e. the US Congress.  It should also be noted,
however, that no claims under the 1916 Act have ever been reviewed by the US Supreme Court,
which is the highest federal court in the United States.20  All court decisions so far have been rendered
by US circuit courts of appeals or US district courts.21
2.15 All of the court decisions addressing the meaning of the 1916 Act and its various provisions
to date also have involved private civil compla ints rather than criminal prosecutions.  Yet no
complainant in a civil suit has so far recovered treb le damages and the cost of the suit.  However, in
one recent civil case involving a 1916 Act claim, Wheeling-Pittsburgh22, some defendants have
elected to settle rather than proceed to trial.
2.16 The US Department of Justice, the agency responsible for prosecuting criminal violations of
the 1916 Act, has never successfully prosecuted a criminal case under the 1916 Act.23  Accordingly,
no criminal sanctions have ever been imposed pursuant to the 1916 Act.
III. CLAIMS AND MAIN ARGUMENTS
A. REQUESTS DEALT WITH BY THE PANEL IN THE COURSE OF THE PROCEEDINGS
1. Preliminary Objection by The United States and Request for a Ruling by The Panel
3.1 As a preliminary matter, the United States  considers24 that the European Communities claims
for the first time in its first written submission that the 1916 Act also violates Articles 1 and 18.1 of
the Anti-Dumping Agreement because these provisions make anti-dumping duties the exclusive
remedy for dumping.  The relevant WTO dispute settlement provisions - Articles 6.2 and 7 of the
DSU and Articles 17.4 and 17.5 of the Anti-Dumping Agreement - preclude the Panel from
                                                                                                                                                                    
Japanese Electronic Products III ")  Helmac Products Corp. v. Roth (Plastics) Corp. , 814 F. Supp. 560 (E.D.
Mich. 1992) (hereinafter " Helmac I ");  Helmac Products Corp. v. Roth (Plastics) Corp ., 814 F.Supp. 581 (E.D.
Mich. 1993) (hereinafter " Helmac II ");  Geneva Steel Company v. Ranger Steel Supply Corp. , 980 F.Supp. 1209
(D. Utah 1997) (hereinafter " Geneva Steel ");  Wheeling-Pittsburgh Steel Corporation v. Mitsui Co. , 35
F.Supp.2d. 597 (S.D. Ohio 1999) (hereinafter " Wheeling-Pittsburgh ").
20 The only reported case in which the US Supreme Court has considered the 1916 Act was United
States v. Cooper Corp ., 312 U.S. 600 (1941), although the issue in that case was whether the United States is a
"person" within the meaning of Section 7 of the US Sherman Act entitled to sue for treble damages thereunder.
21 In the United States, the federal judicial branch is established on three levels. Generally, the lowest
level is the trial court level, consisting of the various US  district courts.  At least one district court can be found
in each of the 50 States.  The next level consists of the US circuit courts of appeals, which are intermediateappellate courts responsible for reviewing district court decisions.  There are 12 federal court circuits.  At the
highest level of the federal court system is the US Supreme Court, which, at its discretion, hears appeals fromdecisions of the circuit courts.
22 The case is still pending while the remaining litigants conduct discovery.
23 In response to a question of the Panel regardi ng the number of cases considered for prosecution by
the US Department of Justice, the United States notes that, so far as it can determine, the US Department ofJustice has never prosecuted nor seriously considered prosecuting a criminal case under the 1916 Act.  In Zenith
III, Op. Cit., p. 1212, the following is stated regarding enforcement of the 1916 Act's criminal provisions until
the early 1970s:
"Apparently there have been four attempts to enforce the criminal provisions of the Act, but
none of them has been successful and none ha s given rise to a reported judicial decision.
Marks, United States Antidumping Laws – A Government Overview  43 Antitrust L.J. 580, 581
(1974)."
24 See the US First Written Submission, dated 3 June 1999, p.2.WT/DS136/R
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considering these two claims because they were not included in the European Communities' request
for the establishment of a panel.25
3.2 The United States notes that Article 7 of the DSU provides that the Panel's mandate is to
examine the "matter" described in the panel request.26  The Appellate Body has definitively described
the "matter" which is properly before a panel to examine.  In Guatemala - Cement , it explained that
the complaining Member must, in its panel request,
"identify the specific measures at issue  and provide a brief summary of the legal
basis of the complaint  sufficient to present the problem clearly. [...]  The "matter
referred to the DSB", therefore, consists of two elements:  the specific measures  at
issue and the legal basis of the complaint  (or the claims )."27
3.3 According to the United States, the Appellate Body has also settled that the complaining
Member may set out the "legal basis for the complain t" - its "claims" - in a summary fashion and that
the minimum requirement is simply for the complaining Member to list provisions of a WTO
agreement28.29  Vague references to unidentified "other" provisions, however, do not satisfy the
standards of Article 6.2 of the DSU.30  If a particular "legal basis of the complaint" - a "claim" - is not
set forth in the panel request, it is not properly before the panel.  Likewise, Article 6.2 is not satisfied
by only identifying the claims in the complaining Member's first written submission.  In
European Communities - Bananas , the Appellate Body explained that a deficiency in a panel request
cannot be cured by the complaining Member's first submission:
"Article 6.2 of the DSU requires that the claims , but not the arguments , must all be
specified sufficiently in the request for the establishment of a panel in order to allowthe defending party […] to know the legal basis of the complaint.  If a claim  is not
specified in the request for the establishment of a panel, then a faulty request cannot
                                                     
25 The United States refers to WT/DS136/3.
26 The United States notes that Article 1.2 of the DSU explains that its rules and procedures govern a
dispute subject to any special or additional rules and procedures contained in the covered agreements.  The same
Article provides that, to the extent that there is a "di fference" between the rules and procedures of the DSU and
the special or additional rules and procedures set forth in a covered agreement, the special or additional rulesand procedures in the covered agreement "shall prevail."  However, as established in the Appellate Body Report
on Guatemala - Anti-dumping Investigation Regarding Portland Cement from Mexico , adopted on
25 November 1999, WT/DS60/AB/R, paras. 65-66 (hereinafter "Appellate Body Report on Guatemala -
Cement "), if there is no "difference," the rules and procedures of the DSU apply together with  the special or
additional rules and procedures of the covered agreement.  The Appellate Body expressly held that there is no
"difference" between Articles 6.2 and 7 of the DSU, and Articles 17.4 and 17.5 of the Antidumping Agreement.Ibid., paras. 67-68.   Accordingly, Articles  6.2 and 7 of the DSU apply together with Articles 17.4 and 17.5 ofthe Antidumping Agreement when the claims at issue are being made under the Antidumping Agreement.When applied together, these Articles permit a panel to consider only the "matter" set forth in the complainingMember’s panel request where, as here, the terms of reference are exclusively defined by reference to the panel
request.  Ibid., paras. 70-72.
27 Appellate Body Report on  Guatemala - Cement , Op. Cit., para. 72 (emphasis in original).
28 The term "WTO agreement(s)" is used hereinafter to refer to the various agreements contained in
Annex 1 and 2 of the WTO Agreement.
29 The United States refers to the Appellate Body Report on India - Patent Protection for
Pharmaceutical and Agricultural Chemical Products , adopted on 16 January 1998, WT/DS50/AB/R, paras. 88-
91 (hereinafter "Appellate Body Report on India – Patents ");  Report of the Appellate Body on European
Communities – Regime for the Importation, Sale and Distribution of Bananas , adopted on 25 September 1997,
WT/DS27/AB/R, para. 141 (hereinafter "Appellate Body Report on European Communities – Bananas ").
30 The United States refers to the Panel Report on European Communities – Regime for the
Importation, Sale and Distribution of Bananas , adopted on 25 September 1997, WT/DS27/R/USA, paras. 7.29-
7.30 (hereinafter "Panel Report on European Communities – Bananas ").WT/DS136/R
Page 7
be subsequently 'cured' by a complaining party's argumentation in its first written
submission to the panel or in any other submission or statement made later in the
panel proceeding."31
3.4 The United States contends that, under these standards, the European Communities' panel
request in the present dispute is insufficient to place claims that the 1916 Act violated Articles 1 and18.1 of the Anti-Dumping Agreement before the Panel.  The European Communities, in its panel
request, characterised the 1916 Act as an anti-dum ping statute and claimed that the 1916 Act was
inconsistent with Article VI:2 of the GATT 1994, which, according to the European Communities,
"specif[ies] that anti-dumping duties are the only possible remedy to dumping whereas the 1916 Act
is having recourse to treble damages and fines and/or imprisonment."
32  The European Communities
at no point claimed - in its panel request or even in its request for consultations - that the 1916 Act
was similarly inconsistent with any provision of the Anti-Dumping Agreement or, in particular, with
Article 1 or Article 18.1 of the Anti-Dumping Agreement.33
3.5 The United States submits that until receip t of the European Communities' first written
submission, the United States had no notice that the European Communities was asserting claimsunder Articles 1 and 18.1 of the Anti-Dumping Agreement.  The Appellate Body has explained that a
defective panel request cannot be cured by a later submission or statement.  Accordingly, the
European Communities' claims under Articles 1 and 18.1 of the Anti-Dumping Agreement are not
properly before the Panel.
3.6 The United States therefore requests that the Panel rule that the claims are not before it and
are eliminated from the instant proceeding.  The United States requests that the Panel rule
expeditiously and, if possible, by the time of its first meeting.
3.7 In response to a question of the Panel regarding its position vis-à-vis  the US request, the
European Communities  states
34 that the United States requests the Panel to exclude claims that the
European Communities has not made.  The relevant EC claims are that by providing for a remedy
other than duties against dumping the 1916 Act violates Article XVI:4 of the Agreement Establishing
the WTO and Article VI:2 of the GATT 1994.  The European Communities makes no separate claimsthat this feature of the 1916 Act violates Article 1 and 18.1 of the Anti-Dumping Agreement.  These
provisions were merely mentioned as arguments in support of the European Communities' claims.
Accordingly, the US request for a preliminary ru ling can be dismissed as being without object.
3.8 The position taken by the Panel in the course of the proceedings vis-à-vis  the US request is
reflected in section VI.B.1 of this report.
                                                     
31 Appellate Body Report on European Communities – Bananas , Op. Cit., para. 143 (emphasis in
original).
32 WT/DS136/1.
33 The United States notes that the European Communities did reference Article 1 of the Antidumping
Agreement but only with regard to a separate claim that Article 1 requires "the carrying out of an investigation
(which has to respect a set of procedural rules) prior to the imposition of any duty."  Never did the European
Communities identify Article 1 of the Antidumping Agreement as the basis for a claim that antidumping dutiesare the sole remedy for dumping.  The United States also refers to the Panel Report on European Communities -
Imposition of Anti-Dumping Duties on Imports of  Cotton Yarn from Brazil , adopted on 5 July 1995, ADP/137,
paras. 442-447 for the proposition that if there is more than one legal basis for alleging a breach of the sameprovision of an agreement, a separate and distinct claim is required.
34 See the European Communities' letter to the Chairman of the Panel, dated 6 July 1999.WT/DS136/R
Page 8
2. Request by Japan for Enhanced Third Party Rights
3.9 Japan , which is a third party in the present case and has requested the establishment of
another panel in respect of the 1916 Act,35 requests to be granted enhanced third party rights.36  I n
particular, Japan requests to receive all the necessary documents, including submissions and written
versions of statements by the parties, and that it be granted permission to attend all the meetings of thesecond substantive meeting of the Panel.
37
3.10 In reply to a request by the Panel for the views of the parties, the European Communities
states that it is happy to support the request of Japan, provided that the European Communities'
similar request in the case initiated by Japan in respect of the 1916 Act (WT/DS162) is also accepted
by the Panel.
3.11 The United States,  in reply to the same request by the Panel, notes that it strongly objects
expanded third party rights for Japan in the present case, since the circumstances of the case do not
warrant it.
3.12 For the United States, expanded third party rights are not needed in order to obtain access to
the parties' submissions.  The United States supports full transparency in the WTO and will be makingits submissions and oral statements available to the public.  Furthermore, the United States recalls that
it has requested in both panel proceedings dealing with the 1916 Act (WT/DS136 and WT/DS162)
that each party provide a non-confidential summary of the information contained in each submission
that could be disclosed to the public unless the party has made the submission public.  The United
States further recalls that the DSU provides that parties shall make such non-confidential versions
available upon request.  Accordingly, both the European Communities and Japan will have access to
each others' submissions as soon as they comply with the requirements of the DSU in this regard.
3.13 The United States argues, moreover, that, as individual complaining parties, Japan and the
European Communities have more than adequate opportunity to present their views and respond to
the arguments of the United States.  In EC Measures Concerning Meat and Meat Products
(Hormones)
38, the panel allowed expanded third party rights because the panel had stated that it
intended to conduct concurrent deliberations in those cases meaning that its deliberations were goingto be based upon the arguments and presentations in both cases, including presentations by experts
made jointly to both panels.  The panel proceeded with this approach despite the fact that the United
States had expressed its unequivocal concern with the panel's "concurrent deliberations" approach.
Thus, because the panel was going to consider arguments made in one case in the course of deciding
another case, the United States requested and was allowed enhanced third party rights.  Otherwise,without an opportunity for the United States to respond, the panel would have been considering what
would have been, in effect, ex parte  submissions.
3.14 The United States notes that, in the present case, the Panel has not stated that it intends to
conduct concurrent deliberations, and for the reasons expressed in the European Communities -
Hormones  proceeding, the United States would not support concurrent deliberations.  Accordingly,
the European Communities will not be denied an opportunity to respond to arguments of the United
States that will be considered by the Panel in making its decision in the case initiated by the European
                                                     
35 See WT/DS162/3.  That panel was established on 26 July 1999 and composed on 11 August 1999
(WT/DS162/4).
36 As stated in Japan's letter to the Chairman of the Panel, dated 2 September 1999.
37 Japan made its request for enhanced third party rights after the first substantive meeting of the Panel.
38 Panel Report on EC Measures Concerning Meat and Meat Products (Hormones), adopted on
13 February 1999, WT/DS26/R/USA, WT/DS48/R/CAN (hereinafter Panel Report on  "European Communities
– Hormones ").WT/DS136/R
Page 9
Communities.  The same holds true for Japan in its case.  The apparent purpose for the request for
expanded third party rights is to provide the third parties with an opportunity to make an additional
submission in their own panel process.  There is no provision in the DSU for such additional
submissions.
3.15 The position taken by the Panel in the course of the proceedings vis-à-vis  Japan's request is
reflected in section VI.B.2 of this report.
B. OVERVIEW OF THE CLAIMS OF THE PARTIES AND FINDINGS REQUESTED
3.16 The European Communities  requests the Panel to find that by maintaining the 1916 Act the
United States has violated:
(a) Article VI:1 and VI:2 of the GATT 1994 and Articles 1, 2.1, 2.2, 3, 4 and 5.5 of the
Anti-Dumping Agreement;
(b) Article III:4 of the GATT 199439;
(c) Article XVI:4 of the Agreement Establishing the WTO;
and that by doing so it has nullified and impaired benefits accruing to the European Communities
under those Agreements.
3.17 The European Communities requests the Panel to hold that the 1916 Act is an anti-dumping
measure since it is targeted at imports and at price discrimination between the exporters' market or
third country market and the importing country's market in terms which are in substance identical to
those laid down in Article VI:1 of the GATT 1994.  Since the conditions under which action may be
taken under the 1916 Act allow action to be taken which would not be allowed under Article VI of the
GATT 1994 or the Anti-Dumping Agreement and in particular because the remedies provided in the
1916 Act are not those allowed under Article VI:2 of the GATT 1994, the Panel should hold that the1916 Act as such violates Article VI:1 and VI:2 of the GATT 1994 and the cited provisions of the
Anti-Dumping Agreement.
3.18 In the alternative, the European Communities asks the Panel to find that the 1916 Act violates
the national treatment requirement of Article III:4 of the GATT 1994 because the 1916 Act leads to
the application of stricter disciplines on imported goods than domestic goods.
3.19 Finally, the European Communities considers that the Panel should also find that the 1916
Act is in violation of Article XVI:4 of the Agreement Establishing the WTO because the United
States has failed to ensure, in respect of the 1916 Act, that its laws are in conformity with its WTO
obligations.
3.20 The United States  requests the Panel to find that nothing in Article VI:2 of the GATT 1994
provides that anti-dumping duties are the exclusive remedy for dumping.  If the Panel therefore rejects
the European Communities' Article VI:2 claim, it need not reach the question of whether the 1916 Act
is governed by Article VI and the Anti-Dumping Agreement.  The United States also requests the
Panel to reject the European Communities' othe r claims under Article VI:1 and the Anti-Dumping
Agreement, because the European Communities has failed to demonstrate that the procedures inArticle VI:1 and the various other provisions asserted under the Anti-Dumping Agreement are
required to be followed in response to injurious dumping.
                                                     
39 This claim is made in the alternative.  See section III.G.1 below.WT/DS136/R
Page 10
3.21 The United States moreover requests the Panel to hold that the 1916 Act is in any event not
inconsistent with either Article VI of the GATT 1994 or the Anti-Dumping Agreement because the
1916 Act is not an anti-dumping statute under US law and therefore is not governed by Article VI of
the GATT 1994 or the Anti-Dumping Agreement.  The United States submits that the 1916 Act is
specifically targeted at a very narrow type of ob jectionable business activity involving antitrust-like
predatory intent.
3.22 The United States further requests the Panel to dismiss the European Communities' claim that
the 1916 Act accords less favorable treatment to imported goods than the Robinson-Patman Act
accords to like domestic goods.  The Panel's decision in this regard should be informed by the fact
that the 1916 Act establishes a standard for relief which has never been met in the case of importersand imported goods.
3.23 The United States also asks the Panel to conclude that the 1916 Act as such is in any event
WTO-consistent because it is susceptible to an interpretation that permits action consistent with the
United States' WTO obligations.
3.24 Finally, the United States requests the Panel to find no violation of Article XVI:4 of the
Agreement Establishing the WTO.  Article XVI:4 of the Agreement Establishing the WTO is not
relevant, unless the 1916 Act is shown to be inconsistent with a separate WTO obligation of the
United States.  The United States submits that this is not the case.
C. THE DISTINCTION BETWEEN DISCRETIONARY AND MANDATORY LEGISLATION
AND ITS RELEVANCE TO THE PRESENT CASE
3.25 In response to a question of the Panel to both parties regarding whether the 1916 Act should
be viewed as mandatory or non-mandatory legisl ation within the meaning given to those terms by
GATT 1947/WTO practice, the United States  notes that both the civil and the criminal provisions
constitute non-mandatory legislation in the context of the European Communities' claims under
Articles III:4 and VI:2 of the GATT 1994.
3.26 The United States recalls that GATT 1947 and WTO panels have uniformly drawn a
distinction between mandatory and discretionary le gislation.  Only legislation which mandates WTO-
inconsistent action can itself be WTO-inconsistent.  In this regard, the panel in Canada - Measures
Affecting the Export of Civilian Aircraft  recently stated:
"We recall the distinction that GATT/WTO panels have consistently drawn between
discretionary legislation and mandatory legislation.  For example, in United States -
Tobacco , the panel "recalled that 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
[...] 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" [citation omitted]."
40
                                                     
40 Panel Report on Canada - Measures Affecting th e Export of Civilian Aircraft , adopted on
20 August 1999, WT/DS70/R, para. 9.124 (hereinafter "Panel Report on Canada – Aircraft "), citing the Panel
Report on United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco , adopted on
4 October 1994, BISD 41S/131, para 118 (hereinafter " United States – Tobacco ").WT/DS136/R
Page 11
3.27 The United States further notes that in EEC - Regulation on Imports of Parts and
Components41, the panel found that "the mere existence" of the anti-circumvention provision of the
European Communities' anti-dumping legislatio n was not inconsistent with the European
Communities' GATT 1947 obligations, even though the European Communities had taken GATT-
inconsistent measures under that provision.42  The panel based its finding on its conclusion that the
anti-circumvention provision "does not mandate the imposition of duties or other measures by the
EEC Commission and Council; it merely authorizes  the Commission and the Council to take certain
actions"43.  In the present dispute, the European Communities is challenging no specific measures
taken under the 1916 Act.  Rather, it is challenging the mere existence of the 1916 Act.  Thus, for that
challenge to succeed, the European Communities must demonstrate not only that the 1916 Actauthorizes WTO-inconsistent action, but that it mandates such action.  In other words, it must show
that this legislation is not susceptible to an in terpretation that would permit the US government to
comply with its WTO obligations.
3.28 The United States further recalls that, in applying the discretionary/mandatory
distinction, panels have found that legislation expl icitly directing action inconsistent with GATT 1947
principles does not mandate inconsistent action so long as it provides the possibility for authorities to
avoid such action.  For example, in United States - Taxes on Petroleum and Certain Imported
Substances ,
44 the Superfund Act required importers to supply sufficient information regarding the
chemical inputs of taxable substances to enable the tax authorities to determine the amount of tax to
be imposed; otherwise, a penalty tax would be imposed in the amount of five percent ad valorem  or a
different rate to be prescribed in regulations by the Secretary of the Treasury by a different
methodology.  The regulations in question had not yet been issued.  Nevertheless, the panelconcluded:
"[W]hether [the regulations] will eliminate the need to impose the penalty tax and
whether they will establish complete equivalence between domestic and imported
products, as required by Article III:2, first sentence, remain open questions.  From the
perspective of the overall objectives of the General Agreement it is regrettable thatthe Superfund Act explicitly directs the United States tax authorities to impose a tax
inconsistent with the national treatment principle but, since the Superfund Act also
gives them the possibility to avoid the need to impose that tax by issuing regulations,
the existence of the penalty rate provisions as such does not constitute a violation of
the United States obligations under the General Agreement."
45
3.29 The United States also notes that, in Thailand - Restrictions on Importation of and Internal
Taxes on Cigarettes46 the panel examined Thailand's Tobacco Act, which established a higher ceiling
tax rate for imported cigarettes than for domestic cigarettes.  While the Act explicitly gave Thai
officials the authority to implement discriminatory tax rates, this did not render the statute mandatory.
                                                     
41 Panel Report on EEC  - Regulation on Imports of Parts and Components , adopted on 16 May 1990,
BISD 37S/132 (hereinafter " EEC – Parts and Components ").
42 The United States refers to EEC – Parts and Components , Op. Cit., paras. 5.9, 5.21, 5.25-5.26.
43 Ibid., para. 5.25.
44 Panel Report on United States - Taxes on Petroleum and Certain Imported Substances , adopted on
17 June 1987, BISD 34S/136 (hereinafter " US – Superfund ").
45 Ibid., para. 5.2.9.
46 Panel Report on Thailand - Restrictions on Importation of and Internal Taxes on Cigarettes , adopted
on 7 November 1990, BISD 37S/200 (hereinafter " Thailand - Cigarettes ").WT/DS136/R
Page 12
The panel concluded that "the possibility that the Tobacco Act might be applied contrary to
Article III:2 was, by itself, not sufficient to make it inconsistent with the General Agreement."47
3.30 The United States recalls, finally, the findings of the panel in the United States - Tobacco
case. That case is factually analogous to the instant case and therefore offers guidance to the Panel.
The panel in the United States – Tobacco case found that a law did not mandate GATT-inconsistent
action where the language of that law was susceptible of a range of meanings, including meanings
permitting GATT-consistent action.  Specifically, the panel examined the question whether a statute
requiring that "comparable" inspection fees be assessed for imported and domestic tobacco mandated
that these fees had to be identical for each, without respect to differences in inspection costs.  If so,
the statute was inconsistent with Article VIII:1(a) of the GATT 1947, which prohibited the impositionof fees in excess of services rendered.
48 The United States argued that the term "comparable" need not
be interpreted to mean "identical," and that the law did not preclude a fee structure commensurate
with the cost of services rendered.49  The panel agreed with the United States:
"[T]he Panel noted that there was no clear interpretation on the meaning of the term
"comparable" as used in the 1993 legislative amendment.  It appeared to the Panelthat the term "comparable", including the ordinary meaning thereof, was susceptible
of a range of meanings.  The Panel considered that this range of meanings could
encompass the interpretation advanced by the United States in this proceeding, an
interpretation which could potentially enable USDA to comply with the obligation of
Article VIII:1(a) not to impose fees in excess of the cost of services rendered, while
at the same time meeting the comparability requirement of [the US law]."
50
The United States adds that the panel therefore found that the complaining party had "not
demonstrated that [the US law] could not  be applied in a manner ensuring that fees charged for
inspecting tobacco were not in excess of the cost of services rendered."51
3.31 In the view of the United States, there is thus a strict burden on a complaining party seeking
to establish that a Member's legislation as such  mandates a violation of WTO obligations: the
complaining party must demonstrate that the legislation, as interpreted in accordance with the
domestic law of the Member, precludes any possibility of action consistent with the Member's WTO
obligations.  Moreover, where legislation is susceptible of multiple interpretations, the complaining
party must demonstrate that none of these interpretations permits WTO-consistent action.
3.32 The United States contends that, in the present case, the European Communities has failed to
meet that burden.  The 1916 Act is susceptible to an interpretation that is WTO-consistent.  In fact, all
final judicial decisions that have considered the 1916 Act have interpreted it as such.  Indeed, US
courts have repeatedly admonished that the 1916 Act should be interpreted whenever possible to
parallel the unfair competition law applicable to domestic commerce.52  Interpreting the 1916 Act to
parallel domestic unfair competition law is clearly consistent with WTO obligations because the WTOdoes not govern competition laws.  Moreover, any susceptibility that particular elements of a 1916
Act claim may have to a range of possible meanings is ultimately of no consequence because the 1916
                                                     
47 Ibid., para. 86.  The United States further notes th at the panel, at para. 88, found that the actual
implementation of the tax rates through regulations was also consistent with Thai obligations, since these rates
were non-discriminatory.
48 The United States refers to United States – Tobacco,  Op. Cit., para. 118.
49 The United States refers to United States - Tobacco , Op. Cit., para. 122.
50 Ibid., para. 123.
51 Ibid. (emphasis added by the United States).
52 The United States refers to Zenith III , Op. Cit., p. 1223.WT/DS136/R
Page 13
Act remains different from an anti-dumping statute under the entire range of conceivable
interpretations.
3.33 Turning to the basis for the distinction, the United States notes that the distinction in GATT
1947/WTO jurisprudence between discretionary and mandatory legislation is not based upon a
particular provision of the WTO Agreement, nor is it limited in its application to a particular WTOprovision.  In the cases discussed above, for example, this distinction was applied in the context of
both Article III and Article VIII of the GATT 1947.  The distinction is a general principle developed
by panels that most likely has its origin in the presumption against conflicts between national and
international laws.  It is both general international practice and that of the United States that statutory
language is to be interpreted so as to avoid conflic ts with international obligations.  There is thus a
presumption against a conflict between international and national law.  In general,
"[a]lthough national courts must apply national laws even if they conflict with
international law, there is a presumption against the existence of such a conflict.  As
international law is based upon the common consent of the different states, it is
improbable that a state would intentionally enact a rule conflicting with internationallaw.  A rule of national law which ostensibly seems to conflict with international law
must, therefore, if possible always be so interpreted as to avoid such conflict."
53
3.34 The United States recalls that, under US law, it is an elementary principle of statutory
construction that "an act of Congress ought never to be construed to violate the law of nations if any
other possible construction remains"54.  While international obligations cannot override inconsistent
requirements of domestic law, "ambiguous statutory provisions […] [should] be construed, where
possible, to be consistent with international obligations of the United States"55.
3.35 According to the United States, GATT 1947 juri sprudence distinguishing between mandatory
and discretionary legislation does no more than apply the general principle that there is a presumption
against conflicts between national and international law.  If a law is susceptible to an interpretation
that is WTO-consistent, there is a presumption that domestic authorities will interpret that law so as to
avoid a conflict with WTO obligations.  This presumption may be seen as underlying theUnited States - Tobacco panel's finding that a domestic law susceptible of multiple interpretations
would not violate a state's international obligations so long as one possible interpretation permits
action consistent with those obligations.
56  This principle applies with equal force in the present case.
The 1916 Act is a discretionary statute susceptible of an interpretation that permits action consistent
with the United States' WTO obligations under both Article III:4 and Article VI:2, as all judicialdecisions to date establish as a matter of fact.  Accordingly, the Panel should rule that the 1916 Act, as
such, is fully consistent with the United States' WTO obligations.
3.36 In response to the Panel's question and the US arguments, the European Communities  notes
that the provisions of the 1916 Act are "mandatory " legislation as this term is used in GATT
1947/WTO practice.  According to that practice, mandatory measures are those which, under nationallaw, require the executive authority to impose a measure.  For example, in Denial of Most-Favoured-
Nation Treatment As To Non-Rubber Footwear From Brazil , the following definition can be found:
                                                     
53 Oppenheim’s International Law, 9th ed., pp. 81-82 (footnote omitted).
54 Murray v. Schooner Charming Betsy , 6 U.S. (2 Cranch) 64, 118 (1804).
55 Footwear Distributors and Retailers of America v. United States , 852 F. Supp. 1078, 1088 (CIT),
appeal dismissed, 43 F.3d 1486 (Table) (Fed.  Cir. 1994), citing DeBartolo Corp. v. Florida Gulf Coast Building
and Trades Council , 485 U.S. 568 (1988).  The United States also refers to the Restatement (Third) of the
Foreign Relations of the United States, s. 114 (1987).
56 The United States refers to United States - Tobacco , Op. Cit., para. 123.WT/DS136/R
Page 14
"[…] the Panel examined whether this legislation as such is consistent with
Article I:1.  The Panel noted that the CONTRACTING PARTIES had decided in
previous cases that legislation mandatorily requiring the executive authority to
impose a measure  inconsistent with the General Agreement was inconsistent with that
Agreement as such , whether or not an occasion for the actual application of the
legislation had arisen.  The Panel recalled that the backdating provisions of the two
Acts are mandatory legislation , that is they impose on the executive authority
requirements which cannot be modified by executive action , and it therefore found
that these provisions as such, not merely their application in concrete cases , have to
be consistent with Article I:1."57
3.37 The European Communities recalls that the United States relies in particular on the EEC -
Parts and Components case.  However, that case concerned authorising provisions in respect of which
there was discretion for the administration.  Whether these provisions produced any effects in practice
depended on the discretion of an administration.  There is no such discretion in the case of the 1916
Act.
3.38 In light of the foregoing, the European Communities considers that there are two main
reasons why the 1916 Act is mandatory legislation.  First, when a private party brings an action under
the 1916 Act there is no room at all for government discretion.58  Second, once a court has found that
the 1916 Act standard is met, it is required to grant relief to the complainant.  The wording of
paragraph 2 of the 1916 Act is unequivocal:
"Any person who violates or combines or conspires with any other person to violate
this section is guilty of a misdemeanour, and, on conviction thereof , shall  be punished
by a fine not exceeding $5,000, or imprisonme nt not exceeding one year, or both, in
the discretion of the court."59
3.39 The European Communities notes that the only  margin of discretion left to a court is
concerned with the type and level of the sanction that will be applied.  And even that discretion can be
exercised only within statutory limits.  Moreover, if it is true, as the United States submits, that theactual meaning of the 1916 Act depends on courts' interpretation of its provisions, it is even clearer
that the government has no discretion at all to influence courts' decisions.  Nor can the government
modify the 1916 Act's legal requirements.  This further confirms that the 1916 Act is "mandatory".
3.40 The European Communities further recalls that, in response to a question of the Panel
regarding what discretion a US court has in dismissing a 1916 Act case or in deciding not to imposetreble damages, for example, because doing so would be contrary to international law obligations of
the United States, the United States replies that
"[a] court would not have discretion to dismiss a well-founded case under the 1916
Act […] nor would a court have discretion not to impose treble damages that had
been properly established."
The European Communities thus considers that neither the administration nor the courts have
discretion over civil claims.
                                                     
57 Panel Report on Denial of Most-Favoured-Nation Treatment as to Non-Rubber Footwear from
Brazil , adopted on 19 June 1992, BISD 39S/128, para. 6.13 (footnote omitted; emphasis added by the European
Communities).
58 The European Communities notes that criminal prosecution under the 1916 Act is the only case
within the discretion of the US government.
59 Emphasis added by the European Communities.WT/DS136/R
Page 15
3.41 The European Communities points out, moreover, that the situation concerning the criminal
liability provisions is somewhat different but that the legislation is still not discretionary within the
meaning of GATT 1947/WTO jurisprudence.  In this  connection, it is important to note that the 1916
Act makes "unlawful" and "misdemeanours" the offences that it describes.  The most pertinent
analogy under GATT 1947 case law is the report of the panel on United States - Measures Affecting
Alcoholic and Malt Beverages.60  One of the many measures examined in that case concerned the
maximum price laws in Massachusetts and Rhode Island.  The panel held those laws to violate the
GATT 1947 even though they were not being enforced, saying:
"Even if Massachusetts may not currently be using its police powers to enforce this
mandatory legislation, the measure continues to be mandatory legislation which mayinfluence the decisions of economic operators."
61
3.42 The European Communities argues that the reason why the panel in United States - Malt
Beverages considered the legislation in issue in that case to have legal effects is that good corporate
citizens, like all good citizens, avoid acting unlawfully and indeed committing misdemeanours,
whether or not the law is being actively enforced and they risk actual punishment.  The samereasoning is applicable to the present case.
3.43 The European Communities notes, in addition, that the US Department of Justice may only
decline to bring a criminal case under certain defined conditions, none of which include a
consideration of whether or not the action would be WTO-compatible.  Also, once the decision to
bring a case has been taken by the US Department of Justice, the courts are obliged to try it and
impose a penalty if the conditions and criteria of the 1916 Act are met.  That is, courts are obliged to
do in criminal cases what the United States said that they are obliged to do in civil cases.  In otherwords, it is mandatory for them to take action against dumping which is inconsistent with WTO rules.
Thus, both the civil and criminal provisions of the 1916 Act create legal effects and in neither case
does this depend on the administration taking some discretionary action.
3.44 The European Communities submits, finally, that the unadopted report of the panel on  EC –
Anti-Dumping Duties on Audio Tape s in Cassettes Originating in Japan
62 as well as the adopted
report of the panel on United States - Definition of Industry concerning Wine and Grape Products63
support its view that the 1916 Act is not discretionary legislation as this term is used in GATT
1947/WTO jurisprudence.64
3.45 In response, the United States reiterates its view that the 1916 Act should be viewed as
discretionary legislation.  In reply to a question of the Panel regarding the discretion enjoyed by theUS Department of Justice as to whether to bring a criminal case or not, the United States states that
the Department of Justice, an executive branch agency, has the discretion to decide whether or not to
bring a criminal prosecution under the 1916 Act.  In other words, while the 1916 Act authorises the
Department of Justice to bring a criminal prosecution, it does not mandate it.
                                                     
60 Panel Report on United States - Measures Affec ting Alcoholic and Malt Beverages,  adopted on
19 June 1992, BISD 39S/206 (hereinafter " United States – Malt Beverages ").
61 Ibid., para. 5.60.
62 Panel Report on EC – Anti-Dumping Duties on Audio Tapes in Cassettes Originating in Japan ,
ADP/136 (unadopted), dated 28 April 1995 (hereinafter " EC - Audio Cassettes ").
63 Panel Report on United States – Definition of Industry concerning Wine and Grape Products ,
adopted by the Committee on Subsidies and Countervailing Measures on 28 April 1992, BISD 39S/436(hereinafter " United States – Definition of Wine Industry ").
64 See section III.H.2 below.WT/DS136/R
Page 16
3.46 The United States notes, in this regard, that the standards used by the Department of Justice in
deciding whether to conduct criminal proceedings, including investigative measures, are set out in a
public document known as the "United States Attorneys' Manual", specifically, Ch. 9-27 of that
Manual entitled "Principles of Federal Prosecution."  This document explains that the Department
enjoys wide discretion regarding whether, when and how it will bring criminal charges.  For example,section 9-27.220 states that, where there is sufficient admissible evidence of a federal offence, the
government may nonetheless decline to prosecute because (1) no substantial federal interest would be
served by prosecution; (2) the person is subject to effective prosecution in another jurisdiction; or (3)
there exists an adequate non-criminal alternative to prosecution.  In section 9-27.230,  "Substantial
Federal Interest" is defined to include, inter alia , "federal law enforcement priorities" and "the nature
and seriousness of the offense."
65
3.47 The United States further notes that in cases where the United States, acting through the
Department of Justice, is itself a party to litigation, it has direct responsibility for ensuring that its own
claims and actions comport with US laws and obligations, and for informing the court of such
considerations.  Also, where appropriate, the Department can seek to intervene in a private civillitigation in order to protect a federal government interest.  The Department does not routinely
intervene in private litigation, however, and it remains a matter of judgment when and before what
courts it should be done.
3.48 As concerns civil cases, the United States contends that the European Communities misses
the point with its argument that when a private party brings an action under the 1916 Act there is no
room for government discretion.  The question in these circumstances is not whether the executive
authority has discretion, but whether the law mandates a violation of a WTO obligation.  In the instantcase, to answer that question the Panel must determine whether the law is susceptible to an
interpretation that is WTO-consistent.  Although prior cases applying the mandatory/discretionary
distinction have involved executive enforcement of a measure, there is no reason that the principle
cannot apply to a measure that is enforced through the judicial branch.
3.49 The United States argues, finally, that the European Communities' reliance on the United
States - Malt Beverages  case is misplaced.  The issue in that case was whether the non-enforcement of
mandatory legislation rendered the legislation non-actionable.   Indeed, this is plainly reflected in the
section quoted by the European Communities.  Yet, that is not the question in the instant case.  The
question in the instant case is whether the law is mandatory, not whether the law is being enforced.
3.50 In response to a question of the Panel regarding whether the mandatory/discretionary
distinction applies also to cases of judicial enforcement of a measure, the European Communities
states that, contrary to the view expressed by the United States, the mandatory/discretionary
distinction does not apply to such cases.  Courts only declare what the law is.  Or, as Montesquieu
noted, the judiciary is "la bouche de la loi".  Accordingly, a court does not make law, it only applies it.
3.51 The European Communities further notes that the US constitution is founded on the principle
of the separation of powers.  The United States cannot argue that its courts regard themselves in
general as having discretion as to whether or not to apply the law, similar to that possessed by the
executive arm of government when powers are delegated.  Even if this were to be the case in some
special areas, such as awarding specific remedies, it does not apply to the adjudication of a dispute
under the 1916 Act.
                                                     
65 The United States notes in this connection that Sections One and Two of the Sherman Antitrust Act
of 1890 can be and often are enforced through criminal as well as civil proceedings , while the Clayton Antitrust
Act is enforceable only through civil actions.WT/DS136/R
Page 17
3.52 The European Communities does acknowledge that it may sometimes appear that courts have
a number of options in interpreting the law.  However, that is simply a reflection of the difficulty of
predicting the outcome of a complex debate.  No court would admit to being free to choose between a
number of options for interpreting the law.  All courts endeavour in good faith to establish the true
meaning of the law on the basis of the text and established principles of interpretation.
3.53 The European Communities considers that the most pertinent WTO decision for the present
case is India – Patent Protection .  In that case, the Appellate Body concluded that the Indian courts
would apply the (mandatory) law even in the face of directly contradictory administrative practice.
This conclusion reflects the principle that courts do not have discretion in the same way as
administrations do.
3.54 The European Communities argues, moreover, that the cases that have been invoked by the
United States all concern cases where the administration was taking action and also had the power to
complete, amend or add to the legislation so as to avoid a violation.  Clearly, courts are not in the
same position and do not have the power to adopt additional or amending rules.  In any event, even if
one could imagine situations where courts are given discretionary powers to amend or add tolegislation in the same way as an administration typically might, that certainly is not the case with the
1916 Act.
3.55 The European Communities also points out that the provisions of the 1947 Protocol of
Provisional Application demonstrate that, historically, it was administrative discretion that was
considered relevant.  That is also one reason why Article XVI:4 of the Agreement Establishing the
WTO speaks of "domestic laws, regulations and administrative procedures".
66
3.56 The European Communities notes, finally, that the United States apparently attempts to
confuse the issue before the Panel by assimilating discretion in the application of legislation  with
ambiguity in the interpretation of legislation , which allegedly exists in the instant case.  However,
there is no basis even under the GATT 1947 to defend legislation which is on its face GATT-
inconsistent on the ground that courts might one day interpret it in a GATT-consistent manner.
3.57 The European Communities recalls that the only GATT 1947 case in which there is any
reference to interpretation  is United States - Tobacco , which the United States claims is particularly
pertinent to the present dispute.  The United States - Tobacco case involved a situation in which
domestic legislation was incomplete.67  There was a requirement on the administration to promulgate
fees for the inspection of imported tobacco at a level "comparable" to that for domestic tobacco but at
the same time the administration had the power to adjust the level of fees for the inspection of
domestic tobacco.  The panel therefore understandably held that there was no basis to hold that the
administration, in fixing the level of fees for imported tobacco, would do so at a level inconsistent
with Article VIII:1(a) of the GATT 1947.  In other word s, the panel held that at such stage there was
no mandatory legislation inconsistent with the GATT 1947.  In the instant case, there is of course no
power for the US administration to complete or amend the 1916 Act which would allow it to make itcompatible with WTO rules.  All the requir ements are already laid down in the 1916 Act.
3.58 The United States  takes issue with the European Communities' description of the United
States - Tobacco  case as involving domestic legislation that was "incomplete," meaning according to
the European Communities that the agency had not yet promulgated its regulations.  The United
States does not agree that that somehow distinguishes the panel's application of the
                                                     
66 Article XVI:4 of the Agreement Establishing the WTO reads as follows: "Each Member shall ensure
the conformity of its laws, regulations and administrative procedures with its obligations as provided in theannexed Agreements." (no emphasis in the original)
67 The European Communities refers to United States - Tobacco , Op. Cit., paras. 114–118.WT/DS136/R
Page 18
mandatory/discretionary distinction from the present case.  In the United States - Tobacco  case, the
panel considered whether a term in a statute could be interpreted by the relevant government
authorities - which happened to be executive branch authorities - in a WTO-consistent manner.  Thus,
the only difference is that executive branch authorities were involved instead of judicial branch
authorities.  There is no reason why the same principle should not apply in the present case.  Thefocus in a mandatory/discretionary analysis is not on which branch of government is applying the law,
but whether there is room in the application of the law for the relevant government authorities to act
in a WTO-consistent manner.  In the present case, not only is there room for such an interpretation,
but the law has already been so interpreted.  Accordingly, the Panel should find that the 1916 Act as
such is WTO-consistent.
3.59 The European Communities  considers that, even if there were any basis for arguing on the
basis of the GATT 1947 that any aspect of the 1916 Act is discretionary and not a per se violation of
the US obligations, the situation is in any event different under the WTO Agreement, since Article
XVI:4 of the Agreement Establishing the WTO expressly requires Members to "ensure the conformity
of its laws, regulations and administrative procedures with its obligations" under the WTOagreements.
68
3.60 The United States replies that the mandatory/discretionary distinction is still being applied in
cases brought under the WTO, as is evidenced by the report of the panel on Canada – Aircraft.
D. APPLICABILITY OF ARTICLE VI OF THE GATT 1994 AND THE ANTI-DUMPING
AGREEMENT
1. The Meaning and Scope of Article VI of the GATT 1994 and The Anti-Dumping
Agreement
3.61 The European Communities  submits that Article VI of the GATT 199469 acknowledges the
existence of a particular problem in international trade and then proceeds to provide a solution.  Three
                                                     
68 See also part III. H. below.
69 Article VI:1 of the GATT 1994 provides as follows:
"The contracting parties recognize that dum ping, by which products of one country are
introduced into the commerce of another country at less than the normal value of the
products, is to be condemned if it causes or threatens material injury to an established
industry in the territory of a contracting party or materially retards the establishment of adomestic industry.   For the purposes of this Article, a product is considered as beingintroduced into the commerce of an importing country at less than its normal value, if theprice of the product exported from one country to another
(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 th e like product for export to any third
country in the ordinary course of trade, 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."WT/DS136/R
Page 19
steps are envisaged in this respect:  First, Article VI defines the practice of dumping.   Second, it sets
out certain other conditions that need to be fulfilled for the application of remedial measures, such as
the existence of injury.  And third, it authorises the remedial measures which can be taken to deal with
dumping.
3.62 Regarding the first step, i.e. the definition of the practice of dumping, the European
Communities recalls that Article VI:1 of the GATT 1994 defines dumping as follows:
"[…] For the purposes of this Article, a product is 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 to another
(a) is less than the comparable price, in the or dinary 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 of trade, 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."
3.63 The European Communities considers that a first essential feature of the above-noted
definition is that it refers to rules targeting imports.  The definition is based on the concept of price
discrimination between the price of these imports and the normal value, which is the domestic price –"the comparable price, in the ordinary course of tr ade" - in the exporting country or, in the absence of
such a price, the highest comparable price for expo rt to any third country in the ordinary course of
trade, or the cost of production plus a reasonable addition for selling cost and profit.  This analysis
yields the definition of the kinds of rules which are anti-dumping rules subject to the discipline of
Article VI of the GATT 1994:
(i) The rules are targeted at imports and by the fact of their importation.
(ii) The practice is defined by reference to discrimination between the prices of the
imported products and domestic prices in the country of export or, in the absence of
such prices, export prices to a third country or cost of production.
3.64 As concerns the pre-conditions for taking action against dumping, the European Communities
notes that the most important pre-condition is stated to be injury.  Article VI:1 provides that dumping
as defined is "to be condemned" if it "causes or threatens material injury to an established industry in
the territory of a contracting party or materially retards the establishment of a domestic industry."
3.65 Finally, with respect to the remedial measures which can be taken, the European
Communities refers to Article VI:2, which reads as follows:
"In order to offset or prevent dumping, a contracting party may levy on any dumped
product an anti-dumping duty not greater in  amount than the margin of dumping inWT/DS136/R
Page 20
respect of such product.  For the purposes of this Article, the margin of dumping is
the price difference determined in accordance with the provisions of paragraph 1."
According to the European Communities, this language establishes the application of anti-dumping
duties as the sole means authorized by the GATT 1994 by which a contracting party can seek to deal
with the problem of dumped imports.
3.66 The European Communities maintains that it is only dumping meeting the definition that is to
be condemned, and then only in the stated circumstances of injury, threat of injury or material
retardation.  Anti-dumping duties may be applied "in order to offset or prevent dumping", but only in
an amount no greater than the margin of dumping as defined.  The reference to "offsetting" as well as
"preventing" also makes clear that anti-dumping duties are the exclusive remedy established by theGATT 1994 for dealing with the problem of dumping, whether past, present or future.
3.67 The European Communities further submits that the Anti-Dumping Agreement is fully
consistent with Article VI and defines in greater detail the conditions and in particular the
requirements for an investigation that need to be  fulfilled to allow anti-dumping action to be taken.
Article 1 of the Anti-Dumping Agreement confirms that an anti-dumping measure can be applied only
under the circumstances provided for in Article VI of the GATT 1994 and pursuant to investigations
conducted in accordance with the Agreement, while  Article 18.1 of the Anti-Dumping Agreement
stipulates that action can be taken against the import of dumped products from another WTO Member
only if  the dumping causes or threatens material injury, and that no other measures can be taken than
those provided for by Article VI of the GATT 1994 and the Anti-Dumping Agreement.
3.68 According to the United States , the cornerstone of the European Communities' claim that the
1916 Act violates Article VI and the Anti-Dumping Agreement is its argument that the WTO anti-dumping rules capture any measure which targets imports and is based upon the concept of price
discrimination. The text of Article VI or the Anti-Dumping Agreement does not, however, support the
European Communities' position.  Nowhere does Article VI or the Anti-Dumping Agreement state
that its disciplines govern any law based upon the concept of price discrimination regardless  of any
other elements required to be proven under the law.  In fact, the European Communities' argument isinconsistent with the text of Article VI.  In this regard, paragraph 1 of Article VI begins by explaining
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."
Paragraph 2 then provides that, "[i]n order to offset or prevent" this injurious dumping, "a Member
may levy on any dumped product an anti-dumping duty not greater in amount than the margin ofdumping in respect of such product."  Article VI thus only addresses actions taken for the purpose of
offsetting or preventing injurious dumping.  It does not purport to address actions taken that are not
designed to offset or prevent injurious dumping, as is the case with the 1916 Act.
3.69 The United States argues, moreover, that to read  into the text of Article VI the limitation that
all laws with any kind of international price discrimination component must conform to the anti-dumping rules, as the European Communities advocates, would extend the anti-dumping rules far into
a realm which pre-dated them and whose objectives, underlying principles and targeted conduct are
quite different - namely, the realm of antitrust or competition laws.  If the Panel were to rule that
Article VI applies to all forms of international price discrimination, and regardless of the nature of the
injury sustained, the 1916 Act would not be the only casualty.  Such a ruling would seem to mean that
other Members' antitrust legislation prohibiting various forms of discriminatory or low pricing,
including Articles 81 and 82 of the EC Treaty, Canada's Competition Act, Japan's Antimonopoly Act,
Mexico's Federal Competition Law, India's Monopolies and Restrictive Trade Practices Act, as well
as the US Sherman Act, would be WTO-inconsistent to the extent that those laws address attemptedWT/DS136/R
Page 21
monopolization or an abuse of dominance undertaken through predatory, cross-border pricing
practices.  That result could not have been intended by Article VI and the Anti-Dumping Agreement.
3.70 According to the United States, the negotiating history of the GATT 1947 supports the
contention that Article VI of the GATT 1994 is not intended as a remedy for predatory pricing.  The
GATT 1947 was agreed to during negotiations which paralleled the negotiations for a proposed largeragreement, the Havana Charter for an International Trade Organization.  The Havana Charter
contained one article addressing anti-dumping and several separate articles addressing private anti-
competitive practices, among other matters.  The GATT 1947 was agreed to first and was intended to
be an interim agreement until the Havana Charter could be finalized, although, as is well known, it
never was.  In any event, the GATT 1947 incorporated verbatim , in Article VI, the article on anti-
dumping that had been negotiated as part of the Havana Charter.  The GATT 1947, however, did not
incorporate any of the Havana Charter articles addressing private anti-competitive practices.
3.71 The United States contends that the subsequent history of the GATT 1947 further supports
this point.  In particular, in 1958, the contracting parties decided to appoint a group of experts to
"study and make recommendations with regard to whether, and to what extent if at all, and how theContracting Parties should undertake to deal with restrictive business practices in international
trade."
70  In 1960, the Group of Experts issued a report in which it recommended that the contracting
parties engage in consultations if there was an alleged restrictive business practice, but that it was
unrealistic to recommend a multilateral agreement on the control of international restrictive business
practices.71
3.72 The United States submits, finally, that a 1989 OECD Report also illustrated that predatory
pricing is not considered the target of anti-dumping rules.  The Report states that "predatory pricing issubject to the competition laws and policies of most OECD countries, but there has been a lively
controversy over what standards should be applied."
72
3.73 The European Communities  considers that the United States is using the term "predatory" in
a misleading manner by confusing the US antitrust notion of predation with its more ordinary
meaning.  According to the European Communities, it is often said that one of the clearest targets of
Article VI of the GATT 1994 is precisely "predatory" dumping.  Indeed, that is one of the forms of
dumping that has always been considered covered by Article VI.  When the first Anti-Dumping Code
was negotiated, the issue of whether dumping measures authorized under multilateral rules should be
limited to predatory conduct was discussed.  A Note submitted by the US delegation for consideration
by the Group on Anti-Dumping Policies in 1966 made the following observations:
"An historical purpose of anti-dumping measures has been to regulate so-called
predatory price discrimination whose objective is to use monopoly power in one's
home market to maintain high prices and to reduce prices in an export market in order
to destroy competitors and establish an additional market monopoly. […] The Draft
Code is not, however, restricted to such conduct , as indeed Article VI is not thus
restricted ."73
3.74 The European Communities also notes that it is a misrepresentation of the EC position for the
United States to claim that the European Communitie s is saying that Article VI and the Antidumping
Agreement govern any international price discrimination law regardless  of the other substantive
                                                     
70 Resolution of 5 November 1958 on "Restrictive Business Practices - Appointment of Group of
Experts", BISD 7S/29.
71 The United States refers to document L/1015, adopted on 2 June 1960, BISD 9S/170, para. 5,7.
72 OECD, Predatory Pricing (1989), p. 3.
73 TN.64/NTB/W/3 (emphasis added by the European Communities).WT/DS136/R
Page 22
elements of that law.  The discriminatory pricing required for action to be taken under anti-dumping
laws is qualitatively different from discriminatory pricing addressed by competition laws.  The criteria
for determining whether a law is subject to the disciplines of Article VI and the Anti-Dumping
Agreement are (i) whether the law is targeted at imports, and (ii) whether it defines the regulated
conduct as price discrimination in the form of lower prices in the market of the importing country thanthose practised on the market of the country of export.  This approach is confirmed by the basic theory
of anti-dumping which recognizes a particular problem posed by price discrimination of this kind,
requiring an analysis distinct from that applying to price discrimination within the same market.
3.75 The European Communities points out, finally, that the 1916 Act is directed against price
discrimination in the form of lower prices in the market of the importing country than on the marketof the country of export.  This is exactly what Ar ticle VI:1 of the GATT 1994 defines as dumping and
does not correspond at all to any known "antitrust" definition of discriminatory pricing.
3.76 The United States  submits that the distinction between antitrust and anti-dumping is not
based upon whether price discrimination occurs within a single market or across markets.  That is not
the factor that distinguishes anti-dumping analysis from antitrust analysis.  At least in the UnitedStates, it is not correct to say that antitrust price discrimination is solely a problem within one and the
same market.  In primary line cases under the Robinson-Patman Act, for example, price differences
have been found within the same market or between two markets.
3.77 The United States recalls, moreover, that it has asked the European Communities whether it
would consider the 1916 Act WTO-consistent if it were amended to apply to both domestic and
imported goods.  The European Communities, in its response to the US question, rewords the 1916
Act so that it applies to discriminatory sales be tween US customers and sales between US customers
and foreign customers.
74  The European Communities then reasons that the hypothetical law is not
governed by Article VI and the Anti-Dumping Agreement because it does not target imports and does
not define the comparison for price discrimination by using the words "lower prices in the market of
the importing country than practised in the market of the exporting country."
3.78 According to the United States, there is, however, no substantive difference between the
actual 1916 Act and the hypothetical law drafted by the European Communities which it considers to
be outside the reach of the anti-dumping disciplines.  The same cross-border transaction would be
captured by both forms of the law.  In each instance of a cross-border transaction, the price
comparison would be between the price in the United States and the price in a foreign market.  To say
that one law is WTO-consistent because it also applies to domestic goods is to elevate form oversubstance and demonstrates that the European Communities' legal approach to the proper scope of
Article VI and the Anti-Dumping Agreement in the present case is results-driven and without merit.
For example, under the European Communities' theory, if the Sherman Act and Article 82 of the EC
Treaty had been drafted in separate pieces of legislation, the measure applicable to imports would be
                                                     
74 The hypothetical law drafted by the European Communities reads as follows:
"It shall be unlawful for any person engaged in commerce, in the course of such commerce,
either directly or indirectly, to sell commoditi es of like grade and quality in the United States
at prices which are lower than those applied to other purchasers in the United States or inforeign markets [subject to applicable adjustments for differences in transport and othercosts];Provided, That such act or acts be done with the intent of destroying or injuring anindustry in the United States, or of preventing the establishment of an industry in theUnited States, or of restraining or monopolizing any part of the trade and commerce in such
articles in the United States."WT/DS136/R
Page 23
WTO-inconsistent; but because those laws apply to imports and domestic goods, the portion that
applies to imports would be consistent with WTO obligations.
3.79 The European Communities  disputes that it is elevating form over substance.  A split
Sherman Act applying only to imports would not look at all like the 1916 Act.  It would not have a
prohibition of price discrimination looking like the definition of dumping in Article VI:1 of the GATT1994.  Also, it is not possible to make the 1916 Act apply to domestic goods without completely
changing its nature.  The 1916 Act is based on price discrimination between the domestic market of
an exporter and the import market.  Such distinctions make no sense when applied to a single
domestic market.
3.80 In response, the United States  maintains its view that Article VI and the Anti-Dumping
Agreement do not govern competition laws simply because those laws incorporate the element of
price discrimination.  The existence of an antitrust objective in a law regulating cross-border price
discrimination should remove it from the scope of Article VI of the GATT 1994.  The issue of
cross-border predation is an entirely legitimate and traditional subject of antitrust concern, whether
under United States, European or other antitrust laws.  Predatory behaviour may constitutemonopolisation, abuse of dominance or anti-competitive price discrimination whether the markets
concerned are local, regional, national or even international.  It would be most unfortunate if the Panel
were to rule that antitrust enforcement bodies are powerless to deal with harmful conduct because
some of that conduct occurs beyond national borders, and that only domestic conduct, domestic
parties or even domestic products are legitimate subjects of competition policy concern, whatever
their economic impacts.
3.81 The United States adds that the Panel is in any event not called upon to define the exact
parameters of Article VI and the Anti-Dumping Agreement for all possible purposes.  Rather, the
Panel must only decide whether the 1916 Act, a law with substantively different requirements from
the anti-dumping rules and which targets a different practice than the anti-dumping rules, is
nonetheless governed by Article VI and the Anti-Dumping Agreement.  There is simply nothing in the
text, or the objectives, of those agreements that would justify such a far-reaching extension of their
disciplines.
2. The Nature of the 1916 Act: Anti-Dumping or Antitrust Law?
(a) The text and distinctive features of the 1916 Act
3.82 The European Communities  notes that the question to be answered by the Panel is whether
the 1916 Act is of such a nature as to be subject to the rules of Article VI of the GATT 1994.  TheEuropean Communities recalls that the objective crit eria for determining whether a law is subject to
the disciplines of Article VI and the Anti-Dumping Agreement are (i) whether the law is targeted at
imports, and (ii) whether it defines the regulated conduct as price discrimination in the form of lower
prices in the market of the importing country than those practised on the market of the country of
export.  On that basis, the 1916 Act is a law which is subject to Article VI of the GATT 1994 because
(i) it is targeted at imports. Its prohibition is directed at "any person importing or
assisting in importing any articles in the United States".  Such persons who breach the
prohibition  are guilty of a misdemeanour, and are liable for treble damages to
persons who are injured by the prohibited conduct; and
(ii) the regulated conduct is defined by reference to discrimination between the price of
the imported products and "the actual market value or wholesale price of such articles
[…] in the principal markets of the country of their production, or of other foreign
countries to which they are commonly exported".WT/DS136/R
Page 24
3.83 The 1916 Act does not, in the view of the European Communities, escape the discipline of
Article VI because it requires the prohibited conduct to be "common and systematic", or because the
price differential must be "substantial".  Article VI applies whether the dumping is limited in
occurrence and sporadic, or frequent and systematic.  It applies whether the dumping margin is large
or small.  It takes into account the magnitude and frequency of the dumping only through the rule thatthe level of anti-dumping duty imposed may not exceed the level of dumping found.
3.84 The European Communities further argues that the 1916 Act does not escape the discipline of
Article VI because sanctions can only be imposed under the 1916 Act if one or more of the
enumerated specific intents are found.  The discipline of Article VI applies to any rule directed at
dumping.  Once it is established that the rule or law is subject to Article VI, then the sole remediespermitted by Article VI are conditional on a finding of (i) dumping in accordance with the definition
of Article VI and (ii) material injury, threat of material injury, or material retardation.  Substituting the
specific intent tests incorporated in the 1916 Act for the injury tests required by Article VI in no way
serves to take the 1916 Act out of the discipline of Article VI.  Quite the contrary, it is one of the
grounds which cause the 1916 Act to infringe Article VI, since the 1916 Act permits the applicationof sanctions in circumstances other than the only ones envisaged by Article VI - namely where there
is material injury, threat of material injury or material retardation.
3.85 The European Communities notes that, likewise, a law which applies tests other than those
provided for in Article VI cannot be saved by an argument that the quantum of difficulty, from the
point of view of the party seeking relief, is greater in the case of that law than would be the case if it
merely followed the injury test of Article VI.  Applying different conditions does not take the measure
outside the scope of Article VI of the GATT 1994, it simply violates the requirements of Article VI.In any event, it is far from clear that the specific intent tests of the 1916 Act are necessarily more
difficult to meet than the injury tests of Article VI .  For example, as regards the test relating to "the
intent of destroying or injuring an industry in the United States", it is presumably difficult to show an
intent to destroy  an industry in the United States.  But showing an intent to injure an industry may be
much easier: an internal memorandum or exchan ge of correspondence between an importer and an
exporter, estimating that, with a price reduction of, say, 10%, the imported product would increase its
market share by 15%, and that some or all of this would be taken from domestic producers, would
presumably be sufficient to establish an "intent of […] injuring" a US industry.  It is not at all difficult
to imagine the existence of such evidence.  Given the pre-trial discovery rules applicable in litigation
in the United States, it is quite possible that such evidence could be obtained by a plaintiff.
3.86 The United States  argues that a review of the text of the 1916 Act establishes that the 1916
Act is a predatory pricing statute with antitrust objectives, not an anti-dumping measure within the
purview of Article VI and the Anti-Dumping Agreement.  The 1916 Act is not a statute that addresses
the "dumping" and "injury" that would make it an anti-dumping statute within the meaning of Article
VI of the GATT 1994.  The 1916 Act is designed to combat a specific form of international pricediscrimination.  This price discrimination not only must involve substantial price differences but also
must be undertaken commonly and systematically and with a specified intent.  The 1916 Act is not
directed at the simple price differences that cause material injury captured by the Anti-Dumping
Agreement,  nor is it based on the Anti-Dumping Agreement's notion of material injury to a domestic
industry.  The 1916 Act is directed at a very different type of harmful business activity than thataddressed by Article VI and the Anti-Dumping Agreement.
3.87 The United States further argues that a review of the various substantive and procedural
requirements of the 1916 Act confirms that they are the same as, or similar to, the requirements
applicable under US antitrust statutes.  For example:WT/DS136/R
Page 25
(a) The 1916 Act requires a finding of price differences, like the Robinson-Patman Act.75
The price differences under the 1916 Act must be "substantial" in amount and
undertaken "commonly and systematically," while the Robinson-Patman Act only
requires two consummated sales to different buyers at different prices.76
(b) The 1916 Act requires a finding that the pricing at issue be undertaken with a
predatory intent.  This predatory pricing requirement is similar to that found in
Section 2 of the Sherman Act and in so- called primary line cases under the Robinson-
Patman Act, although neither of those Acts normally requires proof of any intent, at
least in civil cases.  There is an intent re quirement in criminal antitrust cases, such as
a criminal offense under the Sherman Act.77
(c) The 1916 Act applies to articles of "like grade and quality," just as that term is used in
the Robinson-Patman Act.78
(d) The statute of limitations for bringing a lawsuit under the 1916 Act is the same as that
under the Clayton Act and the Robinson-Patman Act, i.e. four years.79
(e) The 1916 Act provides for enforcement through either a civil lawsuit brought by a
private party before a US court or a criminal prosecution brought by the US
Department of Justice.  These remedies mirror those available under the antitrust
laws, including the Sherman Act, the Clayton Act and the Robinson-Patman Act.80
(f) The issue of whether a private party has the requisite standing to bring a 1916 Act
lawsuit is determined by reference to antitrust standing principles.81
(g) The 1916 Act authorizes the award of treble damages to a successful private litigant.
This remedy is somewhat unusual under US civil law, but it is a common remedy forviolations of US antitrust statutes.  Indeed, in the third paragraph of the 1916 Act, the
US Congress basically replicated the then-existing language of Section 4 of the
Clayton Act
82 and Section 7 of the Sherman Act,83 which authorized treble damages
for "any person who shall be injured in his business or property" by reason of any
conduct proscribed by US antitrust laws.
                                                     
75 The United States refers to 15 U.S.C. 13(a).
76 The United States refers to  International Telephone & Telegraph Corp. et al. , 104 F.T.C. 280, 417,
citing E. Kinter, A Robinson-Patman Primer, 3rd ed. (1979), p. 35.
77 The United States refers to U.S. v. Brown , 936 F.2d 1042, 1046 (9th Cir. 1991).
78 The United States refers to Zenith III , Op. Cit., p. 1197.  The United States notes that the Zenith
court, at pp. 1226-1227 explained that "we find that the same standard of 'like grade and quality' limited productcomparisons under section 2 of the Clayton Act prior to the Robinson-Patman amendments.  Since the Clayton
Act was passed in 1914, the same standard is applicable under the Antidumping Act of 1916."
79 The United States refers to Helmac I , Op. Cit., pp. 566-67, noting that where the 1916 Act did not set
forth applicable statute of limitations, the Court relied on the purpose of the US Congress in enacting the 1916Act to interpret the 1916 Act as having same statute of limitations as other antitrust statutes.
80 In response to a question asked by the Panel in a different context, the United States notes, however,
that the Clayton Act is enforceab le only through civil actions.
81 The United States refers to, e.g., Isra Fruit Ltd. v. Agrexco Agr. Export Co. , Op. Cit., pp. 988-89;
Jewel Foliage Co. v. Uniflora Overseas Florida , Op. Cit., p. 516; Schwimmer v. Sony Corp ., Op. Cit., pp. 796-
97.
82 The United States notes that the relevant Clayton Act language can be found at 38 Stat. 731 (1914).
83 The United States notes that the relevant Sherman Act language can be found at 26 Stat. 210 (1890).
The United States further notes that the US Congress later amended this part of the Sherman Act.WT/DS136/R
Page 26
(h) With regard to its criminal provisions, the 1916 Act is virtually identical to, and
specifies the same penalties as, the criminal provisions of the Sherman Act in force in
1916.
3.88 The European Communities  considers that these differences derive from the time at which
the 1916 Act was adopted and the peculiarly US form of remedies chosen.  For example, theavailability of treble damages is by no means an indication that the measure is an antitrust measure,
but rather relates to the fact that the US Congress disapproves of certain conduct or activities.  Treble
damages have been provided for in US legislation in a number of cases which have nothing to do with
antitrust.
84  Moreover, the European Communities is not aware of any other jurisdiction which
provides for treble damages in this way.  Treble damages is not a feature of an antitrust measure, it isan indication of a US measure.
3.89 The United States  further argues that there are significant differences between the 1916 Act
and the anti-dumping rules.  As a trade remedy, the anti-dumping rules are triggered only in response
to the practice of "dumping," i.e. a situation where an exporter sells its product abroad at lower prices
than it does at home or at prices that are below cost, which causes "material injury" to producers ofthe product in the importing country.  Once these facts are established, the investigating authorities
may impose duties to offset prospectively the injurious dumping.  In contrast, the 1916 Act takes
action against a different type of harmful business activity.  Under the 1916 Act, mere dumping is not
enough.  The complainant must show price discrimination which is common and systematic as well as
substantial, and the complainant must demonstrate a predatory intent.  There is also no requirement
that actual or threatened "material injury" to a domestic industry be shown.  The complainant instead
is required to show damages to its business or property.  Thus, while an importer may violate the 1916Act, it cannot be said that the same facts would satisfy the requirements for the imposition of anti-
dumping duties.
3.90 The United States contends that the differences between anti-dumping rules and the 1916 Act
are readily seen when the requirements of the Anti-Dumping Agreement are contrasted with those of
the 1916 Act:
(a) The price differences required under the two sets of rules are quite different.  Under
the 1916 Act, the price in the United States must be "substantially less" than the price
abroad.  Under the Anti-Dumping Agreement, normally a mere price difference
above a de minimis  level is all that is required, i.e. the price in the United States only
has to be lower than the price abroad.
(b) The 1916 Act requires that the substantial price differences be undertaken "commonly
and systematically."  There is no similar requirement under the Anti-Dumping
Agreement.
                                                     
84 The European Communities lists the following cases: 35 U.S.C. Sec. 296 (Title 35 - Patents / Part III
Patents and protection of patent rights / Chapter 29 - Remedies for infringement of patent, and other actions); 7U.S.C. Sec. 2570 (Title 7 - Agriculture / Chapter 57 - Plant Variety Protection / Subchapter III - Plant VarietyProtection and Rights); 12 U.S.C Sec. 2607 (Title 12 - Banks and Banking / Chapter 27 - Real Estate Settlement
Procedures); 25 U.S.C.S. § 305e (United States Code Service; Title 25 - Indians / Chapter 7A - Promotion of
Social and Economic Welfare); 15 U.S.C. Sec. 1117 (Title 15 - Commerce and Trade / Chapter 22 - Trade-
marks / Subchapter  III - General Provisions); 15 U.S.C. Sec. 1693f (Title 15 - Commerce and Trade / Chapter41 - Consumer Credit Protection / Subchapter VI - Electronic Fund Transfers); 18 U.S.C. Sec. 1964 (Title 18 -Crimes and Criminal Procedure / Chapter 96 - Racketeer Influenced and Corrupt Organizations); 22 U.S.C. Sec.
6082 (Title 22 - Foreign Relations and Intercourse / Chapter 69A - Cuban Liberty and Democratic Solidarity
(Libertad) / Subchapter III - Protection of Property Rights of United States Nationals).WT/DS136/R
Page 27
(c) The 1916 Act requires the complainant to establish "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."  Under US law, this intent must be
"predatory" in nature.  The Anti-Dumping Agreement, in contrast, imposes no intent
requirement of any kind.
(d) In a private action, the 1916 Act requires a showing of damages suffered by the
individual complaining party.  The Anti-Dumping Agreement, in contrast, requires
that material injury to a domestic industry be found to exist.
3.91 The European Communities  concedes that there are differences between the requirements of
the 1916 Act and those of Article VI of the GATT 1994, but these differences do not avoid a
violation.  They are in large part the reasons why there is a violation.  Accordingly, the differences
identified by the United States raise the following questions:
(a) As for the requisite price differences, the European Communities inquires whether
the United States means to say that WTO dumping provisions do not reach"substantial" price discrimination, but onl y price discrimination which is between " de
minimis"  and "substantial".
(b) With respect to the second distinguishing feature identified by the United States, i.e.
the requisite frequency of price discrimination, the European Communities inquires
whether the US position is that WTO dumpi ng provisions do not cover "common and
systematic" dumping.
(c) Regarding the intent requirement, the European Communities inquires whether the
United States means to say that price discrimination causing "material injury" is
outside the scope of WTO dumping provisions if it is also deliberate.  The European
Communities recalls, in this regard, that the 1916 Act requires a number of alternative
"intents", only some of which refer to competition.  The intent to injure the US
industry is sufficient to found liability and requires no effect on competition.
(d) Finally, in relation to the last distinguishing feature, i.e. the showing of damages
suffered by individual companies, the European Communities inquires whether the
US position is that where there is material  injury to the domestic industry within the
meaning of WTO dumping provisions there would not be damage to one or other
individual company.
3.92 The European Communities argues, in addition, that the fact that the 1916 Act only prohibits
price discrimination where the price is lower in the United States than elsewhere and thus is limited to
protecting the US market against low prices also suggests that the 1916 Act is an anti-dumping
measure rather than an antitrust measure.
3.93 In response to the last EC argument, the United States  notes that the 1916 Act and its
interpretation necessarily focus on anti-competitive effects in the United States.  In the words of the
US Supreme Court:WT/DS136/R
Page 28
"Respondents cannot recover antitrust damages based solely on an alleged
cartelization of the Japanese market, because American antitrust laws do not regulate
the competitive conditions in other nations' economies."85
3.94 The United States also reiterates its view that, however the 1916 Act is characterized, the fact
remains that to succeed under it, a plaintiff must plead and prove many elements that make itqualitatively different from a measure intended to remedy dumping.  Foremost among these elements
is the specific predatory intent requirement.
3.95 The European Communities  rejects the US argument that the 1916 Act is qualitatively
different from a measure intended to remedy dumping. The European Communities recalls that the
primary requirement of the 1916 Act corresponds to du mping within the meaning of Article VI of the
GATT 1994.  Certain of the additional requirements such as "common and systematic" dumping and
"substantial" dumping margin may require dumping to be more severe than under Article VI of the
GATT 1994, but this does not make the description of Article VI inapplicable.  Article VI covers all
dumping practices, including those which are "common and systematic".  Article VI covers all forms
of "price dumping", as defined therein.  The only form of dumping whose exclusion from the scope of
the GATT 1947 was ever discus sed is "non-price" dumping.
86
3.96 The United States  considers that the European Communities attempts to minimise the
qualitative differences between the 1916 Act and an anti-dumping measure by arguing that the
"primary requirement" of the 1916 Act corresponds to "dumping" and that the other elements required
to be proved under the 1916 Act are simply a "few additional conditions" that do not suffice to
remove it from the anti-dumping rules.  This mischaracterization is an attempt by the
European Communities to justify labelling the 1916 Act as an "anti-dumping" measure.
3.97 The European Communities  replies that the purpose of Article VI and the Anti-Dumping
Agreement would be undermined if WTO Members could justify the application of measures other
than anti-dumping duties - for example, civil liabili ty for damages or criminal penalties - on the basis
that the conduct to which they are applied is defined in a manner which, while incorporating the
essential elements of the definition of dumping, differs by the addition of one or another additionalcondition like, for example, providing that the additional remedy is available in case of aggravated
dumping, or if the objective definition of dumping is accompanied by certain specific intents.  This is
exactly what the 1916 Act does, it being understood that the 1916 Act was not enacted in order to
circumvent the discipline of Article VI of the GATT 1994, which was only adopted three decades
later.  But to accept that the 1916 Act is compatible with Article VI of the GATT 1994 would entailaccepting that Article VI can be circumvented by national legislation simply by resorting to the
expedient of "bolting on" a few additional definitional elements and providing a remedy other than
anti-dumping duties.
3.98 For the United States , it remains clear from the text of the statute, its legislative history and
the relevant case law that it is the additional elements and their purpose which make the 1916 Actqualitatively different from a mere anti-dumping measure.  These elements are not "conditions" any
more than the requirement that the plaintiff must establish the requisite price difference.  All of the
elements of the 1916 Act must be demonstrated to establish liability.  There is no basis for assuming
that one element is more important or takes precedence over another.
                                                     
85 Matsushita Electrical Industrial Co., Ltd. v. Zenith Radio Corp ., 475 U.S. 574, 582 (1986)
(hereinafter " Matsushita Electrical "), quoting United States v. Aluminum Co. of America , 148 F.2d. 416, 433
(2d Cir. 1945) (L. Hand, J.).
86 The European Communities refers to GATT, Analytical Index: Guide to GATT Law and Practice
(1994), p. 204.WT/DS136/R
Page 29
(b) The theoretical distinction between anti-dumping and antitrust
3.99 According to the European Communities , nothing in the GATT 1994, the Anti-Dumping
Agreement or any other WTO text supports the propos ition that, from a WTO perspective, there is a
clear dichotomy between two mutually exclusive cat egories of national legislation: anti-dumping
legislation which is subject to Article VI of the GATT 1994 and the Anti-Dumping Agreement, on theone hand, and antitrust rules which are not subject to those rules, on the other.  Indeed, there is
nothing in the GATT 1994 and the Anti-Dumping Agreement which deals with or touches on antitrust
at all.  Accordingly, there is nothing in these te xts to prevent laws and rules considered by national
courts or legislatures to be "antitrust" in na ture from being subject to Article VI and the Anti-
Dumping Agreement.  The dichotomy on which the United States bases its argument is a false one.
87
3.100  In reply to a question of the Panel regarding how the basic features, principles and underlying
economic assumptions of anti-dumping and antitrust rules differ, the European Communities notes,
first of all, that the anti-dumping and antitrust rules in many cases had common origins and rely on
common notions.88  Anti-dumping legislation began to appear in various countries at the beginning of
the twentieth century, at about the same time as antitrust legislation appeared in the United States.While the two types of legislation appear to have sprung from the same matrix of ideas prevailing at
that time, anti-dumping legislation has from the start been posited on the notion that international
trade poses a particular set of problems which require specific legislative solutions and remedies.
This notion has increased in importance as tariff and other barriers to international trade have been
reduced.  In the negotiation of the WTO Anti-Dumping Agreement "the European Communities and
the United States […] took the view that effective and workable anti-dumping rules are essential to
maintaining an open and liberal trading system".
89
3.101  The European Communities further points out that the core element in most accounts of the
rationale of dumping is that where national markets are economically separate, economic operators in
one market may exploit the different economic conditions prevailing in the two markets to apply
different prices.  In particular, when there are entry barriers in one market, producers in that market
may exploit those barriers to apply high prices in their domestic market, and use the resulting profitsto subsidise exports to another market.  Such practices may cause injury to actual or potential
producers in the export market concerned.  To the European Communities, the following description
of the economic concept of dumping is a typical one:
"To the economist, dumping is traditionally defined only as price discrimination
between national markets, a definition first proposed by Viner.  There was need of arestricted definition for the purposes of economic theory and that advanced by Viner
enabled the topic to be subsumed within the overall theory of monopoly and
imperfect competition.
                                                     
87 The European Communities notes that, in any event, even in the United States it was recognized that
the 1916 Act addresses the same practices as addressed by anti-dumping legislation in other countries, namelypractices described as "the sale of imported merchandise at less than its prevailing market or wholesale price inthe country of production".  The European Communities refers to the United States Tariff Commission,
Information Concerning Dumping and Other Foreign Competition in the United States and Canada’s Anti-
Dumping Law, Printed for the use of the Committeee on Ways and Means, House of Representatives (1919),
p. 9.
88 The European Communities notes that this is why the 1916 Act is inspired by points addressed in the
Sherman Act.
89 M. Koulen, "The New Anti-Dumping Code Through its Negotiating History", in The Uruguay
Round Results, J. Bourgeois, ed. (1995), p. 160.WT/DS136/R
Page 30
A necessary condition for price discrimination is that the total market for a product
can be broken down into two or more sub-markets and that at least one of the sub-
markets is isolated from the others.  In addition, the seller has to have a certain degree
of monopoly power in one or more of the isolated sub-markets.  In these
circumstances, price discrimination is profitable if there is a difference in theelasticities of demand in the separate sub-markets, thus enabling a higher price to be
charged for the product in the sub-market in which demand is less elastic.
The factors which cause isolation in international trade are high tariffs, import
restrictions and other non-tariff barriers, such as statutorily imposed technical
standards.  These factors are usually found in the domestic market of the supplier andstrengthen his power on that market.  They create a less elastic demand for this
product and enable him to charge higher prices.  The price discrimination need not be
between the domestic and export market, however, and may be practised instead
between different export markets."
90
3.102  The European Communities points out that a similar line of argument is found in the
following passage taken from a US law review note:
"[T]he recoupment requirement – at least as defined in Brooke Group  - is too narrow
in the international context because it fails to consider the ability of firms with a
monopoly or oligopoly in their home markets simultaneously to recoup losses from
dumping by increasing monopoly returns at home.  Dumping in the US allows
foreign producers to reap the economies of scale of producing at optimal capacity
while restricting sales at home to protect their home market monopoly prices."91
3.103  The European Communities further argues that the GATT 1947 reflects the fact that, by 1947,
the idea had coalesced that, in deciding whether to apply anti-dumping measures, the investigating
authority should look to a set of defined possible injurious effects to be determined with respect to an
"industry" in the country of importation.  "Industry" means producers.  "Injury" is therefore to be
determined by reference to the situation of producers.  While there may be an underlying assumptionthat injury to producers will ultimately lead to injury to consumers, this is not explicit in the rules, and
there is no requirement that the injury investigation examine effects of dumping practices on
consumers.
3.104  The European Communities notes that, by contrast, it is often said that antitrust law protects
competition, not competitors.
92  Modern antitrust theory increas ingly tends to explicitly equate
competition and consumer welfare.93  This is reflected in the reasoning and language used by the US
Supreme Court in Brooke Group  which held that in order to prove a "primary line" violation of the
Robinson-Patman Act, a plaintiff must plead and pr ove predation, consisting of (i) prices below "an
                                                     
90 H.-F. Beseler and N. Williams, Anti-dumping and Anti-subsidy Law, The European Communities,
(1986), p.41 (citations omitted).
91 Note, Rethinking the 1916 Antidumping Act, 110 Harv. L. Rev. 1555, 1566 (1997).
92 The European Communities points out that antitrust statutes, at least as regards the United States, use
general language referring to competition as such: "restraint of trade or commerce among the several States, orwith foreign nations" (Section 1 of the Sherman Act); "monopoliz[ing] or attempt[ing] to monopolize […] any
part of the trade or commerce among the several States, or with foreign nations" (Section 2 of the Sherman Act);
price discrimination whose effect may be "substantially to lessen competition or tend to create a monopoly in
any line of commerce, or to injure, destroy, or prev ent competition with any person who either grants or
knowingly received the benefit of such discrimination, or with customers of either of them" (Section 2 of theClayton Act, as amended by the Robinson-Patman Act).
93 The European Communities also notes, however, that there is no commonly accepted standard for
what constitutes a "competition" law.WT/DS136/R
Page 31
appropriate measure" of the defendant's costs, and (ii) a demonstration that the competitor has a
reasonable prospect of recouping its investment in below-cost pricing.  The Court held that the
essential requirements for primary line violations of the Robinson-Patman Act are the same as for
claims of monopolisation by predatory pricing under Se ction 2 of the Sherman Act.  Noting criticism
of earlier case law made in light of "the antitrust laws' traditional concern for consumer welfare andprice competition", the Court said that "the essence of the claim under either statute is the same: A
business rival has priced its products in an unfair manner with the object to eliminate or retard
competition and thereby gain and exercise control over prices in the relevant market."
94
3.105  For the European Communities, it follows from these theoretical considerations that the
essential characteristic of an anti-dumping law covered by the discipline of Article VI and the Anti-Dumping Agreement is that it is aimed at providing a remedy against imports where there is price
discrimination consisting of the imports being sold at  a lower price than that applied to sales of the
same products in the market from which they are exported.  Anti-dumping theory and legislation is
based on the idea that the kind of price discrimination between different markets described in
Article VI of the GATT 1994 poses a problem which is different from, and requires a different set ofremedies from, the problem of price discrimination within one and the same market.
3.106  The United States  disagrees with the European Communities' suggestion that there is a
complete dichotomy between antitrust laws and their pursuit of consumer welfare, and trade laws and
their focus on producer welfare.  This purported dichotomy exaggerates reality.  While it is certainly
true that the purpose of some very well known antitrust laws is to preserve the competitive process in
order to enhance economic efficiency and increase consumer welfare, it is also true that quite a
number of antitrust laws have other purposes, including the protection of small enterprises or otherindividual competitors.
3.107  The United States points out that one example of other antitrust purposes can be found in the
Robinson-Patman Act, where, in the "secondary line" context
95, the statutory concern is for adverse
effects on individual competitors, as well as on competition itself.   Furthermore, even the European
Communities' main antitrust instruments, Articles 81 and 82 of the EC Treaty, retain elements ofconcern for competitors as well as competition:
"In the E.C., however, there is concern also  that large firms may make it hard for
smaller firms to compete, even if the latter  are less efficient.  The preamble to the
[Rome] treaty refers to many factors other than efficiency, such as social policy, fair
competition, small and medium-sized undertakings, peace and liberty.  To protectsmall firms that are less efficient, it may be necessary to control the conduct of firms
that have no power over price."
96
3.108  The United States also recalls that, unlike US antitrust law, the parallel provisions of EC law
condemning abuses of dominant position do not require presentation of "recoupment" evidence to
show "predatory pricing."97  Moreover, EC Member States' own antitrust laws may take similar
positions.   For example, France noted in its 199 6 Annual Report to the OECD Competition Law and
Policy Committee that "the aim of the provisions contained in the Law of 1 July 1996 is to fight the
practice of artificially low retail prices without the need to prove the existence of an anticompetitive
                                                     
94 Brooke Group , Op. Cit., p. 222.
95 The United States recalls that in a "secondary line" context certain buyers of a good receive less
advantageous sales terms from a given seller than other competing buyers.
96 Korah, An Introductory Guide to EC Competition Law and Practice, 6th ed., Oxford (1997), p. 76;
and see also Amato, Antitrust and the Boundaries of Power (1997), chs. 3 and 5.
97 The United States refers to Korah, Op. Cit., pp. 97-107; Tetra Pak II  (C333/94P)[1997] C.E.C., 4
MLR 662.WT/DS136/R
Page 32
agreement or dominant position."98 Likewise, the UK's Office of Fair Trading recently released a
"Consultation Draft" discussing the "abuse of dominance" provision in Britain's 1998 Competition
Act:
"In Akzo  and Tetra-Pak II  the European Court of Justice found the undertakings'
conduct to be an abuse without explicitly considering whether recouping losses wouldbe feasible.  The Director General [of the OFT] therefore does not consider that he
would necessarily be required to establish that predation was feasible."
99
3.109  According to the United States, it can be seen from these examples that the fact that a
measure may include protection for competitors does not remove the measure from the category of
antitrust laws.  It thus remains a challenge for antitrust laws to protect competition without undulyprotecting competitors, or to protect competitors without unduly prejudicing competition.  This
"antitrust paradox" reflects the historic reality that antitrust laws have social and political as well as
economic goals.
3.110  The European Communities  objects to the claim of the United States that the European
Communities is relying on a "complete dichotomy between antitrust and anti-dumping laws".  TheEuropean Communities' position is the opposite.  Antitrust and anti-dumping rules have in many cases
common origins and rely on common notions.  The point is that there is a definition of, and
disciplines for, anti-dumping measures and so the only question for the Panel is whether the 1916 Act
comes within and violates the anti-dumping disciplines, not whether there is a "dichotomy".
3.111  The United States  further contends, in response to the same question asked by the Panel to
the European Communities, that anti-dumping rules and antitrust laws have different objectives, are
founded on different principles, and seek to remedy different problems.  The anti-dumping rules arenot intended as a remedy for the predatory pricing practices of firms or for any other private anti-
competitive practices typically condemned by antitrust laws.  Rather, the anti-dumping rules are a
trade remedy which WTO Members have agreed is necessary to the maintenance of the multilateral
trading system.  Without this and other trade remedies, there could have been no agreement on
broader GATT 1947 and later WTO packages of market-opening agreements, especially given theimperfections which remain in the multilateral trading system.  In contrast, antitrust laws remedy,
among other things, private pricing practices which are objectionable because they are instruments of
cartelization, monopolisation or abuse of dominant position.  While it is true that the anti-dumping
rules address certain private pricing practices, it is not because these pricing practices - that is,
injurious dumping practices - are anti-competitive in an antitrust sense.  Injurious dumping practiceswill not normally qualify as anti-competitive when analysed under the distinct rules of most national
antitrust laws.
3.112  The United States further points out that, as a trade remedy, the anti-dumping rules are
triggered only in response to the practice of "dumping," i.e. a situation where an exporter sells its
product abroad at lower prices than it does at home or at prices that are below cost, which causes"material injury" to producers of the product in the importing country.  Once these facts are
established, the investigating authorities may impose duties to offset prospectively the injurious
dumping.  While this simple definition of injurious dumping may suggest certain comparisons with
competition laws addressing price discrimination, any careful analysis shows major differences
between the principles upon which anti-dumping rules and the competition laws are founded.
                                                     
98 DAFFE/CLP(97)11/08, October 1997, at para. 68.
99 Office of Fair Trading, Formal Consultation Draft - Competition Act 1998 - the Chapter II
Prohibition (OFT 402 1998), Part 4, especially para. 4.31.WT/DS136/R
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3.113  The United States recalls, in this regard, that, although some dumping may be due to business
advantages and market segmentation which have arisen in response to commercial forces, more
typically it is a government's industrial policies or key aspects of the national economic system which
a government has created, promoted, or tolerated that enable injurious dumping to take place.
Principally of concern are certain government industrial policies or practices which in most instancesare not directly or fully subject to any type of WTO prohibitions or disciplines.  In other instances,
these policies or practices may not fully conform to WTO disciplines or, even if they do, may not
leave all Members on an equal footing because of differences in starting levels of openness and
transparency among Members.  These policies still are objectionable because they distort market
structures or processes and, as a result, provide artificial advantages to home market producers and
often do so at the expense of home market consumers.  These artificial advantages generally translate
into increased profits for these producers in their home market, which make possible and, for various
reasons, may encourage these producers to engage in injurious dumping abroad.
3.114  The United States states that one broad category of objectionable policies can be found in
government industrial policies which combine limits on domestic competition with market accessbarriers that keep out foreign competitors.  Here, the possible combinations are quite extensive.  On
the one hand, the existence of only limited domestic competition may be due to many different types
of industrial policies falling under the umbrella of government actions intended to influence the
structure of the home market with the aim of affect ing the number or type of producers, including (1)
government policies limiting the number of producers in a particular industry, such as through the
restrictive award of licenses, (2) State monopolies, (3) government policies favoring a "national
champion" firm within an industry, (4) government policies which divide up and stabilize marketshares and (5) any of a variety of other government policies which regulate commerce by creating,
promoting or tolerating monopolies or oligopolies or by favoring some domestic competitors over
other domestic and foreign competitors.  Other general categories of objectionable policies include
domestic price controls, government subsidisation and state trading arrangements.
3.115  The United States argues that anti-dumping rules are a practical, albeit indirect, response to
these trade-distorting policies.  The anti-dumping rules allow Members to respond through the
imposition of offsetting duties when confronted with one harmful result of these policies, namely,
injurious dumping in export markets by the producers that benefit from these policies.  From this
perspective, the anti-dumping rules represent an effort to maintain a "level playing field" among
producers in different countries.  Anti-dumping duties are designed to offset, quantitatively, theartificial advantages realized by the exporting country's producers so that producers in the importing
country may compete, at least in the importing country's market, on an equal footing with the
exporting country's producers.
3.116  The United States points out that anti-dumping rules also help to neutralise inequities that
may arise from differences in national economic systems, even as international trade liberalises.  Forexample, differing social and legal arrangements for employment and under-employment, or differing
debt-equity structures and debt burdens, often ma de possible by indirect government intervention in
the banking system, can favor the exporting country's producers over the importing country's
producers and lead to injurious dumping.  Other circumstances that can lead to injurious dumping can
include certain competition-inhibiting private conduct, cross-subsidisation that can result from thelegal organisation and operation of foreign business groupings and, in the case of non-market
economies or some economies in transition, export directives and prices and costs not entirely based
on market principles.
3.117  The United States considers that the anti-dumping  rules thus implicitly recognize that there is
an accepted norm for the behavior of governments in the broad multilateral trade context, i.e. a
government should not pursue industrial policies which distort market structures or processes andWT/DS136/R
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thereby provide artificial advantages to domestic producers to the detriment of producers in other
countries.  The anti-dumping rules also recognize that there should be a remedy for certain harms
caused when different economic systems interact.
3.118  Turning to competition laws, the United States notes that they appropriately do not take these
matters into consideration, and they do not address the underlying problems at which the anti-dumping rules are directed.  Instead, competition laws remedy private business practices which, in
themselves, are objectionable because they are anti-competitive in an antitrust sense.  The primary
objectives of competition policy, as expressed in competition laws, are to promote economic
efficiency and to maximize consumer welfare through innovation and the optimal allocation of
resources in competitive markets.  The competition laws therefore are largely directed at thecompetitive practices of private firms and market structures, with the objective of assuring a
competitive market.  In some countries, the competition laws have additional, less central objectives,
such as the preservation of a decentralised economy, support of small businesses or maintenance of
economic and social stability.
3.119  The United States acknowledges that the anti-dumping rules address certain private pricing
practices as do the competition laws.  However, dumping practices are not anti-competitive in an
antitrust sense.  The anti-dumping rules provide a remedy against injurious dumping as an indirect
response to a foreign government's market-distortive industrial policies or differences in national
economic systems.  As a result, although dumping by foreign producers can, for example, send false
signals to the importing country's market that distort investment patterns, dumping practices will not
normally qualify as anti-competitive when analysed under the distinct rules of most national
competition laws.
3.120  The United States recalls that, in the Working Group on the Interaction between Trade and
Competition Policy in 1998, the European Communities recognized the distinction between anti-
dumping law and competition law:
"Antidumping law and competition law apply in different economic, legal and
institutional contexts.  Competition law prohibits and subjects to strict penaltiescertain forms of pricing behaviour by firms.  While competition law applies in
principle within the context of an integrated market, antidumping law applies in an
economic setting which is still characterized by border measures and other regulatory
obstacles and distortions of trade."
100
3.121  The United States notes that, in addition, during the meeting at which the Working Group
considered the above-mentioned document, a representative of the European Communities "reiterated
that the submission by his delegation argued that anti-dumping rules and competition rules applied in
different economic, legal and institutional contexts and that therefore there could be no question of the
replacement of one set of rules for the other, and no question of simply making a mechanical
transposition from competition law into anti-dumpi ng law of concepts which were intended to deal
with a totally different kind of problem and underlay a totally different type of instrument."101
3.122  In response, the European Communities  asserts that the United States seeks to develop a
new theory of dumping which cannot be reconciled with the wording of Article VI of the GATT 1994
and the Anti-Dumping Agreement as well as decades of US enforcement.  The European
Communities inquires whether the United States is henceforth going to refrain from applying anti-dumping duties where there is no underlying government trade-distorting policy or practice.
Likewise, the European Communities wonders whether the United States is in future going to accept
                                                     
100 WT/WGTCP/W/78.
101 WT/WGTCP/M/5, para. 71.WT/DS136/R
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as defences from exporters in dumping cases the argument that "I have no protected domestic market"
or  "I am not dumping, I am engaging in predatory pricing".
3.123  The European Communities adds that, to state that anti-dumping rules respond to government
trade-distorting policies may have far-reaching implications which had certainly never been intended
by GATT 1947 contracting parties.  This argument im plies that anti-dumping rules exercise some sort
of indirect constraint on the domestic policies of a dumper's home country – even in areas outside
trade policy like industrial policy or social relations, to which the United States refers.  There is no
underpinning for this in the wording of WTO dumping provisions or in the negotiating history.  The
only policy limitation underlying WTO dumping rules is the obligation to conform Members' anti-
dumping policy to WTO rules and to take WTO-consistent anti-dumping measures.
3.124  The United States  denies that it is developing a new theory of dumping.  The United States
refers to the fact that its notion of dumping is discussed in detail in the US paper submitted to the
Working Group on the Interaction between Trade and Competition Policy.  Moreover, in the same
Working Group, the European Communities itself recognized basically the same concepts.
Furthermore, it is worth noting that the District Court in Wheeling-Pittsburgh  even recognized this
distinction.  In this regard, that court stated that "dumping itself has long been noted to constitute a
harmful international trade practice which may, through government, as opposed to market-driven
action , cause sharp increases in imported goods, to the detriment of domestic producers."102
(c) Statements by US executive branch officials
3.125  The European Communities  argues that the US government's denial that the 1916 Act is an
instrument to counter dumping is also in contradiction with a number of official statements made by
US Government officials in 1985 and 1986 at the occasion of the discussions on the adoption ofsection 236 and section 1655, two bills to amend the 1916 Act.
103
3.126  The European Communities notes that the Chairman of the US Federal Trade Commission,
on 17 June 1985, wrote in a letter to the US Senate Committee of the Judiciary that the provisions of
the 1916 Act  "establish liability, provided that the  dumping is done" under the conditions described in
the statute.  In a footnote he further clarifies that "[u]nder the Anti-Dumping 1916 Act dumping is thedifference between the price in the US and the price in foreign countries".
104  Moreover, according to
the European Communities, the testimony of 18 July 1986 of USTR General Counsel Alan Holmer to
the US Senate Finance Committee states, inter alia , that the 1916 Act is legal under the GATT 1947
and the Anti-Dumping Code only because it is grandfathered pursuant to the 1947 Protocol of
Provisional Application.105  Similar statements were also made by former US Trade Representative
Clayton Yeutter and by the Department of Justice.106
                                                     
102 Wheeling-Pittsburgh , Op. Cit., p. 604 (emphasis added by the United States).
103 The European Communities notes that the amendments, aimed, inter alia, at making the criteria for
applying the 1916 Act less stringent, were never adopted.
104 Emphasis added by the European Communities.
105 The European Communities refers to pages 4 and 5 of the testimony where it is stated, inter alia ,
that "[t]he Antidumping Code […] expressly limits the remedy for dumping to the prospective collection of
antidumping duties to offset the margin of dumping. […] Article 16 [of the Tokyo Round Anti-Dumping Code,
now Article 18.1 of the WTO AD Agreement] must stand for the proposition that a government can provide itscitizens one, and only one, remedy for dumping.  That remedy is the collection of duties in a manner consistentwith the Antidumping Code.  We believe that our reading flows logically from the letter and spirit of the GATTand the Antidumping Code.  It also follows that S.  1655 would violate the Code by imposing additional
sanctions on top of normal antidumping duties. […] While the same criticism can be levelled at the
Antidumping Act of 1916, that Act was "grandfathered" by the Protocol of Provisional application when theWT/DS136/R
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3.127  In the view of the European Communities, this shows that, in the past, US Government bodies
not only held the view that the 1916 Act concerns dumping practices, but also that, without
grandfathering, it would have been GATT-illegal.  The United States failed to seek a grandfather
exception under the GATT 1994.107  The logical conclusion, according to the European Communities,
is that, since US authorities admitted that the 1916 Act benefited from grandfathering under theGATT 1947 and since the 1916 Act does not benefit from any grandfather clause under the GATT
1994, it is in breach of the WTO Agreement and the GATT 1994.
3.128  In addition, the European Communities refers to the 1995 Antitrust Enforcement Guidelines
for International Operations  of the US Department of Justice and the US Federal Trade Commission .
Those guidelines expressly mention that "the 1916 Act is not an antitrust statute […].  It is a tradestatute that creates a private claim against importers […]"
108.
3.129  In response, the United States  states that, assuming arguendo  that the European
Communities' characterisation of the statements at issue is accurate, the simple answer to the EC
argument is that the two government agencies commenting on the proposed 1986 legislation, i.e. the
US Department of Justice and USTR, we re mistaken as a matter of fact.
3.130  The United States considers that the GATT 1947 document L/2375/Add. 1 of 19 March 1965
shows that the US government did not include the 1916 Act anywhere in the survey of  existing
mandatory legislation not in conformity with Part II of the GATT 1947.  Indeed, at one point, the US
government specifically notified statutes that were not in conformity with Articles III and VI of the
GATT 1947, which are the two Articles which the European Communities claims the 1916 Act
violates.   The 1916 Act was not among them.  The plain import of document L/2375/Add.1 is that, in
the United States' view, the 1916 Act was GATT-legal and therefore did not require "grandfathering".
3.131  The United States confirms that its notification in document L/2375/Add.1 was not binding,
but maintains that it was nevertheless an official statement of the US government's position regarding
the GATT-legality of the 1916 Act in a GATT 1947 forum.  The United States did not have the
occasion to address the GATT-legality of the 1916 Act in the only other possible GATT 1947 forum,
i.e. a dispute resolution proceeding, because no contracting party challenged the 1916 Act under theGATT 1947, and this despite the fact that the United States had never invoked the "grandfathering"
protection made available by the Protocol of Provisional Application.
3.132  The United States further points out that the notification by the United States contained in
document L/2375/Add.1, which is an official statem ent of the US government, contradicts, as a
                                                                                                                                                                    
U.S. joined the GATT in 1947.  Because of this legal technicality, the 1916 Act in its present form is legal under
the GATT."
106 The European Communities refers to a letter, dated 18 February 1986, from US Trade
Representative C. Yeutter to Sen. S. Thurmond, 18 Febr uary 1986, where it is stated, as criticism in connection
with proposed amendments to the 1916 Act, that "[w]hile many of the above objections can be levelled at the
Antidumping Act  of 1916, that Act was grandfathered by the Protocol of Provisional Application upon U.S.
accession to the GATT and is therefore GATT-legal."  The European Communities also refers to another letter,dated 4 February 1986, from Assistant Attorney General J. Bolton to Sen. S. Thurmond, where it is stated that"[t]o the extent that any provisions of the current 1916 Act are inconsistent with the GATT, they are protectedby the "grandfather clause", paragraph 1(b) of the 1947 Protocol of Provisional Application of the GATT".
107 The European Communities notes the existence of paragraph 3(a) of the introductory language to
the GATT 1994 which only mentions "measures taken by a Member under specific mandatory legislation,enacted by that Member before it became a contracting pa rty to the GATT 1947, that prohibits the use, sale or
lease of foreign-built or foreign-reconstructed vessels in commercial applications between points in nationalwaters or the waters of an exclusive economic zone".
108 Section 2.82 of the Guidelines.  The European Communities notes that the full text is available on
the Internet at http://www.usdoj.gov/atr/public/guidelines/internat.txt.WT/DS136/R
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factual matter, the statements cited by the European  Communities.  Therefore, the Panel should attach
no weight to those statements when deciding whethe r the 1916 Act violates Articles III:4 and VI:2 of
the GATT 1994.
3.133  The United States considers it more significant, however, that the inference which the
European Communities draws from the statements made by the two agencies is not accurate.  In eachof the statements, the agency official first discusses why the proposed legislation, which would have
amended the 1916 Act, was GATT-illegal.  Then, the agency official explains that while the 1916 Act
pre-dates the GATT 1947 and is therefore eligible for "grandfathering" if ever challenged as GATT-
illegal, the 1916 Act would no longer be eligible for "grandfathering", under GATT 1947
jurisprudence, if it were amended.  For example, Assistant Attorney General John Bolton of the USDepartment of Justice states:
"To the extent that any provisions of the current 1916 Act are inconsistent with the
GATT , they are protected by the "grandfather clause," paragraph 1(b) of the 1947
Protocol of Provisional Application of the GATT.  Any amendment to the 1916 Act
that is inconsistent with the GATT or the [Antidumping] Code would not benefit
from that protection, however, and accordingly, would contravene our international
obligations."
109
3.134  For the United States it is clear from this statement that the official is not admitting or even
suggesting that the 1916 Act, without the proposed amendments, was GATT-illegal.  Rather, the
official is merely saying that the 1916 Act is eligible for "grandfathering" only if it is not amended
and that it would be GATT-illegal if amended as proposed, given that the proposed amendments are
GATT-illegal.
3.135  The United States submits that the statements of the two officials from USTR are very similar
and attempt to convey the same message, although they are perhaps not as clearly made.  For
example, former US Trade Representative Clayton Yeutter, after detailing various reasons why the
proposed amendments to the 1916 Act were GATT-illegal, states:
"While many of the above objections can be leveled at the Antidumping Act of 1916,
that act was "grandfathered" upon U.S. accession to the GATT and is thereforeGATT-legal.  By significantly amending the 1916 Act, S. 1655 would remove the
protection of the GATT "grandfather clause" [...]."110
3.136  In the view of the United States, it emerges from this statement that, like the US Department
of Justice official, former US Trade Representative Yeutter is simply attempting to make the point
that the "grandfathering" available to protect the 1916 Act from objections like those applicable to the
proposed amendments in question would be lost if the 1916 Act were amended.  He is not attemptingto opine that those objections actually would be valid if levelled against the 1916 Act.
3.137  The United States also points out that the European Communities provided an incomplete
quotation from the 1995 Antitrust Enforcement Guidelines for International Operations of the US
Department of Justice and the US Federal Trade Commission.
111
                                                     
109 Letter of 4 February 1986 from Assistant Attorney General J. Bolton to Sen. S. Thurmond, p. 5
(emphasis added by the United States).
110 Letter of 18 February 1986 from US Trade Representative C. Yeutter to Sen. S. Thurmond
(emphasis added by the United States).  The United States also refers to the Letter of 4 February 1986 fromAssistant Attorney General J. Bolton to Sen. S. Thurmond, p. 5.
111 Section 2.82 of the 1995 Antitrust Enforcement Guidelines provides as follows:WT/DS136/R
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3.138  The United States considers that, for all these reasons, the statements cited by the European
Communities deserve to be given no weight by the Panel in determining whether the 1916 Act
violates Articles III:4 and VI:2 of the GATT 1994.
(d) The classification of the 1916 Act in the US legal system
3.139  The United States  notes that the 1916 Act's placement in the United States Code constitutes
further evidence of its antitrust nature.  When the 1916 Act was codified in the United States Code, it
was placed under Title 15, entitled "Commerce and Trade."  Also located in Title 15 are the Sherman
Act, the Clayton Act and the Federal Trade Commission Act, which are all antitrust laws.  In contrast,
the US anti-dumping laws are codified in Title 19, entitled "Customs Duties".  Moreover, it should be
noted that the 1916 Act was enacted under the heading of "Unfair Competition" in Title VIII of theRevenue Act of 1916.  For the United States, in US  terminology, dumping is not unfair competition.
3.140  The European Communities  responds that, so long as the 1916 Act has the objective criteria
which bring it under Article VI of the GATT 1994, it does not matter whether it is classified in the US
legal system as antitrust or anti-dumping.  In fact, the 1916 Act is not considered an antitrust measure
in the United States, as is evidenced by the Antitrust Enforcement Guidelines for InternationalOperations of the US Justice Department.
3.141  For the European Communities, it is plain, moreover, that dumping is a form of unfair
competition whereas antitrust measures are distinguishable notably because they are designed to
protect competition, not competitors.  The United States itself has regularly recognized that dumping
is unfair competition.  For example, in the report of the panel on United States -  Imposition of Anti-
Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway
112 the US position on
the nature of Article VI of the GATT 1947 is reported in the following terms:
"The drafters of the General Agreement had recognized in 1947 that distortions to
international competition  caused by unfair trade practices could be so severe that
effective remedies to curb such distortions were essential: indeed, as essential to an
overall programme of liberalization of international trade as, for example, the m.f.n.
principle and the national treatment principle."113
3.142  The United States  rejects the EC assertion that the 1916 Act is not considered an antitrust
measure in the United States.  Until at least as recently as 1994, the US Congress considered the 1916
Act to be an antitrust statute because it is included in a compilation of selected antitrust statutes under
the heading "Principal Antitrust Laws" that was prepared by the US Congress.114
                                                                                                                                                                    
"The Revenue Act of 1916, better known as the Antidumping Act, 15 U.S.C. 71, 74, is not an
antitrust statute, but its subject-matter is closely related to the antitrust rules regarding
predation.  It is a trade statute that creates a private claim against importers who sell goodsinto the United States at prices substantially below the prices charged for the same goods intheir home markets.  In order to state a claim, a plaintiff must show both that such lowerprices were commonly and systematically charged, and that the importer had the specific
intent to injure or destroy an industry in the United States, or to prevent the establishment of
an industry."
112 Panel Report on United States - Imposition of Anti-Dumpi ng Duties on Imports of Fresh and Chilled
Atlantic Salmon from Norway , adopted by the Committee on Anti-Dumping Practices on 27 April 1994,  BISD
41S/229 (hereinafter " United States – Anti-Dumping Duties on Salmon from Norway ").
113 Ibid., para. 74 (emphasis added by the European Communities).
114 The document referred to by the United States was not submitted to the Panel.WT/DS136/R
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3.143  The European Communities  notes that it does not know the US Congress document of 1994
and maintains its view that it is a recent invention to consider the 1916 Act as an antitrust statute.
(e) Simultaneous or consecutive filings of 1916 Act claims and 1930 Tariff Act petitions in cases
involving the same matter
3.144  In response to a question of the Panel to the United States regarding whether there have ever
been situations where complaints in respect of the same matter were simultaneously filed under the
1916 Act and the relevant provisions of the 1930 Tariff Act dealing with anti-dumping, the United
States  replies that the situation that most closely approximates the situation described can be found
with regard to the matter underlying the Geneva Steel  case.  In Geneva Steel , the plaintiff filed a 1916
Act complaint in federal court in September of 1996 addressing the allegedly predatory pricingpractices of certain importers of steel plate, and two months later it filed anti-dumping petitions on
steel plate with the US Department of Commerce.  Thus, although these filings were not
simultaneous, they were close in time.  Of course, even if these filings had been made simultaneously,
it would not be accurate to describe them as addressing the "same matter," as the Panel's question
suggests.  In this regard, the 1916 Act provides retroactive relief, i.e. treble damages for past conduct.The US anti-dumping law, in contrast, provides prospective relief.  It remedies, through the
imposition of duties, transactions occurring after the initiation of the anti-dumping investigation.  As a
result, the same transactions would not be reme died by the simultaneous filings of a 1916 Act
complaint and an anti-dumping petition.
3.145  The United States notes that a similar but more complicated situation arose with regard to the
matter underlying the Wheeling-Pittsburgh case.  There, the plaintiff filed a lawsuit against Japanese
and Russian importers of hot-rolled steel in state court asserting novel claims under state law but noclaim under the 1916 Act, a federal law.  For various reasons, that lawsuit was subsequently
transferred to federal court and all of the state claims were dismissed.  The plaintiff nevertheless was
allowed to amend its complaint to state a claim under the 1916 Act.  It is the recollection of the United
States that, by the time the 1916 Act claim was brought, anti-dumping investigations of hot-rolled
steel were already underway.
3.146  The United States notes, finally, that the matter underlying the Zenith III  case, Japanese
television sets, involved both the filing of 1916 Act claims and an anti-dumping petition.  The anti-
dumping petitions were filed with the then-responsible agency, the US Department of Treasury, in
March 1968.  In December 1970, the plaintiff NUE (National Union Electric Corporation) filed suit
under the 1916 Act among other statutes.  In September 1974, the plaintiff Zenith filed a claim underthe 1916 Act.
3.147  With regard to another question of the Panel to the United States regarding whether there has
ever been any situation where a complaint under the 1916 Act was initiated after an anti-dumping
investigation in respect of the same matter was unsuccessful, the United States notes that it is not
aware of any situation where a 1916 Act complaint was filed in the wake of an unsuccessful anti-dumping investigation.
(f) The relevant US case law
(i) The distinction between issues of fact and issues of law
3.148  The European Communities  notes that the question whether a given national law is subject
to and compatible with the disciplines of the WTO Agreement and the GATT 1994 is a matter ofWTO law, which it is for the Panel to decide under the DSU, and subject to appeal to the Appellate
Body.  The Panel cannot be bound by the views of national courts of WTO Members on this question.
Words like "antitrust", "unfair competition", and "p redatory" may have different meanings in differentWT/DS136/R
Page 40
Member states.  They may be used in different ways at different times.  Allowing their use to
determine the scope of application of the discipline of Article VI would effectively invite Members
themselves to choose to withdraw their legislation from WTO disciplines simply by choosing the right
label.  On the other hand, judgments of national courts are relevant insofar as they offer guidance on
the meaning or interpretation of national laws, and it is appropriate for the Panel to take them intoaccount for that purpose.
3.149  The European Communities claims that it is clear on the face of the 1916 Act that it targets
imported products through sanctions applied to importers and that the regulated conduct is defined by
reference to discrimination between the import price and prices on the domestic market or export
prices to a third country.  The debate down the years among lower courts in the United States as towhether the 1916 Anti-Dumping Act is a trade law or an antitrust law
115 is therefore not relevant for
WTO purposes.
3.150  The European Communities considers that, while the Panel must consider US case law and
other official pronouncements in order to establish the meaning and substantive content of the 1916
Act, it need not attach importance to the characterisation of the 1916 Act by US courts as being or notbeing an anti-dumping measure since this is a matter of WTO law, which US courts do not address
but which the Panel must.  In performing this task, the Panel should not have regard to, and should in
any event not be bound by, labels such as "antitrust" or "protectionist" which domestic courts apply
for one or another domestic purpose.
3.151  According to the European Communities, the Pane l should have regard to the elements which
are relevant for the purposes of Article VI of the GATT 1994, i.e. whether the practice which is
targeted by the 1916 Act is covered by Article VI.  Article VI does not only regulate dumping.  It alsodefines what is meant by dumping.  Therefore, the Panel should examine whether the 1916 Act, as
interpreted by US Courts, is directed at this kind of practice, irrespective of any categorisation of the
1916 Act as "antitrust" legislation and of the legislative purpose of the statute by US courts for their
domestic purposes.
3.152  The European Communities finds support for its position in the report of the panel on EEC –
Parts and Components .  The panel in that case examined whether the description or categorisation of
a charge under the domestic law of a contracting party is relevant in determining whether it is subject
to the requirements of Article II or those of Arti cle III:2 of the GATT 1994.  The panel found that "if
the description or categorization under the domestic law of a contracting party were to provide the
required 'connection with importation', contracting parties could determine themselves which of theseprovisions would apply to their charges"
116.  Likewise, if categorisation of the 1916 Act as a dumping
statute by US courts and authorities were necessary  or relevant to establish whether dumping takes
place within the meaning of Article VI of the GATT 1994, the United States could determine itself
whether Article VI would apply to its statute.  Clearly, the purpose of this provision could then be
easily circumvented.
3.153  According to the United States , in all cases, the role of a panel is fundamentally the same: the
panel must first assess the facts presented and then determine their conformity with the relevant
agreement, which generally entails interpreting the sc ope and applicability of those agreements to the
facts.  In the present case, the assessment of the facts could be easily blurred or confused with
interpreting the scope of the relevant agreements.  It is important that the Panel not lose sight of thedistinction between its role as a fact finder in the present case and its role in determining questions of
law. The proper interpretation of the 1916 Act is a question of fact to be established, as it is an
                                                     
115 The European Communities refers to Zenith III , Op. Cit.; Wheeling-Pittsburgh , Op. Cit.; Geneva
Steel , Op. Cit..
116 EC - Parts and Components , Op. Cit., para 5.7.WT/DS136/R
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accepted principle of international law that municipal law is a fact to be proven before an international
tribunal.117  Because it is expedient to its positions in the present case, the European Communities
would have the Panel ignore the US case law interpreting the 1916 Act.  However, the Panel is not
called upon to interpret the 1916 Act as such.  Rather, the Panel must assess the current state of
jurisprudence in the United States regarding the 1916 Act in order to determine the fact of the 1916Act.  It is not the role of the Panel to agree or disagree with judicial decisions interpreting and
applying the 1916 Act.  The danger in the Panel interpreting the 1916 Act as such is that the Panel
might adopt an interpretation of the law that does not match the true application of the law in the
United States.  To do so would result in a Panel report based upon hypothetical facts.  In order to
avoid such an outcome, the Panel should deem the case law interpreting the 1916 Act as dispositivefor purposes of determining the fact of US law.
118
3.154  In support of its position, the United States refers to the Brazilian Loans  case in which the
Permanent Court of International Justice (hereina fter the "PCIJ") deemed controlling the manner in
which French courts had interpreted French legislation.  The PCIJ admonished in that case that a
tribunal of international law should "pay the utmost regard to the decisions of the municipal courts ofa country, for it is with the aid of their jurisprudence that it will be enabled to decide what are the
rules which in actual fact, are applied in the country the law of which is recognized as applicable in a
given case."
119  This principle "rests in part on the concept of the reserved domain of domestic
jurisdiction, and in part on the practical need of av oiding contradictory versions of the law of a state
from different sources."120
3.155  In the view of the United States, it therefore follows that the interpretation of the 1916 Act by
US courts offers more than just guidance to the Panel.   It is their interpretation that is dispositive for
purposes of determining the nature of the 1916 Act.  The Panel is not called upon to opine upon or
interpret the statute itself by agreeing or disagr eeing with any particular court's interpretation.  In
India – Patents , the Appellate Body noted approvingly that the panel had not interpreted Indian law as
such, but, rather, had reviewed the law to determine whether it was WTO-consistent.  Accordingly, it
is the responsibility of the Panel to ascertain the interpretation afforded to the 1916 Act by the weight
of judicial authority in the United States.  This is not to say that that the Panel has no interpretative
role in the instant case.  As confirmed by the Appellate Body in India - Patents , once the Panel has
determined the interpretation of the municipal law as a matter of fact, it is the Panel's function to
determine the applicability of the relevant WTO agreements to those facts.121  These are questions of
law to be determined by the Panel in the first instance.  In the present case, the Panel is called upon todetermine the scope of Article VI and Article III of the GATT 1994.
3.156  The European Communities  rejects the US contention that it does not consider US judicial
decisions relevant for WTO purposes.  The interpretation of the 1916 Act, i.e. determining what it
means, including, notably, what must be pleaded and proved in order to establish a claim under it, is a
                                                     
117 The United States refers to the decision of the Permanent Court of International Justice (hereinafter
the "PCIJ") in Case Concerning Certain German Interests in Polish Upper Silesia , PCIJ Rep. 1926, Series A,
No. 7, p. 19; Case Concerning the Payment in Gold of Brazilian Federal Loans Contracted in France , PCIJ
Rep. 1929, Series A, No. 21, pp. 124-25 (hereinafter " Brazilian Loans ").
118 The United States refers to the Separate Opinion of Judge Lauterpacht in the PCIJ decision in Case
Concerning the Guardianship of an Infant , ICJ Rep. 1958, Sep. Op., p. 91.  According to the United States, it is
settled practice among States that international judicial bodies should accept, and treat as binding, questions of
municipal law and practice decided by competent municipal courts.  The United States refers to the PCIJdecision in Case Concerning the Payment of Various Serbian Loans Issued in France , PCIJ Rep. 1929, Series
A, No. 20, p. 46; Brazilian Loans , Op. Cit., pp. 124-25.
119 Brazilian Loans ,  Op. Cit., pp. 124-25.
120 I. Brownlie, Principles of Public International Law, 4th ed., Clarendon Press (1990), p.41.
121 The United States refers to the Appellate Body Report on India – Patents, Op. Cit., paras. 65-66.WT/DS136/R
Page 42
matter of US law and therefore of fact before the present Panel.  The Panel should of course look to
the text of the statute and the pronouncements of US courts and other authorities to determine this
question.  By contrast, the question of what is the meaning and the extent of the disciplines laid down
in Article VI of the GATT 1994, and the question of whether a Member's legislation with certain
features is covered by and is in conformity with Article VI, are matters of WTO law to be determinedby the Panel.
3.157  In reply to a question of the Panel regarding the relevance to the present case of the Appellate
Body's report in the India – Patents  case, the European Communities points out that that report is
particularly relevant to the present case because it states in very clear terms the task to which the
Panel is called.  In that report, the Appellate Body distinguished between the possible objectivespursued when interpreting domestic law in international tribunals and other dispute settlement fora,
including in WTO dispute settlement, and upheld the panel's review of India's legislation.  The
considerations developed in the India – Patents  Appellate Body report also apply to the present
dispute.  As the Appellate Body found in that case, it is essential that the Panel carry out "an
examination of the relevant aspects of [US] municipal law" in order to determine whether the USprovisions are in conformity with the obligations laid down in the GATT 1994, the Agreement
Establishing the WTO and the Anti-Dumping Agreement.  As the Appellate Body pointed out,
"[t]here [is] simply no way for the Panel to make this determ ination without engaging in an examination
of [domestic] law ."
122  In the same vein as the European Communities has argued before the present
Panel, the Appellate Body concluded that "[t]o sa y that the Panel should have done otherwise would
be to say that only India can assess whether Indian law is consistent with India's obligations under the
WTO Agreement .  This, clearly, cannot be so." 123
3.158  In response, the United States  notes that the European Communities agrees that the nature of
the 1916 Act is a question of fact for the Panel and that US judicial decisions interpreting the 1916
Act are dispositive for this purpose.
(ii) Comments on the case law in general
3.159  The European Communities  asserts that US courts' views on whether the 1916 Act is a trade
law or an antitrust law are far from consonant.  It is sufficient to note that while some judgments,
notably those of the District Court and the Circuit Court of Appeals in the Zenith III  case, suggest that
the 1916 Act is solely an antitrust law and not a trade law, this view has been strongly contested.  For
example, the District Court in Geneva Steel  held:
"The 1916 Act means what its plain language says.  In addition to its antitrust
prohibitions, the Act has a protectionist component that prohibits conduct designed to
injure the domestic steel industry."124
3.160  The European Communities points out that even those Courts that claim that the 1916 Act is
solely an antitrust statute acknowledge that establishing that dumping took place remains the first
prerequisite to apply the 1916 Act.  For instance, in In re Japanese Electronic Products II , which
described the 1916 Act as "complex antitrust litigation",  the Court of Appeals for the Third Circuit
held that:
"The 1916 Act makes it illegal to dump imported goods on the US market with the
purpose of destroying or injuring US industry.  […]  The first element necessary to a
finding of dumping  under the 1916 Act is proof that a price differential exists
                                                     
122 India – Patents , Op. Cit., para 66 (emphasis added).
123 Ibid., para 66.
124 Geneva Steel , Op. Cit., p. 1214.WT/DS136/R
Page 43
between two comparable products, one of whic h is imported or sold in the US and the
other of which is sold in the exporting country."125
3.161  The European Communities reiterates in this connection that the fact that the conduct targeted
by a statute is defined by reference to discrimination between the price of the imported products and a
benchmark which is generally the price of the product in the exporting country, is sufficient todetermine that the statute is directed at dumping and is subject to the disciplines of Article VI of the
GATT 1994.  There is, therefore, no need to discuss the case law any further.
3.162  Nor does the European Communities accept that for the purposes of establishing the
applicability of Article VI of the GATT 1994 it is necessary to examine the question whether the law
protects competitors as distinct from competition, or whether the specific intent requirement relates toan intent to injure industry as opposed to an intent to injure competition.  The language quoted above
makes clear that US courts themselves have taken sharply different positions on these questions, and
there is nothing to suggest that there will be greater clarity in the foreseeable future.
3.163  The United States  contends that the prevailing view among US courts that have addressed
the issue supports interpreting the 1916 Act as an antitrust-like statute.  Contrary to the EuropeanCommunities' suggestion that US courts have taken different positions, the prevailing view among US
courts that have addressed the issue, which include the US Supreme Court in the Cooper  case, is that
the 1916 Act is an antitrust-like statute.  It is their interpretation of the 1916 Act that, as a factual
matter, must control in the present dispute.  More  fundamentally, the prevailing interpretation of the
1916 Act shows that the 1916 Act is not a statute that addresses the "dumping" and "injury" that
would make it an anti-dumping statute within the meaning of Article VI of the GATT 1994.   As the
courts have recognized, the 1916 Act is designed to combat a specific form of international pricediscrimination.  This price discrimination not only must involve substantial price differences but also
must be undertaken commonly and systematically and with a specified intent.  The 1916 Act is not
directed at the simple price differences that cause material injury captured by the Anti-Dumping
Agreement,  nor is it based on the Anti-Dumping Agreement's notion of material injury to a domestic
industry.
3.164  The United States notes that, in Zenith III , the US court decision on the interpretation of the
specific provisions of the 1916 Act, the Court explained that the 1916 Act was part of the corpus of
US antitrust law of the era and, therefore, any given provision generally should be interpreted in a
manner consistent with antitrust principles.
126 Every other final and conclusive US court decision in
this area, moreover, has supported the Zenith III  analysis.127  More specifically, these court decisions
confirm that the 1916 Act is directed at a very different type of harmful business activity from that
addressed by Article VI and the Anti-Dumping Agreement.  While the Court of Appeals for the Third
Circuit used the term "dumping" in connection with the 1916 Act, it apparently did so in a non-
technical sense.  Moreover, contrary to the European Communities' assertion, the Court did not state
that a finding of "dumping" is itself a necessary precondition to apply the 1916 Act.
3.165  The European Communities  adds that the domestic case law so heavily relied on by the
United States is much less supportive of the US position than the United States would have the Panel
believe.  In most of the cases cited by the United States as identifying the 1916 Act as "antitrust-like",
a careful reading reveals that the problem of categorization was raised as a step in resolving other
                                                     
125 In re Japanese Products II , Op. Cit, pp. 322 and 324 (emphasis added by the European
Communities).
126 The United States refers to Zenith III , Op. Cit., p. 1212, 1223.
127 The United States refers to Schwimmer v. Sony Corp. , Op. Cit.;  Outboard Marine Corp. v. Pezetel ,
Op. Cit.;  Jewel Foliage Co. v. Uniflora Overseas Florida , Op. Cit.;  Western Concrete Structures Co. v. Mitsui
& Co., Op. Cit.;   Isra Fruit Ltd. v. Agrexco Agr. Export Co. , Op. Cit.;   Helmac I , Op. Cit.;  Helmac II , Op. Cit..WT/DS136/R
Page 44
issues very far removed from those now before the Panel.  Among those other issues are: Is the
"comparability" test under the 1916 Act the same or different from that under the Robinson-Patman
Act?128  What is the applicable prescription period for claims under the 1916 Act?129  May an importer
of competing products sue under the 1916 Act, or is standing to sue limited to domestic producers?130
3.166  The United States  maintains its position that the prevailing view among US courts is that the
1916 Act is an antitrust-like statute, and it is their interpretation which must control in the present
dispute.
(iii) United States v. Cooper Corp.
3.167  The United States  asserts that the US Supreme Court, which is the highest court in the
United States and the final arbiter of a statute's meaning, recognized the 1916 Act as an antitruststatute in United States v. Cooper Corp .
131  In that case, the Supreme Court expressly described the
1916 Act as "supplemental" to the Sherman Act, the United States' first and most basic antitrust
law.132
3.168  The European Communities  contests this US assertion.  According to the European
Communities, the issue in Cooper  was whether the United States is a "person" within the meaning of
Section 7 of the Sherman Act, entitled to sue for treble damages thereunder.  What the Court did in
examining the Sherman Act was to list what it described as "supplemental legislation".  That list
included "the antidumping provisions of the Revenue Act of 1916".133  This statement from the
Supreme Court should rather be interpreted as a confirmation that the 1916 Act is an anti-dumping
act.
3.169  The United States  disagrees with the European Communities that by calling the 1916 Act
"supplemental" to the Sherman Antitrust Act, the foremost antitrust law in the United States, theCourt thereby "confirmed" that it is an anti-dumping measure.  In any event, it should be noted that
the leading lower court case addressing how specific provisions of the 1916 Act should be interpreted
is Zenith III.  It "conclude[d] [...], on the basis of the statutory text, that the 1916 Act is an antitrust,
not a protectionist statute ."
134
(iv) Zenith Radio Corp. v. Matsushita Electric Industrial Co. and In re Japanese Electronic
Products Antitrust Litigation
3.170  The European Communities  asserts that in fact none of the cases referred to by the
United States clearly establish, even for purely domestic purposes, let alone in a manner that would be
relevant for the WTO, that the 1916 Act is an antitrust statute.  The closest there is to such a case is
the District Court's judgment in the Zenith III case. The issue in that case was whether products sold
by the defendants in the United States and Japan were sufficiently comparable to give rise to a claim
under the 1916 Act.  The Court held that they were not, a judgment partially reversed by the Circuit
                                                     
128 The European Communities refers to Zenith III , Op. Cit..
129 The European Communities refers to Helmac I , Op. Cit..
130 The European Communities refers to Isra Fruit Ltd. V. Agrexco Agr. Export Co. , Op. Cit.; Western
Concrete Structures Co., Inc. v. Mitsui & Company (USA) Inc ., Op. Cit.; Jewel Foliage Company v. Uniflora
Overseas Florida, Inc ., Op. Cit.; Schwimmer v. Sony Corp. , Op. Cit.;  Outboard Marine Corporation v. Pezetel ,
Op. Cit..
131 312 U.S. 600 (1941) (hereinafter " Cooper ").
132 The United States refers to Cooper , Op. Cit., pp. 608 –610.
133 The European Communities refers to Cooper , Op. Cit., pp. 608-610.
134 Zenith III , Op. Cit., p. 1214 (emphasis added by the United States).WT/DS136/R
Page 45
Court of Appeals.  The District Court's judgment is based on an analysis of the 1916 Act as having
two features:
(i) The 1916 Act is "intended to complement the antitrust laws by imposing on importers
substantially the same legal strictures relating to price discrimination as those which
had already been imposed on domestic businesses by the Clayton Antitrust Act of1914", with the result that the "like grade and quality" test of the Robinson-Patman
Act should also be used for the 1916 Act.
135  The Court found that this test was
narrower than the standard under the 1921 Antidumping Act, which permits a degree
of discretion to the administering authority on this issue.
(ii) The value of imported merchandise is determined by reference to the sales of
"similar" merchandise, because the 1916 Act borrows the language from the 1913
Tariff Act.
3.171  The European Communities points out that the question whether the standards under the 1916
Act were more rigorous than those under the 1921 Antidumping Act arose because anti-dumping
duties had been assessed against some of the products involved in the litigation under the 1916 Act,and the plaintiffs sought to rely on this to establish comparability.
3.172  The European Communities further recalls that the Court of Appeals agreed that the 1916 Act
should be interpreted consistently with its purpose, which was "to prohibit anticompetitive pricing".
136
But it held that products could be comparable under the Act even though "products sold in Japan havetechnical components that make them work in Japan, and those sold in the United States have
technical components that make them work in the United States.  Considered in terms of consumer
utility, i.e. consumer use and preference, mark etability, and commercial interchangeability, the
purchaser of a CEP [consumer electronic product] in Japan buys the same thing as the purchaser of a
CEP in the United States: an operable CEP.  Because the two consumers purchase the same thing, we
would, absent other factors, expect them to pay the same price."
137
3.173  The European Communities asserts that the analysis of the District Court concerning the
relationship between the 1916 Act and the antitrust laws is not, however, convincing for WTOpurposes or even, as the later US cases show, for purposes of US law.  The following arguments
support this contention:
(a) The legislative history materials invoked, dating from the period of 1916 to 1921,
date from a period when there was no clearly accepted theoretical distinction between
antitrust and protectionist legislation.
(b) The "intent" of a law cannot determine whether it is subject to the discipline of
Article VI of the GATT 1994.  Otherwise, the discipline could be avoided simply by
changing the label and explanation given to a law.
(c) Nothing in the opinions of either the District Court or the Circuit Court of Appeals
holds or suggests that the predation standards which are applicable under the antitrustlaws, but which had not been fully developed at the time of the Zenith  judgments,
should also be read into the 1916 Act.
                                                     
135 The European Communities refers to Zenith III , Op. Cit., p. 1197.
136 In re Japanese Electronic Products II , Op. Cit., p. 324.
137 Ibid., p. 325.WT/DS136/R
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3.174  In the view of the United States , the nature of the 1916 Act was squarely addressed in the
Zenith III  case.  In that case, the District Court specifically considered the character of the 1916 Act
because, according to the Court, "the character of the statute is of salient concern in its
construction."138  To that end, the Court stated that its task "was to ascertain whether the Act was
intended to be part of the corpus of antitrust law, or whether the Act was intended to be 'protectionist'
legislation, as that term is used in discussion of tariff barriers to free trade."139  After examining the
similarities between the 1916 Act and other antitrust statutes, the Court concluded that the 1916 Act
"is an antitrust, not a protectionist statute ."140  The Court also explained that "[t]hat conclusion is
strongly corroborated by the political and legal history of the relevant era, and the legislative history
of the 1916 Act."141
3.175  The United States notes that the Zenith III  Court also quoted the relevant congressional report,
which states that the purpose of the 1916 Act was to adopt a provision "[i]n order that persons,
partnerships, corporations, and associations in foreign countries, whose goods are sold in this country,
may be placed in the same position as our manufacturers with reference to unfair competition [...] ."142
The Court also recounted how Representative Kitchin, the chairman of the House Committee on
Ways and Means and the House sponsor of the 1916 Act, stated "in unambiguous terms" that the 1916
Act was "intended to do no more than to impose on importers the same pricing restrictions which had
already been imposed on domestic businesses by the Clayton Antitrust Act of 1914."143  The Court
stated that
"Representative Kitchin, explaining his bill at the outset of its consideration by the
full House of Representatives, explained:
We believe that the same  unfair competition law which now applies to the domestic
trader should apply to the foreign import trader."144
3.176  The United States also points out that the Zenith III  Court further explained that, at the time of
the enactment of the 1916 Act, "unfair competition" re ferred to the activities addressed by the antitrust
laws of the era.  The Court quoted the following explanations by the US Secretary of Commerce,
William Redfield, in 1915:
"'Unfair competition' is forbidden by law in domestic trade, and the Federal Trade
Commission exists to determine the facts and takes steps to abate the evil wherever
found. The door, however, is still open to "unfair competition" from abroad which
may seriously affect American industries for the worse. It is not normal competition
of which I speak, but abnormal. […] If it shall pass beyond fair competition and exertor seek to exert a monopolistic power over any part of our commerce, we ought to
prevent it."
145
3.177  The United States further recalls that the Zenith  Court ultimately concluded that it would be
guided by the following principles when interpreting the 1916 Act:
                                                     
138 Zenith III , Op. Cit., p. 1212.
139 Ibid., p. 1212.
140 Ibid., p. 1214 (emphasis added by the United States).
141 Ibid., p. 1214.
142 Ibid., p. 1221, quoting H.R. Rep. No. 922, 64th Cong., 1st Sess. 9-10 (1916).
143 Ibid., p. 1222.
144  Ibid., p. 1222, quoting 53 Cong. Rec. App. 1938 (1 916) (footnote omitted; emphasis added by the
United States).
145 Ibid., p. 1219, quoting Annual Report of the Secretary of Commerce 43 (1915).WT/DS136/R
Page 47
"The principal lesson which we draw from the legislative history of the 1916 Act,
viewed against the historical background of the first [Woodrow] Wilson
Administration, is that the statute should be interpreted whenever possible to parallel
the "unfair competition" law applicable to domestic commerce.  Since the 1916
Antidumping Act is a price discrimination law, it should be read in tandem with thedomestic price discrimination law, section 2 of the Clayton Act, which was amended
by the Robinson-Patman Act in 1936.  And, in order to be faithful to the intention of
Congress to subject importers to the "same unfair competition law," we should not
interpret the 1916 Act to impose on importers legal strictures which are more
rigorous than those applied to domestic enterprises ."
146
3.178    The United States notes, finally, that, on appeal, the Third Circuit Court of Appeals found
that the 1916 Act was enacted "to do with unfair competition" and concluded that the "primary aim of
the 1916 Act is to prohibit anti-competitive pricing".147  It also held that the plaintiff must show a
specific, not just general, predatory intent to injure or destroy an industry.148 
3.179  In response, the European Communities  maintains its view that there is no case law stating
that plaintiffs in a 1916 action should provide evidence of predatory intent within the meaning of the
Robinson-Patman Act and as defined by the Brooke Group  ruling.  The Third Circuit's 1983 opinion
in the Zenith  case, uses the 1916 Act's phrase "intent of destroying or injuring an industry in the
United States" interchangeably with the phrase "specific predatory intent".149  However, the word
"predatory" is not used as a term of art incorpor ating the concepts of sales "below an appropriate
measure of cost" and reasonable prospect of recoupment of losses.  It is necessary to quote
extensively from the opinion to show exactly what the Court means.  The following passage of theopinion summarises the evidence which the Court considered sufficient to create a genuine issue of
fact
150 on the issue of specific intent under the 1916 Act:
"To make out a claim that defendants conspired under the antitrust laws, plaintiffs need
only show that defendants conspired with general intent to restrain trade [citations].
However, a showing of general intent does not necessarily constitute a prima facieshowing of the specific intent required by the 1916 Act […].  After reviewing the
record in this case, we hold that evidence supporting plaintiffs' theory that defendants
entered into the alleged conspiracy also creates a genuine issue of fact as to whether
defendants agreed to dump CEPs on the United States market with the specific intent to
destroy or injure an industry in the United States.
Evidence supporting plaintiff's conspiracy theory would support an inference of
predation in the United States market.  This evidence is offered to show that the
Japanese defendants agreed to stabilise prices at artificially high levels in Japan,
insulating themselves by agreement from pr ice-cutting competition at home.  There is
also evidence that defendants at the same time entered into an agreement to sell the
fruits of the excess capacity of the Japanese CEP industry in the United States at low
prices.  We assume that the minimum price agreement, of which all the Japanese
defendants were members, was mandated by the Ministry of International Trade and
Industry [MITI].  Plaintiffs offer this evidence to show that defendants used the prices
                                                     
146 Ibid., p. 1223 (footnote omitted; emphasis added by the United States).
147 In re Japanese Electronic Products II, Op. Cit., p. 324 (emphasis added by the United States).
148 The United States refers to In re Japanese Electronic Products II , Op. Cit., pp. 327-328.
149 The European Communities refers to In re Japanese Electronic Products II , Op. Cit., pp. 327-28.
150 The European Communities notes that a "genuine issue of facts" is created where the court
concludes that, based on the facts pleaded and the evidence presented before trial, the trier of fact could reach a
conclusion favourable to the plaintiff.WT/DS136/R
Page 48
in that agreement as reference prices.  Finally, plaintiffs point to evidence that
defendants sought to conceal sales below MITI prices by a system of rebating.
The Japanese defendants also allegedly eliminated the possibility of price-cutting
competition amongst themselves in the United States by agreeing to [certain customerallocation rules] […].  By thus allocating the market, defendants allegedly brought to
bear the full force of their low-price conspiracy on their United States competitors in an
effort to drive them out of the market.
Furthermore, plaintiffs' experts […] concluded that during the time of the alleged
conspiracy, defendants operated an export cartel directed towards the United States with
the specific intent to undersell their United  States competitors and eventually to drive
them out of business. […]
We believe that the evidence in this summary judgment record creates a genuine issue
of fact as to whether defendants conspired to dump CEPs in the United States with the
specific intent to injure or destroy an industry in the United States […]."
151
3.180  In the view of the European Communities, there is clearly no reference to sales below costs or
to recoupment of losses in the quoted passage.  The evidence cited is presented as circumstantial
evidence of intent to injure and destroy an industry, "injure and destroy" and "predation" being used
in an every-day, non-technical sense.
3.181  The European Communities also notes in this connection that in the Wheeling Pittsburgh
case, it is held that under the 1916 Act "predato ry pricing" means something different than under
antitrust law and that this distinction renders the predatory pricing element as defined by Brooke
Group inapplicable to " dumping cases", basically because in the context of international trade the
whole premise of Brooke Group  is lacking.  This is echoed in the following passage taken from a US
law review note:
"[T]he recoupment requirement - at least as defined in Brooke Group  - is too narrow
in the international context because it fails to consider the ability of firms with a
monopoly or oligopoly in their home markets simultaneously to recoup losses from
dumping by increasing monopoly returns at home.  Dumping in the US allowsforeign producers to reap the economies of scale of producing at optimal capacity
while restricting sales at home to protect their home market monopoly prices."
152
3.182  The European Communities points out that, in this view, dumping can allow recoupment
through high prices in the domestic market, simultaneous to selling at low prices in an export market,which was exactly what the plaintiffs alleged in Zenith III .  In this theory of dumping, there could not
be any need to show a prospect of recoupment later in time as referred to in Brooke Group , since
recoupment is already occurring at the same time in another market.
3.183  The United States  concedes that the Third Circuit Court of Appeals did not further elaborate
on the element of "specific predatory intent" in its 1982 opinion, but points out that the meaning ofthis element was in any event clarified in a subsequent decision.  In 1986, the Zenith  case was
remanded from the US Supreme Court and the Third Circuit Court of Appeals again had an
opportunity to consider the plaintiffs' 1916 Act claims.  The United States considers that some
background information is helpful to fully understanding the Third Circuit's 1986 decision.
                                                     
151 In re Japanese Electronic Products II , Op. Cit., pp. 328-29.
152 Note, Rethinking the 1916 Anti-Dumping Act, Op. Cit., pp. 1555-1572.WT/DS136/R
Page 49
3.184  The United States thus recalls that Zenith and another US company named NEU commenced
litigation against Japanese television set manufacturers in the early 1970s, complaining of Sherman
Act, Robinson-Patman Act, 1916 Act and other violations of federal law.   During a series of
decisions by the District Court and the Court of Appeals in the years 1980-83, the Sherman Act and
1916 Act claims were first dismissed by the District Court for lack of evidentiary support and thenreinstated by the Third Circuit.   The US Supreme Court then accepted the Sherman Act antitrust
claims for review.  Those claims were based on the theory that defendants had conspired to
monopolise the US market by using excess profits in the Japanese home market to launch a predatory
pricing attack on the United States.  The Supreme Court reversed the Court of Appeals and remanded,
stating that the plaintiff had not developed any credible proof of an illegal conspiracy to monopolise.The Supreme Court held that claims under the Sherman Act for conspiracies or attempts to
monopolise through predatory low pricing could only be  established by proof that such prices were
below some appropriate measure of costs as well as evidence of a realistic expectation of recouping
prior losses through future monopoly rents.
153  The Court of Appeals was ordered to consider its prior
orders in the Zenith  case in light of the Supreme Court's decision.  On remand, the Third Circuit
dismissed the plaintiffs' 1916 Act claims, like the Sherman Act claims, upon the basis that there was
no evidence of the possibility of recoupment.  The Court reasoned that "[s]ince the Sherman Act
conspiracy charge failed in the Supreme C ourt, our holding on the Antidumping [1916] Act
conspiracy claim must fail with it."154
3.185  According to the United States, the Supreme Court's decision in Matsushita Electrical
actually laid the groundwork for the Supreme Court's decision in Brooke Group  some 7 years later.  In
Brooke Group , the Supreme Court re-examined the so-called "primary line"155 provisions of the
Robinson-Patman Act and held that proof of recoupment was required in order to establish a
predatory pricing claim.  In doing so, the Supreme Court relied heavily upon its decision in
Matsushita Electrical .
3.186  The United States therefore argues that, contra ry to the European Communities' assertion that
antitrust predation standards have never been read into the 1916 Act, in In re Japanese Electronic
Products III , the 1916 Act claims were dismissed by the Court of Appeals based upon the same
predatory pricing/recoupment standards that were established for the Robinson-Patman Act by Brooke
Group  some years later.  The Supreme Court's 1986 Matsushita Electronical  decision was and
remains a foundation of US antitrust jurisprudence on predatory pricing issues.
3.187  According to the European Communities , it is incorrect to deduce from the 1986 In re
Japanese Electronic Products III  decision that the legal standard applied there for the 1916 Act claims
was the same as that applied by the Supreme Court to the Sherman Act claims.  To understand the
correct meaning of many of the pronouncements made by the various courts concerned, it is necessary
to consider the detailed context in which they  were made.  The original complaint in the Zenith III
case was based on both Sections 1 and 2 of the Sherman Act and the 1916 Act.  The District Courtgranted summary judgment on both sets of claims.
156  The Court of Appeals reversed the judgments of
                                                     
153 The United States refers to Matsushita Electrical , Op. Cit..  The United States notes that the
Supreme Court reiterated this standard in the same year in another antitrust case, Cargill, Inc. v. Monfort of
Colorado, Inc. , 479 U.S. 104 (1986), deciding what constitutes proof of injury to competition in the Clayton Act
context of mergers and acquisitions.
154 In re Japanese Electronic Products III , Op. Cit., pp. 48-49.
155 The United States recalls that "primary line" stan ds for adverse effects upon direct competitors of
the defendant, as opposed to "secondary line," which refers  to adverse effects on competitors of the defendant’s
favoured downstream customers.
156 The European Communities recalls that summary judgment is granted where the court concludes
that, based on the facts pleaded and the evidence presente d before trial, the trier of fact could not reach aWT/DS136/R
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the District Court on both sets of claims so that, if there had been no appeal to the Supreme Court,
they would have been tried by the District Court.  The Supreme Court, however, granted certiorari  as
regards the Sherman Act claims, but not the 1916 Act claims.  It reversed the judgment of the Third
Circuit Court of Appeals, with instructions that the case should be remanded to the Court of Appeals
"for further proceedings in conformity with the opinion of this Court".  The Court of Appeals, in itssubsequent 1986 judgment, expressed some perplexity as to what this signified in relation to the 1916
Act claims.  It first considered the consequences of the Supreme Court's judgment with respect to the
Sherman Act claims which were the only ones that the latter had considered.  It concluded that the
District Court's summary judgment on the Sherman Act claims must be reinstated, using reasoning to
which it is difficult to do justice without quoting it verbatim :
"The conspiracy on which the plaintiffs rely in support of their Sherman Act claims is a
horizontal conspiracy among Japanese manufacturers of consumer electronic products
to maintain artificially high prices in the Japanese home market to help support sales at
low prices in the American export market, thereby injuring American manufacturers
competing with them in the latter market.  When this court first reviewed the summary
judgment record, we concluded it permitted fi ndings that there are high entry barriers in
the Japanese home market; that the Japanese manufacturers have higher fixed costs and
higher debt-equity ratios than their American counterparts; that the Japanese
manufacturers, individually and in the aggregate, created higher plant capacities than
could reasonably be absorbed by the Japanese home market, thereby creating an
incentive to dispose of the excess capacity in a market outside Japan [citation].  We also
concluded that there is direct and circumstantial evidence of an agreement to stabilizeJapanese home market prices to realize the profits needed to support sales at low prices
in the United States [citation].  Despite these conclusions, the Supreme Court
conclusively held that the defendants 'had no motive to enter into the alleged
conspiracy'.  [citation] […].  The Supreme Court […] conclusively held that 'in light of
the absence of any rational motive to conspire, neither [defendants'] pricing practices,nor their conduct in the Japanese market, nor their agreements respecting prices and
distribution in the American market, suffice to create a "genuine issue for trial".'
citation] These holdings are the law of the case and are binding on this court.
Consequently the plaintiffs are now foreclosed from arguing that there was a motive to
enter into the alleged conspiracy.  They are also foreclosed from arguing that the directand circumstantial evidence to which this court referred in its prior opinion is sufficient
to overcome a motion for summary judgment."
157
3.188  The European Communities concedes that, in concluding that there was no motive to enter
into the alleged conspiracy, the Supreme Court had invoked the antitrust theory of predation,including the theory which holds that true predation can only occur where sales are made below "an
appropriate measure of costs" and there is a reasonable prospect of recoupment of the losses so
incurred.  But the European Communities notes that the Supreme Court had done this in the context of
its plenary review of the evidentiary record to determine whether there was a genuine issue of fact
which required rejection of the motion for summary judgment.  The Supreme Court observed that theJapanese companies "have no motive to sustain [the losses resulting from selling in the US market at
low prices] absent some strong likelihood that the alleged conspiracy in this country will eventually
pay off" and added that "courts should not permit fact-finders to infer conspiracies when such
inferences are implausible".
158  This holding was, and was treated by the Court of Appeals as, a
                                                                                                                                                                    
conclusion favourable to the plaintiff (there is no "g enuine issue of fact"), so the case should be dismissed
without a trial.
157 In re Japanese Electronic Products III , Op. Cit.,  p. 46.
158 Matsushita Electrical , Op. Cit., at 593.WT/DS136/R
Page 51
holding regarding the facts presented in the case rather than one regarding the interpretation of the
language of the Sherman Act.
3.189  The European Communities notes that it was in this context that the Third Circuit Court of
Appeals' 1986 opinion came to reconsider the 1916 Act claims which the Supreme Court had not
treated.  The Court of Appeals said:
"Since it is now the law of the case that there is insufficient evidence of a conspiracy to
price predatorily in the American market, it is necessary to reconsider our disposition of
the Antidumping Act claim.  As we expl ained in our earlier opinion, the Antidumping
Act of 1916 includes as a substantive element in the cause of action a proviso that the
acts complained of 'be done with the intent of destroying or injuring an industry in theUnited States' [citation].  The plaintiffs assert that the Japanese manufacturers
individually and collectively have engaged in illegal dumping.  With respect to the
conspiracy claims, we earlier held 'that the evidence supporting plaintiffs' theory that
defendants entered into the alleged conspiracy also creates a genuine issue of fact as to
whether defendants agreed to dump [consumer electronic products ] on the United
States market with the specific intent to destroy or injure an industry in the United
States'. [citation]   Since the Sherman Act conspiracy charge failed in the Supreme
Court, our holding on the Antidumping Act conspiracy claim must fail with it.  The
Antidumping Act claims against individual Japanese manufacturers are equally
vulnerable because we relied, in reversing summary judgment on those claims, on the
evidence tending to show that the individua l manufacturers joined in a conspiracy to
sell in the American market at predatory prices  […]."
159
3.190  The European Communities contends that it is evident from the foregoing that the reasoning
of the Court of Appeals is narrowly logical:
(a) Based on a plenary review of the factual record, the Supreme Court has held that
there is no triable issue of fact as regards the Sherman Act claims;
(b) the Third Circuit Court of Appeals held in an earlier opinion that the evidence in the
factual record in the case supporting the finding of a violation of the Sherman Act is
the same evidence which could support findings of an agreement by the Japanese
exporters to engage in conduct infringing the 1916 Act, and of individual
infringements of the 1916 Act by them;
(c) therefore, following the Supreme Court's ruling, and in light of its earlier insistence
that the factual basis for the Sherman Act claims and the 1916 Act claims was
identical, the Court of Appeals considered  to be compelled to dismiss the 1916 Act
claims.
3.191  For the European Communities, it is clear that the Third Circuit Court of Appeals in no way
held that there is a general requirement, as a matte r of statutory interpretation, to prove pricing below
cost and a reasonable prospect of recoupment in relation to claims made under the 1916 Act where the
claim is based on specific intent to destroy or injure a US industry.  Further confirmation is given by
the fact that no subsequent court has ever sought to give to the 1986 opinion of the Third Circuit in In
re Japanese Electronic Products III  case the meaning which the United States tries to give it.
                                                     
159 In re Japanese Electronic Products III , Op. Cit., pp. 47-48 (emphasis added by the European
Communities).WT/DS136/R
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3.192  In the view of the European Communities, the decisive feature of the Zenith III  litigation is
that in that specific case the 1916 Act claim had been discussed on the basis of the same evidence
which was dismissed for the antitrust claim.  The Third Circuit Court of Appeals concluded as
follows:
"There is no other  evidence tending to show that any of the defendants still in the
case dumped  consumer electronic products with the required intent to injure or
destroy a United States industry."160
The European Communities considers that this statem ent contains the legal standard which is relevant
for the 1916 Act: whether imports are dumped or not.  Furthermore, the statement of the Court does
not prove that a 1916 Act claim would not have been upheld if based on other  evidence or arguments,
and this irrespective of the fate of possible claims of antitrust nature.  In other words, if there had been
other evidence, the Third Circuit Court of Appeals could have found a violation of the 1916 Act even
though there was no violation of antitrust law.
3.193  The United States  submits that the European Communities' analysis of the 1986 In re
Japanese Electronic Products III  decision is untenable.  In finding that the evidence in the record did
not support a claim under the 1916 Act because it was the same evidence the Supreme Court had held
to be legally insufficient under the Sherman Act, the Third Circuit Court of Appeals necessarily
applied the same legal standard.  The reason why the evidence was insufficient under the 1916 Act
was because there were no facts in the record that could satisfy the legal standard applied by the
Court.  And the legal standard that was applied by the Third Circuit in that case was the same as the
one applied by the Supreme Court to the Sherman Act claims - namely, that there must be evidence of
below cost pricing and possibility of recoupment.
3.194  The United States further points out that even the author of the law review note which the
European Communities attached to its second submission agrees with its reasoning.  The author
states:
"On remand, the Third Circuit failed to acknowledge any significant differences
between a 1916 Act claim and a Sherman Ac t predatory pricing claim, holding that
'[s]ince the Sherman Act conspiracy charged failed in the Supreme Court, our holding
on the Antidumping Act conspiracy claim must fail with it.'  This decision implies
that a 1916 Act defendant must have a reasonable prospect of recouping its lost
profits before "predatory" intent can rationally be attributed to it ."161
(v) Helmac Products Corp. v. Roth (Plastics) Corp.
3.195  The European Communities  contends that the Helmac I  case is far from categorical on
whether the "nature" of the 1916 Act is that of a classical antitrust law such as the Sherman Act or the
Robinson-Patman Act.162  The fact that the 1916 Act has objectives other than protecting competition
is confirmed by the statement in Helmac I  that "[b]esides injury to competition the Antidumping Act
also provides a cause of action when defendants at tempt to, among other things, injure an industry in
the United States".163
                                                     
160 Ibid., p. 48 (emphasis added by the European Communities).
161 Note, Op. Cit., p. 1559 (footnote omitted and emphasis added by the United States).
162 The European Communities recalls that the main point in Helmac I  was for the Court to decide
which statute of limitations is applicable to the 1916 Act, i.e. the 4 year statute of limitations of the Clayton Actor the 5 year statute of limitation of the Tariff Act.
163 Helmac I , Op. Cit., p. 575-576.WT/DS136/R
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3.196  The European Communities also notes that the Court in Helmac I  said that :
"This does not mean that the Antidumping Act of 1916 must be interpreted
consistently with the antitrust statutes in all situations.  The language differences may
have serious implications in other contexts.  Such a possibility is recognised in Zenith
Radio. 'The principal lesson which we draw from the legislative history of the 1916Act […] is that the statute should be interpreted whenever possible  to parallel the
unfair competition law applicable to domestic commerce'.  [citation]  Despite its
characterisation of the Antidumping Act of 1916 as an antitrust statute, the Zenith
Radio concluded that Congress intended to incorporate certain principles provided in
the Tariff Act  of 1913."
164
3.197  Beyond the issue of the mere label of the 1916 Act, Helmac I  confirms, in the view of the
European Communities, such as was the case with Zenith III165 that the existence of dumping, in the
classical sense of the word, is a prerequisite for action under the 1916 Act :
"While Zenith is helpful for analysis of the applicability of anti-trust law to an anti-
dumping  case under the Antidumping Act of 1916 […]."166
[…]
"In an anti-dumping  claim, there are two competitors, one foreign and one domestic,
operating on the same level of the marketing chain. […] Under the Robinson-Patman
Act there are two levels of activity at issue."167
3.198  The European Communities further notes that the Court in Helmac I  takes the view that,
unlike in Robinson-Patman Act cases, the requirement that sales must take place before action is
taken should not stand in 1916 Act cases:   
"There is no similar requirement in an antidumping  claim.  When one competitor
unilaterally decides to lower his price with the requisite intent, that creates the
violation. Thus I conclude that the actual sales requirement of a Robinson-Patman
claim cannot be transferred to an antidumping  claim."168
3.199  The European Communities infers from these quotations that
(a) Helmac I  and also Zenith III  consider that the existence of dumping, i.e . price
discrimination between two different national markets, is essential to undertake action
under the 1916 Act;
(b) Helmac I  rather considers that the underlying objective of the 1916 Act is to counter
dumping;
                                                     
164 Helmac I , Op. Cit., p. 566 (emphasis added by the European Communities)
165 The European Communities recalls that the court in In re Japanese Electronic Products II , stated at
pp. 321 and 324, that "the 1916 Act makes it illegal to dump imported goods on the US market with the purpose
of destroying or injuring US industry. […] The first element necessary to a finding of dumping under the 1916Act is proof that a price differential exists between two comparable products, one of which is imported or soldin the US and the other of which is sold in the exporting country."
166 Helmac I , Op. Cit., p. 573 (emphasis added by the European Communities).
167 Ibid., p. 574 (emphasis added by the European Communities).
168 Helmac I , Op. Cit., p. 574 (emphasis added by the European Communities).WT/DS136/R
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(c) therefore Helmac I  considers that there are differences of interpretation and
application between the 1916 Act and classical antitrust rules such as the Robinson-
Patman  Act, i.e . in the Helmac I  case regarding whether an offer for sale is sufficient
to trigger action.
3.200  The United States  considers unsustainable the European Communities' claim that the Helmac
I Court found that the "underlying objective of the 1916 Act is to counter dumping."  The decision
merely reflects that the District Court found multiple statutory objectives, all of which, broadly
speaking, can be considered to come within "competition policy".  Moreover, a review of the decision
shows that the European Communities' assertion is contradicted by the facts.  As the European
Communities has noted, the Helmac I  Court, citing the Zenith III  decision, exhorted that the 1916 Act,
"should be interpreted whenever possible to parallel the 'unfair competition' law applicable to
domestic commerce."169  In any event, the Helmac I  Court's statement that the 1916 Act is not
required to be interpreted consistent with other antitrust laws is not relevant to the Panel's analysis.
The relevant point is that the 1916 Act is susceptible to a WTO-consistent interpretation and, in fact,
has been so interpreted to date.
(vi) Geneva Steel Corp. v. Ranger Steel Supply Corp. and Wheeling-Pittsburgh v. Mitsui & Co.
3.201  The European Communities  argues that the Geneva Steel  and Wheeling-Pittsburgh  cases
have confirmed the close link between the 1916 Act and the Trade Act of 1930 as amended, which
provides for application of anti-dumping duties.  For example, in the most recent case, the Wheeling-
Pittsburgh  case, the Court held:
"Under the United States Constitution, only Congress and the President may regulate
international trade.  Congress has enacted both [the 1916 Act] as well as the TradeAct of 1930, as amended, [citation].  [The 1916 Act] permits any party injured by
international dumping to bring a lawsuit in federal court and recover triple the amount
of damages suffered, together with attorney's fees. […] The Trade Act permits the
United States International Trade Commission, upon a finding of dumping, to file a
complaint on behalf of an entire industry.  Based upon a finding of dumping, theUnited States Commerce Department is authorized to increase the tariff charged on
any unlawfully dumped foreign goods in an amount which would raise the cost of the
imported product to the fair market price."
170
3.202  The European Communities further argues that, unlike the other cases quoted by the United
States, the Geneva Steel and Wheeling-Pittsburgh  cases squarely address the nature of the 1916 Act,
and do so from the point of view of whether antitr ust predation standards should be read into the
specific requirements of the 1916 Act.  They hold th at such standards need not be met as regards the
specific intent to destroy or injure a US industry.  The Zenith III  case did not hold to the contrary.
The earlier case law does discuss the legislative intent of Congress, but not, as the United States
claims, "the interpretation of the intent element of the 1916 Act".  Consequently, the 1916 Act has a
protectionist component that prohibits dumping designed to injure the domestic industry.  Thefollowing passage of the Geneva Steel  decision confirms this:
"[T]he language of the Act itself, in addition to prohibiting antitrust violations, clearly
and literally prohibits non-antitrust and no-predatory pricing conduct.  By the words it
                                                     
169 Ibid., p. 566.
170 Wheeling-Pittsburgh Steel Corp. v. Mitsui & Co. , 1999 WL 38856, (S.D. Ohio), 22 January 1999.WT/DS136/R
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chose, Congress protected United States industries from unfair dumping, whether the
dumper possessed predatory intent or not."171
3.203  The European Communities does acknowledge, however, that both District Court rulings
establish a distinction between "dumping undertaken with  the intent to injure industry", i.e. the first
three intents, and "dumping undertaken with anti-co mpetitive predatory intent", i.e. the last two
intents.  Both Courts admit that the last two types of  intent under the 1916 Act, i.e. intent to restrain or
monopolise commerce, have similarities to domestic antitrust law and do not exclude that the Brooke
Group  requirements may well apply here.  They do not further examine this issue, however, as these
grounds were not invoked by the respective plaintiffs.  Both Courts also point out that their reasoning
is supported by the majority of case law, particularly Helmac I , though with the exception of the
Zenith III  case.
3.204  The European Communities argues, however, that this distinction made by both District
Courts between two kinds of dumping is based exclusively upon concepts and principles of US
antitrust law, namely the "intent" that the defendants  must be shown to have.  Under Article VI of the
GATT 1994, dumping is not a matter of intent.  It is a matter of selling at a price lower than the one inthe country of exportation, and that is precisely the conduct that needs to be shown in the first place
under the 1916 Act.  The showing of intent under the 1916 Act only comes after "dumping" has been
established.
3.205  In response, the United States  first of all notes that it is the view of the Geneva Steel
preliminary decision that the 1916 Act has five alternative intents.  This does not represent the view of
the highest court in the United States to have considered this issue.
3.206  The United States further notes, as a threshold matter, that the Geneva Steel  and Wheeling-
Pittsburgh  decisions - district court rulings on motions to dismiss – are interlocutory decisions and
thus neither final nor conclusive under US law.  Therefore they cannot, at the present time, be
considered by the Panel as authoritative interpretations of US law.  Both cases are currently in the
discovery stage, which means that no trial has taken place.  A federal district court decision on a
motion to dismiss is considered as "final" only once all of the claims in the case have been tried orotherwise adjudicated and the district court has entered judgment.
172  At that point, the district court
decision becomes "appealable," meaning that a party to the case may take an appeal to a circuit court
of appeals.  If no party appeals the case, the district court's decision becomes "conclusive" and
therefore binding on the parties.  However, even a final district court decision is not binding on other
district courts or appellate courts and it does not have persuasive value unless it has been soundlyreasoned.
173  If a party does appeal the case, the appellate court, in turn, will conduct a review and
either affirm, modify or reverse the district court's decision.  The appellate court's decision then is the
"conclusive" decision in the case, assuming that it is not subsequently reviewed by the US Supreme
Court.174  A "conclusive" appellate court decision is binding precedent on all of the district courts in
the appellate court's circuit, and on other panels of judges sitting in the same court of appeals, butoffers only persuasive precedent to courts in other circuits.
175
                                                     
171 Geneva Steel , Op. Cit., p. 1217
172 The United States refers to Cohen v. Beneficial Industrial Loan Corp ., 337 U.S. 541, 545-47 (1949);
International Society for Krishna Consciousness, Inc. v. Air Canada , 727 F.2d 253, 254-55 (2d Cir. 1984).
173 The United States refers to Threadgill v. Armstrong World Industries Inc ., 928 F.2d 1366, 1371 (3d
Cir. 1991).
174 The United States refers to Metropolitan Water Co. v. Kaw Valley Drainage District , 223 U.S. 519,
524 (1912).
175 The United States notes that there are twelve federal court circuits in the United States.  Each
district court is assigned to a circuit for purposes of appeal.WT/DS136/R
Page 56
3.207  The United States considers, moreover, that, under WTO jurisprudence, it is premature for the
European Communities to base any aspect of its challenge to the 1916 Act under Article VI:2 of the
GATT 1994 on the Geneva Steel  or Wheeling-Pittsburgh  decisions.  Just as with discretionary
authority which the executive may or may not exercise,176 the mere possibility that the District Courts'
decisions in those cases will become final and conclusive under US law is not enough to allow eitherdecision to form any basis of a Panel finding that th e 1916 Act is inconsistent with Article VI:2 of the
GATT 1994.  As long as it remains possible that either the District Court or the Circuit Court, on
appeal, will interpret the 1916 Act in a manner that is entirely consistent with Article VI:2 of the
GATT 1994, neither decision should be considered.
3.208  The United States also is of the view that, even if the Panel were to consider them, it may
only consider how these preliminary decisions affect the prevailing interpretation in the United States.
It cannot consider whether these decisions constitute violations themselves because the Panel's terms
of reference do not include decisions as measures being challenged.  The European Communities has
challenged the 1916 Act as such, and not any specific application of the 1916 Act.
3.209  The United States also argues that, in any event, the Geneva Steel and Wheeling-Pittsburgh
decisions do not treat the 1916 Act as an anti-dumping statute.  More specifically, these decisions do
not interpret the 1916 Act in a way that renders it a statute addressing the "dumping" and "injury"
condemned by Article VI.  These decisions differ from the other court decisions only in their more
expansive reading of one element of a 1916 Act claim, i.e. the element setting forth the requisite
intent.  In fact, in Wheeling-Pittsburgh , the Court ruled that a showing of "predatory" intent is
required although it is not necessary to show the possibility of recoupment.  Under the Geneva Steel
decision, a complainant could show either the traditional antitrust predatory intent or an intent toinjure a US industry.  Just like all of the othe r court decisions, however, both Courts require the
complainant to show intent as well as each of the other elements of a 1916 Act claim.  Thus, even
under these decisions, the basic differences between the 1916 Act and the Anti-Dumping Agreement
remain.
3.210  The United States contends, finally, that the conclusion that the 1916 Act is not an anti-
dumping statute remains sound even if the 1916 Act could be considered to have a "protectionist"
component.  To begin with, the concept of "protectionism" here means a focus on the protection of
industry.  This component of the 1916 Act still can be said to reflect antitrust standards of earlier eras,
such as those found in the 1936 Robinson-Patman Act.  Indeed, many governments, including the
United States, continue to maintain statutes today that in some ways protect competitors.  The fact
that a measure may include protection for competitors does not remove the measure from the category
of antitrust laws.
3.211  The European Communities  notes that, according to the United States, the Geneva Steel and
Wheeling-Pittsburgh  rulings are not "authoritative".  However, the United States cannot dispute, and
does not deny, the fact that they are not merely hypothetical and that they are there. H For theEuropean Communities, that is sufficient to make th em relevant.  Also, the mere fact that these cases
depart from what the United States appears to describe as being the most authoritative ruling as yet,
i.e. Zenith III , rather reveals the unauthoritative nature of this case.
3.212  The United States  replies that, even if the two preliminary decisions in Geneva Steel  and
Wheeling-Pittsburgh are considered by the Panel in the context of analysing possible interpretations
of the 1916 Act, they do not change the fact that the 1916 Act is susceptible to an interpretation that is
WTO-consistent.  This is demonstrated through the Zenith III  line of cases as well as the other
                                                     
176 The United States refers to, e.g ., United States - Tobacco , Op. Cit., paras. 118 and 121;
United States - Restrictions on Imports of Tuna , unadopted, dated 3 September 1991, DS21/R, paras. 5.20-5.21;
United States – Superfund , Op. Cit., para. 5.2.9.WT/DS136/R
Page 57
decisions applying antitrust principles to decide the issue at hand.  In any event, the Geneva Steel  and
Wheeling-Pittsburgh  decisions differed from the Zenith III  line of cases only in their characterization
of the intent requirement.  This interpretation, however, does not transform the 1916 Act into an anti-
dumping statute.  Both Courts still required that the requisite specific intent to injure or destroy be
pleaded as well as the other elements of the 1916 Act.  In Wheeling-Pittsburgh , the Court expressly
described the intent required as "predatory intent".177  Furthermore, neither Court required that the
plaintiff plead and prove material injury to the domestic industry as required in dumping.
E. VIOLATION OF ARTICLE VI:2 OF THE GATT 1994
1. General Arguments
3.213  The European Communities  submits that the WTO anti-dumping rules, laid down in Article
VI of the GATT 1994 and in the Anti-Dumping Agreement, establish a comprehensive and complete
multilateral regime to define and address the issue of dumping in international trade.  This
comprehensive nature also pertains to the regulation of the measures that can be taken once injurious
dumping within the meaning of Article VI of the GATT 1994 is found.  In that case, as is made clear
by Article VI:2 of the GATT 1994, "[i]n order to offs et or prevent dumping, a contracting party may
levy on any dumped product an anti-dumping duty not  greater in amount than the margin of dumping
in respect of such product".  This exclusive character cannot but be clearer if the several provisions
included in Article VI are examined together.  That Article, inter alia,  assigns a specific function to
anti-dumping measures and repeatedly sets precise maximum quantitative limits to their permissible
level.  The function of anti-dumping measures is to "offset" dumping or "p revent" dumping in the
case of threat of material injury.  This is then further emphasized in Article 9.1 of the Anti-Dumping
Agreement, where it is suggested to limit the duty to the amount necessary to offset the injury
suffered by the domestic industry, which may be less than the full dumping margin.  The imposition
of duties is additionally limited in those paragraphs of Article VI of the GATT 1994 which prohibit
parties from cumulating anti-dumping and countervailing duties to counter the same practice.  It
cannot go unnoticed that all those limitations and qualifications applying to the imposition of anti-
dumping duties would have absolutely no purpose and absolutely no result if WTO Members werefree to choose any other type of measure and then with no maximum limits as to amount and impact.
3.214  The European Communities recalls that the remedial measures provided for by the 1916 Anti-
Dumping Act are treble damages and/or criminal penalties.  These remedies are not duties.  They do
not fall into the only type of measures allowed under multilateral anti-dumping rules to counter
dumping practices, nor are they authorised by other WTO provisions.
3.215  The European Communities contends that recogn ition of the fact that duties are the sole
allowed remedies was again made by the US authorities.  The testimony of USTR General Counsel
Alan Holmer to the US Senate Finance Committee on 18 July 1986 contains the following portions:
"The Antidumping Code, however, expressly limits  the remedy for dumping to the
prospective collection of antidumping duties to offset the margin  of dumping. Article
16 of the Code states: 'No specific action against dumping of exports from another
Party can be taken except in accordance with the provisions of the General
Agreement, as interpreted by this Agreement.'  This language prohibits the use of
additional sanctions, such as fines, embargoes, imprisonment or other draconian
measures.
[…]
                                                     
177 The United States refers to Wheeling-Pittsburgh , Op. Cit., p. 604.WT/DS136/R
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It has also been argued that "the Code also does not affect other actions that are not in
the nature of 'duties' that may affect goods that are 'dumped.'"  The thrust of this
argument is that if a government chooses to address dumping through the imposition
of duties, it must do so under the procedures set out in the Antidumping Code, but at
the same time, a government is free to use any other means that it chooses to punishdumping.  This interpretation of Article 16, however, appears rather implausible if
one considers its consequences.  Under this view, a foreign government would be
perfectly within its rights to convict an American businessman of dumping and
imprison him for a period of 10 years, since the government would have a right to use
whatever alternative sanctions for dumping it pleased.
It follows that Article 16 must stand for the proposition that a government can
provide its citizens one, and only one, remedy for dumping.  That remedy is the
collection of duties in a manner cons istent with the Antidumping Code .  We believe
that our reading flows logically from the letter and spirit of the GATT and the
Antidumping Code.  It also follows that S. 1655 would violate the Code by imposingadditional sanctions on top of normal antidumping duties.
While the same criticism can be leveled at the Antidumping Act of 1916, that Act was
'grandfathered' by the Protocol of Provisional Application when the U.S. joined the
GATT in 1947 ."
178
The European Communities adds that Article 16 of the 1979 Anti-Dumping Code is identical to
Article 18 of the WTO Anti-Dumping Agreement.
3.216  The European Communities maintains that the compensatory, remedial objective of the
measure authorized in Article VI of the GATT 1994 assumes that only a quantifiable price measure
may offset a precisely quantified dumping margin or, possibly, a lower injury level.  In other words,
only a measure increasing the costs of the exporters up to the point of somehow forcing them to raise
prices on their export markets where they have been found to dump is really fit to "offset" dumping.The remedial objective cannot be served by criminal liability and sanctions when their result is to
"deprive of liberty" one of the economic actors involved in trade in foreign goods, such as importers
in the case of the 1916 Act.  As to pecuniary criminal sanctions, even if they were to be within the
maximum level imposed by Article VI of the GAT T 1994, the additional criminal liability element
involved is already beyond the remedial objective described in Article VI and in the Anti-DumpingAgreement.  It will obviously also be beyond that objective whenever the level of the penalty exceeds
the dumping margin.
3.217  The United States  argues that, for the European Communities' claim under Article VI:2 to
succeed, it must establish two points: first, it must  establish that Article VI:2 provides that anti-
dumping duties are the sole remedy for dumping; and, second, it must establish that the 1916 Act isthe type of measure governed by Article VI and the Anti-Dumping Agreement.  The European
Communities' claim under Article VI:2 is defective from the outset because nothing in Article VI:2
addresses whether anti-dumping duties are the sole remedy for dumping.  Even assuming arguendo
that Article VI:2 provides the sole remedy for dumping, the European Communities' claim still fails
because the 1916 Act, as a statute directed at anti-competitive conduct, is not governed by Article VIof the GATT 1994 or the Anti-Dumping Agreement.
                                                     
178 Testimony of 18 July 1986 of USTR General Counsel Alan Holmer to the US Senate Finance
Committee, pp. 4-5 (emphasis added by the European Communities).WT/DS136/R
Page 59
2. The Text and Relevant Context of Article VI:2 of the GATT 1994
3.218  The United States  is of the view that the European Communities' claim fails at the outset
because nothing in Article VI:2 of the GATT 1994179 addresses whether anti-dumping duties are the
exclusive remedy for dumping.
3.219  The United States notes that paragraph 2 simply states that a Member "may" levy an anti-
dumping duty to offset or prevent dumping.  It doe s not in any way suggest that remedies for dumping
other than anti-dumping duties are prohibited.  For example, it does not state that a Member "may
only" levy anti-dumping duties.  If the word "only" had been intended, the text could and would have
said so.  The European Communities, while focusing on the phrase "in order to offset or prevent
dumping," ignores the fact that the directive in the paragraph is permissive and unqualified.
3.220  In the view of the European Communities , the United States is reading Article VI:2 of the
GATT 1994 out of context and contrary to its clear ob ject and purpose.  A provision in an Agreement
such as the GATT 1994 stating that something "may" be done does not necessarily mean that any
alternative action, which could be more or less restrictive of trade, is in no way restricted.  Whether it
has this meaning or whether it implies on the contrary that no other action may be taken depends onthe context in which the word "may" is being used.
3.221  The European Communities points out that the context of Article VI comprises Articles III to
XIX of the GATT 1994, all of which regulate problems in international trade.  Thus, Article VI
regulates the action that members may take against dumping and the conditions under which they may
take this action.  Article VI:2 expressly states that the action which may be taken is to levy an anti-
dumping duty.  It is contrary to the object and purpose of Article VI to argue, as the United States
appears to, that nothing in Article VI restricts the ability of members to take other action to preventdumping, for example imprisoning the importers.
3.222  The United States  considers that the European Communities' argument relating to the
meaning of the term "may" is defective because the European Communities disregards the immediate
context provided by paragraphs 3 to 6 of Article VI and instead argues that the context of Article VI
comprises Articles III to XIX of the GATT 1994, without, however, explaining why this turns "may"in Article VI:2 into "shall" or "may only."
3.223  In the opinion of the United States, it is significant that the use in Article VI:2 of the
permissive term "may" contrasts with the four imme diately following paragraphs of Article VI, where
express prohibitions on the imposition of duties are stated.  In each of these paragraphs, Article VI
uses the mandatory term "shall" and clearly conveys what is not permitted.   For example, paragraph 5provides as follows:
"No product of the territory of any Member imported into the territory of any other
Member shall  be subject to both anti-dumping and countervailing duties to
compensate for the same situation of dumping or export subsidization."
180
                                                     
179 Paragraph 2 of Article VI provides as follows:
"In order to offset or prevent dumping, a contracting party may levy on any dumped product
an anti-dumping duty not greater in amount than the margin of dumping in respect of suchproduct.  For purposes of this Article, the margin of dumping is the price differencedetermined in accordance with the provisions of paragraph 1."
180 Emphasis added by the United States.WT/DS136/R
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3.224  The United States notes that paragraph 6(a) of Article VI uses a similar formulation:
"No contracting party shall  levy any anti-dumping [...] duty on the importation of any
product of the territory of another Member unless it determines that the effect of the
dumping [...] is such as to cause or threaten material injury to an established domestic
industry, or is such as to retard materially the establishment of a domestic
industry."181
3.225  The United States asserts, moreover, that the only WTO provisions that arguably address the
issue of any possible limitations on the remedies  available for dumping are found not in the GATT
1994, but rather in the Anti-Dumping Agreement.  The United States does not, however, examine the
possible relevance of any provisions of the Anti-Dumping Agreement because the European
Communities has not brought any claims under those provisions before the Panel.
3.226  The European Communities  responds that words must always be interpreted in context.
The relevant context in the present case is Article VI of the GATT 1994, which seeks to regulate the
problem of dumping, just as other GATT 1994 provis ions regulate other problems.  The US approach
to context is simplistic.  It merely points out that paragraphs 3 to 6 of Article VI contain the word
"shall" and Article VI:2 does not.  It pays no attention to the structure  of Article VI.  Article VI of the
GATT 1994 starts off in paragraph 1 with a definition of a problem, then specifies the action that may
be taken to combat it and then imposes certain restrictions on the imposition of those duties.
3.227  The European Communities further contends that the only reason why paragraph 2 of
Article VI  uses the word "may" is because it was not intended that WTO Members should be obliged
to impose anti-dumping duties, i.e. to take action against dumping at all.  The ordinary meaning of
Article VI:2 when read in context and having regard to the structure of Article VI is that other
remedies than duties, such as fines and treble damages, cannot be imposed.
3. The Negotiating History
3.228  The European Communities  asserts that its view that duties are the sole allowed remedies is
borne out by the negotiating history of Article VI of the GATT 1994.  According to the European
Communities, despite attempts by some contracting parties to the GATT 1947 to provide for other
types of offsetting measures, both during the preparatory work and the Review Session of 1955,Article VI was intentionally limited to anti-dumping duties.
3.229  The European Communities points out that the original text of Article VI of the GATT 1947 -
that is, the text actually adopted in 1947 - did contain an explicit prohibition of anti-dumping
measures other than duties.  The structure of the original Article VI was different from what it is now.
If the original text is examined, it is seen that it started with a prohibition of duties above a certainlevel of remedy authorized
182 and ended with the explicit statement that duties were the sole allowed
remedy.
                                                     
181 Emphasis added by the United States.
182 The European Communities refers to the language of the original text of Article VI:1
which reads:
"No anti-dumping duty shall be levied on any product of the territory of any contracting party
imported into the territory of any other contracting party in excess of an amount equal to the
margin of dumping under which such product is being imported […]."WT/DS136/R
Page 61
3.230  The European Communities recalls that the revised text, which originated in Article 34 of the
Havana Charter, followed a different drafting technique.  Under the revised approach, an explicit rule
making duties the exclusive remedy was no longer considered necessary.  It is instructive, in this
regard, to recall the explanation given by the 1948 Working Party on "Modifications to the General
Agreement" for changing the text of Article VI of the GATT 1947.  The Report of the Working Partynotes in this regard:
"While agreeing that there is no substantive difference between Article VI of the
General Agreement and Article 34 of the Charter, the working party recommends the
replacement of that article, as the text adopted at Havana contains a useful indication
of the principle governing the operation of that article and constitutes a clearerformulation of the rules laid down in that article. The working party, endorsing the
views expressed by [the Subcommittee on Article 34 at the Havana Conference]
agreed that measures other than compensatory anti-dumping and countervailing
duties may not be applied to counteract dumping or subsidization except in so far as
such other measures are permitted under other provisions of the GeneralAgreement."
183
3.231  The European Communities takes the view that, by expressly stating that there was no
substantive change, the Working Party has made it quite clear that there was no intention, in changing
the text of Article VI of the GATT 1947, to allow other remedies than duties against dumping.
3.232  The European Communities also recalls anothe r relevant statement of the same Working
Party.  The Report of the Working Party notes that it "[…] agreed that measures other than
compensatory anti-dumping and countervailing duties may not be applied to counteract dumping orsubsidization except insofar as such other measures are permitted under other provisions of the
General Agreement."
184  In doing so, it confirmed, in the view of the European Communities, the
"definite understanding" of the relevant Subcommittee of the Havana Conference, from which the text
of Article VI was taken.  Therefore, it results not only from the negotiating history of the GATT 1947,
but also from subsequent interpretation that duties are the only authorized remedy to counter dumpingpractices under Article VI of the GATT 1994.
The European Communities further points out that  the United States itself acknowledged that
the negotiating history of Article VI confirms the exclusivity of the duty remedy.  As can be seen
from the report of the panel on United States -  Anti-Dumping Duties on Salmon from Norway,  the
United States argued before that panel as follows:
"Regarding the negotiating history of the General Agreement, the United States also
observed that injurious dumping had been viewed with such concern during the
original GATT negotiations that proposals had been considered to permit imposition
of tougher countermeasures than merely offsetting duties.  However, in the end the
Article VI remedy had been limited to such duties ."
185
3.233  The United States  disputes that the negotiating history confirms the European Communities'
view.  The negotiating history of Article VI s hows that GATT 1947 originally included a paragraph in
Article VI - paragraph 7 – which provided in pertinent part:
                                                     
183 BISD II/41, 42, para. 12.
184 Reprinted in GATT, Analytical Index: Guide to GATT Law and Practice (1994), pp. 216-217.
185 United States – Anti-Dumping Duties on Salmon from Norway , Op. Cit., para. 75 (footnote omitted;
emphasis added by the European Communities).WT/DS136/R
Page 62
"No measures other than anti-dumping […] duties shall be applied by any contracting
party […] for the purpose of offsetting dumping […]."186
3.234  The United States recalls, however, that paragraph 7 existed for only about one year.
Article VI was modified soon after GATT 1947 came into force, with the initial relevant discussions
on this matter taking place in early 1948 during the so-called "Havana Conference," which addressed
the draft charter of the International Trade Organization (hereinafter the "ITO"), a document whichwas similar in many respects to the GATT 1947.  At that time, members of the Subcommittee on
Article 34 considered a provision in the draft ITO charter, identical to the original paragraph 7 of
Article VI of the GATT 1947, and decided to remove it.  The record of these discussions explains:
"The Subcommittee agreed to the deletion of paragraph 6 of the Geneva draft which
expressly prohibited the use of measures other than anti-dumping or countervailingduties against dumping or subsidization.  It did so with the definite understanding that
measures other than compensatory anti-dumping […] duties may not be applied to
counteract dumping […] except insofar as such other measures are permitted under
other provisions of the Charter."
187
3.235  The United States further notes that, later that year, during the Second Session of the GATT
1947, the Working Party on Modifications to the General Agreement referenced the work of the ITO
Subcommittee on Article 34 and agreed, inter  alia, to replace the entire then-existing Article VI with
its counterpart under the draft ITO charter, which in final form contained no provision like paragraph
7 of Article VI of the GATT 1947.  In a report, the Working Party explained:
"The working party, endorsing the views expressed by [the ITO Subcommittee on
Article 34], agreed that measures other than compensatory anti-dumping […] duties
may not be applied  to counteract dumping […] except insofar as such other measures
are permitted under other provisions of the General Agreement."188
3.236  The United States points out that, many years later, a paragraph similar in many respects to
the original paragraph 7 of Article VI of the GATT 1947 appeared in Article 16.1 of the Tokyo Round
Anti-Dumping Code.  It provided:
"No specific action against dumping of exports from another Party can be taken
except in accordance with the provisions of the General Agreement, as interpreted by
this Agreement."
3.237  The United States also recalls that in a footnote to Article 16.1 it was stated that Article 16.1
"is not intended to preclude action under other relevant provisions of the General Agreement, as
appropriate."  A provision virtually identical to Article 16.1 of the Tokyo Round Anti-Dumping Codenow appears in the Anti-Dumping Agreement, in Ar ticle 18.1, except that now it refers to the GATT
1994 instead of the GATT 1947.
3.238  In the European Communities'  view, the introduction of an explicit prohibition of measures
other than duties in Article 16.1 of the Tokyo Round Anti-Dumping Code cannot be argued to have
changed the meaning of Article VI of the GATT 1947.
189  On the contrary, it confirmed that meaning.
                                                     
186 Reproduced in GATT, Analytical Index: Guide to GATT Law and Practice, 6th ed. (1995), p. 238.
187 Reports of Committees and Principal Sub-Committees, ICITO I/8, p. 74, para. 25 (Geneva,
September 1948), quoted in GATT, Analytical Index: Guide to GATT Law and Practice, Op. Cit., p. 238.
188  BISD II/41, 42, para. 12.
189 The European Communities refers to J. H. Jackson, World Trade and the Law of GATT, The
Bobbs-Merrill Co. (19 69), pp. 405-408, 420.WT/DS136/R
Page 63
Thus, there does not appear to be a rule in Article VI that is not either referred to or repeated in the
Code.  The reason for this was that the Code and the GATT 1947 were distinct legal sets of rules, with
different membership and separate means of enforcement.  A claimant under the Code needed to be
able to invoke any rule in Article  VI.  If repetition was necessary for the express provisions of Article
VI, it was a fortiori necessary for those which had been recognized to be implied in such article.  In
the light of the foregoing it is therefore not surprising that the Code repeated explicitly the implicit
Article VI rule that duties are the exclusive remedy for dumping.
3.239  The European Communities further submits that when the Tokyo Round Code was modified
and transposed into the WTO Agreement's text, what happened was a conversion of an earlier treaty,
and the non-removal rather than insertion of a clause.  It would have been a rather unusual step toremove an explicit clause from an agreement on the basis that the point was implicit.  It would have
looked rather like a deliberate repeal of the rule.
3.240  The United States  replies that, in any event, the negotiating history of Article VI does not
indicate which of the provisions in Article VI of the GATT 1947 is the one that made the original
paragraph 7 unnecessary by implicitly establishing that anti-dumping duties are the exclusive remedyfor dumping.  There is no indication that the provision in question is paragraph 2.
4. The Relevance of Article 18.1 of the Anti-Dumping Agreement
3.241  The European Communities  contends that the adoption of the WTO Anti-Dumping
Agreement has not changed the content of Article VI in respect of the limitation to duties because it
includes no derogation or conflicting rule on this point.  To the contrary, the WTO Anti-Dumping
Agreement, and specifically Article 18.1 thereof, does nothing but confirm Article VI in this respect.
3.242  The European Communities therefore considers that  it is sufficient to rely on Article VI to
claim that the 1916 Act violates WTO rules by providing for remedies other than duties in order to
counter dumping practices.
3.243  The United States  rejects the European Communities' argument that Article VI:2 of the
GATT 1994 makes anti-dumping duties the exclusive remedy for dumping and that it is therefore
sufficient for the Panel to rely solely on that provision for this proposition.  Moreover, the EuropeanCommunities' view that Article 18.1 of the WTO Anti-Dumping Agreement "does nothing but
confirm Article VI in this respect" is also wrong.
3.244  The United States argues, first, that the negotiating history of Article VI does not indicate
which of the provisions in Article VI of the GATT 1947 is the one that made the original paragraph 7
unnecessary by implicitly establishing that anti-dumping duties are the exclusive remedy for dumping.There is no indication that the provision in question is paragraph 2.
3.245  The United States notes, second, that during the Tokyo Round, a provision wholly separate
from Article VI:2 of the GATT 1947 - Article 16.1 of the Tokyo Round Anti-Dumping Code - was
adopted to deal directly with the issue of whethe r, and to what extent, anti-dumping duties are the
exclusive remedy for dumping.  This provision, like its successor, Article 18.1 of the WTO Anti-Dumping Agreement, uses carefully crafted language to express the intended limitation regarding
remedies other than anti-dumping duties, and it is much more precise than any rule that could be
derived from the negotiating history of Article VI.  The inclusion of these later provisions would seem
to suggest the opposite of the European Communities ' argument.  That is, the fact that Article 16.1 of
the Tokyo Round Anti-Dumping Code and its successor, Article 18.1 of the Anti-DumpingAgreement, needed to be added is evidence that Article VI:2 does not mean what the European
Communities claims.  Otherwise, these later provisions would be redundant and unnecessary.
Interpretations which render parts of a treaty superfluous should be avoided.WT/DS136/R
Page 64
3.246  The United States recalls, finally, that with the Uruguay Round and the coming into force of
the GATT 1994 and the WTO Anti-Dumping Agreemen t, yet another fundamental change took place
that further renders the European Communities' reliance on the negotiating history of Article VI
inapposite.  Specifically, the relationship between Article VI and the Anti-Dumping Agreement is
different from the relationship that had existed between Article VI and the Tokyo Round Anti-Dumping Code.  While it previously was possible for a panel to find a violation based independently
on a paragraph in Article VI of the GATT 1947, it is now no longer possible for a panel to do so.  Any
violation must now include an invocation of a part icular provision of the Anti-Dumping Agreement.
In Brazil - Measures Affecting Desiccated Coconut
190, the Appellate Body explained this fundamental
change in the context of considering whether Article VI of the GATT 1994 may be appliedindependently of the Agreement on Subsidies and Countervailing Measures (hereinafter the "SCM
Agreement").  In support of its finding that Article VI may not be independently applied, the
Appellate Body reasoned that Article VI of the GATT 1994 and the SCM Agreement now constitute a
"package of rights and obligations," given the structure of the WTO Agreement, to which the GATT
1994 and the SCM Agreement are annexed.
191  The Appellate Body, quoting from the panel report,
stated that the SCM Agreement and Article VI "together define, clarify and in some cases modify the
whole package of rights and obligations of a potential user of countervailing measures."192   L i k e
Article VI of the GATT 1994 and the SCM Agreemen t, Article VI of the GATT 1994 and the Anti-
Dumping Agreement constitute a package of rights and obligations regarding the use of anti-dumping
measures.  The plain language of Articles 1 and 18.1 shows that these provisions do not merely
interpret Article VI, but, rather, go beyond by imposing a limitation on anti-dumping measures where
Article VI:2 has none.  It is therefore not proper for a panel to apply Article VI independently.
3.247  The United States notes that, in the present case, inexplicably, the European Communities has
excluded from its panel request what may be the only relevant part of the package of rights and
obligations regarding the use of anti-dumping measures, i.e. Article 18.1 of the Anti-Dumping
Agreement.  Indeed, regardless of whether it is the only relevant part of this package, it certainly is an
essential part of it.  In addition, if the Panel were to entertain a claim solely based upon Article VI:2of the GATT 1994, it would run the very real risk of inconsistent decisions when one panel reviews a
claim solely based on Article VI:2 and another panel reviews a claim under Article 18.1 of the Anti-
Dumping Agreement.
3.248  The United States submits that, for all these reasons, the Panel should reject the European
Communities' argument that Article VI:2, standing  alone , mandates that anti-dumping duties are the
only remedy for dumping.
3.249  In response, the European Communities  notes that the United States seems to accept that
Article VI does not allow remedies against dumping  other than duties when it insists "that the
negotiating history of Article VI does not indicate wh ich of the provisions in Article VI of the GATT
1947 is the one that made the original paragraph 7 unnecessary by implicitly establishing that anti-dumping duties are the exclusive remedy for dumping".  Moreover, in relation to the US argument
that "there is no indication that the provision in question is paragraph 2", the European Communities
inquires which provision it could be other than paragraph 2 read in the context of the other provisions
of Article VI.
3.250  Regarding Article 16.1 of the Tokyo Round Anti-Dumping Code, the European Communities
reiterates its view that the introduction of an explicit prohibition of measures other than duties in
Article 16.1 of the Tokyo Round Anti-Dumping Code cannot be argued to have changed the meaning
                                                     
190 Appellate Body Report on Brazil – Measures Affecting Desiccated Coconut , adopted on
20 March 1997, WT/DS22/AB/R (hereinafter " Brazil – Desiccated Coconut ").
191 The United States refers to Brazil – Desiccated Coconut , Op. Cit., p. 16.
192 Brazil – Desiccated Coconut , Op. Cit., p. 17, quoting from para. 246 of the panel report.WT/DS136/R
Page 65
of Article VI of the GATT 1947.193  On the contrary, it confirmed that meaning.   Thus, there does not
appear to be a rule in Article VI that is not either referred to or repeated in the Code.  The reason for
this was that the Code and the GATT 1947 were distinct legal sets of rules, with different membership
and separate means of enforcement.  A claimant under the Code needed to be able to invoke any rule
in Article VI.  If repetition was necessary for the express provisions of Article VI, it was a fortiori
necessary for those which had been recognized to be  implied in such article.  In the light of the
foregoing it is therefore not surprising that the Co de repeated explicitly the implicit Article VI rule
that duties are the exclusive remedy for dumping.
3.251  The European Communities further submits that when the Tokyo Round Code was modified
and transposed into the WTO Agreement's text, what happened was a conversion of an earlier treaty,and the non-removal rather than insertion of a clause.  It would have been a rather unusual step to
remove an explicit clause from an agreement on the basis that the point was implicit.  It would have
looked rather like a deliberate repeal of the rule.
3.252  As concerns the United States' reliance on Brazil - Desiccated Coconut , the European
Communities notes that the reference made by the Appellate Body to an indivisible relationshipbetween Article VI of the GATT 1994 and the SC M Agreement rather supports the view that a
separate citation of the Anti-Dumping Agreement in the present case is not necessary.  The Appellate
Body in Brazil - Desiccated Coconut  held that Article VI cannot be read independently of the SCM
Agreement and that they "together define, clarify and in some cases modify the whole package of
rights and obligations […]"
194.  The European Communities agrees that the same applies to the Anti-
Dumping Agreement.  Yet the United States in fact asks the Panel to do the opposite of what the
Appellate Body found to be necessary.  The United States seems to admit that there is within the
"package" an obligation not to apply remedies other than duties against dumping but asks the Panel to
only look at Article VI:2 and exclude any argu ment under Article 1 and 18 of the Anti-Dumping
Agreement.
3.253  The European Communities argues that, at any rate , its request for a panel clearly identified a
violation of the obligation not to use measures other than duties to combat dumping and consideredthat this obligation was implicit in Article VI:2 of the GATT 1994.  If other parts of the "package" are
considered relevant to this obligation they can and must be applied by the Panel, just as the panel and
the Appellate Body in Brazil - Desiccated Coconut  applied provisions of the SCM Agreement that
had not been referred to in the request for establishment of that panel.
3.254  In conclusion, the European Communities reiterates its view that the provision violated is
Article VI:2 of the GATT 1994.  If the Panel should disagree that this is the provision which contains
the clearly described violation, it should apply Article 18.1 of the Anti-Dumping Agreement to be
faithful to the conclusions of the Appellate Body in Brazil - Desiccated Coconut .  Article 18.1 of the
Anti-Dumping Agreement is not in conflict with Article VI, as the United States has also agreed.
Therefore, Article 18.1 cannot modify the meaning of Article VI.
3.255  The United States  notes that the European Communities attempts to cure its defective panel
request by suggesting that, while it is not asserting claims under Articles 1 and 18.1 of the Anti-
Dumping Agreement, the Panel should consider them as merely "arguments."  The Panel should reject
such an attempt.  The European Communities chose to rely upon Article VI:2 of the GATT 1994 for
its position that Article VI and the Anti-Dumping Agreement provide the sole remedy for dumping.  Itcould have included Articles 1 and 18.1 of the Anti-Dumping Agreement in its panel request, but,
inexplicably, it chose not to.  The European Communities should not be allowed to bootstrap what are
in reality new claims into the present case by su ggesting that they are only "arguments."  For the
                                                     
193 The European Communities refers to J. H. Jackson, Op. Cit., pp. 405-408, 420.
194 Brazil – Desiccated Coconut , Op. Cit., p. 17, quoting from para. 246 of the panel report.WT/DS136/R
Page 66
Panel to analyse whether these newly invoked articles support the European Communities' other
claims would be the same as considering them as claims themselves.  In both instances, the Panel
would be required to determine whether those provisions provide an exclusive remedy for dumping.
The European Communities should not be allowed to so easily circumvent the requirements of the
DSU.
3.256  The United States in fact takes the view that the Panel does not even have the authority to
consider whether Articles 1 and 18.1 of the Anti-Dumping Agreement support the proposition that
Article VI of the GATT 1994 provides the sole remedy for dumping.  To do so would exceed the
jurisdiction of the Panel.  In India - Patents , the Appellate Body made clear that a panel has authority
to consider only those claims which are included in the complaining party's panel request.195 The
Appellate Body stated definitively in that case that "[a] panel cannot assume jurisdiction that it does
not have."  Because Articles 1 and 18.1 of the Anti-Dumping Agreement were not included in the
European Communities' panel request, the Panel does not have the authority to consider them.
3.257  In response to the US argument that the Panel cannot analyse whether Articles 1 and 18.1 of
the Anti-Dumping Agreement support the EC position, the European Communities  recalls that the
Appellate Body in European Communities - Bananas stated that
"Article 6.2 of the DSU requires that the claims , but not the arguments , must all be
specified sufficiently in the request for the establishment of a panel in order to allow
the defending party and any third parties to know the legal basis of the complaint."196
3.258  The European Communities further notes that th ere is nothing in the DSU that requires the
numbers  of the provisions of the covered agreements to be cited in a request for the establishment of a
panel.  The obligation in Article 6.2 of the DSU is to provide a brief summary of the legal basis of thecomplaint sufficient to state the problem clearl y.  The Appellate Body has merely said in European
Communities - Bananas that citing the numbers of the provisions suffices, it has not said it is the only
way to set out the legal basis.
197  There can be no doubt that the European Communities has clearly
described the obligation concerned and the United States has neither contested this nor misunderstood
the obligation described, it is merely disagreeing about the number to be given to it.
3.259  The United States  rejects the EC argument that "[t]here is nothing in the DSU that requires
the numbers  of the provisions of the covered agreements to be cited in a request for the establishment
of a panel."  The United States wonders how a Memb er identifies a provision of a covered agreement
other than by listing its number.  The Appellate Body certainly anticipates that the complaining
Member will list the number of the relevant provision when setting forth a claim.  In India – Patents ,
the Appellate Body explained:
"In European Communities – Bananas , we accepted the view of the panel in that case
that it was "sufficient for the Complaining Parties to list the provisions of the specific
agreements alleged to have been violated without setting out detailed arguments as to
which specific aspects of the measures at issue relate to which specific provisions ofthose agreements", and we also agreed with the panel that the request in that case was
sufficiently specific to comply with the "minimum standards" established by
Article 6.2 of the DSU.  In this case, in contrast, there is a failure to identify a specific
provision of an agreement that is alleged to have been violated.  This falls below the
                                                     
195 The United States refers to India – Patents , Op. Cit., paras. 92-93.
196 European Communities - Bananas,  Op. Cit., para. 143.
197 The European Communities refers to the Appellate Body Report on  European Communities -
Bananas , Op. Cit., para. 141.WT/DS136/R
Page 67
"minimum standards" that we were willing to accept in European Communities –
Bananas ."198
3.260  The United States recalls that, in the present case, it is not simply a matter of the European
Communities' failure to identify the number  of the provision on which it was basing its claim.  The
European Communities did not even identify the covered agreement .  The European Communities
recognizes that it should have identified Article 18.1 of the Anti-Dumping Agreement.  Where the
European Communities set forth its claim in its panel request, however, the European Communities
did not merely fail to reference Article 18.1.  It also failed even to identify the Anti-Dumping
Agreement as the relevant covered agreement.  Thus, the European Communities is left with no basis
for arguing that anti-dumping duties are the exclusive remedy for dumping.  It cannot rely onArticle VI:2 of the GATT 1994, and it did not list Article 18.1 of the Anti-Dumping Agreement in its
panel request.
5. The Interpretation of the Footnote to Article 18.1 of the Anti-Dumping Agreement
3.261  In reply to a question of the Panel to both pa rties regarding the correct interpretation of the
footnote to Article 18.1
199 of the Anti-Dumping Agreement, the European Communities  points out
that the ordinary meaning of the footnote in this provision and of its predecessor in Article 16.1 of the
Tokyo Round Anti-Dumping Code is that the Anti-Dumping Agreement does not prevent Members
from taking appropriate action under other trade defence instruments provided within the GATT
1994, such as countervailing duty action and safeguard action.
3.262  The European Communities asserts that this in terpretation is confirmed by the negotiating
history.  The factors taken into account by the negotiators in deciding to delete a corresponding
provision when drafting the Havana Charter, and when amending the GATT 1947, were exactly thesame.  It is true that in the first case the negotiators used the phrase "other provisions of the Charter"
whereas those in the second spoke of "other provisions of the General Agreement".  However, it is
clear that the Charter negotiators had in mind the Charter provisions that were incorporated in the
General Agreement.
3.263  In support of its position, the European Communities references the Report of the Working
Party established by Sub-Committee C of the Third Committee of the Havana Conference where,
according to the European Communities, it appears clearly from paragraphs 3(iv) and 6 that the
express prohibition of other measures against dumping was agreed to be unnecessary, removed and
replaced by a statement to the minutes that other measures were not allowed because of concerns that
some parties had about the implications for enforcing their rights under Articles 13 and 14 whichcorrespond to what is now Article XVIII of the GATT 1994.
200
3.264  The European Communities argues that, even if it could be argued that the Charter negotiators
intended to preserve a wider range of possible measures, those who negotiated the 1948 amendments
                                                     
198 India – Patents , Op. Cit., para. 91 (footnote omitted).
199 Article 18.1 and its footnote provide as follows:
"18.1 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.24
[...]
____________
24 This is not intended to preclude action under other relevant provisions of GATT 1994, as
appropriate."
200 The European Communities refers to document E.CONF.2/C.3/C/18, paras. 3(iv) and 6.WT/DS136/R
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to the GATT 1947 clearly did not, since they explicitly refer to "other provisions of the General
Agreement".  The GATT 1947 negotiators were prepared to refer to the Havana Charter where that
was their intention, as is apparent, for instance, from the Note ad Article II:4 of the GATT 1947.
3.265  The European Communities considers, finally, that  the fact that this footnote was considered
necessary merely confirms the EC view that alternative action against dumping such as trebledamages, fines and imprisonment are not compatible with WTO rules.
3.266  The United States , in reply to the same question of the Panel, reiterates at the outset its view
that the Panel should not reach the issue of the correct interpretation of Article 18.1 of the Anti-
Dumping Agreement or its footnote.  As a legal matter, Article 18.1 is not within the Panel's terms of
reference.
3.267  Nevertheless, in response to the Panel's question, the United States notes that the footnote to
Article 18.1 should be interpreted as meaning that a Member can take measures which deal with
injurious dumping even when such measures are not explicitly set forth in Article VI of the GATT
1994 or the Anti-Dumping Agreement, as long as the measure is not inconsistent with other GATT
1994 provisions.
3.268  The United States recalls that language nearly identical to that used in Article 18.1 and its
footnote can be found in Article 16.1 of the Tokyo Round Anti-Dumping Code and its footnote.  The
meaning of the footnote to Article 16.1 was clear.  No action against dumping could be taken except
consistently with the GATT 1947.  This merely restates the basic principle of pacta sunt servanda :
every treaty in force is binding on the parties to it and must be performed by them in good faith.
However, it is also clear that there was never any intention to eliminate the other GATT-consistent
options available to address a factual situation that constituted a case of injurious dumping.  Acontracting party that was a party to the Code retained the option to address such dumping by
eliminating the injury, for instance by raising the duty on the product concerned on an MFN basis to a
level not in excess of the relevant tariff binding.  Or it could renegotiate the duty on the product
consistent with Article XXVIII of the GATT 1947.  Or it could provide adjustment assistance for the
industry or workers injured by the dumping.  Or, if th e factual situation also supported the taking of a
safeguard action under Article XIX of the GATT 1947 or a countervailing duty under Article VI of
the GATT 1947, the contracting party concerned could pursue those avenues.
3.269  The United States further points out that, read literally, Article 16.1 alone might have been
misinterpreted to lock any government into levyi ng anti-dumping duties whenever it was faced with a
factual situation constituting injurious dumping.  The footnote preserved flexibility to take any othermeasure that was otherwise GATT-consistent.  The same conclusions hold today.  If a WTO Member
is faced with a factual situation constituting injurious dumping, it is not locked into levying anti-
dumping duties, but has the option of taking other measures that are in accordance with the GATT
1994.  If the measure is of a nature that is simply not regulated by the GATT 1994, as is the case for
the 1916 Act, the measure is a fortiori  consistent with the GATT 1994.
F. VIOLATIONS OF ARTICLE VI:1 OF THE GATT 1994 AND ARTICLES 1, 2.1, 2.2, 3, 4
AND 5.5 OF THE ANTI-DUMPING AGREEMENT
3.270  The European Communities  notes that the 1916 Act prohibits dumping under different
conditions than those laid down in Article VI of the GATT 1994 and the Anti-Dumping Agreement
and applies different procedures and remedies than provided for therein.  This gives rise to numerousWT/DS136/R
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violations of specific provisions of Ar ticle VI of the GATT 1994 and the Anti-Dumping
Agreement.201
3.271  The European Communities submits that Artic le VI:1 of the GATT 1994 provides that
dumping is to be condemned if it causes or threatens material injury and that Article 3 of the Anti-
Dumping Agreement lays down a detailed definition of this notion and how injury may beestablished.  The 1916 Act does not require actual injury at all, let alone material injury, but only one
or more of the intents, including the intent to injure a domestic industry, no matter how threatening
such intent may actually be.  As a practical matter, evidence of actual injury will often be used to
prove intent to injure under the 1916 Act.  Where this occurs, there is nothing in the 1916 Act which
ensures that the injury shown must correspond to the "material injury" standard of Article VI of the
GATT 1994 and the Anti-Dumping Agreement.  Furthermore, because other intents are relevant under
the 1916 Act, in certain circumstances measures will be authorised under the 1916 Act without any
inquiry into the effects on the US industry.  Accordingly, the 1916 Act violates Article VI:1 of the
GATT 1994 and Article 3 of the Anti-Dumping Agreement.
3.272  The European Communities further argues that remedies under the 1916 Act are available to
private parties without the mediation of governmental authorities.  The absence of an administrative
procedure means that no investigation conforming to the requirements of the Anti-Dumping
Agreement is conducted.  Court proceedings are not a substitute for such administrative
investigations.  In the case of civil damages proceedings, the proceeding is conducted in the
framework of the adversarial relationship between the parties.  In both civil and criminal proceedings,
the ultimate factual finding is made by the judge and/or a jury, who do not have the specialist
knowledge of the subject of national authorities – a factor which is important in such a technical area.The conduct of the proceedings is determined by the parties to the proceedings, without the
intervention and the responsibility of the importing country's administrative authorities.  Accordingly,
the 1916 Act fails to respect a number of procedural and due process requirements set forth in the
Anti-Dumping Agreement, for example:
(a) the requirement that national authorities ve rify the information in a complaint before
the investigation is opened;
202
(b) the requirement that notice be given to the government of the exporting country
before an anti-dumping investigation is launched;203
(c) the requirement that a complaint only be made on behalf of the domestic industry and
be supported by a minimum proportion of the domestic industry.  Thisrepresentativity requirement serves an important function of avoiding frivolous
complaints and the harassment of exporters and importers;
204
(d) the possibility for governments of exporting countries to make comments on
proposed findings;205
(e) the possibility for industrial users and representative consumer organisations to
provide information on dumping, injury and causality,206
                                                     
201 The European Communities notes that, even if the Panel were to consider that the provisions of
Article VI:2 did not contain mandatory language, all of the other provisions of Article VI:1 and the Anti-Dumping Agreement invoked by the European Communities contain clearly mandatory language.
202 The European Communities refers to Article 5.3 of the Anti-Dumping Agreement.
203 The European Communities refers to Article 5.5 of the Anti-Dumping Agreement.
204 The European Communities refers to Articles 4 and 5.4 of the Anti-Dumping Agreement.
205 The European Communities refers to Articles  6.9 and  6.11 of the Anti-Dumping Agreement.WT/DS136/R
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(f) the requirement that measures not be retroactive.207
3.273  The United States  considers that the European Communities' claims under Article VI:1 of the
GATT 1994 and the Anti-Dumping Agreement are adjuncts to its claim under Article VI:2 of theGATT 1994 and that each of these claims rests on the assumption that the Panel has already found the
1916 Act to be in violation of Article VI:2 of the GATT 1994.  Thus, each of these claims has the
same two premises of the alleged violation of Ar ticle VI:2 of the GATT 1994, namely, that Article
VI:2 of the GATT 1994 makes anti-dumping duties the exclusive remedy for dumping and, further,
that the 1916 Act is an anti-dumping statute that provides remedies for dumping other than anti-dumping duties.  Because these two premises are erroneous, the European Communities' various
claims under the GATT 1994 and the Anti-Dumping Agreement have no merit.  Nothing in Article
VI:2 of the GATT 1994 provides that anti-dumping duties are the exclusive remedy for dumping.
Moreover, even assuming arguendo  that Article VI:2 of the GATT 1994 makes anti-dumping duties
the exclusive remedy for dumping, that provision nevertheless does not govern the 1916 Act becausethe 1916 Act is not an anti-dumping statute, and it  does not provide remedies directed at the type of
harmful conduct condemned by Article VI.  Acco rdingly, like the European Communities' claim
under Article VI:2, the Panel should reject the European Communities' various other claims under
Article VI of the GATT 1994 and the Anti-Dumping Agreement.
3.274  The European Communities  rejects the US argument that its claims based on Article VI:1 of
the GATT 1994 and Articles 2.1, 2.2, 3, 4 and 5.5 of the Anti-Dumping Agreement depend on the
claim that duties are the exclusive remedy and fall away if the European Communities' exclusive
remedy claim fails.
3.275  The European Communities argues that Article VI:1 defines dumping and provides that it is
to be condemned if it causes injury, threat of inju ry or material retardation.  It follows clearly that
measures taken against dumping are only consistent with Article VI:1 if there is a finding of both (i)
dumping in accordance with the definition in that Arti cle and (ii) injury, threat of injury or material
retardation caused by such dumping.  There is no mention of anti-dumping duties, so these principles
would apply even if other measures could be taken consistently with Article VI:2.
3.276  According to the European Communities, the same argument applies to the cited Articles of
the Anti-Dumping Agreement.  Article 1 provides in relevant part that "[a]n 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".
Articles 2.1 and 2.2 set forth amplified rules on the substantive definition of dumping.  Article 3 does
the same for injury.  Article 4 defines "domestic industry", which is relevant for the injury definition.
Article 5.5 provides that, "after receipt of a properly documented application and before proceeding to
initiate an investigation, the authorities shal l notify the government of the exporting Member
concerned".  It can easily be seen that all these provisions make no mention of the application of
duties as a remedy, and would have to be applied even if it were to be decided that measures other
than duties, such as civil damages or criminal pena lties, could, consistently with Article VI of the
GATT 1994, be applied to remedy dumping.
3.277  The United States  considers that the European Communities has failed to demonstrate that
the various procedural and substantive requirements found in Article VI:1 and the Anti-Dumping
Agreement mandate compliance in and of themselves.  The European Communities argues that the
provisions setting forth these procedural and substantive requirements do not themselves indicate that
they apply only when a Member is imposing a measure set forth in the Anti-Dumping Agreement,
such as duties.  From that assertion, the European Communities concludes that these procedural and
                                                                                                                                                                    
206 The European Communities refers to Article 6.12 of the Anti-Dumping Agreement.
207 The European Communities refers to Article 10 of the Anti-Dumping Agreement.WT/DS136/R
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substantive requirements apply even when a remedy not set forth in the Anti-Dumping Agreement is
imposed.  This argument lacks merit.  For one thing, it wholly ignores the context provided by the
remaining provisions of Article VI and the Anti-D umping Agreement, all of which are geared toward
a Member's imposition of a measure set forth in the Anti-Dumping Agreement, such as duties.  If
duties are not the exclusive remedy, then it makes no sense to interpret the other provisions ofArticle VI and the Anti-Dumping Agreement as mandating compliance with their procedures and
investigation requirement.
3.278  According to the United States, the European Communities' argument also is defective on a
more basic level.  It looks at provisions which themselves are silent as to whether they apply only to
measures set forth in the Anti-Dumping Agreement or, alternatively, apply to all measurescounteracting dumping, even those not set forth in  the Anti-Dumping Agreement.   Then, without
explaining why, the European Communities arbitrarily chooses to read this silence as nevertheless
supporting the alternative that supports its claims in the present case.  When a WTO agreement is
truly silent on a particular matter, however, there is no basis for a panel to find a violation.  A panel
must terminate its analysis and find no violation.
208
3.279  The European Communities  replies that it finds this argument unconvincing since the
provisions are also silent as to whether they appl y to the steel industry or not but no-one would think
– or at least the European Communities would not think of – arguing that there is therefore "no basis
for a panel to find a violation" when they are so applied.  An obligation which is not restricted in its
scope applies generally.  In this case the obligation to comply with the procedural requirements of
Article VI of the GATT 1994 and the Anti-Dumping Agreement apply to all anti-dumping action and
not just to duties.
3.280  The United States  argues that, in any event, the Panel need not even reach these questions if
it concludes, as it should, that the European Communities has failed to show that the 1916 Act is an
anti-dumping statute governed by Article VI  of the GATT 1994 and the Anti-Dumping Agreement.
G. VIOLATION OF ARTICLE III:4 OF THE GATT 1994
1. Introduction
3.281  The European Communities  argues that if the Panel considers that the 1916 Act is fully
within the scope of Article VI of the GATT 1994 and th erefore subject to its disciplines, then there is
no need to consider the EC claim under Article III:4 of the GATT 1994.  If the Panel considers,
however, that all or any portion of the 1916 Act is consistent with Article VI of the GATT 1994 and
the Anti-Dumping Agreement, then it should consider the European Communities' claim under
Article III:4 of the GATT 1994 with respect to that portion of the 1916 Act found to be consistent
with Article VI of the GATT 1994 and the Anti-Dumping Agreement.
3.282  The European Communities is of the view that the 1916 Act infringes Article III:4 of the
GATT 1994209 since it accords to products of contracting parties imported into the United States
treatment less favourable that that accorded to like products of US origin.
                                                     
208 The United States refers to the Panel Report on United States - Imposition of Countervailing Duties
on Imports of Fresh and Chilled Atlantic Salmon from Norway , unadopted, dated 4 December 1992, SCM/153,
paras. 243-46 and 247-49; Panel Report on New Zealand - Imports of Electrical Transformers from Finland ,
adopted on 18 July 1985, BISD 32/S55, paras. 4.2-4.3.
209 Article III:4 of the GATT 1994 provides as follows:WT/DS136/R
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3.283  The United States  considers that a review of the historical applications of the 1916 Act and
the Robinson-Patman Act conclusively demonstrates that the 1916 Act raises no national treatment
concerns under Article III:4 of the GATT 1994.  In addition, even if the 1916 Act and the Robinson-
Patman Act are compared using an element-by-element approach, no national treatment concerns
arise.
2. The 1916 Act as a Law Affecting the Internal Sale of Imported Products and the
Robinson-Patman Act as Comparable Legislation
3.284  For the European Communities , the 1916 Act is a law and it also affects the internal sale of
products because it prohibits, inter alia , the sale or offering for sale of products below a certain price.
The fact that a product cannot be sold at a freely established price affects, indeed may inhibit, its sale.The fact that the measure applies to importers does not prevent the applicability of Article III:4.  The
US measure before the panel on United States – Section 337 Tariff Act 1930
210  also applied to
importers by imposing penalties on them but was still held to affect imported products.211
Furthermore, the circumstances under which a product is imported cannot prevent a product from
being "like" comparable domestic products.  Indeed, the very fact that the 1916 Act appliesexclusively to imported products already establishes a prima facie breach of Article III of the GATT
1994 since domestic products are not subject to the requirements of the 1916 Act.
3.285  The European Communities further notes that the 1916 Act is a price discrimination law
addressed to the specific case of differences between the price on the US market of goods imported
into the United States and the price of the same goods on the domestic market of the exporter or on
third country markets.  The comparable legislation applying to price discrimination on the US market
in respect of US domestic products is the Robinson-Patman Act.
212 The Robinson-Patman Act
provides as follows:
"It shall be unlawful for any person engaged in commerce, in the course of such
commerce, either directly or indirectly to discriminate in price between different
purchasers of commodities of like grade and quality, […] and where the effect of
such discrimination may be to substantially lessen competition or tend to create amonopoly in any line of commerce, or to injure, destroy, or prevent competition with
any person who either grants or knowingly receives the benefit of such discrimination
or with customers of either of them."
213
3.286  The United States  takes issue with the European Communities' assertion that a prima facie
breach is established by the fact that the 1916 Act applies exclusively to imported products.
                                                                                                                                                                    
"The products of the territory of any contracting party imported into the territory of any other
contracting party shall be accord ed treatment no less favourab le than that accorded to like
products of national origin in respect of all laws, regulations and requirements affecting their
internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of
this paragraph shall not prevent the application of differential internal transportation chargeswhich are based exclusively on the economic operation of the means of transport and not onthe nationality of the product."
210 Panel Report on United States – Section 337 of the Tariff Act of 1930 , adopted on 7 November 1989,
BISD 36S/345 (hereinafter " United States – Section 337 ").
211 The European Communities refers to United States – Section 337 , Op. Cit., para. 5.10.
212 The European Communities refers to Section 2 of the Clayton Act, as amended by the
Robinson-Patman Act in 1936 (15 U.S.C. § 13).  According to the European Communities, it is established thatthis statute applies only to differences in price within the US market, not to differences between prices on the
US market and prices on a foreign market.  The European Communities refers to Zenith I , Op. Cit., p. 248.
213 15 U.S.C. § 13(a).WT/DS136/R
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According to the United States, no such presumption arises.  The panel on United States - Section 337
recognized that the nature of the inquiry in an Arti cle III:4 dispute is one of substance, not form.  It
explained that:
"the mere fact that imported products are subject […] to legal provisions that are
different than those applying to products of national origin is in itself not conclusivein establishing inconsistency with Article III:4.  In such cases, it has to be assessed
whether or not such differences in the legal provisions applicable do or do not accord
to imported products less favorable treatment."
214
3.287  The United States does agree with the European Communities, however, that the comparable
statute applicable to domestic goods is Section 2 of the Clayton Act, as amended by the Robinson-
Patman Act.215
3. The "No Less Favourable Treatment" Standard
(a) General arguments
3.288  According to the European Communities , if the text of the Robinson-Patman Act is
compared with that of the 1916 Act, it can be seen that while the two texts have in common a
requirement that price discrimination be found in respect of the relevant markets, they differ asregards the other elements which must be proved in order for an infringement of the law to be present.
In the case of the 1916 Act, the additional requirements are the intent to (i) destroy a US industry, or
(ii) injure a US industry, or (iii) prevent the establishment of a US industry, or (iv) restrain trade and
commerce, or (v) monopolise trade and commerce.  By contrast, in the Robinson-Patman Act, the
additional requirements are:
"the effect of such discrimination may be to substantially lessen competition or tend
to create a monopoly in any line of commerce, or to injure, destroy, or preventcompetition with any person who either grants or knowingly receives the benefit of
such discrimination or with customers of either of them."
3.289  The European Communities further notes that among Robinson-Patman cases a distinction is
made between the probable impact of price discrimination (i) on direct competitors of the
discriminating seller (primary line injury), (ii) on the favoured and disfavoured buyers of thediscriminating seller (second-line injury) and (iii) on the customers of either of them (third-line
injury).  Primary line discrimination is the only direct domestic analogue of international price
discrimination as condemned in the 1916 Act.  The US Supreme Court has held in the Brooke Group
case that in order for the requisite effect on competition to be present, it must be shown that (i) the
defendant charged prices below an appropriate measure of cost, and (ii) it had a reasonable prospectof recouping its investment in below cost prices.
3.290  In light of the foregoing, the European Communities contends that a careful comparison of
the two laws, taking into account not only the respective texts but also the additional requirements
read into the Robinson-Patman Act as a condition for finding primary line violations, demonstrates
that it is substantially more difficult to prove a violation of the Robinson-Patman Act than it is toprove a violation of the 1916 Act.  As a consequenc e, the 1916 Act allows the application of measures
to imported products under less favourable conditions than those applicable to domestic products, thus
resulting in less favourable treatment of imported products in violation of Article III:4 of the GATT
1994.
                                                     
214 United States - Section 337 , Op. Cit., para.5.11.
215 The United States refers to Zenith III , Op. Cit., pp. 1213-1214.WT/DS136/R
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3.291  The European Communities points out, finally, that, in the Zenith III  case, the District Court
merely held that the 1916 Act should "whenever possible" be interpreted to parallel the Robinson-
Patman Act  […].  The term "whenever possible" suggests that it should not necessarily always be the
case, as was confirmed in the Helmac I  case.
3.292  The United States  is of the view that any analysis of the compatibility of the 1916 Act with
the national treatment provisions of Article III:4 of the GATT 1994 should begin and end with one
fundamental point.  The 1916 Act has rarely been invoked.  More importantly, the 1916 Act
establishes a standard for relief which has never been met in the case of importers and imported
goods.  The Robinson-Patman Act, in contrast, has been successfully invoked in a vast number of
civil cases.216  From this perspective, the 1916 Act can be seen to treat importers and imported goods
more  favourably than the Robinson-Patman Act treats US sellers and their goods.
3.293  In this connection, the United States recalls that, since the 1993 Brooke Group  decision, there
have been more than forty reported court of appeals and district court opinions in more than forty
different cases that have addressed allegations that the price discrimination provisions of the
Robinson-Patman Act have been violated, including cases leading to more than ten court of appealsand district court decisions in 1998 alone.
217  By comparison, only two district court determinations -
at very early stages in their respective proceedings - have during that same period addressed
allegations that the 1916 Act has been violated.  This vast disparity alone establishes that the price
discrimination proscriptions of the Robinson-Patman Act create far more danger of liability for
domestic firms than the 1916 Act creates for importers, and therefore treat domestic firms far less
favorably than the 1916 Act treats importers.  Moreover, while liability for an importer under the
1916 Act can arise only from injury to the firms with which it competes, domestic firm liability underthe Robinson-Patman Act can arise both from that type of injury and from injury to one or more
downstream purchasers.  As a consequence, cases involving secondary line liability, in addition to
those involving primary line liability, are also relevant to any comparison to the 1916 Act.
3.294  The United States further notes that the conclusion that the Robinson-Patman Act treats
domestic firms less favorably than the 1916 Act treats importers is strengthened by the number ofprimary line price discrimination cases since Brooke Group .  In particular, since the Brooke Group
decision, four court of appeals decisions, arising from three cases addressing allegations of primary
line price discrimination, have been issued.
218  To the extent that the success of a particular case can
                                                     
216 The United States notes that only in a very small number of cases has the US Department of Justice
invoked the criminal provisions of the Robinson-Patman Act over the years, or obtained convictions.  The
United States refers to ABA Antitrust Law Developments, 4th ed. (1997), a US antirust reference work, which
notes, at page 490: "Section 3 [the criminal law provision of the Robinson-Patman Act] has rarely beenenforced, and no prosecutions have been brought under that section since the 1960s."
217 The United States refers to, e.g., Godfrey v. Pulitzer Publishing Co ., 161 F.3d 1137 (8th Cir. 1998);
George Haug Co. v. Rolls Royce Motor Cars, Inc ., 148 F.3d 136 (2d Cir. 1998); Kentmaster Manufacturing Co.
v. Jarvis Products Corp ., 146 F.3d 691 (9th Cir. 1998), amended, No. 96-56341, 1999 WL 19636 (9th Cir. Jan.
20, 1999); Metro Ford Truck Sales, Inc. v. Ford Motor Co ., 145 F.3d 320 (5th Cir. 1998); Sally Bridges v.
MacLean-Stevens Studios, Inc ., 35 F.Supp. 2d 20, 28 (D. Me. 1998); Malek Wholesaler, Inc. v. First Film
Extruding, Ltd ., 1998 U.S.Dist. LEXIS 3674 (N.D. Ill. Mar. 20, 1998); City of New York v. Coastal Oil New
York, Inc. , 1998-1 Trade Cas. (CCH) ¶ 72,087 (S.D.N.Y. 1998); Liberty Lincoln-Mercury v. Ford Motor Co. ,
134 F.3d 557 (3d Cir. 1998); Hoover Color Corp. v. Bayer Corp ., 24 F. Supp. 2d 571 (W.D. Va. 1998); Bell v.
Fur Breeders Agricultural Cooperative , 3 F. Supp. 2d 1241 (D. Utah 1998); Precision Printing Co. v.
Unisource Worldwide, Inc ., 993 F. Supp. 338 (W.D. Pa. 1998); Rebel Oil Co., Inc. v. Atlantic Richfield Co ., 957
F.Supp. 1184, 1192 (D. Nev. 1997), affirmed, 146 F.3d 1088 (9th Cir.), cert. denied, 119 S. Ct. 541 (1998).
218 The United States refers to Kentmaster Manufacturing Co. v. Jarvis Products Corp ., 146 F.3d 691,
694-95 (9th Cir. 1998), amended, No. 96-56341, 1999 WL 19636 (9th Cir. Jan. 20, 1999);  Coastal Fuels of
Puerto Rico, Inc. v. Caribbean Petroleum Corp. , 79 F.3d 182, 188 (1st Cir. 1996); Rebel Oil Co. v. AtlanticWT/DS136/R
Page 75
be measured by the level of the federal court system to which it rises, all of these lawsuits alleging
primary line discrimination were more successful than either of the two 1916 Act lawsuits.  Moreover,
fourteen district court decisions addressing primary line discrimination - in addition to those which
led to some of the above court of appeals decisions -  have been issued.219  These figures suggest that
allegations of primary line discrimination under the Robinson-Patman Act - even without consideringallegations of secondary line discrimination - have continued to pose far more of a threat of liability to
domestic firms than the 1916 Act poses to foreign firms.
3.295  The United States contends, moreover, that, even if provisions of the 1916 Act and the
Robinson-Patman Act are compared in detail, no national treatment concerns arise.  This is because
the 1916 Act is intended to prevent unfair competition by extending the prohibitions of unfaircompetition in domestic commerce embodied in Sect ion 2 of the Clayton Act of 1914 to importers.
220
Consistent with that construction, the prevailing interpretation among the courts that have considered
the 1916 Act is either an explicit or implicit endor sement of the following principles enunciated by
the District Court in Zenith III :
"The principal lesson which we draw from the legislative history of the 1916 Act,
viewed against the historical background of the first Wilson administration, is that the
statute should be interpreted whenever possible to parallel the "unfair competition"
law applicable to domestic commerce.  Since the 1916 Antidumping Act is a price
discrimination law, it should be read in tandem with the domestic price discrimination
law, section 2 of the Clayton Act, whic h was amended by the Robinson-Patman Act
in 1936."221
3.296  As regards the District Court's use of the term "whenever possible", the United States notes
that it cannot speculate why the Court employed the term.  A court decides one case at a time, and
does not act as though it were a legislature.  The important point is that the District Court recognized
the similarity of the language with other antitrus t statutes and held that the issue in question, the
                                                                                                                                                                    
Richfield Co ., 146 F.3d 1088, 1091 (9th Cir. 1998), cert. denied, 119 S.Ct. 541 (1998),  and 51 F.3d 1421, 1429
(9th Cir. 1995).
219 The United States refers to J&S Oil, Inc. v. Irving Oil Corp ., 1999-2 Trade Cas. (CCH) ¶ 72,615
(D.Me. August 4, 1999), at 85551-54; Wynn ex rel. Alabama v. Philip Morris Inc ., 51 F.Supp. 2d 1232, 1247
(N.D. Ala. 1999); Malek Wholesaler, Inc. v. First Film Extruding, Ltd ., 1998 U.S. Dist. LEXIS 3674 (N.D. Ill.
March 24, 1998); Taylor Publishing Company v. Jostens, Inc ., 36 F.Supp. 2d 360, 372-73 (E.D. Tex. 1999);
Sally Bridges v. MacL ean-Stevens Studios, Inc ., 35 F.Supp. 2d 20, 27-28 (D. Me. 1998); City of New York v.
Coastal Oil New York, Inc ., 1998-1 Trade Cas. (CCH) ¶ 72,087 (S.D.N.Y. 1998); Stearns Airport Equip. Co. v.
FMC Corp. , 977 F.Supp. 1269, 1273 (N.D. Tex. 1997); Cardinal Indus. v. Pressman Toy Corp ., 1997-1 Trade
Cas. (CCH) ¶ 71,738 (S.D.N.Y. Dec. 17, 1996); The Zeller Corp. v. Federal-Mogul Corp. , 1997-1 Trade Cas.
(CCH) ¶ 71,805 (N.D. Ohio June 25, 1996); Anti-Monopoly, Inc. v. Hasbro, Inc ., 958 F.Supp. 895, 906
(S.D.N.Y. 1997), and 1995-2 Trade Cas. ¶ 71,095 (S.D.N.Y. 1995), at 75,241; Clark v. Flow Measurement, Inc .,
948 F.Supp. 519, 522-29 (D. S.C. 1996); C.B. Trucking, Inc. v. Waste Management, Inc. and WMX , 944
F.Supp. 66, 68-69 (D. Mass. 1996); En Vogue v. UK Optical, Ltd. and British Optical Import Company , 843
F.Supp. 838, 845-47 (E.D.N.Y. 1994); Lago & Sons Dairy, Inc. v. H.P. Hood, Inc ., 1994 U.S. Dist. LEXIS
12909 (D. N.H. 1994).
220 The United States notes that the US Department of Justice, in a letter from Samuel J. Graham,
Assistant Attorney General, dated 30 June 1916, published in N.Y. Times on 4 July 1916 at page 10, stated that
the "purpose" of the 1916 Act should be to prevent unfair competition.  Just as we have said  to our own peopleby the Clayton Act that they should not indulge in unfair competition, so we propose to say the same to theforeigner."
221 Zenith III , Op. Cit., p. 1223.  The United States also refers to page 1214 of the same decision where
it is stated that "[a]s a price discrimination statute, the Antidumping Act of 1916 is functionally similar to the
price discrimination statutes which are applicable to domestic business."WT/DS136/R
Page 76
standard for comparability of products, should be based upon antitrust principles.  It should be noted
that the District Court in Zenith III  also stated the following:
"[The 1916 Act] was intended to complement the antitrust laws by imposing on
importers substantially the same legal strictures relating to price discrimination as
those which had already been imposed on domestic businesses by the ClaytonAntitrust Act of 1914.
222
[. . .]
[I]n order to be faithful to the intention of Congress to subject importers to "the same
unfair competition law" [that is applicable to domestic commerce], we should not
interpret the 1916 Act to impose on importers legal strictures which are more rigorousthan those applied to domestic enterprises."
223
3.297  According to the United States, consistent with these pronouncements, a comparison of the
provisions of the 1916 Act with those of the Robinson-Patman Act makes it clear that the 1916 Act
actually provides more  favourable treatment than the Robinson-Patman Act in many ways and, in any
event, does not in any instance provide less favourable treatment.
(b) The relevance of trade effects
3.298  The European Communities  asserts that the approach taken by the United States in respect
of the European Communities' claim under Article III:4 of the GATT 1994 is fundamentally flawed.
In effect, it seeks to apply a test which focuses on which law - the one applying to imports or the one
applying to domestic products - is more often invoked successfully and what are the relative degrees
of difficulty of successfully asserting a claim under the respective laws.  However, as established in a
long series of panel reports and confirmed by the Appellate Body, Article III of the GATT 1994protects competitive opportunities and not trade flows.
224  Hence, in order to establish a violation of
Article III:4 it is not necessary to show that the measure challenged has had any actual effects.  The
mere possibility that a measure may result in some circumstances in less favourable treatment being
afforded to imported products is already sufficient to establish a violation of Article III:4. Thus, in the
EEC - Animal Feed Proteins  case .
"[…] the Panel examined whether a purchase regulation which does not necessarily
discriminate against imported products but is capable of doing so is consistent with
Article III:4.  The Panel noted that the exposure of a particular imported product to a
risk of discrimination constitutes, by itself, a form of discrimination.  The Panel
therefore concluded that purchase regulations creating such a risk must be consideredto be according less favourable treatment within the meaning of Article III:4."
225
3.299  In the view of the European Communities, whether the conditions for applying the 1916 Act
make it more or less difficult to apply is completely irrelevant for the purposes of establishing a claim
under Article III:4.
                                                     
222 Zenith III , Op. Cit., p. 1196-1197.
223 Ibid., p. 1223.
224 The European Communities refers to, e.g., the Appellate Body Report on Japan - Taxes on
Alcoholic Beverages , adopted on 1 November 1996, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, p. 16
and the panel reports cited therein.
225 Panel Report on EEC - Payments and Subsidies Paid to Processors and Producers of Oilseeds and
Related Animal-Feed Proteins , adopted on 25 January 1990, BISD 37S/86, para 141.WT/DS136/R
Page 77
3.300  The United States  replies that it does not argue that the European Communities' claim under
Article III:4 should be dismissed because the 1916 Ac t has not had any trade effects.  Although there
may be some merit to that argument, the United States has chosen not to make it.
(c) The relevance of the absence of successful invocations of the 1916 Act
3.301  The European Communities  rejects the US contention that the 1916 Act treats importers of
foreign goods more favourably than the Robinson-Patman Act treats sellers of US goods because the
latter has been successfully invoked much more often than the former.  The European Communities
refers the Panel to the panel report on United States - Standards for Reformulated and Conventional
Gasoline226 where the panel rejected the argument that the US measures involved in that case could be
justified because imported gasoline was treated "on the whole" no less favourably than domesticgasoline.  The United States did not appeal this el ement of the panel report.  The panel in the gasoline
standards case rejected the "on the whole" reasoning because it would mean that less favourable
treatment in one instance could be offset by more favourable treatment in another instance and noted
that such an approach had also been rejected by the GATT 1947.
227  It is therefore clear that under
Article III:4 an analysis has to be carried out at the level of an individual product, not at the level ofthe application of the law to all possible products.   Any individual product must be treated no less
favourably than a like domestic product, and this in all cases.
3.302  The United States  responds that the European Communities fails to understand the US
position.  The United States does not argue that the 1916 Act on the whole treats imported goods more
favourably than domestic goods and only in a few instances treats imported goods less favourably
than domestic goods.   The argument made by the United States is unqualified, just as is Article III:4.
It is a fact that the 1916 Act establishes a standard for relief that is virtually impossible to satisfy andthat has never been met in the case of importers and imported goods.  The intent requirement of the
1916 Act is an overarching factor that is present in every instance, not just "on the whole" and exerts
offsetting influence to any other perceived disadvantage.  The Robinson-Patman Act, in contrast, has
been successfully invoked on innumerable occasions to obtain relief involving US sellers and their
goods.
3.303  The United States does not suggest that the Panel base its finding regarding the European
Communities' Article III:4 claim entirely upon the fact that the 1916 Act has never been successfully
invoked.  But this fact is relevant to the Panel's determination of whether the alleged differences
between the 1916 Act and the Robinson-Patman Act afford less favourable treatment.  The difference
in terms of the successful invocation of the respective Acts shows that the 1916 Act requirements,taken together, are  less rigorous for every  importer, than the requirements under the Robinson-Patman
Act.  As a result, the 1916 Act treats importers and imported goods more favourably than the
Robinson-Patman Act treats US sellers and their goods.
3.304  The European Communities  considers that the fact that the 1916 Act has not often been
invoked is due to a number of factors which do nothing to demonstrate that it provides morefavourable treatment to imports than the Robinson-Patman  Act does to domestic goods.  The
following factors explain why the 1916 Act has not been invoked so often:
(a) proceedings tend to be complex and time-consuming, and thus very expensive to the
defendants;
                                                     
226 Panel Report on United States – Standards for Reformulated and Conventional Gasoline , adopted
on 20 May 1996, WT/DS2/R (hereinafter "Panel Report on United States – Gasoline ").
227 The European Communities refers to the Panel Report on United States – Gasoline , Op. Cit.,
para. 6.14, which refers to United States - Section 337 , Op. Cit., para. 5.14.WT/DS136/R
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(b) plaintiffs have an alternative remedy in normal (Article VI-compliant) anti-dumping
action. This may often be more convenient and explains why there have not been
many 1916 Act cases.  The true comparison should therefore arguably be between all
dumping price discrimination cases a nd domestic Robinson-Patman Act cases;
(c) in the Wheeling-Pittsburgh  case a settlement was reached among the parties, which
means that the complainant did find relief.  The terms of the settlement were not
made public, but it is known that the companies have agreed to certain import
restrictions and pledged to purchase a certain amount of Wheeling-Pittsburgh steel.
3.305  The United States  reiterates its view that the substantive reason for the complete absence of
successful recoveries under the 1916 Act is found in the requirement that the complaining party showa specific , predatory intent on behalf of the defendant importer.   This requirement has been described
by the courts, in the particular context of the 1916 Act, as virtually impossible to satisfy.  Even the
interlocutory decision in Geneva Steel , which virtually forms the basis for the European Communities'
whole position in the present case, acknowledged that
"[…] the burden of proving such improper intent may not be easy.  Absent some
compelling evidence, it may be nearly impossible ."
228
3.306  Notwithstanding this US contention, the European Communities  asserts, however, that the
1916 Act is still regarded as an efficient means of action.  Recently, for example, a San Francisco law
firm has been encouraging (potential) clients to resort to the 1916 Act against illegal exports, which
shows that the 1916 Act is still regarded as an efficient means of action.  The letter states in relevant
part:
"We believe that a legal action on behalf of the numerous steel companies who have
been injured as a result of illegal steel dumping by companies from Japan, Brazil,
South Korea, Russia and other countries is a viable and appropriate means to recover
losses that have been incurred. The claims would be based on the 1916 Antidumping
Act [...] which creates a private cause of action for dumping [...].  Our proposed
action is similar to, but different in important respects, from actions already broughtby Wheeling-Pittsburgh and Geneva Steel.  These plaintiffs did not utilize the
leverage that multiple plaintiffs can have in obtaining a significant recovery."
According to the European Communities, the letter  also shows the growing effectiveness of the
harassment value of the 1916 Act.
3.307  The United States maintains its view that one element of a 1916 Act claim - the requirement
of a specific, predatory intent - renders the 1916 Act more favourable to importers and imported
goods than is the Robinson-Patman Act to US sellers and their goods in every instance.  The courts
have interpreted this requirement as virtually impossible to satisfy, and the historical applications of
the 1916 Act support this view, as there has never been a successful case brought under the 1916 Act.
When this factor is taken into account to the extent  that it might be capable of exerting an offsetting
influence in each individual case, the only reasonable conclusion is that the 1916 Act treats importers
and imported goods more favourably than the Robinson-Patman Act treats US sellers and their goods.
3.308  The United States submits, moreover, that this approach was followed by the panel in United
States - Section 337 .  There, the panel explained that "an element of more favourable treatment would
only be relevant if it would always accompany and offset an element of differential treatment causing
                                                     
228 Geneva Steel , Op. Cit., p. 1224 (emphasis added by the United States).WT/DS136/R
Page 79
less favourable treatment."229 The panel found that some of the procedural advantages given to foreign
respondents under Section 337 operate in all cases, and therefore it "took these factors into account to
the extent that they might be capable of exerting an offsetting influence in each individual case of less
favourable treatment resulting from an element cited by the Community."230
3.309  The United States thus concludes that it would be entirely appropriate for the Panel to begin
and end its analysis of the European Communities' Article III:4 claim based upon the fact that the
intent requirement is virtually impossible to satisfy.
(d) Element-by-element comparison of the 1916 Act and the the Robinson-Patman Act
3.310  The European Communities  asserts that there are four principal differences between the
1916 Act and the Robinson-Patman Act that result in unfavourable treatment being afforded toimported products in violation of Article III:4  of the GATT 1994.  These concern (i) the intent
requirements under each Act, (ii) the measurement of price discrimination, (iii) the sufficiency of
offers for sale for supporting claims under each Act, and (iv) the available defences under each Act.
3.311  The United States  reiterates its view that the intent requirement of the 1916 Act is virtually
impossible to satisfy.  It is therefore unnecessary or at least inconsequential for the Panel to considerhow one element of the 1916 Act might compare to a corresponding element of the Robinson-Patman
Act.  Even if the Panel were to find a particular element of the 1916 Act to be more rigorous than a
corresponding element of the Robinson-Patman Act,  that finding could not transform the 1916 Act
into a more rigorous statute than the Robinson-Patman Act, given that, when all of the requirements
of the 1916 Act are viewed together, they are not more rigorous than the Robinson-Patman Act
requirements in light of the 1916 Act's intent standard.
3.312  The United States further notes that, in any event, a careful comparison of each of these
differences confirms what is manifest from a review of the actual application of the Acts.  That is, the
1916 Act actually affords more  favourable treatment to imported goods than the Robinson-Patman
Act does regarding domestic goods.
(i) The injury/predation standards
3.313  The European Communities  notes that, under the Robinson-Patman Act, the pleading and
proof requirements that a primary line complainan t must meet in order to demonstrate that it is
suffering from a predatory pricing policy are now we ll established since the US Supreme Court issued
its decision in the Brooke Group  case.  Two conditions must be fulfilled in order to successfully
demonstrate predatory pricing: (i) the defendant is charging prices below an appropriate measure of
cost, namely, average variable costs
231 and (ii) that it has a reasonable prospect to recoup its
investment in below cost prices.  In its Brooke Group  ruling, the Supreme Court defines in detail the
conditions that must be met for such a recoupment to occur :
(i) Below cost pricing must be capable of driving the firm's rivals out of the market or
causing them to raise their prices to su pra-competitive levels within a disciplined
oligopoly;
                                                     
229 United States - Section 337, Op. Cit., para. 5.16.
230 Ibid ., para. 5.17.
231 The European Communities refers to, e.g., McGahee v. Northern Propane Gas Co ., 858 F.2d 1487,
1504 (11th Cir. 1988); cert. denied, 490 U.S. 1084 (1989); Northeastern Tel. Co. v. AT&T , 651 F.2d 76, 87-88
(2d Cir. 1981), cert. denied, 455 U.S. 943 (1982); Chillicothe Sand & Gravel Co. v. Martin Marietta Corp ., 615
F.2d 427, 432 (7th Cir. 1980); Janich Bros. v. American Distilling Co ., 570 F.2d 848, 858 (9th Cir. 1977), cert.
denied, 439 U.S. 829 (1978).WT/DS136/R
Page 80
(ii) there must be a likelihood that the predatory scheme will cause a rise in prices above
a competitive level that would be sufficient to compensate for the amounts expended
on the predatory action.
3.314  The European Communities points out, in this regard, that determining whether recoupment
of predatory losses is likely requires an estimate of the cost of the alleged predation and a closeanalysis of both the scheme alleged by the plaintif f and the structure and conditions of the relevant
market.  This represents a burden of proof which it is very difficult to sustain as the Supreme Court
itself has recognised.
232  In its Brooke Group  judgment, the Court held that "predatory pricing
schemes are rarely tried and even more rarely successful" and "the costs of erroneous liability are
high"233.
3.315  The European Communities further recalls that the anti-competitive intents and effects which
must be proved in order to establish a primary line Robinson-Patman Act infringement are not
required by the 1916 Act.  Under the 1916 Act, discriminatory pricing must rather be conducted with
the intent of injuring, destroying or preventing the establishment of a US industry.  In the Wheeling-
Pittsburgh case, the Ohio District Court in its Opinion and Order of 22 January 1999234 found that the
complaining party had the duty to demonstrate that the defendants sold their products with the intent
to injure or destroy the domestic hot-rolled steel industry but that the additional "predatory pricing"
tests as set forth in Brooke Group  were not applicable to the case before it, since such proof was not
required in dumping cases.
3.316  The European Communities submits that the practical result of the difference between the
"predatory pricing" test under the Robinson-Patman Act and the "intent to injure" test under the 1916
Act is that the same conduct by two firms, one selling imported products and the other sellingdomestic products, could be deemed to infringe the 1916 Act in the case of the imported products, and
not to infringe the Robinson-Patman Act in the case of the domestic products.  This was recognized
by the US Court in the Helmac I  case.
235
3.317  The European Communities concedes that if it were to be definitively established by a
judgment of the US Supreme Court that Brooke Group  predation is required for a violation of the
1916 Act, all possibility of discrimination in the sense of Article III:4 of the GATT 1994 would be
eliminated in respect of the injury/predation el ements.  But the European Communities denies that
there is a reasonable prospect of this occurring.  Such a holding would go against the clear language
of the 1916 Act.
3.318  In this regard, the European Communities states that, while some courts have made general
holdings that the 1916 Act is an antitrust, not a trade statute, others, in the more recent past, have held
that it is both.  On the assumption that a case raising the issue reached it, the US Supreme Court
remains free to interpret the 1916 Act according to its own convictions.  In its opinion of 22 January
1999, issued within the context of the Wheeling-Pittsburgh  case, the Ohio District Court notes that
there is no requirement in the US constitution that Congress should impose the same standards ofconduct on the importers of goods as it does on domestic producers of goods.  If the hypothetical
approach of the United States to developments in  its Supreme Court case law were followed, it could
                                                     
232 The European Communities refers to Matsushita Electric , Op. Cit.
233 The European Communities recalls that the primary line provisions of Section 2(a) of the Robinson-
Patman Act which make price discrimination unlawful "where the effect of such discrimination may be tosubstantially less competition or tend to create a monopoly in any line of commerce or to injure, destroy orprevent competition with any" competing seller of the goods in question, has been interpreted as "reallyreferring to the effect upon competition and not merely upon competitors".
234 The European Communities refers to Wheeling-Pittsburgh , Op. Cit., p. 603.
235 The European Communities refers to Helmac I , Op. Cit., p. 575 et seq..WT/DS136/R
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be said, inferring from actual 1916 Act case law, that there is at least a reasonable prospect that the
Supreme Court will take the same view.
3.319  The European Communities concludes that, in these circumstances, the Panel can only take
the 1916 Act to mean what its plain language says and what the courts which have considered it to
date have taken it to mean.  Since a number of them clearly consider that the 1916 Act is at least inpart a trade law not incorporating antitrust predation requirements, and since plaintiffs are clearly
continuing to pursue litigation on this assump tion, discrimination under Article III:4 of the GATT
1994 is present.
3.320  The United States  points out that the 1916 Act requires a complainant to show that the
defendant possessed a specified intent, i.e. an intent  to injure, destroy or prevent the establishment of
a US industry or to restrain or monopolise trade.  The prevailing judicial interpretation of the 1916
Act is that the intent requirement is a predatory intent requirement.  Under the Robinson-Patman Act,
the comparable element is the requirement that th e complainant show "anti-competitive effect" which
is commonly called "predatory pricing."  This is demonstrated through proving an appropriate
measure of below cost pricing and the possibility of recouping the predatory losses.
236
3.321  The United States notes that the question thus becomes whether this supposed difference
between the laws constitutes unfavourable treatment for imported goods.  The European Communities
concedes that a requirement of predatory intent under the 1916 Act like that required under the
Robinson-Patman Act would eliminate all Article III:4 concerns with regard to the 1916 Act.  In fact,
the current state of US case law holds that evidence of the requisite intent under the 1916 Act is
essentially the same predatory intent contemplated by the Robinson-Patman Act.  As a factual matter,
it is the US case law interpreting the 1916 Act that is  dispositive in determining the nature of the 1916
Act.  Thus, based upon the European Communities' statement and the prevailing judicial
interpretation of the intent requirement, the Panel should find that the 1916 Act is fully consistent with
Article III:4 as it accords the exact same treatment to foreign goods as the Robinson-Patman accords
like domestic goods.
3.322  According to the European Communities , the United States has not demonstrated that the
requisite intent under the 1916 Act is essentially the same predatory intent contemplated by the
Robinson-Patman Act.  It uses the terms "predation" and "predatory intent" very loosely, without
recognizing the difference between (i) the narrow an d antitrust specific meaning now applied also to
primary line infringements of the Robinson-Patman Act as a result of the Brooke Group  decision of
the Supreme Court, which requires, as a condition to  establishing predation, a showing of sales below
an appropriate measure of cost and a reasonable prospect of recoupment of the losses from selling
below cost and (ii) the broader every-day meaning of "predatory" which does indeed correspond to
"intent to injure or destroy".
3.323  In response, the United States  notes that it is not familiar with the "broader every-day
meaning" of the term "predatory" and the European Communities has neglected to provide a sourcefor this definition.  In any event, whether the term is considered an "everyday" term or otherwise, the
European Communities cannot dispute that the term "predatory" is an antitrust term.
3.324  The European Communities , however, maintains its view that when the 1916 Act refers to
"intent to injure or destroy [...] US industry", it means "injure or destroy" in the broad every-day sense
of these terms, and not predation in the technical antitrust sense of Brooke Group.   This conclusion
has been reached - after the Brooke Group decision - by the two District Courts in Geneva Steel  and
Wheeling-Pittsburgh.  These cases are important because they are the only cases among those cited by
the United States or of which the European Communities is aware in which courts were specifically
                                                     
236 The United States refers to Brooke Group , Op. Cit., pp. 222-23.WT/DS136/R
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called on to decide whether an action under the 1916 Act and based on specific intent to injure or
destroy a US industry must plead and prove predati on in the technical antitrust sense as opposed to the
ordinary sense.  The Court in Geneva Steel  said the following:
"Zenith Radio [referring to the opinions dealing with the comparability tests] did not
reach the precise issue present in the instant case.  However, to the extent ZenithRadio can be read to compel a finding th at the 1916 Act has no protectionist aspects,
as distinct from antitrust aspects, this court respectfully disagrees.  Such a holding
could only be reached by the judicial branch rewriting the statute, and thereby
inappropriately invading the terrain of the legislative branch."
237
3.325  The European Communities further recalls that the Court in Wheeling-Pittsburgh  faced
exactly the same issue and gave a similar response:
"The Court finds that, under [the 1916 Act] […] Wheeling-Pitt must show that the
defendants sold their product at a price level prohibited by the statute with the intent
to injure or destroy the domestic hot-rolled steel industry.  The additional proof of
'predatory pricing' as the term is used in Brooke Group is not applicable to this case.[…] Under the domestic antitrust statutes, 'predatory pricing', after Brooke Group,
means below-cost pricing established with the reasonable expectation that, through
later acquired market share, recovery of th e cost incurred by the earlier lower prices
will occur.  Under the Anti-dumping Act of 1916 […] 'predatory pricing' means
something different.  The artificially low pri ces must be set with the goal of injuring,
destroying, or preventing the establishment of an American industry.  It is certainly
within the purview of Congress to distin guish harm caused by domestic competitors
from those caused by international ones.  For example, dumping itself has long been
noted to constitute a harmful international trade practice which may, through
government, as opposed to market-driven action, cause sharp increases in imported
goods, to the detriment of domestic producers."
238
3.326  In the view of the European Communities, regardless of whether these two decisions are
"final" or "conclusive", they are the most recent pronouncements of US courts on the 1916 Act.  They
appear to be the only judicial pronouncements, recent or otherwise, which deal specifically and
narrowly with the question whether antitrust standa rds relating to predation apply to what must be
pleaded and proved in 1916 Act claims based on an allegation of "intent to injure or destroy a US
industry".  While it is true that neither opinion was "final" in the sense of "appealable", they are bothwell reasoned opinions to which weight would be attributed by other courts confronted with the same
issue - an issue which was not confronted by the cases on which the United States relies.
3.327  With respect to the suggestion of the United States that district court opinions, interlocutory
or otherwise, do not have weight, the European Comm unities considers that it is sufficient to read the
various opinions involved.  All of the case law cited, except for two opinions of the Third CircuitCourt of Appeals, consists of opinions of district courts.  These opinions refer to and cite opinions of
district courts, whether interlocutory or final, as well as the opinions of the circuit courts of appeals.
The reasoning is very nuanced, paying particular attention to the precise issue dealt with in each case,
but also showing a willingness, as  illustrated by the opinions in Geneva Steel  and Wheeling-
Pittsburgh , to examine the logic applied by a circuit court of appeals other than the one having
jurisdiction over the district court in question, and to disagree with it.   This is consistent with the
common law system as applied by US federal courts .  In that system, opinions of circuit courts of
appeals are binding on district courts located in the circuit in question which deal with the specific
                                                     
237 Geneva Steel , Op. Cit., p. 1219.
238 Wheeling-Pittsburgh, Op. Cit., pp. 603-04.WT/DS136/R
Page 83
question before the district court, but otherwise district courts are free to, and do, consider the issues
before them on the merits, considering all relevant authorities and arguments.
3.328  In summing up its position, the European Communities reiterates that it remains the case that,
in respect of the difference betw een intent to injure under the 1916 Act and predatory intent under the
Robinson-Patman Act, there are circumstances where facts caught by the former in respect ofimported products would not be caught by the latter in respect of domestic products.  To take a simple
example, an internal memorandum of the defendant declaring the intention to take market share from
a US competitor could, by itself, be evidence of intent to injure under the 1916 Act but would not
suffice to show predation under the Robinson-Patman Act.
3.329  In response, the United States  argues that the European Communities provides no support for
the conclusion it draws from its hypothetical example involving the internal memorandum.
According to the United States, there is credible evidence to support the opposite conclusion.  For
example, the European Communities' analysis square ly contradicts a comment by the District Court in
Geneva Steel .  In that case, the District Court observed that
"mere knowledge on the part of the importer that his sales will capture business away
from his United States competitor, standing alone, will not be sufficient to
demonstrate an intent to injure the entire United States steel industry and will
therefore be inadequate to establish a violation of the Act."
239
3.330  The United States also notes that, in 1983, the Third Circuit Court of Appeals in In re
Japanese Electronic Products II  dismissed the plaintiffs' claims against Sony, Motorola and Sears
because the plaintiffs' evidence was found to be lega lly insufficient.  That evidence included that the
defendants sold CEPs at substantially lower prices in the United States than the prices at whichcomparable CEPs were sold in Japan; that they knew that the other defendants were engaging in
similar activity; and they knew that concerted dumping could injure or destroy the CEP industry in the
United States.  The court found that even this evidence did not rise to the level of showing  a "specific
predatory intent."
3.331  The United States thus considers it, at the very least, highly questionable that the internal
memorandum example posed by the European Communities would result in liability under the 1916
Act.
3.332  In concluding, the United States recalls that the highest US court to have considered the issue
of intent requirement, the Third Circuit Court of Appeals, has held that the showing of intent required
by the 1916 Act is essentially the same as the showing of predatory intent required to establishprimary line price discrimination under the Robinson-Patman Act, as interpreted by the Supreme
Court in its Brooke Group  decision.
3.333  The United States argues, however, that even if recoupment is not the requirement, the Panel
should still conclude that the 1916 Act treats imports no less favourably than the Robinson-Patman
Act treats domestic products.  First, the European Communities does not offer an explanation orsupport for its opinion that it is more difficult to prove recoupment of losses than a specific intent to
destroy an industry.  The European Communities' opinion is also contradicted by the actual
application of the 1916 Act as well as express statements by the courts and the Tariff Commission.
Second, the case-law indicates that the specific predatory intent element is virtually impossible to
satisfy.  Thus, in no instance do importers receive less favourable treatment.
                                                     
239 Geneva Steel , Op. Cit., p. 1224.WT/DS136/R
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(ii) The measurement of price discrimination
3.334  The European Communities  notes a difference in the approach to establishment of price
discrimination under the 1916 Act and the Robinson-Patman Act.  According to the European
Communities, the 1916 Act is applicable whenever goods are imported into the United States at prices
substantially below the prices charged in the country  of production or other countries where the goods
are commonly exported. The statute reads in the relevant part:
"It shall be unlawful […] 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 ti me of exportation to the United States."240
3.335  The European Communities recalls that, by contrast, to establish a primary line infringement
under the Robinson-Patman Act, it must be shown that the defendant is charging prices below a
certain measure of its costs .  In the practice of the courts, that measure is the average variable cost of
production.  Where prices are above average variable cost of production, there is no infringement,
even if the accused company is applying different prices to different customers.
3.336  In the view of the European Communities, in many if not most cases of international price
discrimination, prices of imported products are still above average variable costs of production.241  In
such cases, importers may have to face legal proceedings under the 1916 Act for price practices above
average variable cost while domestic producers would not be at risk under the Robinson-Patman Act
for sales made at similar levels.242  The fact that sanctions can be imposed and damages awarded in
situations involving foreign goods sold at a price which bears a given relation to cost of production,
while the same price having the same relation to cost of production charged by domestic producers
cannot be challenged under the Robinson-Patman Act, amounts to less favourable treatment ofimported products prohibited under Article III:4 of the GATT 1994.
3.337  The United States  asserts that, as regards the requisite price discrimination, the 1916 Act
treats foreign products more  favourably than the Robinson-Patman Act treats domestic products,
because the 1916 Act requires a more difficult showing by the complainant in this area than does the
Robinson-Patman Act.
3.338  The United States' first supporting argument is that the 1916 Act requires proof of a far larger
number of illegal price differences - imposed in a systematic way - in order to establish liability.  In
particular, the complainant must show that the defendant "commonly and systematically" made the
sales prohibited by the 1916 Act.  By contrast, under the Robinson-Patman Act, liability can be
established on the basis of as few as two consummated sales.
243
3.339  The United States notes, as a second point, that the 1916 Act requires proof of a larger price
difference than the Robinson-Patman Act in an absolute sense.  In particular, under the 1916 Act the
complainant must establish that the articles at issue are sold within the United States at a price
"substantially less than actual market value or wholesale price of such articles […] in the principal
markets of the country of their production, or of other foreign countries to which they are commonly
                                                     
240 15 U.S.C. § 72.
241 According to the European Communities, the use of term ‘substantially’ in the 1916 Act does not
change this conclusion, since there will be many cases where the price discrimination meets the "substantial"test without the price of the imported product falling below average variable costs.
242 The European Communities notes that the Geneva Steel  and the Wheeling-Pittsburgh  proceedings
are two concrete examples.
243 The United States refers to  International Telephone & Telegraph Corp. et al. , Op. Cit., p. 417,
citing E. Kinter, A Robinson-Patman Primer, 3rd ed. (1979), p. 35.WT/DS136/R
Page 85
exported."  By contrast, the Robinson-Patman Act simply requires a showing of a "cognizable"
difference in price, which need only be greater than a de minimis  difference.  Thus, for example, a
circuit court of appeals recently held that a 2.38 percent price difference provided a basis for liability
under the Robinson-Patman Act.244  Such a small difference would hardly satisfy the requirement that
the price be "substantially less" under the 1916 Act.
3.340  The United States considers that the European Communities ignores these facts by focussing
instead on what type of price practices will result in an award of damages under the two statutes.  The
United States further considers that the European Communities' argument is contradicted by US case
law.  According to the US Supreme Court, unde r the Robinson-Patman Act, the complainant only
needs to "prove that the prices complained of ar e below an appropriate measure of the rival's cost."245
Lower courts, meanwhile, have not agreed on what the appropriate measure of a rival's costs are.
Some courts have held, for example, that the prices complained of need only be below average cost,
while other courts have held that they need to be below average variable costs.  In the 1916 Act
context, on the other hand, the one court that has squarely addressed this issue has only endorsed the
more stringent standard of average variable costs.  As that Court explained:
"It is somewhat of a stretch to suggest the [1916] Act justifies damages when [the
defendant's] prices equalled or exceeded average variable cost […].  Therefore, this
Court shall limit damages to those cases where [the defendant] set prices below
average variable cost."246
3.341  The United States considers, therefore, that, in a 1916 Act case, the plaintiff may have to
establish two elements: first, the price difference between the US market and the foreign market; and
second, the price in the US market, which must be below average variable costs.  In contrast, in aRobinson-Patman Act case, the plaintiff must only establish a certain measurement of below cost
pricing.  Thus, the 1916 Act actually affords more favourable treatment to imports than the Robinson-
Patman Act does to domestic goods.
3.342  The United States thus concludes that the European Communities' argument overlooks or
ignores the relevant case law, which confirms that on this difference as well the 1916 Act is appliedmore strictly than the Robinson-Patman Act.
3.343  In response to the US argument that there is some disagreement among US courts on what the
appropriate measure of a rival's costs is, the European Communities  recalls, first of all, how it
comes about in the US federal court system that courts reach different results on the same issue of
law.  For federal court purposes, the United States is divided into circuits, each circuit having its owncircuit court of appeals.  Appeals from decisions of district courts lie to the circuit court of appeals of
the circuit in which they are located.  District courts are bound by the positions taken by their circuit
court of appeals, which is in turn bound by positions taken by the US Supreme Court.  So long as the
Supreme Court has not spoken on a particular issue of law, it can happen that different and conflicting
positions develop among the circuit courts.
3.344  Addressing the substantive aspects of the disagreement among US courts on what is the
"appropriate measure of costs", the European Communities notes that at least two Circuits, the Second
and the Fifth, have clearly and unequivocally adopted the "average variable cost" test.  They have held
that sales below the "average variable cost" leve l are conclusively presumed to be predatory while
                                                     
244 The United States refers to Chroma Lighting v. GTE Products Corp. , 1997-1 Trade Cas (CCH)
71,836 (9th Cir. 1997) at 79,885.
245 Brooke Group  , Op. Cit., pp. 222-23.
246 Helmac II , Op. Cit., p. 583.WT/DS136/R
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sales above it are conclusively presumed not to be.247  Other Circuits have taken more nuanced
positions, which allow of the possibility that predation may be established at prices above average
variable costs but below average total costs, depending on the presence of other indicia of predatory
intent.248  However, according to the European Communities, what matters is that the test of the 1916
Act concerns differences in sales prices alone, whereas the Robinson-Patman Act after the SupremeCourt's  Brooke Group  decision requires not only differences in price but also a price below costs.
Whatever the "appropriate measure of costs" is, it is clear that there can be situations where a price in
the United States is "substantially" below the sales price applied in the domestic market but is not
below costs.  In such a situation, the 1916 Act could apply, whereas in the comparable situation
involving domestic products, the Robinson-Patman Act could not.
3.345  The European Communities is aware that a Michigan District Court in Helmac II  declined to
award damages under the 1916 Act absent a showing of prices below average variable costs.  The
Michigan District Court justified this with no other reasoning than the observation that "it is
somewhat of a stretch" to allow damages for prices above this level.  This decision was not appealed,
and the Court's unsupported reasoning would have been a good issue on appeal if there had been one.Its implausibility is accentuated by the fact that the same Court, in the same case, a few months
earlier, explicitly held that the other element of antitrust predation - reasonable prospect of
recoupment of losses from sales below cost - di d not have to be proved in claims under the 1916
Act.
249
3.346  The European Communities notes, finally, that, even if on the basis of the court decision in
Helmac II no remedy (damages) were available to a plaintiff if the price is not below costs, there
would still be a difference between the Robinson-Pa tman Act and the 1916 Act.  Under the Robinson-
Patman Act, there is no liability at all if the price is not below cost.  Under the 1916 Act, this would
not prevent liability from arising but simply lead to only nominal damages being recovered.  This is of
only limited help to an importer who has had to suffer the expense and uncertainty of lengthy
litigation in the US courts.
3.347  The United States  replies that Helmac II is the only final decision to have considered the
issue.  The District Court applied precisely the same measure of discrimination to the 1916 Act claim
as is applied in many primary line Robinson-Patman Act cases.  The European Communities has no
answer to this point other than  that it believes that the Court's reasoning is "unsupported" or
"implausible", which the United States disputes.  The European Communities' opinion, however, is
not relevant.  It is not for the parties or the Panel to agree or disagree with the judicial interpretationsof the 1916 Act.  The question of the proper interpretation of the 1916 Act is a question of fact for the
present Panel.
3.348  The United States argues that, in any event, there are a number of good reasons for the
Helmac II Court's decision to measure price discrimination in the same way under both the 1916 Act
and the Robinson-Patman Act.  In particular, comparing the price charged by a particular firm to thecost structure of that firm can help establish whether the price represents competition on the merits or
is instead intended to injure competition as part of a predatory strategy.  For example, average
                                                     
247 The European Communities refers to Northeastern Telephone Company v. AT&T , Op. Cit.;
International Air Industries v. American Excelsior Co. , 517 F.2d 714 (5th Cir. 1975).
248 The European Communities refers to, e.g., Mcgahee v. Northern Propane Gas Company , Op. Cit.;
Chillicothe Sand & Gravel Co. v. Martin Marietta Corp ., Op. Cit..
249 The European Communities refers to Helmac I , Op. Cit., p. 576 where the Court states the
following:  "Helmac alleges that Roth (plastics) attempted to injure Helmac, an industry in the United States.Such an allegation, if proven, would establish a violatio n of the Antidumping Act of 1916.  It is not necessary,
however, for Helmac to prove that Roth (plastics) had the ability to recoup the losses incurred in eliminating
Helmac from competition".WT/DS136/R
Page 87
variable cost constitutes the shut-down point, i.e. the price level below which it makes more sense to
shut down completely than to continue operating.  If a firm makes sales at prices below average
variable cost for a significant period of time, that suggests that it intends to injure competition,
because there is no pro-competitive reason for making sales at such prices.
(iii) Offering for sale vs. actual sale as threshold requirements for complaints
3.349  For the European Communities , another reason why dumping is easier to establish under the
1916 Act than under the Robinson-Patman Act is that under the former a simple offer to sell foreign
goods is sufficient to entitle a request for treble damages, while cases against price discrimination
under the Robinson-Patman Act require actual sales. 250
3.350  The United States  concedes that one district court has suggested that an offer to sell may be
sufficient to support a claim under the 1916 Act, but recalls that the Act still requires that the offers to
sell were made "commonly and systematically."  Any significance this difference may have is more
than offset by the greater difficulty of establishing the prevalence of price differences under the 1916
Act than under the Robinson-Patman Act.   The 1916 Act requires the plaintiff to prove that the price
differences at issue - whether in the form of offers or actual sales - are imposed "commonly andsystematically."  By contrast, the Robinson-Patman Act can be satisfied with as few as two
consummated sales.
(iv) Defences available under the Robinson-Patman Act, but not expressly provided for in the
1916 Act
3.351  The European Communities  believes that price discrimination under the Robinson-Patman
Act may be more easily justified, as specific and additional defences against a prima facie case of
price discrimination are available under its provisions. Under the Robinson-Patman Act, a defenceagainst a prima facie case of price discrimination exists when:
(a) the seller shows "that his lower price or the furnishing of services or facilities to any
purchaser was made in good faith to meet an equally low price of a competitor, or the
services furnished by a competitor " ("meeting competition" defence),
(b) the price changes occur " in response to changing conditions  affecting the market for
or the marketability of the goods concerned" ("changing market conditions"
defence).
251
3.352  The European Communities notes that none of the above defences is provided for in the 1916
Act.  In the view of the European Communities, these two examples are an additional demonstration
that sanctioning price discrimination under the Robinson-Patman Act is more difficult than under the1916 Act.
3.353  The United States  agrees that the 1916 Act, on its face, does not specifically authorize any
defences.  The Robinson-Patman Act, on the other hand, allows three defences namely, a "meeting
competition" defence, a defence based upon "changing market conditions" and a "cost justification"
defence.
252  The United States contends that these differences do not undermine the conclusion that
the 1916 Act accords no less favourable treatment to foreign products than the Robinson-Patman Act
accords domestic products because these defences are inherent in the 1916 Act's requirement that an
                                                     
250 The European Communities refers to  Helmac I , Op. Cit., pp. 575-76.
251 15 U.S.C. 13(a),(b) (emphasis added by the European Communities).
252 15 U.S.C. 13(a),(b).WT/DS136/R
Page 88
intent to injure or destroy an industry be proven.  This is also recognized in the following excerpt
from a treatise on US and EC competition laws:
"Unlike the Robinson-Patman Act, the 1916 Act does not expressly provide for
meeting competition and cost justification defenses.  These considerations would
appear relevant to predatory intent and thus should implicitly be included in the 1916Act."
253
3.354  The United States therefore considers that, in a 1916 Act case, any evidence which would
support the Robinson-Patman Act defences would be equally and directly relevant to whether the
showing of predatory intent can be made in the first place.  Evidence showing that the defendant's
pricing practices were undertaken only with the intent of meeting competition, responding tochanging market conditions or to account for cost savings would be used to show whether the
defendant had the requisite predatory intent in the first place.  This type of evidence would not have to
be presented as a defence, but, rather would undermine any other available evidence tending to show
that the defendant had a predatory intent.  Indeed, a case upon which the European Communities
relies, Geneva Steel , makes this point.  There, the Court explained that one reason why it is difficult to
prove the requisite intent under the 1916 Act is that "evidence of normal pricing cuts [...] would be
insufficient to establish liability under the 1916 Act."
254  In a Robinson-Patman Act case, it is
necessary to provide for these defences.  Without them, conduct undertaken merely to meet
competition or for other proper purposes could be punished.
3.355  In response to a question of the Panel regarding the implications for US law purposes of the
distinction between codified and non-codified defences, the United States further notes that, as far as
the defendant is concerned, there is no particular advantage to having a defence codified in a statute asopposed to arguing that the same evidence undermines the plaintiff's required showing.  In fact, it
would seem that the opposite is true.  If a defence is codified, the defendant would bear the burden of
pleading and proving the defence.  On the other hand, if the same evidence is relevant to rebutting the
plaintiff's required showing, the defendant may present this evidence without having to carry the
ultimate burden.
3.356  The European Communities  concedes that the same evidence may be relevant in many cases
under both the Robinson-Patman Act and the 1916 Act.  However, the European Communities asserts
that it is evident that evidence which establishes the "meeting competition" or "changing market
conditions" defence under the Robinson-Patman Act will not in all circumstances suffice to negate
predatory intent under the 1916 Act.  There are other circumstances in which liability under the 1916Act would arise than predatory pricing, let alone predatory pricing in the antitrust sense.
3.357  The United States  notes that the European Communities does not offer any examples,
concrete or hypothetical, to support this allegation.  The United States finds it impossible to imagine,
for example, that any court would conclude that a particular defendant intended to destroy a particular
industry if the defendant was simply matching the prices of competing firms in that industry orfacilitating the sale of perishable merchandise.
H. VIOLATION OF ARTICLE XVI:4 OF THE AGREEMENT ESTABLISHING THE WTO
1. The Meaning and Scope of Article XVI:4
3.358  The European Communities  considers that, since, in its view, the 1916 Act is an anti-
dumping statute covered by the discipline of Ar ticle VI of the GATT 1994 and the Anti-Dumping
                                                     
253 B. Hawk,  United States, Common Market and International Antitrust (1996-1 Suppl.), p. 357
254 Geneva Steel,  Op. Cit., p. 1220.WT/DS136/R
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Agreement, it should, pursuant to Article XVI:4 of the Agreement Establishing the WTO255, have
been brought into full conformity with the rules set forth in Article VI and in the Anti-Dumping
Agreement.
3.359  The European Communities contends that Article XVI:4 lays down a new and additional
obligation in the framework of the multilateral trading system.  It imposes a positive obligation toensure the conformity of a Member's domestic laws, regulations and administrative procedures with
its WTO obligations.  As a result of this obligation, in cases where pre-existing domestic legislation
may be inconsistent with new WTO obligations, including those arising under Article VI of the
GATT 1994, and Articles 1, 2.1, 2.2, 3, 4 and 5.5 of the Anti-Dumping Agreement, a Member was
required to amend its domestic legislation so as to avoid any conflict as from 1 January 1995.
3.360  According to the European Communities, the new principle governing the relationship
between domestic laws, regulations and administrative procedures and WTO obligations that is
embodied in Article XVI:4 of the Agreement Establishing the WTO is a fundamental one.
256  Because
it is laid down in the basic agreement of the system, it covers the whole set of the annexed
agreements, whether or not they may contain specific  expressions of the same principle.  Furthermore,
by virtue of Article XVI:3 of the Agreement Establishing the WTO it is a superior rule to provisions
in the annexed agreements.
3.361  The United States  takes the view that the meaning of the text of Article XVI:4 is
straightforward.  If a Member's law, regulation, or administrative procedure does not conform with its
obligations as provided in the WTO agreements, that  Member has an affirmative obligation to bring it
into conformity.  Conversely, if those laws, regu lations and administrative procedures conform with
its obligations, the Member need undertake no further action.  Thus, as regards the instant case,Article XVI:4 is not relevant, unless the 1916 Act is shown to be inconsistent with a separate US
obligation under a WTO agreement.
3.362  The United States further considers that the new so-called "obligations" asserted by the
European Communities have been created out of whole cloth.  Article XVI:4 of the Agreement
Establishing the WTO provides that "[e]ach Member shall ensure the conformity of its laws,regulations and administrative procedures with its obligations as provided in the annexed
Agreements ."
257  By its terms, this provision does not provide a new and additional obligation beyond
those provided in the annexed Agreements.
3.363  The European Communities  adds that Article XVI:4 applies over and above similar
obligations under general public international law as enshrined in Articles 26 and 27 of the ViennaConvention on the Law of Treaties.  The Vienna Convention on the Law of Treaties, in Article 26,
codifies the customary principle of good faith impl ementation of international treaty obligations and,
in Article 27, spells out a negative obligation, i.e. to refrain from invoking domestic law in order to
justify any departure from an international obligation undertaken by a state.  The obligation to respect
                                                     
255 Article XVI:4 of the Agreement Establishing the WTO reads as follows:
"Each Member shall ensure the conformity of its laws, regulations and administrative
procedures with its obligations as provided in the annexed Agreements."
256 The European Communities refers to the Arbitrator's Report on Japan - Taxes on Alcoholic
Beverages , dated 14 February 1997, WT/DS11/13, para 9, where it is stated that "[a]s a general and fundamental
obligation imposed on all WTO Members, Article XVI:4 of the Marrakesh  Agreement Establishing the World
Trade Organization  (the " WTO Agreement" ) requires that each Member shall ensure the conformity of its laws,
regulations and administrative procedures with its obligations as provided in the WTO Agreement ."
257 Emphasis added by the United States.WT/DS136/R
Page 90
WTO obligations thus results directly from the presence of those rules in the WTO Agreement and
Article XVI:4 of the Agreement Establishing the WTO would be reduced to redundancy if interpreted
as not containing an additional and different obligation.
3.364  The European Communities further argues that the obligation in Article XVI:4 of the
Agreement Establishing the WTO must go beyond merely revoking the "grandfather clause" of theProtocol of Provisional Application, which permitted the maintenance of mandatory legislation
inconsistent with the GATT 1947.  This is effected by the introductory text to the GATT 1994.
3.365  The United States  is perplexed by the European Communities' argument regarding
Articles 26 and 27 of the Vienna Convention because the Vienna Convention is not a covered
agreement under the WTO.  In fact, it is through the provisions of Article XVI:4 that the principles ofArticle 26 of the Vienna Convention became legally binding on all Members of the WTO, even
though not all Members are parties to the Vienna Convention.  For example, the United States is not a
party.
3.366  With regard to the European Communities' argument based upon the introductory text of the
GATT 1994, the United States argues that, by definition, Article 1(a) and (b) are applicable only tothe GATT 1994, and not to other WTO agreements such as the General Agreement on Trade in
Services (hereinafter the "GATS") and the Agreement on Trade-Related Aspects of Intellectual
Property Rights (hereinafter the "TRIPS Agreement").  Article XVI:4 therefore provides an
overarching statement in the Agreement Establishing the WTO, clearly applicable to all annexed
agreements and not just the GATT 1994, that no measures are grandfathered.  Article XVI:4 thus
serves to remove any doubt which might have existed in its absence that all measures must be brought
into conformity as from 1 January 1995.  Indeed, it was precisely in this manner and for this purposethat the Appellate Body cited Article XVI:4 in India - Patent .  In that case, India attempted to argue
that it could delay changing its law as required by Article 70.9 of the TRIPS Agreement because of
differences between the language of that provision and that of other Articles of the TRIPS Agreement.
Specifically, India claimed that while other TRIPS Agreement provisions explicitly required changes
to domestic laws, Article 70.9 did not.  The Appellat e Body rejected this argument, stating at the
outset of its discussion that "India's arguments must be examined in the light of Article XVI:4 of the
WTO Agreement ".
258  Article XVI:4 thus assisted in clarifying that India could not rely on claimed
differences in TRIPS Agreement language to delay compliance.
3.367  In the view of the United States, beyond serving this overarching function of providing
context for provisions of the WTO agreements, Article XVI:4 imposed an obligation on Members toreview existing legislation at the time the WTO Agr eement was to enter into effect to make sure that
existing laws, regulations and administrative procedures did, in fact, conform to the Members' WTO
obligations, and where those laws did not, to bring them into conformity.  In the United States, for
example, a comprehensive review of US law was undertaken after the Uruguay Round Final Act to
determine which laws, regulations or administrative procedures might need to be changed in order tocomply with Article XVI:4.  Where a statutory change was necessary, it was proposed to the US
Congress and enacted as part of the Uruguay Round Agreements Act, which was signed into law on
8 December 1994.  All changes in regulations and administrative procedures that were necessary to
bring the United States into conformity with  its obligations under the WTO Agreement were
described in the Statement of Administrative Action which was submitted by the executive branchand approved by Congress as part of the Uruguay Round Agreements Act.
3.368  The US counter-arguments notwithstanding, the European Communities  maintains its view
that Article XVI:4 does not only contain an obligation to avoid violating the WTO agreements.
According to the European Communities, it also contains an obligation to take positive action to
                                                     
258 India – Patents, Op. Cit., para. 79.   WT/DS136/R
Page 91
ensure that nothing in a WTO Member's "laws, regulations and administrative procedures" is
inconsistent with the WTO agreements, that nothing in  them contains conditions or criteria or powers to
take action which conflict with those agreements.  This has already been recognised by the Appellate
Body in the India –Patent case.  In that case, both the panel and the Appellate Body upheld the
United States' claim that domestic law can be incons istent with WTO provisions not merely because it
mandates WTO-inconsistent actions, but also because it fails to provide "a sound legal basis" for the
administrative procedures or any other executive action required to implement WTO obligations.259
The underlying rationale was that in the absence of a sound legal basis for mailbox patent applicationsin domestic law, the basic objective of WTO law, namely to create predictable conditions of
competition, could not be achieved.
3.369  The European Communities submits that the 1916 Act also does not provide such a "sound
legal basis" for implementation of Article VI of the GATT 1994 and the Anti-Dumping Agreement.
Its wording conflicts with Article VI of the GATT 1994 and the Anti-Dumping Agreement in the
ways that the European Communities has explained.  The United States seeks to diminish this by
arguing that certain courts have suggested that the 1916 Act may have some characteristics of antitrustlegislation.  It is clear that this case law, even taken together with the extrapolations thereof which the
United States seeks to make and suggests may be adopted in the future, is a long way from "ensuring
conformity" with Article VI of the GATT 1994 and the Anti-Dumping Agreement.  The two most
recent decisions of US courts, Geneva Steel  and Wheeling-Pittsburgh , actually interpret and allow the
1916 Act to be applied in a way which would violate those provisions. In this regard, the European
Communities notes that the applicability of Article XVI:4 is not limited to final judgements and that,
in any event, the United States has done nothing to  fulfil its obligation under Article XVI:4.  It has
neither amended the 1916 Act nor intervened in the cases referred to in order to ensure that the 1916
Act is not applied in a manner contrary to the United States' WTO obligations.  Nor has it even said
that it disagrees with the decisions adopted by the District Courts in these two cases.
3.370  In its response, the United States  recalls that the discussion by the Appellate Body in
India-Patent  of a "sound legal basis" comes in the context of an analysis of the specific textual
obligation at issue in that case, Article 70.8(a) of the TRIPS Agreement.  That provision affirmatively
requires Members to provide in their domestic  legal systems a mechanism for the filing of
applications for patents which protects their novelty and priority.  India instead had on its books a law
explicitly prohibiting such applications, that is, specifically mandating a violation of India's TRIPS
Agreement obligations.  India claimed that unwritten, unpublished "administrative instructions" neverproduced for the panel took priority over the mandatory law, but the panel and Appellate Body found
nothing to support this claim.  It was in this context, the context of Article 70.8(a) of the TRIPS
Agreement with its requirement of a domestic legal mechanism accomplishing specific ends, that the
panel and Appellate Body concluded that the "admin istrative instructions" failed to provide a sound
legal basis.
260  The concept was not analysed in the abstract as somehow derived independently of
Article 70.8(a).  Furthermore, it is worth noting that the Appellate Body reversed panel findings
relating to "legitimate expectations" generally and removal of "reasonable doubts" because these
findings were not textually based.  Likewise, the European Communities' theory that the 1916 Act
violates Article XVI:4 because it does not provide a "sound legal basis" for implementation of
Article VI has no textual basis and must therefore be rejected.
2. The Relevance to an Article XVI:4 Inquiry of The Distinction Between Mandatory and
Discretionary Legislation
3.371  The European Communities  argues that, even if it were possible to interpret the 1916 Act in
a manner compatible with Article VI of the GATT 1994, Article XVI:4 of the Agreement Establishing
                                                     
259 The European Communities refers to India – Patents , Op. Cit., para 58.
260 The United States refers to India – Patents , Op. Cit., paras. 56-58.WT/DS136/R
Page 92
the WTO would require a WTO Member to take positive measures to ensure compliance with its
WTO obligations and eliminate even a potential incompatibility with WTO obligations.  The
United States cannot hide behind the excuse that action contrary to WTO obligations might one day
not be allowed by the US Supreme Court.   The fact that courts are regularly interpreting the 1916 Act
in a manner contrary to Article VI of the GATT 1994, should require the United States to interveneand prevent this.
3.372  According to the United States , the European Communities' assertion that Members must
take affirmative action to eliminate even a "potential" incompatibility suggests that the European
Communities believes that WTO Members are under an affirmative obligation to include in their
domestic law explicit limits on discretionary authority.  This formulation of WTO obligations isdiametrically opposed to the principle set forth in each and every panel report which has addressed the
issue – that legislation must mandate, and not merely leave open the possibility, of GATT- or WTO-
inconsistent action.  Likewise, such a formulation is also inconsistent with the approach taken in other
GATT 1947 contexts, for example, working parties exam ining the legislation of a contracting party or
acceding country to determine whether that legislation mandates  GATT-inconsistent results and not
whether it could  deliver such results.
261  Therefore, the analysis of whether the 1916 Act is
inconsistent with Article XVI:4 must be based upon an analysis of whether the 1916 Act mandates a
violation of the text of Article VI and the Anti-Dumping Agreement.   
3.373  The European Communities  responds that, even if on the basis of the GATT 1947 it could
be argued that any aspect of the 1916 Act is discretionary and not a per se violation of the
United States' obligations, the situation is in an y event different under the WTO Agreement, since
Article XVI:4 of the WTO Agreement now expressly requires Members to "ensure the conformity ofits laws, regulations and administrative procedures with its obligations" under the WTO agreements.
Article XVI:4 covers both domestic legislation per se  and its application to specific cases.
3.374  The European Communities further notes that on e effect of Article XVI:4 is to shift the
borderline between discretionary and mandatory legislation so as to bring legislation with "less
mandatory" character under WTO disciplines.  Article XVI:4, whatever its other consequences maybe, at least broadens the range of acts that can be classified as "mandatory".  This is well illustrated by
the decision of the GATT 1947 panel in the EC – Audio Cassettes case.  The panel in that case applied
the "shall ensure the conformity" clause of wh at was then Article 16.6(a) of the Tokyo Round Anti-
Dumping Code to hold EC anti-dumping legislation as Code-infringing, despite the fact that the
initiation of proceedings under the legislation was discretionary.  It then examined particular ruleswithin the legislation to see whether they mandated infringements of the Code or allowed
administrators discretion to act in a legal way.  The panel expressed itself as follows:
"[T]he Panel did not consider in any event that its task in this case was to determine
whether the EC's Basic Regulation in its totality was non-mandatory in the sense that
the initiation of investigations and imposition of duties were not mandatory functions.Should panels accept this approach, they would be precluded from ever reviewing the
content of a Party's anti-dumping legislation, a result that would undermine the
requirement of Article 16:6 of the Agreement that Parties bring their legislation,
regulations and administrative procedures into conformity with the provisions of the
Agreement.  Rather, the Panel considered that  its task in this case was to determine
whether the EC's Basic Regulation was mandatory in the sense that the EC was
                                                     
261 The United States refers to the Report on The European Economic Community , adopted on
29 November 1957, BISD 6S/70, p. 80, para.10.WT/DS136/R
Page 93
required by its legislation to use the averaging methodology complained of by
Japan."262
3.375  The European Communities submits that the EC - Audio Cassettes  case shows that the criteria
and conditions set out in legislation whose overall application may be discretionary must also comply
with WTO obligations.  The same reasoning can be extended to the instant case.  For example, the1916 Act says that criminal prosecution is discretionary, but once a case is coming into prosecutions,
the question arises whether there is an offence.
3.376  The European Communities is aware that the report of the panel in the EC - Audio Cassettes
case was never adopted, but notes that the reason why the report was not adopted had nothing to do
with the distinction between mandatory and discreti onary measures.  Moreover, the Appellate Body in
Japan - Alcoholic Beverages  noted on the legal status of an unadopted panel report that:
"a panel could nevertheless find useful guidance in the reasoning of an unadopted
panel report that it considered to be relevant."
263
3.377  The European Communities adds that the panel in United States – Definition of the Wine
Industry took the same position as the EC - Audio Cassettes  panel. The report of that panel was
adopted.  In United States – Definition of the Wine Industry , the United States argued that the case
should not proceed in the absence of an application of the law since the violation was purely
"hypothetical".  The panel rejected this argument and ruled on the compatibility of the US law stating:
"The Panel noted that it had been called upon, in its terms of reference, to review the
facts of the matter referred to the Committee by the EEC in document SCM/54, and
that the issue raised in this document was the conformity of the US law in question
(i.e. Section 612(a)(1) of the Trade and Tariff Act of 1984) as such with the
provisions of the Code, as required by its Article 19:5(a)."264
3.378  The European Communities notes that Article 19:5(a) of the Tokyo Round Subsidies
Agreement was virtually identical to Article 16:6(a) of the Tokyo Round Anti-Dumping Code which
the EC- Audio Cassettes  panel relied on.  Both are equivalent to Article XVI:4 of the Agreement
Establishing the WTO.
3.379  The European Communities further points out that one of the purposes of Article XVI:4 of the
Agreement Establishing the WTO is to ensure secur ity and predictability in the international trading
system.  Placing importers under the threat of draconian civil and criminal penalties can have a
"chilling effect" on imports even if the legislation has for some reason not so far been applied to the
point of imposing penalties.265  Paradoxically, the more a law is effective as a deterrent, the less will
be the evidence of actual rather than possible application.  The following passage of the report of the
panel in United States – Malt Beverages  is pertinent:
"[…] the measure continues to be mandatory legislation which may influence the
decisions of economic operators".266
                                                     
262 EC - Audio Cassettes , Op. Cit., para. 362.
263 Japan – Taxes on Alcoholic Beverages , Op. Cit., p. 15.
264 United States – Definition of the Wine Industry , Op. Cit., para. 4.1.
265 The European Communities notes that the mere fact of non-application may be accidental, subject to
change and completely out of a government's control.
266 United States – Malt Beverages , Op. Cit., para. 5.60.WT/DS136/R
Page 94
3.380  The European Communities submits that the report of the GATT 1947 panel in the Japan –
Trade in Semi-conductors  case267 also illustrates this point.  It makes clear that even a measure which
is not formally binding can still be capable of constituting an infringement. The same can be said of
binding measures that are not often enforced, such as the 1916 Act.
3.381  The United States  maintains its view that, since the 1916 Act is susceptible to an
interpretation that is fully consistent with all of the United States' WTO obligations and has been so
interpreted to date, there is no requirement under Article XVI:4 that the United States take action to
change the law.  Moreover, the distinction is still being applied in cases brought under the WTO, as is
evidenced by the report of the panel on Canada – Aircraft.
3.382  The European Communities  responds that the US interpretation would reduce Article XVI:4
of the Agreement Establishing the WTO to inutility and redundancy.  The US argument that the 1916
Act "is susceptible to an interpreta tion that is fully consistent with all US WTO obligations" is based
on an alleged non-actionability of discretionary legislation under the GATT 1947 and ignores
Article XVI:4 of the Agreement Establishing the WTO, which has at least significantly reduced the
required degree of mandatoriness for actionability.
3.383  The European Communities concedes that the mandatory/discretionary distinction continues
to be significant, for example, in cases where an administrative authority is given a general power to
regulate trade and to adopt measures of commercial policies.  This gives to the authority the
possibility to take measures which are incompatible with WTO obligations but it can of course also
choose to remain within the bounds of what would not violate WTO rules.  The fact that the authority
has the possibility to take measures which are incompatible is not of itself a violation of WTO
obligations.  A violation arises where incompatible measures are taken or where the administration isobliged to take into consideration criteria or apply conditions that are inconsistent with those
prescribed in the WTO agreements.  It is the latter situation that prevails in the case of the 1916 Act.
3.384  As regards the relevance of the panel report on Canada – Aircraft , the European Communities
recalls that the panel in that case found that the measure authorising grants could not be an
infringement of the SCM Agreement since the body in question was not required to subsidize, i.e. toinfringe the SCM Agreement.
268  The panel then went on to consider whether that body actually did
give subsidies.  This case is not, however, of any guidance in the present case in view of the context in
which the panel's reasoning occurs.  The panel at that point in Canada – Aircraft was examining
whether there were any subsidies in preparation for examining whether they were de facto export
contingent and therefore prohibited.  Subsidies are not as such inconsistent with the WTO Agreement,as indeed the SCM Agreement recognises in its footnote 23.  They only violate the WTO Agreement
if certain conditions are met, notably if they are export-contingent.  Therefore, a fortiori the mere
power to grant subsidies is not objectionable.  Even if the Canada – Aircraft panel's overall
conclusion may be correct, its reliance on the discretionary/mandatory distinction to arrive at its
conclusion appears misplaced and inappropriate.  In any event, this part of the report has not had thebenefit of being reviewed by the Appellate Body.
3. Relationship With Article 18.4 of The Anti-Dumping Agreement
3.385  In response to a question of the Panel to both parties regarding the relationship between
Article XVI:4 of the Agreement Establishing the WTO and Article 18.4 of the Anti-Dumping
Agreement, the European Communities  argues that Article 18.4 of the Anti-Dumping Agreement
reiterates and confirms, for the specific area covered by that Agreement, the general obligation laid
down in Article XVI:4 of the Agreement Establishing the WTO in respect of all its annexed
                                                     
267 Panel Report on Japan – Trade in Semi-conductors,  adopted on 4 May 1988, BISD 35S/116 .
268 The European Communities refers to Canada – Aircraft , Op. Cit., para.  9.127WT/DS136/R
Page 95
agreements.  Article XVI:4 is therefore broader in scope than Article 18.4 of the Anti-Dumping
Agreement and also applies, for example, to Article VI of the GATT 1994.
3.386  The European Communities further notes that, as  regards their respective content, there is
essentially no difference between Article 18.4 and Article XVI:4.  The only substantive difference
results from the qualification in the Anti-Dumping Agreement "as [the WTO provisions] may applyfor the Member in question".  Apart from a historical explanation that this clause was carried forward
from the Tokyo Round Code, in the new Anti-Dumping Agreement the scope for differential
treatment of specific countries is rather limited.  One example is provided by Article 15 as regards
developing country Members.  Moreover, the slight difference in wording does not remove the WTO
dumping provisions from the scope of  Article XVI:4.  For example, in Guatemala – Anti-Dumping
Investigation Regarding Portland Cement From Mexico , the panel reviewed a claim under Article 5.5
of the Anti-Dumping Agreement in the light of Article XVI:4.
269
3.387  The European Communities adds that Article XVI:4 has generalised an obligation which was
first set out in a more sectoral context and within a more limited group of GATT 1947 contracting
parties, i.e. the parties to the Tokyo Round Anti- Dumping Code and the parties to the Tokyo Round
Subsidies Code.  If regard is had to the negotiating history of the Agreement Establishing the WTO, it
is clear that it came at a relatively late stage of the Uruguay Round.  At that stage, the negotiations of
the Anti-Dumping Agreement were much more advanced and the reiteration of the old Code
provision had not been questioned.
3.388  The United States  is of the view that, like any other US law, regulation or administrative
procedure, under Article XVI:4, anti-dumping laws, regulations and procedures, assuming they are
mandatory, must conform with the requirements of the various WTO agreements.
3.389  With regard to Article 18.4 of the Anti-Dumping Agreement, the United States notes that,
although the language is not identical to Article XVI:4, there were similar provisions in the Tokyo
Round Codes on Anti-Dumping and Subsidies which have  generally been interpreted as requiring the
parties to those agreements to adopt laws, regula tions and procedures that permit them to act in
conformity with their obligations under those Agreements.  Article 18.4 of the Anti-DumpingAgreement should be interpreted in the same way.
IV. THIRD PARTY SUBMISSIONS
A. INDIA
4.1 According to India , Article VI of the GATT 1994 establishes the only GATT-compatible
means of dealing with dumping.  Three steps are envisaged in this Article.  Firstly, what constitutesdumping; secondly, what conditions must be fulfilled for the application of remedial measures; and
thirdly, what steps a Member can take once dumping has been established.  As regards this third step,
Article VI:2 provides for the levying of anti-dumping duties.  It is therefore clear that Article VI lays
down that, provided that there is material injury to the domestic industry and provided the relevant
procedures are followed, WTO Members can levy anti-dumping duties.  Hence, Article VI clearlyestablishes that the application of anti-dumping duties is the sole and only means authorized by the
GATT 1994 to deal with the problem of dumped imports.
                                                     
269 The European Communities refers to the Panel Report on Guatemala - Anti-Dumping Investigation
Regarding Portland Cement From Mexico , adopted on 25 November 1998, WT/DS60/R , para 7.38.WT/DS136/R
Page 96
4.2 India notes, however, that, under the 1916 Act, th e United States can apply measures other
than anti-dumping duties.270  Thus the very purpose and intent of Article VI and that of the Anti-
Dumping Agreement is thwarted.  The remedial measures provided for by the 1916 Act are treble
damages and/or criminal penalties, including fines and/or imprisonment.  These remedies are not
duties and are not, therefore, the type of measures allowed under WTO anti-dumping rules to counterdumping practices.  The United States has argued that the use of the phrase "may levy […] an anti
dumping duty" in Article VI:2 does not preclude the use of other remedies for dumping.  This
argument is not valid.  Article VI of the GATT 1994 was specifically incorporated to address the
problems of dumping and provides for the levying of anti-dumping duties as the sole remedy.  It
would be totally unacceptable if Members could not only impose anti-dumping duties, but also suchother civil or criminal penalties as are prescribed by the 1916 Act.  Clearly therefore, the 1916 Act
violates Article VI:2 of the GATT 1994.  Read in its proper context, the word "may" in Article VI:2
appears to imply that the levying of an anti-dumpi ng duty is not mandatory.  However, it cannot under
any circumstances, be interpreted as providing recourse to Members to resort to measures other than
"anti-dumping duties".
4.3 Moreover, India does not agree with the US contention that the application of such measures,
i.e. measures other than the application of anti-dumping duties, is justified on the grounds that the
conduct to which the 1916 Act applies is defined in a manner which, while incorporating the essential
elements of dumping, differs by the addition of one or  more conditions.  It is the view of India that, as
long as the 1916 Act provides remedial action fo r dumping of products into the domestic market, it
must be in conformity with the provisions of Article VI and the Anti-Dumping Agreement.  Since this
is not the case, the 1916 Act is inconsistent with the principles and objectives laid down in Article VIof the GATT 1994 and the Anti-Dumping Agreement.
4.4 India is also of the view that the 1916 Act is inconsistent with Article VI:1 of the GATT 1994
and Article 3 of the Anti-Dumping Agreement because it does not require there to be actual injury, let
alone material injury to the domestic industry as a precondition for taking action.  It only stipulates
that action under the 1916 Act can be taken as long as there is intent to injure the domestic industry.Moreover, the absence of administrative procedures in the 1916 Act means that no investigation
conforming to the requirements of the Anti-Dumping  Agreement needs to be carried out when taking
action under the 1916 Act.  Thus, judicial decisi ons under the 1916 Act can be made without the
procedural safeguards otherwise provided for in the Anti-Dumping Agreement.  Finally, the 1916 Act
fails to respect a number of procedural and due process requirements as set forth in the Anti-DumpingAgreement, including inter alia (i) the requirement that the competent authority verify the information
given in any complaint before initiating an investig ation; (ii) the requirement that notice be given to
the government of the exporting country before such an investigation is started; (iii) the requirement
that a complaint will be entertained only if it is supported by a minimum percentage of the domestic
industry; (iv) the possibility for the governments of exporting countries to make comments on theproposed findings and (v) the requirement that the measures not be restrictive.  The 1916 Act is
therefore clearly violative of the procedural provisions of the Anti-Dumping Agreement.
4.5 As regards the US argument that the 1916 Act is not an anti-dumping law at all, but is an
antitrust law, India does not agree.  As accepted by the United States, the 1916 Act clearly targets
products which are being sold within the United States allegedly at a price substantially less than theactual market value or wholesale price of the products.  This is entirely in consonance with the
definition of dumping given in Article VI.  In accordance with Article VI, dumping occurs when
"products of one country are introduced into the commerce of another country at less than the normal
                                                     
270 India notes, in this regard, that the 1916 Act can be invoked and has been invoked over the years by
complaining parties desirous of using the remedies offered by it as an alternative and, more importantly, as a
supplement to the Antidumping Act of 1921 and later US anti-dumping legislation.WT/DS136/R
Page 97
value of the products".  Clearly therefore, the 1916 Act is a law which should be subject to the
provisions of Article VI of the GATT 1994 and of the Anti-Dumping Agreement.
4.6 Furthermore, India entirely agrees with the averments by the European Communities relating
to the 'grandfathering' of the 1916 Act.  It is clear from the various statements made before US Senate
Committees, including the testimony by the USTR General Counsel in 1986, that even in the UnitedStates the view was that without grandfathering the 1916 Act would be GATT-inconsistent.  The
failure of the United States to seek a grandfather exception under the GATT 1994, after admitting that
the 1916 Act benefited from grandfathering under the GATT 1947, necessarily implies that the
United States waived its grandfather rights on the 1916 Act.  The United States cannot, therefore,
keep in force domestic legislation which is clearly incompatible with the provisions of the GATT1994.
4.7 India further argues that the 1916 Act cannot escape the discipline of Article VI simply
because it requires the prohibited conduct to be "common and systematic".  Article VI applies whether
the dumping is limited in occurrence or sporadic, and whether the dumping is frequent or systematic.
Once it is established that the relevant rule or law, in the present case the 1916 Act, is subject toArticle VI, then the only remedy permitted is th e imposition of anti-dumping duties, subject to a
finding of dumping in accordance with the definition of Article VI and the existence of injury to the
domestic industry, or threat thereof.  Thus, any anti-dumping law which goes beyond providing relief
in the form of anti-dumping duties, such as the 1916 Act, is inconsistent with the GATT 1994.
4.8 Finally, India recalls the United States' argument that the US courts' interpretation of the 1916
Act is dispositive as a factual matter of the nature of the 1916 Act and that the Panel cannot depend on
its own interpretation.  In this connection, India simply refers the Panel to the Appellate Body'sdecision in India – Patents .
271
4.9 In conclusion, it is India's view that even though the 1916 Act provides relief against alleged
dumping, it does not conform to the provisions of Article VI of the GATT 1994 and those of the Anti-
Dumping Agreement.  The 1916 Act thereby nullifies and impairs the benefits accruing to the
United States' trading partners under those Agreements.  India therefore urges the Panel to find the1916 Act to be violative of the above-mentioned provisions and requests the Panel to direct the
United States to bring its domestic law in conformity with its obligations under the GATT 1994.
B. JAPAN
4.10 Japan  considers that it has a substantial trade intere st in the present matter.  In this regard,
Japan recalls that, in November 1998, the Wheeling-Pittsburgh Steel Corporation filed a complaintunder the 1916 Act against nine companies, including three Japanese trading firms.  They are Mitsui
& Co., Marubeni America Corp., and Itochu International Inc..  Japan is one of the major steel
producing countries, and the US steel market was the largest market abroad for the Japanese steel
makers in 1998.  The Japan Iron and Steel Exporters Association and other exporters' associations
asked the Japanese government to take appropriate action.  They are concerned about the negativeimplications for trade in steel and the threat of substantial trade barriers for steel exports.
4.11 According to Japan, the pending litigation initiated by Wheeling-Pittsburgh Steel has serious
negative trade implications.  One is the "chilling effect" on exports from Japan.  Even if no criminal or
civil penalties are ever imposed, the  potential liability under the 1916 Act discourages defendants - in
the Wheeling-Pittsburgh  case Japanese trading firms - from importing the relevant products at issue
once legal proceedings have been initiated.  Considering that litigation of this kind usually is
protracted and given the possibility of treble damages being imposed, the importers' risk when
                                                     
271 India – Patents , Op. Cit., paras. 65-66.WT/DS136/R
Page 98
continuing to import without knowing the final outcome of the litigation is tremendous and
prohibitive.  The threat of retroactive imposition of treble damages is sufficient to deter imports.  The
eventual impact of the Wheeling-Pittsburgh  litigation will not result from the final judgement of the
District Court, but from the actual negative effect on imports due to the threat of civil liability or
criminal sanctions.
4.12 Japan further argues that the three Japanese trading firms involved in Wheeling-Pittsburgh
have found the litigation process to be extraordinarily expensive, burdensome as well as disruptive to
their business.  The effect of these burdens is already so obvious that four non-Japanese defendants in
this litigation have reached out-of-court settlements.  Although the precise terms of the settlements are
not publicly available, these defendants settled with Wheeling-Pittsburgh Steel by agreeing to buy acertain quantity of steel from it at an agreed price.  These settlements have obviously distorted sound,
market-oriented trade practice, which has been an essential concept during successive rounds of
multilateral trade negotiations.
4.13 Japan adds that it cannot be denied that this kind of litigation under the 1916 Act may occur
again.  So far, no judgement as to whether liability exists have been rendered in the Geneva Steel  or
Wheeling-Pittsburgh  case.  However, even at the present stage of litigation, the existence of the 1916
Act and the ongoing litigation have enormous adverse effects on trade, as shown above.
4.14 Japan also argues that, until and unless overturned by other court decisions, the decisions in
Geneva Steel  and Wheeling-Pittsburgh  will prevail in the application of the 1916 Act.  Even if they
were to be overturned, similar cases may arise any time and repeatedly as long as the 1916 Act
remains in force.
4.15 Turning to legal aspects, Japan considers that judicial decisions under the 1916 Act are made
without the procedural safeguards provided for in the Anti-Dumping Agreement.  Furthermore, Japan
rejects the US assertion that the 1916 Act is not directed at dumping and therefore is not an anti-
dumping statute.  The 1916 Act is not only directed at  antitrust, but also directed at dumping.  The US
assertion is not justified, considering recent US court findings, i.e. Geneva Steel  and Wheeling-
Pittsburgh , the previous testimonies and documents by US government officials, the legislative
history as well as the wording of the 1916 Act.
4.16 Japan further notes that on 26 July 1999 the DSB established another panel in respect of the
1916 Act at Japan's request and pursuant to Article XXIII of the GATT 1994, Articles 4 and 6 of the
DSU and Article 17 of the Anti-Dumping Agreement.  In its panel request, Japan requests that the
panel find that the 1916 Act is neither consistent with nor justified by the following relevantprovisions:
272
(a) Article III:4 of the GATT 1994;
(b) Article VI of the GATT 1994 and the Anti-Dumping Agreement, and in particular
Article VI:2 of the GATT 1994 and Arti cle 18.1 of the Anti-Dumping Agreement;
(c) Article XI of the GATT 1994;
(d) Article XVI:4 of the Agreement Establishing the WTO
4.17 Japan also recalls that the subject of and the issues underlying Japan's panel request are the
same as in the dispute before the present Panel.  In relation to some relevant provisions, Japan has
                                                     
272 Japan refers to WT/DS162/3.WT/DS136/R
Page 99
concerns similar to those set out by the European Communities before the present Panel.  However,
Japan has additional legal arguments which the panel established at its request will need to assess.
C. MEXICO
4.18 Mexico  is of the view that the present dispute concerns a law which violates the WTO
agreements both in its letter and in its operation, regardless of the nature of that law within the USlegal system.  The 1916 Act has had real adverse effects and represents a risk for trade with the
United States.
4.19 Mexico contends that the Panel should not follow the principles of interpretation of the
United States courts, as the United States suggests, since its terms of reference are as follows:
"To examine, in the light of the relevant provisions of the covered agreements cited
by the European Communities in document WT/DS136/2, the matter referred to the
DSB by the European Communities in that document and to make such findings as
will assist the DSB in making the recommendations or in giving the rulings provided
for in those agreements."
273
4.20 In the view of Mexico, the terms of reference clearly require the Panel to examine the matter
referred to the DSB by the European Communities in the light of the relevant provisions of the WTO
Agreement, of the GATT 1994 and of the Anti-Dumping Agreement .  It follows that the examination
must be conducted in the light of those three Agreements only, and not of the domestic judicial
decisions of the United States, which not only do not form part of the terms of reference of the Panel,
but also concern an area of application that is different and independent of the WTO.  Mexico agrees
with the European Communities that the nature of the 1916 Act should be determined with reference
to the provisions of the GATT 1994 and WTO law and not on the basis of the national legislation orcase law of any particular Member.
4.21 Mexico notes, in this regard, that the trade practice regulated by the 1916 Act contains several
of the elements of Article VI of the GATT 1994 and of the Anti-Dumping Agreement.  Mexico agrees
with the European Communities that in order to determine the applicability of the disciplines of
Article VI of the GATT 1994 to the 1916 Act, it is necessary to compare the content of the twosystems.  Thus, Article VI contains two basic elements which also appear in the 1916 Act:
(i) It targets imports;
(ii) it is based on the difference between the prices of imports and a concept commonly
known as "normal value".
4.22 Mexico further notes that there are additional elements common to the two systems, including
the following:
(i) Both systems are based on price differentials;
(ii) the calculations in both systems require adjustments;
(iii) both systems incorporate the concept of injury or material retardation;
(iv) both systems condemn the trade practice in question.
                                                     
273 WT/DS136/3.WT/DS136/R
Page 100
4.23 Mexico concludes, therefore, that the trade practice regulated by the 1916 Act comes under
the definition of dumping, and consequently, it is a law that regulates dumping and the associated
remedies.  Both disciplines are provided for in Article VI of the GATT 1994 and the Anti-Dumping
Agreement.
4.24 Mexico recalls that the United States asserts that there are a number of differences between
the 1916 Act and the Anti-Dumping Agreement.  However, for the following reasons, Mexico
considers that these differences are irrelevant for the purposes of determining the nature of the 1916
Act:
(a) The price differential is irrelevant.  The Anti-Dumping Agreement applies to small
dumping margins and large dumping margins alike.  In any case, the concept of"substantially less" coincides with the de minimis  concept in the Anti-Dumping
Agreement.
(b) The requirement that the differential should be "common and systematic" is also
irrelevant.  There is no requirement in Article VI of the GATT 1994 or in the
Anti-Dumping Agreement that the trade practice should be sporadic.
(c) According to the United States, unlike the Anti-Dumping Agreement, the 1916 Act
requires that there should be intent of destroying or injuring an industry in the
United States, or of preventing the establishment of an industry in the United States.
Mexico contends that the United States assertion is at best partial, since it fails to
recognize that the purpose of both the GATT 1994 and the Anti-Dumping
Agreement, on the one hand, and the 1916 Act, on the other, is to avoid injury or
material retardation to the domestic industry.
(d) The United States argues that the 1916 Act requires that the complaining party suffer
damages, while the Anti-Dumping Agreement requires that injury to a domestic
industry must be found to exist.  However, this argument fails to recognize that both
systems provide for the initiation of the procedure at the request of a party when such
party is affected by the trade practice in question.
4.25 Mexico notes that, in any case, none of the differences invoked by the United States mean
that the 1916 Act does not regulate the trade practice known as dumping, and consequently, the
United States has failed to substantiate its assertions that Article VI of the GATT 1994 and the Anti-
Dumping Agreement are not applicable thereto.  In f act, the only thing that the United States succeeds
in showing by highlighting the differences between the two systems is that the 1916 Act does notmeet the minimum WTO requirements for initiating and conducting procedures in respect of this kind
of unfair international trade practice and for settling such cases.
4.26 Mexico considers, therefore, that the 1916 Act regulates the trade practice known as dumping
and that it is subject to the disciplines of Article VI of the GATT 1994 and the Anti-Dumping
Agreement.  Mexico further considers that the 1916 Act violates certain provisions of Article VI of
the GATT 1994 and the Anti-Dumping Agreement.  The table below sets out the most important
violations.
274
                                                     
274 Mexico points out that without prejudice to its view that there may be other provisions that are
violated, the present examination will be limited to the provisions that are expressly set forth in the request for
the establishment of a panel by the European Communities.WT/DS136/R
Page 101
Provisions of the 1916 Act Provisions violated Comments
"[A] price substantially less
than the actual market value or
wholesale price of such articles
[…] in the principal markets of
the country of their production,or of other foreign countries to
which they are commonly
exported […]."Article VI:1(a) and (b) of the
GATT 1994 and Articles 2.1
and 2.2 of the Anti-Dumping
AgreementThe 1916 Act does not respect
the precedence of criteria for
establishing normal value.
"Provided , That such act or acts
be done with the intent of
destroying or injuring an
industry in the United States, orof preventing the establishment
of an industry in the United
States, or of restraining or
monopolizing any part of trade
and commerce in such articlesin the United States".Article VI:1 of the GATT 1994
and Article 3 of the Anti-
Dumping AgreementIn order to condemn dumping,
there must be injury, threat of
injury or material retardation,
while the 1916 Act merelyrequires the intent thereof.
"Any person who violates orcombines or conspires with any
other person to violate this
section is guilty of a
misdemeanour, and, on
conviction thereof, shall bepunished by a fine not
exceeding $5,000, or
imprisonment not exceeding
one year, or both, in the
discretion of the court."Article VI:2 of the GATT 1994
and Article 1 of the Anti-
Dumping Agreement.WTO Members may only offset
dumping through the imposition
of duties not greater than the
margin of dumping and only
once they have initiated and
conducted an investigation inaccordance with the Anti-
Dumping Agreement.
"[A]nd shall recover threefold
the damages sustained, and thecost of the suit, including a
reasonable attorney's fee."Article VI:2 of the GATT 1994 Anti-dumping duties may not be
greater than the margin ofdumping of the product in
question.
"The foregoing provisions shallnot be construed to deprive the
proper State courts of
jurisdiction in actions for
damages thereunder."Article 1 of the Anti-Dumping
Agreement, Article VI of the
GATT 1994The proper means of offsetting
dumping consists in anti-
dumping measures imposed
pursuant to an investigation
conducted in accordance with
the Anti-Dumping Agreement.
4.27 Furthermore, Mexico agrees with the European Communities that since the 1916 Act is
subject to the obligations of Article VI of the GATT 1994 and of the Anti-Dumping Agreement, and
since the 1916 Act is not in conformity with the obligations imposed by those Agreements, it alsoviolates Article XVI:4 of the Agreement Establishing the WTO.
4.28 For these reasons, Mexico considers that the Panel should conclude that the 1916 Act violates
the provisions of the WTO, in particular of the Anti-Dumping Agreement and of the GATT 1994, and
that consequently, it violates Article XVI:4 of the Agreement Establishing the WTO.  Similarly, the
1916 Act may also violate Article III of the GATT 1994, but Mexico does not see the need to dwell
on this point.WT/DS136/R
Page 102
V. INTERIM REVIEW275
A. INTRODUCTION
5.1 The interim report of the Panel was issued to the parties on 20 December 1999, in application
of Article 15.2 of the DSU.  On 7 January 2000, the European Communities and the United States
submitted written requests to the Panel to review some aspects of the interim report.  Neither theEuropean Communities nor the United States requested that the Panel hold a further meeting with the
parties.
5.2 As we were reviewing the comments of the parties, we noted that the United States raised an
argument relating to the competence of the Panel to make some of the findings it had made under
Article VI of the GATT 1994 and the Anti-Dumping Agreement.  Without prejudice to the questionwhether the argument of the United States was procedurally or substantively justified, we considered
that there were reasons to give further considera tion to the issue raised by the US argument and to
consult the parties on this matter.  Since the issue was very specific and none of the parties had
actually requested a hearing, we were of the view that such a consultation would be better carried out
in writing.  We therefore asked questions to bo th parties regarding the admissibility of the US
argument.  We also requested the United States to elaborate on its statement and asked the European
Communities to comment on it.
B. C
OMMENTS BY THE EUROPEAN COMMUNITIES
5.3 The EC has made comments regarding the clarity of certain paragraphs. Whenever
appropriate, we have clarified what we meant.
5.4 In that context, we have modified paragraph 6.60 by specifying that we considered the
historical context and legislative histor y of the 1916 Act like US courts would do.
5.5 The EC also refers to our review of the statements of the US executive branch regarding
"grandfathering" of the 1916 Act and our conclusion in paragraph 6.65 that we should use such
statements only to the extent that they confirm established practice.  The EC claims that we appear to
have omitted to do so when we examined the historical context and legislative history of the 1916
Act. We did not refer to these confirmatory elements in the section on historical context andlegislative history because that section related to how the notion of dumping in the 1916 Act was
understood at the time of its enactment.  The confirmatory elements to which the EC refers relate
more, in our opinion, to the question whether, as of 1947, the United States considered that the 1916
Act was inconsistent with its obligations under GATT 1947.
5.6 We addressed the arguments of the parties regarding the above-mentioned statements of the
US executive branch because the parties discussed extensively the validity of those statements.  We
found that they were of limited use. The reason why we did not refer to them later was that, in our
opinion, there was no related evidence to which they could be attached.
5.7 With respect to the comments of the EC on paragraphs 6.89 and 6.161 (now 6.164), we
redrafted these two paragraphs to differentiate the present issue from that in the United States –
Tobacco  case.  Since the 1916 Act had been applied in specific cases, there was no need to determine
                                                     
275 According to Article 15.3 of the Understanding on Rules and Procedures Governing the Settlement
of Disputes (hereinafter "DSU"), "the findings of the final report shall include a discussion of the argumentsmade at the interim review stage".  The following section entitled "Interim Review" is therefore part of the
findings of our report.WT/DS136/R
Page 103
whether there was a possibility to interpret it in the future in a WTO-compatible manner.  It was only
necessary to determine whether the 1916 Act fell within the scope of Article VI or not.
5.8 In paragraph 6.106 (now 6.109), the EC suggested that the Panel replaces, in its comparison
of the definitions of price discrimination in th e 1916 Act and Article VI of the GATT 1994, the words
"sufficiently different" by "qualitatively different".  We agree that the question related to the nature ofthe requirements contained in the price discrimination test of the 1916 Act and we clarified the
concept wherever appropriate.
5.9 The EC also requested the Panel to avoid using the term "affirmative defences" in paragraph
6.204 (now 6.206) and to modify paragraph 6.167 (now 6.170) and footnote 400 (now 424) because
"affirmative defence" has a specific meaning and relates to a legal issue, in particular an exception,not to the initial question of fact. According to the EC, the US arguments on the mandatory/non-
mandatory nature of the 1916 Act are factual arguments designed to rebut the EC’s factual
arguments.
5.10 We agree that the meaning to be given to the terms of the 1916 Act is of course a question of
fact.  However, in our opinion, the issue whether the 1916 Act as interpreted by US courts mandatesor not a violation of the WTO Agreement is an issue of law.  The Panel also considers the reference of
the United States to the non-mandatory nature of the 1916 Act to be a legal defence advanced by the
United States against the claims of violation made by the EC.  As a result, we did not modify the
related paragraphs which the EC requested us to amend.
5.11 With respect to our consideration of judicial economy in paragraph 6.205 (now 6.207), we
made it clear that, in our opinion, findings under Article VI:1 and VI:2 addressed the essential
features of the 1916 Act. We consider that our findings under the Anti-Dumping Agreement addresssecondary aspects of the 1916 Act.  We nonetheless considered that it was useful to make such
findings given the various ways in which the United States may decide to implement this report.
5.12 Finally, the EC requested the Panel to redraft paragraph 6.226(a) (now 6.228(a)) because the
Panel did not need to make and, actually, had not made findings about the future developments of US
case-law.  We note that the United States also requested the Panel to delete that sub-paragraph asunnecessary to the Panel's finding and susceptible to foster misunderstanding of the role of panels in
reviewing the domestic laws of Members.
5.13 As mentioned above, we do not intend to make findings on the potential or future evolution of
the US case-law regarding the 1916 Act.  On the contrary, since we found at present a violation of the
WTO Agreement by the 1916 Act, we do not need to determine whether the 1916 Act could be foundto be WTO consistent in the future. In addition, the question of the context in which the text of the
1916 Act should be addressed constitutes one of the issues on which the Panel expressly took
position.  We consequently decided to keep paragraph 6.228(a) in the final report, but we redrafted it
to clarify it and address the concerns expressed by the parties, essentially with respect to the actual
scope of our findings on this issue.
5.14 We also clarified paragraph 6.93 and 6.94, which related to arguments of the EC, and
paragraph 6.167, regarding the finding of the panel on United States – Definition of the Wine Industry .
However, we did not agree with the EC that that report actually stated what the EC said in its
comments.  The phrase "and [the panel] did not consider it necessary to examine whether the
legislation was mandatory or discretionary" suggested by the EC seems to be more like aninterpretation of the panel report.   Moreover, we did not find it necessary to modify Article 6.134(a)
since it seems clear to us that US court decisions in relation to the 1916 Act so far have only had legal
effects within the US legal order.WT/DS136/R
Page 104
C. COMMENTS BY THE UNITED STATES
5.15 The United States raised two main categories of comments.  The first one addresses the
alleged absence of "jurisdiction" of the Panel to make any findings with respect to any claim under the
Anti-Dumping Agreement and, consequently, under Article VI of the GATT 1994. In support of its
position, the United States relies on the findings of the Appellate Body in the case of Guatemala –
Anti-Dumping Investigation Regarding Portland Cement from Mexico276and on those of the panel and
of the Appellate Body in the case of Brazil – Measures Affecting Desiccated Coconut .277  The second
category of arguments relates to alleged misrepresentations of the United States’ arguments by the
Panel.
5.16 With respect to the first category, the United States contends that it continuously throughout
the proceeding pointed out the failure of the EC to challenge any particular measure taken under the
1916 Act and that it argued on other grounds that the Panel had no right to address the 1916 Act under
Article VI or the Anti-Dumping Agreement.  We nevertheless note that, in practice, the United States
framed its defence in the context of claims addressing the WTO-compatibility of the 1916 Act as
such, by arguing that the 1916 Act was a non-mandatory law within the meaning of GATT1947/WTO practice. Moreover, the preliminary issue it raised in its first submission related to the
possibility of the EC to refer to Articles 1 and 18.1 of the Anti-Dumping Agreement as claims or as
arguments in support of its claims. Such arguments are of a totally different nature than and totally
unrelated to the argument raised by the United States at the interim review stage.
5.17 The United States also claims that its new argument is of a jurisdictional nature and had to be
raised at this stage of the proceedings. We agree that some issues of jurisdiction may be of such a
nature that they have to be addressed by the Panel at any time.  However, we consider that adistinction must be made between (i) issues of jurisdiction which occur exclusively as a result of the
content of the interim report and could not be legitimately foreseen earlier in the process and (ii)
jurisdictional issues that were alr eady evident at the beginning of the proceedings.  The fact that the
EC challenged the 1916 Act as such and not one of the measures referred to in Guatemala – Cement
was clear from the request of the EC for the establishment of a panel and was noted by theUnited States.
278  Consequently, we would have expected the United States to raise it at an early stage
of the proceedings.
5.18  We agree that Article 15 of the DSU does not seem to prohibit a party from raising new
arguments at the interim review stage, provided they are made in the context of a request for review of
precise aspects of the interim report.  However, we note that the DSU, in particular Appendix 3,provides for well defined steps in the proceedings, during which parties may raise arguments in
support of their positions.  The fact that the interim review takes place at the very end of those
proceedings, once all submissions have been made, hearings have taken place and a draft report has
been issued to the parties is evidence that this st age of the proceedings is not meant to address issues
which could have been better addressed in the written and oral proceedings conducted by the Panel.
279
                                                     
276 Adopted on 25 November 1998, WT/DS60/AB/R, hereinafter " Guatemala – Cement ".
277 Adopted on 20 March 1997, WT/DS22/R and DS22AB/R, hereinafter " Brazil – Dessicated
Coconut ".
278 See para. 3.27 above.
279 The limited function of the interim review stage is confirmed by the existence of an appeal
procedure, where parties may address issues of la w covered in the panel report and challenge legal
interpretations developed by the panel (Article 17.6 of the DSU).   On the role of the interim review stage inpanel proceedings, see, e.g., the views expressed by the panel on India - Quantitative Restrictions on Imports  of
Agricultural, Textile and Industrial Products , adopted on 22 September 1999, WT/DS90/R, para. 4.2. The Panel
notes in this respect that the parties have not contested any of the factual findings made in the course of these
proceedings, in particular those relating to the meaning of the 1916 Act, the context of its enactment and theWT/DS136/R
Page 105
Moreover, Article 3.10 provides that parties must engage in dispute settlement in good faith.  This
implies that they should not withhold until the interim review stage arguments that they could be
legitimately expected to have raised at a much earlier stage of the proceedings, in light of the claims
developed in the first submissions. In this respect, we see no reasons why the United States could not
have made the argument at issue at the very beginning of the proceedings, since it dealt with theadmissibility of all the claims raised by the EC under Article VI of the GATT 1994 and the Anti-
Dumping Agreement.
5.19 As a result, we consider that there would be a number of reasons to reject the US argument as
untimely. However, since Article 15.3 of the DSU provides that the final report shall include a
discussion of the arguments made at the interim review stage, and since our decision to address theEC claims under Article VI of the GATT 1994 and the Anti-Dumping Agreement may be subject to
appeal, we consider that it is justifiable to explain why, in our view, the competence of the Panel to
address a violation of Article VI and the Anti-Dumping Agreement is not affected by the findings of
the Appellate Body in Guatemala – Cement and of the panel and Appellate Body in Brazil –
Desiccated Coconut .
5.20 We first consider the provisions of the Anti-dumping Agreement on consultation and dispute
settlement. Paragraphs 1 to 4 provide as follows:
"17.1 Except as otherwise provided herei n, the Dispute Settlement Understanding is
applicable to consultations and the settlement of disputes under this Agreement.
17.2 Each Member shall afford sympathetic consideration to, and shall afford
adequate opportunity for consultation regarding, representations made by another
Member with respect to any matter affecting the operation of this Agreement.
17.3 If any Member considers that any benefit accruing to it, directly or indirectly,
under this Agreement is being nullified or im paired, or that the achievement of any
objective is being impeded, by another Memb er or Members, it may, with a view to
reaching a mutually satisfactory resolu tion of the matter, request in writing
consultations with the Member or Member s in question.  Each Member shall afford
sympathetic consideration to any request from another Member for consultation.  
17.4 If the Member that requested consultations 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 thematter to the Dispute Settlement Body ("DSB").  When a provisional  measure has a
significant impact and the Member that re quested 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."
5.21 We first note that Article 17 of the Anti-Dumping Agreement does not replace the DSU as a
coherent system of dispute settlement for that Agreement.
280 In this respect, the Appellate Body in
                                                                                                                                                                    
interpretations made by the US courts, which would be the type of questions that a party may wish to raise at the
interim review stage.
280 Guatemala - Cement, Op. Cit., para. 67.WT/DS136/R
Page 106
Guatemala – Cement  explained that "the rules and procedures of the DSU […] apply to disputes
brought pursuant to the consultation and dispute settlement provisions contained in Article 17".281
5.22 We also note that nothing in the terms of either Article 17.2 or Article 17.3 limits the scope of
possible consultations under the Anti-Dumping Agreement. Article 17.3 was not listed in Appendix 2
of the DSU because "it provides the legal basis for consultations to be requested by a complainingmember under the Anti-Dumping Agreement .  Indeed, it is the equivalent provision in the Anti-
Dumping Agreement to Articles XXII and XXIII of the GATT 1994, which serves as the basis for
consultation and dispute settlement under the GATT 1994 [and] under most of the other agreements in
Annex 1A of the Marrakesh Agreement Establishing the World Trade Organization ".
282
5.23 In contrast, Article 17.4 deals with a particul ar situation under the Anti-Dumping Agreement,
hence its status of  special or additional provision under the DSU.  As stated by the Appellate Body in
Guatemala – Cement :
"We see the special or additional rules and procedures of a particular covered
agreement as fitting together with the generally applicable rules and procedures of the
DSU to form a comprehensive, integrated dispute settlement system for the WTO
Agreement .  The special or additional provisions listed in Appendix 2 of the DSU are
designed to deal with the particularities of dispute settlement relating to obligations
arising under a specific covered agreement, while Article 1 of the DSU seeks to
establish an integrated and comprehensive dispute settlement system for all of the
covered agreements of the WTO Agreement  as a whole.  It is, therefore, only in the
specific circumstance where a provision of the DSU and a special or additional
provision of another covered agreement are mutually inconsistent that the special oradditional provision may be read to  prevail  over the provision of the DSU."
283
5.24 Paragraph 66 of the Appellate Body report in Guatemala – Cement  illustrates the function of
Article 17.4.  Article 17.4 deals with the particular issue of challenging actions taken by anti-dumping
authorities .  There is nothing in the provisions of Article 17.4 limiting the scope of application of the
dispute settlement provisions applicable to anti-dumping, except in relation to the specific issue ofMembers' anti-dumping actions.
284
5.25 Our reading of Article 17.4 is not only confirmed by the immediate context of that provision,
i.e. Article 17.1, 17.2 and 17.3, but also by other provisions of the Anti-Dumping Agreement.
Article 18.4 provides that:
"Each Member shall take all necessary steps, of a general or particular character, to
ensure, no later than the date of entry in to force of the WTO Agreement for it, the
conformity of its laws, regulations and administrative procedures with the provisions
of this Agreement as they may apply for the Member in question."
We understand Article 18.4 of the Anti-Dumping Agreement as requiring the conformity of Members'
anti-dumping laws as of the date of entry into force of the WTO Agreement for those Members.  Inother words, a Member's anti-dumping legislati on must be compatible with the WTO Agreement
                                                     
281 Ibid., para. 64.
282 Ibid.
283 Ibid. , para. 66.
284 If the position of the United States that only the three types of measures referred to by the Appellate
Body in Guatemala – Cement  could be challenged under the DSU were correct, then any Member could escape
the application of the disciplines of Article VI and the Anti-Dumping Agreement merely by taking other types
of measures than those provided for in the Anti-Dumping Agreement.WT/DS136/R
Page 107
continuously, whether that legislation is applied or not.  If dispute settlement could be initiated in
relation to anti-dumping actions  only, i.e. if the conformity of a domestic anti-dumping law could
only be reviewed when that law is applied, the provisions of Article 18.4 would be deprived of their
meaning and useful effect, since a Member could maintain a WTO-incompatib le law in total impunity
as long as none of the measures referred to in Article 17.4 is adopted.  Even if, on the occasion of thereview of a particular action, the law on which the measure was based were found to be WTO-
incompatible, the interpretation advocated by the Un ited States would fail to give meaning and legal
effect to the terms "no later than the date of entry into force of the WTO Agreement for [that
Member]" in Article 18.4 and would be contrary to the principle of effectiveness.
285 Moreover, Article
18.4 requires that all necessary steps , of a general or particular nature, be taken. Those terms would
be redundant if the anti-dumping laws of Members only had to be WTO-consistent when actually
applied to a particular situation.
5.26 As could already be noticed from the previous paragraphs, the interpretation of Article 17 of
the Anti-Dumping Agreement by the Appellate Body confirms our view.   The argument of theUnited States is essentially based on an interpretation of paragraph 79 of the Appellate Body Report
in Guatemala – Cement taken out of its context.
286 The facts at issue in the Guatemala – Cement  case
were different from those before us.  In that case, Mexico contested a specific investigation carried
out by Guatemala against imports of Portland cement from Mexico.  If one reads the reasoning of the
Appellate Body in the factual context to which it pertains, it is not possible to draw the extensive
conclusion suggested by the United States.  The specific scope of the findings in that case is
confirmed by the Appellate Body itself in the paragraph following the one quoted by theUnited States:
"80. For all of these reasons, we conclude that the Panel erred in finding that
Mexico did not need to identify "specific measures at issue" in this dispute.  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
                                                     
285 Ut res magis valeat quam pereat.  See, e.g., Appellate Body Report on Argentina – Safeguard
Measures on Import of Footwear , adopted on 12 January 2000, WT/DS121/AB/R, para. 88 and Appellate Body
Report on United States – Standards for Reformulated and Conventional Gasoline , adopted on 20 May 1996,
WT/DS2/AB/R, page 23.
286 Paragraph 79 of the Appellate Body report in the Guatemala – Cement  case referred to by the
United States reads as follows:
"79. Furthermore, Article 17.4 of the Anti-Dumping Agreement  specifies the types of
"measure" which may be referred as part of a "matter" to the DSB.  Three types of anti-dumping measure are specified in Article 17.4:  definitive anti-dumping duties, the acceptanceof price undertakings, and provisional measures.  According to Article 17.4, a "matter" may bereferred 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 acceptance of a price undertaking, or aprovisional measure.  This requirement to iden tify a specific anti-dumping measure at issue in
a panel request in no way limits the nature of the claims  that may be brought concerning
alleged nullification or impairment of benefits or the impeding of the achievement of any
objective in a dispute under the Anti-Dumping Agreement .  As we have observed earlier, there
is a difference between the specific measures at issue -- in the case of the Anti-Dumping
Agreement , one of the three types of anti-dumping measure described in Article 17.4 -- and
the claims or the legal basis of the complaint referred to the DSB relating to those specificmeasures.  In coming to this conclusion, we note that the language of Article 17.4 of the Anti-
Dumping Agreement  is unique to that Agreement."WT/DS136/R
Page 108
of the matter referred to the DSB pursuant to the provisions of Article 17.4 of the
Anti-Dumping Agreement  and Article 6.2 of the DSU." (emphasis added)
Thus, the findings of the Appellate Body in Guatemala-Cement  were limited to the taking of action in
situations contemplated in Article 17.4.  They could not be – and actually were not - intended to limit
the scope of application of dispute settlement under the Anti-Dumping Agreement.
5.27 We therefore conclude 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.  In that respect, we consider that the
findings of the panel and the Appellate Body in Brazil – Desiccated Coconut  referred to by the United
States are not applicable to this case, since those findings referred to the non-applicability of the
Agreement on Subsidies and Countervailing Measures to  existing measures or investigations initiated
pursuant to applications made before the entry into force of that Agreement.287
5.28 The second category of comments by the United States relates to allegedly factually
misleading statements of the Panel or to alleged misrepresentations of the arguments of theUnited States in the findings.
5.29 Regarding the statement of the Panel in paragraph 6.42 concerning the fact that criminal
prosecutions may have been initiated under the 1916 Act, the United States argues that, to its
knowledge, no criminal prosecutions have ever be en brought under the 1916 Act.  In fact, we relied
on a remark of the United States District Court, E.D. Pennsylvania, in its 1980 judgement in Zenith
Radio Corp. v. Matsushita Electric Industrial Co. Ltd. , where the court stated that:
"apparently there have been four attempts to enforce the criminal provisions of the
Act, but none of them has been successful and none has given rise to a reported
judicial decision.  Marks, United States Antidumping Laws – A Government Overview
43 Antitrust L.J. 580, 581 (1974)"
288
We note, however, that the statement contested is not essential to our findings. Since the comment ofthe United States would tend to confirm that records are not clear on this point, we redraftedparagraph 6.42 in line with the general thrust of the paragraph, which was to specify in what context
(criminal or civil proceedings) US courts had interpreted the 1916 Act.
5.30 Regarding the comments of the United States on paragraph 6.77, we clarified that the phrase
in the fifth sentence of that paragraph quoted by the United States was the opinion of the Panel, notthat of the United States. Moreover, the United States asserts that its position was actually different
from that summarised by the Panel.  However, it is our understanding that, in the view of the
United States, anti-dumping duties were not the exclusive remedy against injurious dumping allowed
under Article VI.  This is the only point that the Panel wishes to make in the sentence at issue.
Consequently, we have added footnote 346 which refers to the arguments of the United Statesregarding the interpretation of Article VI:2 of the GATT 1994 in section III.E.2 of this report.
5.31 At the request of the United States, we also clarified paragraph 6.85, even though the terms
contested were included in the opinion of the Panel, not in a summary of the position of the
United States.  What we meant was that, once a law has been found not to mandate a WTO-illegal
action, any review of that law under the DSU must stop and it cannot be challenged as such.  Sincethe EC does not contest specific instances of applications of the law, this appeared to the Panel to be
the essence of the US argumentation.
                                                     
287 See Article 32.3 of the Agreement on Subsidies and Countervailing Measures.
288 494 F. Supp. 1190, at p. 1212.WT/DS136/R
Page 109
5.32 The United States also argues that the Panel has misrepresented the US position in paragraph
6.195 (now 6.197) by stating that "the United States does not seem to contest the fact that Article 18.1
of the Anti-Dumping Agreement in the least states that duties are the only remedies allowed to
counter certain forms of dumping under Article VI of the GATT 1994 and the Anti-Dumping
Agreement".  We do not see any contradiction between the interpretation of the US argument made bythe Panel and the position of the United States as expressed in its comments.  The United States
alleges that a Member could counteract dumping with measures which are not explicitly set forth in
Article VI or the Anti-Dumping Agreement.  In th e view of the Panel, this does not exclude that,
under Article VI and the Anti-Dumping Agreement , the only remedy be anti-dumping duties.  This is
different from saying that anti-dumping duties are the only remedies allowed against injuriousdumping  under the WTO Agreement .  Our understanding of the US arguments is also consistent with
the position of the United States in this case that "Article 18.1 of the Anti-Dumping Agreement uses
carefully crafted language to express the intended limitation regarding other remedies than duties."
289
We nevertheless redrafted paragraph 6.197 to make the elements of our deduction clearer.
5.33 Finally, we also clarified paragraph 6.112 (now 6.115) to make clear that the term "'effect'
tests" originated in the Panel, not the United States.
5.34 In the light of the comments of the parties, the Panel considered that some aspects of its
reasoning had to be further clarified.  In this respect, the Panel found it useful to add paragraph 6.97
on the relationship between Article VI of the GATT 1994 and the Anti-Dumping Agreement. In
addition, it reorganised its presentation of section C.2(b)(i) and (ii). The Panel also added footnote
293 to paragraph 6.1, footnote 310 to paragraph 6.32, footnote 313 to paragraph 6.34, footnote 352 to
paragraph 6.84.  We also modified footnote 344 to paragraph 6.76, as well as paragraph 6.79. Thesenew or modified paragraphs or footnotes merely qualify or elaborate on statements already contained
in the text.  They neither change the reasoning of the Panel nor affect its findings.
VI. FINDINGS
A. F
ACTS AT THE ORIGIN OF THE DISPUTE AND ISSUES TO BE ADDRESSED BY THE PANEL
1. Facts at the origin of the dispute
6.1 The law, the WTO-consistency of which is contested by the European Communities,290 is a
United States legislative text enacted under the heading of "Unfair Competition" in Title VIII of the
Revenue Act of 1916.291 It has been known since as the "Antidumping Act of 1916."292 The 1916 Act,
                                                     
289 See para. 3.245 above.
290 Throughout these findings, the European Communities as a WTO Member will be indifferently
referred to as the "European Communities" or the "EC".
291 Act of 8 September 1916.  The Revenue Act can be  found at 39 Stat. 756 (1916).  Title VIII of the
Revenue Act is codified at 15 U.S.C. §§ 71-74.
292 A number of official documents published by the US authorities and a number of US court decisions
refer to Title VIII of the Revenue Act of 1916 as the "Antidumping Act of 1916".  Authors have also called it
the "1916 Antidumping Act" or qualified it as an act dealing with certain forms of dumping, irrespective of
whether they considered it to be an "anti-dumping" law or an "anti-trust" law.  See, e.g., A. Paul Victor: The
Interface of Trade/Competition Law and Policy: An Overview , 56 Antitrust L.J. 397, p. 401;  John H. Jackson,
World Trade and the Law of GATT (1968), p. 403, footnote 4. However, we note that the word "anti-dumping"
does not appear as such in the text of the law.  Since the question whether this law is an anti-dumping law withinthe meaning of Article VI of GATT 1994 is one of the issues that this Panel has to address, we find it more
appropriate to refer to it in our discussion as the "1916 Act".WT/DS136/R
Page 110
which provides for civil and criminal penalties by US federal courts for a certain form of transnational
price discrimination293 when conducted with specific intent,294 reads as follows:
"It shall be unlawful for any person impor ting 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 aprice 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 which they are commonly
exported after adding to such market value or wholesale price, freight, duty, and other
charges and expenses necessarily incident to the importation and sale thereof in theUnited States: Provided , That such act or acts be 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.
Any person who violates or combines or conspires with any other person to violate
this section is guilty of a misdemeanour, and, on conviction thereof, shall be punished
by a fine not exceeding $5,000, or imprisonme nt 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, without respect to the amount in controversy, and shall recoverthreefold the damages sustained, and the cost of the suit, including a reasonable
attorney’s fee.
The foregoing provisions shall not be construed to deprive the proper State courts of
jurisdiction in actions for damages thereunder."
6.2 Two significant features of the 1916 Act are that:
(a) it provides for a review of the practices concerned by the judiciary branch of
government
295 at the federal level, not by the executive branch of government; and
                                                     
293 Even though the word "discrimination" may have specific meanings in certain circumstances, it is
used throughout the findings as meaning a differentiation, a distinguishing mark (see, e.g., The New Shorter
Oxford English Dictionary (1993), p. 689).  As a result, the term "transnational price discrimination" in these
findings refers only to the existence of a difference in  price between two markets located in different countries,
irrespective of the intent of the exporter behind that price difference or the effects thereof.  See also
Jacob Viner's definition of "dumping" as a "price-discrimination between national markets" (Dumping, A
Problem in International Trade (1923), p. 3).
294 The 1916 Act was part of a legislative effort of the United States to address a number of practices
perceived at that time as "unfair competition".  A number of major anti-trust and trade laws of the United Statesstill applicable today were adopted by the Congress of the United States (hereinafter the "US Congress")
between the end of the 19
th century and the 1930’s. The Sherman Act (15 U.S.C. 1-7) dates back to 1890 and the
Clayton Act to 1914 (15 U.S.C. 12, 13, 14-19, 20, 21, 22-27; 29 U.S.C. 52, 53). Subsequent to the 1916 Actcame the 1921 Anti-Dumping Act, the 1930 Tariff Act (which has become since the basis of the current USanti-dumping legislation) and the 1936 Robinson-Patman Act, amending Section 2 of the Clayton Act of 1914.
295 The terms "judiciary branch of government", "executive branch of government" and "legislative
branch of government" are, throughout this report, used within the meaning given to them in US constitutional
law.WT/DS136/R
Page 111
(b) it provides for two "tracks" of litigation before US federal courts: (i) civil proceedings
through which a person may seek to recover damages, and (ii) criminal proceedings
whereby the US Department of Justice may seek the imposition of a fine or
imprisonment.
2. Issues to be addressed by the Panel
6.3 The understanding of the Panel as to the claims and defences of the parties is, in a
summarised form, as follows.296
6.4 The EC challenges the 1916 Act as such, not a particular instance of application.  It claims
that the 1916 Act violates Articles III:4, VI:1 and VI:2 of the GATT 1994, Articles 1, 2.1, 2.2, 3, 4,
5.5 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade
1994297 and Article XVI:4 of the Marrakesh Agreemen t Establishing the World Trade Organization.298
6.5 The EC claims that the 1916 Act falls within the scope of Article VI of the GATT 1994
because the 1916 Act targets certain practices defined as "dumping" in that Article.  According to the
EC, the 1916 Act applies (i) when imported products are sold on the United States market at a lower
price than they are sold on the domestic market of the exporting country or of a third country and (ii)by reason of their importation. This corresponds to the definition of dumping under Article VI:1. The
EC argues that recent court decisions and, in general, US case-law on the 1916 Act should be used by
the Panel as factual guidance that the 1916 Act has been applied as an anti-dumping statute.
Moreover, since the 1916 Act does not respect other requirements of Article VI:1 of the GATT 1994,
the 1916 Act violates Article VI:1.
6.6 The EC also claims that, by providing for treble damages, fines or imprisonment, the 1916
Act violates Article VI:2 of the GATT 1994, which provides that the imposition of duties is the onlyremedy allowed to counteract dumping under the WTO Agreement.
6.7 Furthermore, the EC claims that the 1916 Act vi olates a number of requirements of the Anti-
Dumping Agreement, inter alia  by not respecting procedural requirements as to the determination of
material injury and the initiation and conduct of the investigation leading to the imposition of
measures.
6.8 The EC claims that since the 1916 Act is an anti-dumping statute covered by the disciplines
of Article VI of the GATT 1994 and the Anti-Dumping Agreement, it should have been brought into
conformity with the rules set forth in Article VI of the GATT 1994 and with the Anti-Dumping
Agreement, pursuant to Article XVI:4 of the Agreement Establishing the WTO.
6.9 Finally, the EC claims, in the alternative or if the Panel were to find that the 1916 Act
complies fully or in part with Article VI of the GATT 1994, that the 1916 Act violates Article III:4 of
the GATT 1994 to the extent that it provides less favourable treatment to imported goods than is
                                                     
296 The claims and arguments of the parties are reported in greater detail in Sections II and III of this
Report.
297 Referred to hereafter as the "Anti-Dumping Agreement".
298 Throughout these findings, the Marrakesh Agreement Establishing the World Trade Organization,
including its annexes, will be referred to as the "WTO Agreement".  The Marrakesh Agreement Establishing theWorld Trade Organization, without its annexes, will be referred to as the "Agreement Establishing the WTO". Inthat context, Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization will bereferred to as "Article XVI:4 of the Agreement Establishing the WTO".  The agreements annexed to the
Agreement Establishing the WTO will be referred to as the "WTO agreements".WT/DS136/R
Page 112
granted to US goods under the Robinson-Patman Act299 in terms of the difference in (i)
injury/predation standards, (ii) measurement of price discrimination, (iii) sales requirements and
thresholds requirements for complaints and (iv) the statutory defences available under the Robinson-
Patman Act and not expressly provided for in the 1916 Act.
6.10 The United States argues that the 1916 Act is an anti-trust statute.300 It is not subject to the
disciplines of Article VI since it does not address injurious dumping within the meaning of Article VI
but a much narrower form of international price discrimination with an anti-trust objective, as
demonstrated by the legislative history and the subse quent case-law relating to it. In this respect, the
United States stresses that it is not the role of the Panel to interpret US law and case-law.  It should
consider it as facts to be proved.  On that basis, the Panel should find that the 1916 Act, as an anti-trust statute, does not violate Article VI:1 of the GATT 1994.  If one were to follow the EC
interpretation of Article VI:1, all anti-trust laws of Members, including the EC competition rules
under Article 82 of the Treaty of Amsterdam, would be subject to Article VI of the GATT 1994 to the
extent that they rely on transnational price discrimination.
6.11 The United States further claims that Article VI:2 as such does not provide that duties are the
sole remedy allowed to counteract dumping and that a Member is bound to respect the provisions of
the Anti-Dumping Agreement only to the extent it intends to impose duties.
6.12 The United States argues that in any event the 1916 Act, to the extent that the US Department
of Justice enjoys discretion to file - or not - a suit with a federal court, is a "non-mandatory" law
within the meaning given to that concept by GATT 1947 panels and by panels and the Appellate Body
under the WTO. The United States further argues that the 1916 Act is susceptible, and indeed has
been interpreted in a WTO-compatible manner. In application of past GATT 1947 panel practice, thisalso makes the 1916 Act "non-mandatory" legislation. It is therefore for the EC to prove that the 1916
Act is not capable of a WTO-compatible interpretation.
6.13 The United States further argues that Article XVI:4 of the Agreement Establishing the WTO
does not require Members to pre-empt any possible WTO-inconsistent interpretation of their domestic
laws. It is the opinion of the United States that the 1916 Act is in conformity with its WTOobligations until it is ruled by the WTO that it is not.
6.14 Finally, the United States claims that the 1916 Act does not violate Article III:4 of the GATT
1994. Compared with the Robinson-Patman Act, the 1916 Act actually grants more favourable
treatment to imported goods than to US goods. The 1916 Act requires an intent  to destroy or injure an
industry in the United States, or to prevent the establishment of an industry in the United States, or torestrain or monopolize any part of trade and commerce in the articles concerned in the United States.
According to the United States, this requirement that an "intent" be demonstrated by the plaintiff has
been considered to be the main reason for the very  rare and generally unsuccessful application of the
1916 Act compared with the Robinson-Patman Act. Apart from this, the procedural requirements
under the two statutes are either similar or more favourable to defendants under the 1916 Act.
                                                     
299 See footnote 294 above.
300 The Panel notes that the parties have used the terms "competition" and "anti-trust" to refer to the
same rules and policies.  We are aware of the fact that the term "anti-trust" is more frequently used in theUnited  States.  We also note that the term "competition" is used not only in EC law but also by certaininternational organizations, such as the OECD (see, e.g., Competition and Trade Policy, Their Interaction
(1984)).  However, since our examination of the matter requ ires us to deal with US statutes and case-law, it was
found appropriate to use the term "anti-trust" when describing the practice that the parties consider to fall within
the scope of "anti-trust" or "competition" law in general.WT/DS136/R
Page 113
6.15 From the above, it appears to the Panel that the two parties address the WTO-compatibility of
the 1916 Act through approaches that are diametrically opposed.  The European Communities, basing
itself on the definition of "dumping" found in Article VI:1 of the GATT 1994 and the absence of
express limitation of the scope of that article, seems to be of the view that any law which targets
"dumping" within the meaning of Article VI is a "trade" law and is therefore subject to the relevantWTO disciplines. The approach of the United States, on the contrary, seems to be that the disciplines
of Article VI of the GATT 1994 apply only to the ex tent that a law purports to address dumping as an
international trade practice.  If what the law targets is not "injurious dumping" within the meaning of
Article VI of the GATT 1994, but the anti-trust effects (e.g., restraining or monopolising trade within
the territory of a Member) of a narrower form of transnational price discrimination, WTO disciplineson anti-dumping do not apply to it.
6.16 On the basis of the arguments developed by the parties, the Panel considers that it needs to
approach the matter before it as follows.
6.17 First, since we are called to determine the compatibility of a law of the United States with the
WTO obligations of that Member, we should determine how to consider that law and its"surrounding", i.e. the circumstances of its enactment (including the legislative history)
301 and the
subsequent interpretation(s).  This is in our view important since both parties have substantially
discussed those aspects, including the relevance of certain court decisions.  Judicial interpretation, as
evidence of the meaning given to the terms of a legal text, may affect the way we should understand
the terms of the 1916 Act.
6.18 Second, we should proceed to address the issue whether we review the 1916 Act under
Article VI or under Article III:4 of the GATT 1994 first, or if we review it under either provision atall.  The reason for this is that, while the 1916 Act addresses transnational price discrimination, it
imposes internal measures. Article VI relates to actions by Members vis-à-vis  a particular practice
whereas Article III:4 ensures that foreign products, once imported, are not subject to less favourable
treatment than domestic products.  We believe that it falls within our competence and duty to
determine the applicability of Articles III:4 and VI as part of our review of the compatibility of the1916 Act under the provision(s) found applicable, without prejudice to judicial economy.
6.19 On the basis of our conclusions on the application of Articles III:4 and VI to the 1916 Act, we
shall address the compatibility of the 1916 Act under Article III:4 and/or Article VI of the GATT
1994 and the Anti-Dumping Agreement to the extent necessary to assist the WTO Dispute Settlement
Body
302 in making its recommendations.  We should do this having regard to the defence of the
United States based on the alleged "mandatory/non-mandatory" nature of the 1916 Act.
6.20 Once this is done, we may also consider the claims of the EC under Article XVI:4 of the
Agreement Establishing the WTO.
6.21 However, before reviewing the substantive issues of the case, we need to address the
procedural issues raised by the parties in the course of the proceedings.
                                                     
301 Since the term "legislative history" is used throughout this report in relation to the preparation of US
pieces of legislation, it will be given the meaning it has under US practice, i.e. "The background and events,including committee reports, hearings, and floor debates, leading up to the enactment of a law." Black's Law
Dictionary, 6th Ed. (1990), p.  900.
302 Hereinafter also referred to as the "DSB".WT/DS136/R
Page 114
B. PROCEDURAL ISSUES
1. Request for a preliminary ruling by the United States
6.22 The United States, in its first written submission, requested the Panel to issue a preliminary
ruling on two claims allegedly made by the EC in its first written submission. According to the United
States, the EC claimed that the 1916 Act violates Articles 1 and 18.1 of the Anti-Dumping Agreement
for the first time in its first submission.  In the opinion of the United States, Articles 6.2 and 7 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes303 and Article 17.4 and
17.5 of the Anti-Dumping Agreement preclude the Panel from considering these two claims because
they were not included in the EC’s request for the establishment of a panel.
6.23 At the request of the Panel, the European Communities addressed the request of the United
States.  The EC stated that the United States asked the Panel to exclude claims that the European
Communities had not made. The EC claimed a violation of Article VI:2 of the GATT 1994, but it
made no separate claims that the 1916 Act violates Articles 1 and 18.1 of the Anti-Dumping
Agreement.  These provisions were merely arguments in support of the EC claims.
6.24 The Panel recalls that in its report on European Communities – Regime for the Importation,
Sale and Distribution of Bananas , the Appellate Body mentioned that
"Article 6.2 of the DSU requires that the claims , but not the arguments , must all be
specified sufficiently in the request for the establishment of a panel in order to allow
the defending party to know the legal basis of the complaint."304
In light of the reply of the EC that Articles 1 and 18.1 of the Anti-Dumping Agreement "were only
mentioned as arguments in support of [its] claims", the Panel considered that it was not necessary to
address the issue any further.
6.25 However, the United States stressed, during the first meeting of the Panel with the parties,
that the Panel should reject the EC’s attempt to circumvent the requirements of the DSU by describing
its references to Articles 1 and 18.1 of the Anti-Dumping Agreement as "mere arguments". Indeed, if
the Panel were to analyse whether these newly invoked articles support the EC’s other claims, thePanel would be required to determine whether those provisions provide an exclusive remedy for
dumping.
6.26 We understand these arguments of the United States as an elaboration of its original request
for a preliminary ruling, even though they were also made in relation to the EC claim of a violation of
Article VI:2 of the GATT 1994.  At this stage, we address them to the extent necessary to reply to theprocedural aspect of the arguments of the United States. We note that panels in the past have faced
similar situations where a complainant relied on a given provision to support a claim based on another
provision.  In India – Quantitative Restrictions on Imports  of Agricultural Textile and Industrial
products , the United States discussed the applicability of both Article XVIII:B of the GATT 1994 and
of the Understanding on Balance-of-Payments Prov isions of the GATT 1994.  The panel found that,
while the United States had made a claim under Article XVIII:11 of the GATT 1994, it had not made
any claim under other provisions of Article XV III:B of the GATT 1994 or under the Understanding
on Balance-of-Payments Provisions of GATT 1994. The panel concluded that it would not "address
any claim of the United States based on the [U nderstanding on Balance-of-Payments Provisions of
                                                     
303 Hereinafter the "DSU".
304 Appellate Body Report on European Communities – Regime for the Importation, Sale and
Distribution of Bananas,  adopted on 25 September 1997, WT/DS27/AB/R (hereinafter " European Communities
-Bananas "), para. 143 (emphasis in the original).WT/DS136/R
Page 115
GATT 1994] or on other provisions of Article XVIII :B other than Article XVIII:11".  The panel
nonetheless held that these provisions were "part of the context of those provisions alleged by the
United States to have been violated".305
6.27 We also recall that Article 31 of the Vie nna Convention on the Law of Treaties (1969)306
provides that the interpretation of a provision of a treaty should be made in its context, and that
"context", for the purpose of the interpretation of a treaty, shall comprise, inter alia, the "text [of the
treaty], including its preamble and annexes".307 As a result, there are grounds to consider that other
provisions of the WTO agreements than those referred to in the terms of reference can be considered
by the Panel under certain conditions.
6.28 However, we limit ourselves at this stage to taking note of the fact that the EC does not make
any separate claim under Article 18.1 of the Anti-Dumping Agreement. In light of the clarification by
the EC, we also conclude that the EC claim under Article 1 of the Anti-Dumping Agreement308 does
not relate to its claim under Article VI:2 of the GATT 1994, but addresses a different aspect of the
matter.
2. Request for enhanced third party rights by Japan
6.29 On 2 September 1999, Japan requested to be granted enhanced third party rights in this case.
In particular, Japan requested to receive all the necessary documents, including submissions and
written versions of statements of the parties and to attend all the sessions of the second substantive
meeting of the Panel.  At the request of the Panel, the EC and the United States commented on this
request.  The EC agreed to the request of Japan, prov ided that the EC’s request of a similar nature in
the case initiated by Japan concerning the same matter (WT/DS162) would also be accepted.
6.30 The United States strongly objected to the request of Japan.  In the opinion of the
United States, enhanced third party rights were not necessary in order to obtain access to the
submissions of the parties.  In European Communities – Measures Concerning Meat and Meat
Products ("Hormones") ,309 the panel had granted enhanced third party rights essentially because the
panel had informed the parties that concurrent deliberations would be conducted in the case initiated
by the United States and in the case initiated by Canada.  The United States mentioned that it wouldnot support concurrent deliberations in this case and that it could not agree to a request of which the
apparent purpose was to provide the third parties with an opportunity to make an additional
submission in their own panel process.
6.31 On 13 September 1999, the Panel, through its Chairman, informed the parties and Japan that
it could not accede to the request of Japan. The Panel reserved its right to reconsider the issue in light
of subsequent events and informed the parties and Japan that it would address the matter in detail in
its findings.
                                                     
305 Adopted on 22 September 1999, WT/DS90/R (hereinafter " India – Quantitative Restrictions "),
paras. 5.18-5.19.  These findings were not modified by the Appellate Body.
306 Hereinafter the "Vienna Convention". Article 3.2 of the DSU instructs us to clarify the existing
provisions of the WTO Agreement "in accordance with cust omary rules of interpretation of public international
law". From its very first decision and repeatedly ther eafter, the Appellate Body has considered that these
customary rules were embodied inter alia  in Articles 31 and 32 of the Vienna Convention.
307 Article 31.2 of the Vienna Convention.
308 See WT/DS136/2.
309 Adopted on 13 February 1998, WT/DS48/R/CAN (complaint by Canada), hereinafter the " EC –
Hormones " case.  See also WT/DS26/R/USA (complaint by the United States).WT/DS136/R
Page 116
6.32 The Panel carefully considered the arguments raised by the parties. It notes that, while the
DSU does not provide for enhanced third party rights, neither Article 10 of the DSU nor any other
provision of the DSU prohibits panels from gr anting third party rights beyond those expressly
mentioned in Article 10.310  The Appellate Body in the EC – Hormones  case confirmed that granting
enhanced third party rights was part of the discretion of panels under Article 12.1 of the DSU.311
6.33 The Panel notes, however, that the DSU differentiates in terms of rights between main parties
and third parties and that this principle should be respected in order to keep with the spirit of the DSU
in that respect.  Enhanced third party rights have so far been granted for specific reasons only.  In the
EC - Hormones  case, like in this case and the case initiated by Japan (WT/DS162), the two panels
were composed of the same panelists and dealt with the same matter. While these elements appearedto play a significant role in the decisions taken by the panels and in their confirmation by the
Appellate Body, we consider that they could not be  decisive.  Otherwise, enhanced third party rights
would have to be granted in almost all cases where the same matter is subject to two or more
complaints with the same panel composition.
312  We note that particular circumstances existed in the
EC – Hormones  case which certainly contributed to the decisions of the panels to review the two
cases concurrently, such as their highly technical and factually intensive nature, as well as the fact that
the panels had decided to hold one single meeting with the parties and the experts consulted pursuant
to Article 11.2 of the Agreement on Sanitary and Phytosanitary Measures.  These decisions were
largely based on practical reasons and due process had to be preserved.  We conclude from the reports
in the EC – Hormones  case that enhanced third party rights were granted primarily because of the
specific circumstances.
6.34 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 the proceedings in
WT/DS136 and the United States objected to concur rent deliberations.  We are of the view that, in
such a context, we ought to conduct this case independently from the case initiated by Japan both interms of procedure and of analysis of the substantive issues before us.
313
6.35 We are of the view that respecting due process vis-à-vis  Japan did not require the participation
of Japan in the second substantive meeting of the Panel. This said, having regard to Article 18.2 of the
DSU, we urged the EC and the United States, in the course of the proceedings, to communicate to
Japan in due course meaningful non-confidential summaries of their submissions to the Panel, ifrequested to do so by Japan.
6.36 We therefore find that there was no reason to grant enhanced third party rights to Japan in
these proceedings.
                                                     
310 The Panel considers that the provisions of Article  9 of the DSU, in particular Article 9.3 which
addresses the situation of this Panel and the panel requested by Japan on the same matter (WT/DS162) are oflimited assistance in the present issue.
311 Adopted on 13 February 1998, WT/DS26/DS48/AB/R, para. 154.
312 Our remark is based on our understanding of the current state of the WTO practice.  It is without
prejudice to the question whether enhanced third pa rty rights would be advisable or not in general.
313 Accordingly, while we assume that the United States may further elaborate on its argumentation or
submit new arguments in the case initiated by Japan, this Panel shall consider only the arguments of theUnited States submitted in the course of the present case and exclusively as they were developed in the present
case.WT/DS136/R
Page 117
3. Burden of proof
6.37 We recall the Appellate Body Report on United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India ,314 which stated that:
"the burden of proof rests upon the party, whether complaining or defending, who
asserts the affirmative of a particular claim or defence. If that party adduces evidencesufficient to raise a presumption that what is claimed is true, the burden then shifts to
the other party, who will fail unless it adduces sufficient evidence to rebut the
presumption."
6.38 Applying this rule to the factual evidence submitted in the present case, the European
Communities, as the complainant, should normally adduce sufficient evidence to raise a prima facie
case that each of its claims has merit. If it were to do so, it would then be for the United States to
adduce sufficient evidence to rebut that prima facie  case.  If the United States were to assert the
affirmative of a particular defence, it would bear the burden of proving it.  This rule however is only
applicable to determine whether and when a party bears the burden of proof.  Once both parties have
submitted evidence meeting those requirements, it is up to the Panel to weigh the evidence as a whole.In cases where the evidence as a whole regarding a particular claim or defence remains in equipoise,
the issue must be decided against the party bear ing the burden of proof on that claim or defence.
6.39 With respect to the interpretation of the covered agreements, the Panel will be aided by the
arguments of the parties but will not be bound by them.  Pursuant to Article 3.2 of the DSU, our
decision on such matters must be in accord with th e rules of treaty interpretation applicable to the
WTO Agreement.
C. P
RELIMINARY ISSUES
1. Context in which the 1916 Act should be examined by the Panel
(a) Issue before the Panel
6.40 We note that the EC contests the compatibility of the 1916 Act as such – not of particular
instances of application – with certain provisions of the WTO Agreement. While it is clear from the
terms of Article 3.2 of the DSU that it falls within the competence of the Panel to "clarify the existingprovisions of [the covered agreements] in accordance with customary rules of interpretation of public
international law", the DSU does not expressly provide how panels should address domestic
legislation.  Article 11 of the DSU only specifies that panels "should make […] an objective
assessment of the facts of the case".  However, both Article 3.2 of the DSU and the practice of the
Appellate Body make it clear that we have, whenever appropriate, to develop our approach on thebasis of that of international courts in simila r circumstances.  We will consequently take into
consideration the practice of international tribunals in this respect.
6.41 This case has an additional dimension.  Although panels often have to address domestic laws,
in the present case we are called upon to review the consistency of a law which was enacted more
than eighty years ago, and the historical, cultural, legal and economic context of the time undoubtedlyinfluenced its terms. We also note that the parties seem to have diverging views regarding how the
Panel should consider the court decisions relating to that law.
6.42 The 1916 Act was seldom applied since its enactment and no court judgement based on that
law has so far imposed sanctions on the defendant.  It is the understanding of the Panel, based on the
                                                     
314 Adopted on 23 May 1997, WT/DS33/AB/R, p. 14.WT/DS136/R
Page 118
information provided by the parties, that there was never any court decision based on criminal
proceedings under the 1916 Act.  Until the early 1970's, there was only one reported court decision
addressing the civil procedure provided for in the 1916 Act.315  Since 1975, there has been only a
limited number of judicial interpretations of the provisions of the 1916 Act.  All these interpretations
come from US circuit courts of appeals or US district courts.316 No claim under the 1916 Act was ever
expressly reviewed by the Supreme Court of the United States.317
6.43 Therefore, we find it appropriate to clarify from the outset how we shall take into
consideration the text of the 1916 Act itself, the historical context of its enactment (including the
legislative history) and its subsequent interpretation as it results from the US case-law and any other
relevant element of information.
(b) How should the Panel consider the text of the 1916 Act, the context of its enactment, the case-
law relating to it and other relevant pieces of information
(i) Arguments of the parties and approach of the Panel
6.44 The European Communities claims that the 1916 Act is clear on its face.  In its view, the
Panel should not be influenced by the terms used by US courts when it characterises the 1916 Actunder the WTO Agreement.  The EC considers that judgements of national courts are relevant insofar
as they offer guidance on the meaning or interpretation of national laws and it is appropriate for the
Panel to take them into account for that purpose. The Panel should follow the reasoning of the
Appellate Body in its report on India - Patent Protection for Pharmaceutical and Agricultural
Chemical Products
318 and carry out an examination of the rele vant aspects of US municipal law. The
interpretation of the 1916 Act, i.e. determining what it means, including what must be pleaded and
proved in order to establish a claim under it, is a matter of US law and therefore of fact before thePanel.
6.45 The EC also refers to letters or statements of US officials before the US Congress that the
1916 Act was "grandfathered" under GATT 1947 as "existing legislation" within the meaning of the
Protocol of Provisional Application.  For the EC, th is is an admission by the United States of the
GATT/WTO-incompatibility of the 1916 Act.
6.46 The United States argues that the role of the Panel is to assess the facts and then determine
their conformity with the relevant WTO agreements, which generally entails interpreting the scope
and applicability of those agreements to the facts.  The proper interpretation of the 1916 Act is a
question of fact to be established, as it is an accepted principle of international law that municipal law
is a fact to be proven before international tribunals.
6.47 The United States also considers that the Congressional Record and other documents such as
the 1915 Annual Report of the [US]  Secretary of Commerce  are evidence that the 1916 Act addresses
unfair competition.  Regarding the statements of US officials referred to by the EC, the United States
considers that the Panel should attach no weight to them in light of the official US notifications to the
                                                     
315 H. Wagner and Adler Co. v. Mali , F.2d 666 (2d Cir. 1935).
316 Federal courts (district courts and circuit courts  of appeals) are competent to review cases brought
under the 1916 Act, under the supervision of the Supreme Court of the United States.
317 In United States v. Cooper Corporation (312 U.S. 600, 1941), hereinafter the " Cooper  case", at
p. 745, the Supreme Court of the United States made a reference to the 1916 Act as "supplemental" to theSherman Act.  This decision is discussed further in section VI.D.2.(d)(ii) below.
318 Adopted on 16 January 1998, WT/DS50/AB/R (hereinafter " India – Patent (US) ").WT/DS136/R
Page 119
GATT of its "grandfathered" laws, which did not include the 1916 Act.319 Thus, those statements are
mistaken as a matter of fact.
6.48 The understanding of a law the WTO-compatibility of which has to be assessed begins with
an analysis of the terms of that law.  However, we consider that we should not limit ourselves to an
analysis of the text of the 1916 Act in isolation from its interpretation by US courts or other USauthorities, even if we were to find that text to be clear on its face. If we were to do so, we might
develop an understanding of that law different from the way it is actually understood and applied by
the US authorities. This would be contrary to ou r obligation to make an objective assessment of the
facts of the case, pursuant to Article 11 of the DSU.  Therefore, we must look at all the aspects of the
domestic legislation of the United States that are relevant for our understanding of the 1916 Act.However, looking at all the relevant aspects of the domestic law of a Member may raise some
methodological difficulties, such as how much deference must be paid to that Member's
characterisation of its legislation. In that context, we will determine first how to deal with that aspect
of the examination of a domestic law and how we should consider the case-law related to it, since
courts are, inter alia , responsible for interpreting the law.  Moreover, in light of the fact that the law at
issue was enacted more than eighty years ago and not regularly invoked, and since the parties have
referred to other elements such as the historical context, the legislative history and subsequent
declarations of US authorities made in relation to the 1916 Act, we shall also explain how we will
consider them.
(ii) Consideration by panels of domestic law in general
6.49 We note that in India – Patent(US) , the Appellate Body addressed in some detail the issue of
how panels should consider municipal law.  The Appellate Body stated that:
"In public international law, an international tribunal may treat municipal law in
several ways.  Municipal law may serve as evidence of fact and may provide
evidence of State practice."
320
"It is clear that the examination of the relevant aspects of Indian municipal law […] isessential to determining whether India has complied with its obligations under Article70.8(a) [of the TRIPS Agreement].  […] To say that the Panel should have done
otherwise would be to say that only India can assess whether Indian law is consistent
with India's obligations under the WTO Agreement .  This, clearly, cannot be so."
321
6.50 The extent to which panels may examine the laws of Members was illustrated by the
Appellate Body in the same report. Having to de termine whether India provided for legal protection
commensurate with the requirements of Article 70.8 of the TRIPS Agreement, the Appellate Body
asked itself the question of "what constitutes […] a sound legal basis in Indian law".322  Moreover, it
agreed with the conclusion of the panel that "the current administrative practice [of India, based on
so-called "administrative instructions" from the government] creates a certain degree of legal
insecurity in that it requires Indian officials to ignore certain mandatory provisions of the Patent
Act."323 The Appellate Body also agreed that "it was necessary for the Panel in this case to seek a
detailed understanding of the operation  of the Patent Act as it relates to the 'administrative
                                                     
319 The United States refers to GATT document L/2375/Add.1 (19 March 1965).
320 Op. Cit., para. 65.  See also M.N. Shaw, International Law (1995), p. 106, mentioning that domestic
law "can be utilised as evidence of compliance or non-compliance with international obligations".
321 Ibid., para. 66.
322 Ibid.., para. 59.
323 Ibid., para. 63, Panel Report, para. 7.35.WT/DS136/R
Page 120
instructions' in order to assess whether India had complied with Article 70.8(a) [of the TRIPS
Agreement.]"324
6.51 Thus, our understanding of the term "examination" as used by the Appellate Body is that
panels need not accept at face value the characterisation that the respondent attaches to its law.  A
panel may analyse the operation of the domestic legislation and determine whether the description ofthe functioning of the law, as made by the respondent, is consistent with the legal structure of that
Member.  This way, it will be able to determine whether or not the law as applied is in conformity
with the obligations of the Member concerned under the WTO Agreement.
325
(iii) Consideration of the case-law relating to the 1916 Act
6.52 In the present case, unlike India in the India – Patent (US)  case, the United States does not
claim that some administrative interpretations dete rmine the meaning of the 1916 Act.  The situation
is different to the extent that both parties rely, in order to support their claims, on a number of
judgements by US courts which have applied and interpreted the 1916 Act since the 1970's.326  I n
many Members, final judicial decisions regarding the interpretation of a given law may not be
contested any further, whereas administrative interpretations of a law may generally be overruled by adomestic judge called upon to review that law. However, an administrative interpretation will
normally provide one single interpretation.  In contrast, depending on the judicial structure of a
Member, judicial interpretations may emanate from several courts positioned at different levels in the
judicial order. The diversity of the sources of the case-law may make it more difficult to assess the
respective value of the judgements of which that case-law is composed.
                                                     
324 Ibid., para. 68 (emphasis added).
325 This is evidenced by the examples used by the Appellate Body (Ibid., para. 67):
"Previous GATT/WTO panels also have conducted a detailed examination of the domestic
law of a Member in assessing the conformity of that domestic law with the relevantGATT/WTO obligations.  For example, in United States – Section 337 of the Tariff Act of
1930 [footnote omitted], the panel conducted a detailed examination of the relevant United
States' legislation and practice, including the remedies available under Section 337 as well asthe difference between patent-based Section 337 proceedings and federal district court
proceedings, in order to determine whether Section 337 was inconsistent with Article III:4 ofthe GATT 1947."
326 The following – final or interlocutory - court decisions relate to claims made under the 1916 Act: H.
Wagner and Adler Co. v. Mali , Op. Cit.;  In re Japanese Electronic Products Antitrust Litigation , 388
F.Supp. 565 (Judicial Panel on Multidistrict Litigation, 1975) (hereinafter " In re Japanese Electronic Products
I");  Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd. , 402 F.Supp. 244 (E.D. Pa. 1975) (hereinafter
"Zenith I "); Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd. , 402 F.Supp. 251 (E.D. Pa. 1975)
(hereinafter " Zenith II ");  Outboard Marine Corp. v. Pezetel , 461 F. Supp. 384 (D. Del. 1978);  Schwimmer v.
Sony Corp. of America , 471 F. Supp. 793 (E.D.N.Y. 1979);  Schwimmer v. Sony Corp. of America , 637 F.2d 41
(2nd Cir. 1980);  Jewel Foliage Co. v. Uniflora Overseas Florida , 497 F. Supp. 513 (M.D. Fla. 1980); Zenith
Radio Corp. v. Matsushita Electric Industrial Co., Ltd. , 494 F.Supp. 1190 (E.D. Pa. 1980) (hereinafter " Zenith
III");  In re Japanese Electronic Products Antitrust Liti gation (Zenith Radio Corp. v. Matsushita Electric
Industrial Co., Ltd.) , 723 F.2d 319 (3d Cir. 1983) (hereinafter " In re Japanese Electronic Products II ");
Western Concrete Structures Co. v. Mitsui & Co., 760 F.2d 1013 (9th Cir. 1985);   Isra Fruit Ltd. v. Agrexco
Agr. Export Co. , 631 F. Supp. 984 (S.D.N.Y. 1986);  In re Japanese Electronic Products Antitrust Litigation
(Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd.) , 807 F.2d 44 (3d Cir. 1986) (hereinafter " In re
Japanese Electronic Products III ")  Helmac Products Corp. v. Roth (Plastics) Corp. , 814 F. Supp. 560 (E.D.
Mich. 1992) (hereinafter " Helmac I ");  Helmac Products Corp. v. Roth (Plastics) Corp ., 814 F.Supp. 581 (E.D.
Mich. 1993) (hereinafter " Helmac II ");  Geneva Steel Company v. Ranger Steel Supply Corp. , 980 F.Supp. 1209
(D. Utah 1997) (hereinafter " Geneva Steel ");  Wheeling-Pittsburgh Steel Corporation v. Mitsui Co. , 35
F.Supp.2d. 597 (S.D. Ohio 1999) (hereinafter " Wheeling-Pittsburgh ").WT/DS136/R
Page 121
6.53 We recall that the International Court of Justice, in the Elettronica Sicula S.p.A (ELSI)  case,
referred to the judgement of the Permanent Court of International Justice327 in the Brazilian Loans
case – to which the United States also refers in its submissions - and noted that:
"Where the determination of a question of municipal law is essential to the Court's
decision in a case, the Court will have to weigh the jurisprudence of the municipalcourts, and 'If this is uncertain or divided, it will rest with the Court to select the
interpretation which it considers most in conformity with the law' ( Brazilian Loans ,
PCIJ, Series A, Nos. 20/21, p. 124)."
 328
We are fully aware that our role is to clarify the existing provisions of the covered agreements so as todetermine the compatibility of a domestic law with those agreements. We are also aware that, in theBrazilian Loans  case, the PCIJ was asked to apply domestic legislation to a given case. We are
nevertheless of the view that there is nothing in the text of the DSU, nor in the practice of the
Appellate Body, that prevents us from "weigh[ing] the jurisprudence of municipal [US] courts" if it is
"uncertain or divided".  This would not require us to develop our own independent interpretation of
US law, but simply to select among the relevant judgements the interpretation most in conformitywith the US law, as necessary in order to resolve the matter before us.
329
6.54 We note that the 1916 Act is applied by US federal courts. Interpretations by the Supreme
Court of the United States (hereinafter the "Supreme  Court") prevail over interpretations made by the
courts of appeals of the various circuits.  Interpretations by courts of appeals, in turn, prevail over
interpretations by district courts, but only within the same circuit.330
6.55 We understand from the submissions of the parties that the Supreme Court has yet to address
the interpretation of specific provisions of the 1916 Act.  It mentioned the 1916 Act in only one of its
judgements.331  Thus, the case-law submitted by the parties that would allow us to understand the
actual meaning of the 1916 Act today essentially comes from district courts and courts of appeals of
various circuits of the US federal judicial system. We also note that the parties in their submissions
have relied on different judgments, which they claim support their interpretations of the 1916 Act.
6.56 We shall respect the formal hierarchy of court decisions in the US federal system to the extent
that it is applicable. In that context, we shall allow a circuit court of appeals decision to prevail over a
district court decision.   However, applying such a formal approach may prove insufficient in some
instances, for example when the decisions to  be compared come from different circuits.332 Therefore,
                                                     
327 Hereinafter "PCIJ".
328 ICJ, Case Concerning Elettronica Sicula S.p.A. (ELSI)  (United States of America v. Italy), ICJ
Reports 1989, p. 15, at p.47, para. 62.
329 We do not consider that this would be engaging into interpreting  US law, with the risks highlighted
by the United States in its submissions. Our approach is in line with the reasoning of the PCIJ in the Brazilian
Loans  case, which, even though it had to apply domestic law, was prudent in its approach of the domestic case-
law:
"It follows that the Court must pay the utmost regard to the decisions of the municipal courtsof a country, for it is with the aid of their jurisprudence that it will be enabled to decide whatare the rules which, in actual fact, are applied in  the country the law of which is recognized as
applicable in a given case" (PCIJ, Series A, Nos. 20/21, p. 124)
330 A description of the organization of the US federal judicial system is found in para. 2.14 and
footnote 21 above.
331 Cooper , Op. cit.
332 From the replies of the United States to our questions, we understand that the stare decisis  effect
which can be attached to precedents in common law does not apply between court decisions handed down in
different circuits.WT/DS136/R
Page 122
in all instances, we shall first ascertain whether th e judgements subject to our comparison address (i)
the same issue, and (ii) at the same level of detail. In other words, we should always make sure that a
comparison can reasonably be made, both in terms of fact and in terms of the legal issues addressed,
before giving preference to the interpretation contained in one judgement compared with the
interpretation contained in another judgement of a court belonging to another circuit.
6.57 Moreover, we should normally, with respect to a given issue, allocate more weight to a final
judgement than to an interim or "interlocutory" decision, since the latter does not definitively
determine a cause of action, but only "decides some intervening matter pertaining to the cause."333
However, we should also determine which argumentation is more convincing.  Again, we will notsubstitute our judgement for that of US courts.  Our analysis should be based not only on the qualityof the reasoning, but also on what we would perceive to be in line with the dominant interpretation,
"paying utmost regard to the decision of the municipal courts". This is consistent with the US court
practice that if a precedent is not binding, the weight afforded to it will depend on the persuasive
value of the reasoning in the decision.
6.58 If, after having applied the above methodology, we could not reach certainty as to the most
appropriate court interpretation, i.e. if the evidence remains in equipoise, we shall follow the
interpretation that favours the party against which the claim has been made, considering that the
claimant did not convincingly support its claim.
6.59 Finally, we also consider that we should not accept at face value the use of certain terms such
as "dumping", “antidumping”, "antitrust", "protectioni sm" or "predatory pricing" in court decisions, in
other administrative documents or in academic works, when those terms are not further substantiated.
We recall that the mere description or categorisation of a measure by a Member should not beconsidered as a decisive factor for the application of the WTO Agreement to that measure.
334 In the
present case, such descriptions or categorisations may be valid under US law but not necessarily in the
WTO context. Likewise, having regard to the importa nce of the legislative history in the interpretation
of statutes by the US judiciary branch, terms used in 1916 will have to be understood within the
meaning they had at the time, not in light of the meaning they have today, unless we have evidence
that US courts have done so.
(iv) Consideration of the historical context and other evidence of the meaning of the 1916 Act
6.60 The historical context of the 1916 Act encompasses several elements.  The first one, to which
US courts also extensively refer in order to determine "the intent of Congress", is the legislative
history as it appears, inter alia , from the Congressional Records. Since we have to examine the 1916
Act and understand its actual scope and operation, we should, as US courts do, pay attention to the
legislative history of that statute, as appropriate.  The political and economic context as it emerges
from public declarations of the time or studies of the period may also be relevant. When considering
this evidence, we should not lose sight of the degree of development of anti-trust and trade law
concepts at the time of the enactment of the 1916 Act.
                                                     
333 See Black's Law Dictionary, 6th Ed. (1990), p. 815.
334 See, Panel Report on EEC – Regulation on Imports of  Parts and Components,  adopted on
16 May 1990, BISD 37S/132 (hereinafter " EC – Parts and Components "), paras 5.6 and 5.7.  In that report, the
panel stated that:
"if the description or categorization of a charge under the domestic law of a contracting party
were to provide the required "connection with importation", contracting parties could
determine themselves which of these provisions would apply to their charges."WT/DS136/R
Page 123
6.61 Regarding the statements of US officials referred to by the EC,335 we note that the EC
considers them as showing that, in the past, US Government bodies not only held the view that the
1916 Act concerns dumping practices, but also that, without "grandfathering", it would have been
GATT illegal.  For the European Communities, th e US authorities admitted that the 1916 Act was
"grandfathered" under the GATT 1947, even though the United States had not included the 1916 Actin its notification of "grandfathered" laws to the GATT 1947.  We also note that the United States
considers that the 1916 Act was not included in the survey of existing mandatory legislation not in
conformity with part II of the GATT 1947
336 because the 1916 Act was GATT-legal and therefore did
not require "grandfathering".
6.62 The consequences that the European Communities would like the Panel to draw from the
above-mentioned statements are not clear.   We are not supposed to "make the case for [the]
complaining party".337 However, we find it relevant to determine at this stage what consequences
could, from a legal point of view, be drawn from these statements.
6.63 First, we should determine whether they coul d actually generate legal obligations for the
United States under international law.  For instance, since they are subsequent to the notification bythe United States of its "grandfathered" legislation under the GATT 1947, it might be argued that they
implicitly modified that notification by stating that the 1916 Act was "grandfathered".  We recall that
the International Court of Justice has developed, inter alia  in its judgement in the Nuclear tests
case,
338 criteria on when a statement by a representative of a State could generate international
obligations for that State.  In the present case, we are reluctant to consider the statements made by
senior US officials in testimonies or letters to the US Congress or to members thereof339 as generating
international obligations for the United States. First, we recall that the constitution of theUnited States provides for a strict separation of the judicial and executive branches.  With the
exception of criminal prosecutions, the application of the 1916 Act falls within the exclusive
responsibility of the federal courts. Under those circumstances, a statement by the executive branch of
government in a domestic forum can only be of limited value.  Second, with the possible exception of
the statement of US Trade Representative Clayton Yeutter, they were not made at a sufficiently highlevel compared with the statements considered by the International Court of Justice in the Nuclear
Tests case, where essentially declarations by a head of State and of members of the French
government were at issue. Moreover, the statements  referred to in the present case were not directly
addressed to the general public.  Finally, they were not made on behalf of the United States, but – at
best – on behalf of the executive branch of government.  This aspect would not be essential if thestatements had been made in an international forum, where the executive branch represents the
State.
340  However, in the present case, the statements were addressed to the US legislative branch.
Therefore, we cannot consider them as creating oblig ations for the United States under international
law.
6.64 A related issue is whether these statements should be treated as admissions of facts or of the
legal nature of the 1916 Act under the WTO. We note that the factual accuracy of the statements
mentioned in this case has been put in doubt by the United States before the Panel. While this is not
                                                     
335 The arguments of the parties on this issue are reported in section III:D.2.(c) above.
336 See GATT Doc. L/2375/Add.1 of 19 March 1965.
337See Appellate Body Report in Japan – Measures Affecting Agricultural Products , hereinafter " Japan
– Agricultural Products ", adopted on 19 March 1999, WT/DS76/AB/R, para. 129.
338 ICJ, Nuclear Tests case ,  judgements of 20 December 1974, ICJ Reports 1974, p. 253 (Australia v.
France), p. 457 (New Zealand v. France). See, e.g., Pa trick Daillier & Alain Pellet, Droit International Public,
5th edition ( 1994), p. 354-358.
339 The statements or letters to which the EC refers are listed in para. 3.126 and footnotes 105 and 106
above.
340 See also Article 7 of the Vienna Convention.WT/DS136/R
Page 124
sufficient to reject those statements out of hand, we are reluctant to consider them as "admissions" of
the United States without prior verification of the context in which they were made.
6.65 For these reasons, we consider that these statements should be used only to the extent that
they confirm other established evidence.
6.66 The United States has also referred to the codification system of its federal legislation and to a
compilation made for the use of the Committee on the Judiciary of the US House of Representatives
as evidence of the anti-trust nature of the 1916 Act.  These documents are informative regarding the
opinions of the authorities of the United States as to the classification of the 1916 Act as an anti-trust
or as an anti-dumping statute. However, as such, the codification of the 1916 Act or its inclusion in a
compilation for a committee of the US Congress cannot affect our determination of the compatibilityof the 1916 Act with the WTO provisions.
341 With regard to the 1995 Antitrust Enforcement
Guidelines for International Operations  issued by the US Department of Justice and the US Federal
Trade Commission referred to by the European Communities, we note their role as "antitrust guidance
to business engaged in international operations".  We therefore consider that they are indicative of the
position of a particular department of the executive branch of the US government.  Moreover, to theextent that these guidelines do not substantiate the reasons why the 1916 Act should be considered as
a trade statute and, in fact, mention that "its subject-matter is closely related to the anti-trust rules
regarding predation", we consider that we should re fer to those guidelines only as a confirmation of
other established evidence, if necessary.
6.67 Having clarified how we shall consider the materials before us in assessing the WTO-
compatibility of the 1916 Act, we now proceed to discuss the preliminary issue of the applicability of
Articles III:4 and VI of the GATT 1994
2. Relationship between Article III and Article VI of the GATT 1994
(a) Issue before the Panel
6.68 The European Communities primarily claims that the 1916 Act violates Article VI of the
GATT 1994 and certain provisions of the Anti-Dumping Agreement. It also claims that the 1916 Act
violates Article III:4 of the GATT 1994 in the alternative  or "if […] all or any portion of the 1916 Act
is consistent with Article VI of the GATT 1994 and the Anti-Dumping Agreement". The
United Sstates claims that the 1916 Act is not subject to the disciplines of Article VI essentially
because it is not aimed at dumping.
6.69 Article III:4 of the GATT 1994 provides in relevant parts as follows:
"The products of the territory of any cont racting party imported into the territory of
another contracting party shall be accorded treatment no less favourable than that
accorded to like products of national origin in respect of laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use...".
6.70 Article VI provides in relevant parts as follows:
                                                     
341 See Panel Report on EC – Parts and Components,  Op. Cit., para. 5.7. That panel addressed the
description or categorisation of a charge under domestic law and concluded that if the description orcategorisation of a charge under the domestic law of  a contracting party were to provide the required
"connection with importation", contracting parties could determine themselves which of these provisions wouldapply to their charges. With such an interpretation the basic objective underlying Articles II and III could not be
achieved.  We consider that the same reasoning app lies with respect to the application of Article VI.WT/DS136/R
Page 125
"1. The contracting parties recognize that dumping, by which products of one
country are introduced into the commerce of another country at less that the normal
value of the product, is to be condemned if it causes or threatens material injury to an
established industry in the territory of a contracting party or materially retards the
establishment of a domestic industry. […]
2. In order to offset or prevent dumping, a contracting party may levy on any
dumped product an anti-dumping duty no greater in amount than the margin of
dumping in respect of such product. […]"
6.71 The arguments of the parties raise the question whether the 1916 Act could, by its nature, fall
within the scope of Article VI only, of Article III:4 only, or partly or wholly within the scope of both.This question is prompted by two considerations:
(a) from the arguments of the parties, it does not seem that the same provision of the
1916 Act could, at the same time, infringe Article III:4 and Article VI of the GATT
1994; and
(b) these articles seem to be based on different premises: Article III (entitled "National
Treatment") operates on the basis of a comparison between the treatment granted to
domestic and imported products respectively, once the latter have been cleared
through customs. Thus Article III:4 applies to measures imposed by Members
internally, irrespective of the objective of the measures.  In contrast, Article VI does
not compare the treatment of domestic and imported products. The basis for the
applicability of Article VI to the law of a Member does not seem to be the type of
measures  which is imposed by that Member, since other reasons than dumping may
lead to the imposition of duties, but the type of trade practice at the origin  of the
measure.
6.72 The Panel thus believes that the nature  of the 1916 Act might be such as to affect the
relevance of the EC claims under Article III:4 or Article VI. Irrespective of the question of judicial
economy, the Panel considers that it has the "com petence of its competence", i.e. that it may
determine whether a given claim can be addressed, irrespective of the positions expressed by the
parties on the issue.
342 The fact that the European Communities formulates its claims primarily under
Article VI does not require the Panel to address the EC claims under Article VI if it were to find that
that provision is not applicable because the qualification juridique  made by the EC is not correct.343
On  the other hand, the Panel may not have to address the EC claims under Article III:4 if it were to
find that the 1916 Act falls exclusively within the scope of Article VI.
6.73 Therefore, it would be relevant to consider whether Article III:4 or Article VI of the GATT
1994 - or both – are applicable  to the 1916 Act, irrespective of whether the 1916 Act is compatible
with those provisions or not.
                                                     
342 This is different from exercising judicial economy, which is based on the necessity to address a
claim in light of findings made on another claim. It  is also different from determining whether a claim is
properly before the Panel on the basis of the request for establishment of a panel.  It is a question of knowing
whether the Panel can rule on two claims which, on the basis of a first consideration of the facts and argumentsbefore it, might be mutually exclusive.
343 For instance, if a complainant were to claim a violation of Article XI of GATT 1994 in relation to a
small tariff increase, the panel called upon to address the issue may be entitled to reject the claim on the groundthat the measure at issue is not a quantitative restriction within the meaning of Article XI, without addressing
any further the claim and the related arguments.WT/DS136/R
Page 126
(b) Approach to be followed by the Panel
6.74 Having regard to paragraph 6.71(b) above, we note that the issue whether the 1916 Act should
be addressed under Article III:4 only, Article VI onl y, or both, is not obvious from the outset. In our
opinion, reaching conclusions on this matter requires that we address the substance of the case, since
one of the issues before us is whether the 1916 Act can be subject to the disciplines of Article VI and
the Anti-Dumping Agreement.  It is therefore appropriate to address this question as part of the
substantive issues of this case, but separately from the actual WTO-compatibility of the 1916 Act.
Based on our findings regarding the applicability of Articles III:4 and VI to the 1916 Act, we shall
proceed to review the compatibility of that law with either provision or both.
6.75 However, even though we do not reach yet any conclusion on the applicability of either
provision, we need to decide at this stage wh ether to begin our analysis with Article VI or
Article III:4.
6.76 It is a general principle of international law that, when applying a body of norms to a given
factual situation, one should consider that factual situation under the norm which most specifically
addresses it.344 As a result, one way to reply to the question above is to determine which article more
specifically addresses the 1916 Act.  We agree that this will require us to touch upon the substance of
the case, but we recall that this test is used here fo r purely procedural reasons, that is to determine the
order of our review.  Such a prima facie  analysis is, of course, without prejudice to the final findings
on the issue of the applicability of Articles III:4 and VI, to be reached after a more detailed review of
the scope of each provision, as necessary.
6.77 As mentioned above, our understanding is that Article III:4 and Article VI are based on two
different premises. The applicability of Article III:4 seems to depend primarily on whether themeasure applied pursuant to the law at issue is an internal measure or not.
345 In contrast, the
applicability of Article VI seems to be based on the nature of the trade practice which is addressed.
Under Article VI, the type of sanction eventually applied does not seem to be relevant for a measure
to be considered as an anti-dumping measure, or not.   We note in this respect that, for the EC, the fact
that the 1916 Act imposes other sanctions than duties is insufficient to make that law fall outside thescope of Article VI and, for the United States, under Article VI, dumping does not have to be
counteracted exclusively with duties.
346 Consequently, it seems to us that the fact that a law imposes
measures that can be qualified as "internal measures", such as fines, damages or imprisonment, does
not appear to be sufficient to conclude that Article VI is not applicable to that law.
                                                     
344 See Appellate Body Report on European Communities – Bananas, Op. cit. , para. 204 , and the
judgement of the Permanent Court of International Justice in the Serbian Loans  case (1929), where the PCIJ
stated that "the special words, acco rding to elementary principles of interpretation, control the general
expression" (PCIJ, Series A, No. 20/21, at p. 30).  See also György Haraszti, Some Fundamental Problems of
the Law of Treaties (1973), p. 191.
345 See Panel Report on United States – Restrictions on Imports of Tuna  (not adopted), DS21/R,
3 September 1991, para 5.12:
"Another panel had found that the words "treatment no less favourable" in Article III:4 call for
effective equality of opportunities for imported products in respect of the application of laws,
regulations or requirements affecting the sale, offering for sale, purchase, transportation,distribution or use of products[…]. It was apparent to the Panel that the comparison impliedwas necessarily one between the measures applied to imported products and the measuresapplied to like domestic products."
346 See the arguments of the United States regarding the ordinary meaning of Article VI:2 of the GATT
1994, in section III.E.2 above.WT/DS136/R
Page 127
6.78 We also note that the parties agree that the 1916 Act deals with transnational price
discrimination.  Furthermore, the United States argues that it does not merely address dumping, and
that other requirements under the 1916 Act make that law fall outside the scope of Article VI.  We
note that Article III:4 states that imported products
"shall be accorded treatment no less favourable than that accorded to like products of
national origin in respect of laws, regulations and requirements affecting their internal
sale, offering for sale, purchase, transportation, distribution or use."
Determining that damages, fines or imprisonment, which are imposed on persons, may accord less
favourable treatment to imported products with resp ect to their internal sale, offering for sale,
purchase, transportation, distribution or use, is not a priori  impossible and has actually been done by
previous panels.347  However, a preliminary examination of the scope of application of Article III:4
(i.e. internal sale, offering for sale, purchase, transportation, distribution or use) would tend to show
that the terms of Article III:4 are less specific than  those of Article VI when it comes to the notion of
transnational price discrimination.
6.79 In application of the principle recalled by the Appellate Body in European Communities –
Bananas  and by the Permanent Court of International Justice in the Serbian Loans  case,348 there
would be reasons to reach the preliminary conclusion that we should review the applicability of
Article VI to the 1916 Act in priority, as that article apparently applies to the facts at issue more
specifically. This preliminary conclusion is based on our understanding of the arguments of the parties
and on a preliminary review of the terms of Articles III:4 and VI.  Since the fact that the 1916 Act
provides for the imposition of internal measures does not seem to be sufficient as such to differentiatethe scope of application of Article III:4 and that of Article VI, we had to consider the other terms of
these articles.
6.80 Our preliminary conclusion does not address the question whether the 1916 Act could fall
within the scope of both provisions.  If we determine that the 1916 Act actually falls within the scope
of Article VI, we will continue with the EC claims of violation of Article VI:1, VI:2 and the Anti-Dumping Agreement, as necessary to enable the DSB to make sufficiently precise recommendations
and rulings.  Once this part of our terms of reference has been addressed, we shall also decide whether
pursuing our review with an analysis of the applicability of Article III:4 would be necessary to enable
the DSB to make sufficiently precise recomme ndations and rulings so as to allow for prompt
compliance "in order to ensure effective resolution of disputes to the benefit of all Members."
349 If we
do not find that the 1916 Act falls within the scope of Article VI of the GATT 1994, we will proceed
to consider the applicability of Article III:4 to the 1916 Act and, if applicable, the compatibility of the
1916 Act with that provision.
6.81 Consequently, we proceed with a review of the applicability of Article VI to the 1916 Act.
                                                     
347 See, e.g., Panel Report on United States – Section 337 of the Tariff Act of 1930 , adopted on
7 November 1989, BISD 36/345, para. 5.10.  See also Panel Report on Italian Discrimination Against Imported
Agricultural Machinery , adopted on 23 October 1958, BISD 7S/60,  which mentioned at para. 12 that:
"The selection of the word "affecting" [in Artic le III:4] would imply, in the opinion of the
Panel, that the drafters of the Article intended to cover in paragraph 4 not only the laws and
regulations which directly governed the conditions of sale or purchase but also any laws orlaws or regulations which might adversely modify the conditions of competition between thedomestic and imported products on the internal market."
348 See footnote 344 above.
349 See Appellate Body Report on Australia – Measures Affecting Importation of Salmon , adopted on
6 November 1998, WT/DS18/AB/R, para. 223.WT/DS136/R
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D. APPLICABILITY OF ARTICLE VI OF THE GATT 1994 TO THE 1916 A CT
1. Preliminary remarks on the possibility of interpreting the 1916 Act in a WTO-
compatible manner and on its "mandatory/non-mandatory" nature
(a) Issue before the Panel
6.82 We recall that the United States has argued in the course of these proceedings that 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 past and/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.350  The EC considers that the mandatory/non-mandatory doctrine
applies only to the executive branch of government.  Judges have no discretion in applying a law.
Finally, pursuant to the panel practice under the Tokyo Round agreements on anti-dumping and on
subsidies and countervailing measures, the discretion of the US Department of Justice to initiate
criminal proceedings is insufficient to make the 1916 Act a non-mandatory law.
6.83 We could treat these arguments as a question of admissibility of the EC claims.  However, for
the reasons presented below, we shall address them as part of our review of the EC claims under
Article VI of the GATT 1994 and the Anti-Dumping Agreement and, if necessary, Article III:4 of the
GATT 1994.351
6.84 As a preliminary remark, it should be noted that, even though the parties used the terms
"mandatory/non-mandatory" or "discretionary" legislat ion in their arguments with respect to different
aspects of the 1916 Act, we consider that we should differentiate the issues before us.  We consider
that the question whether the US Department of Justice has discretion to initiate or not criminalproceedings under the 1916 Act is indeed a question of application of the doctrine on mandatory/non-
mandatory legislation within the meaning usually given to it in the GATT and in public international
law.
352   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, however, simply a question of assessing the current
meaning of the law.
                                                     
350 The United States does not seem to allege that a similar discretion exists in relation to the civil
proceedings which would make the 1916 Act non-mandatory.
351 Such an approach is also consistent with the practice of other panels, which addressed this issue in
the course of their review of the conformity of measures with GATT provisions.  See United States – Measures
Affecting the Importation, Internal Sale and Use of Tobacco , adopted on 4 October 1994, BISD 41S/131,
para. 118. That report refers to the report of the panel on United States – Taxes on Petroleum and certain
Imported Substances , adopted on 17 June 1987, BISD 34S/136, p. 160; the report of the panel on EEC –
Regulation on Imports of Parts and Components , Op. cit. , pp. 198-199; the report of the panel on Thailand,
Restrictions on Importation of and Internal Taxes on Cigarettes , adopted on 7 November 1990, BISD 37S/200
pp. 227-228; the report of the panel on United States – Measures Aff ecting Alcoholic and Malt Beverages ,
adopted on 19 June 1992, BISD 39S/206, pp. 281-282, 289-290; and the report of the panel on United States –
Denial of MFN Treatment as to Non-Rubber Footwear from Brazil , adopted on 19 June 1992, BISD 39S/128,
p. 152.  See also Panel Report on Canada – Measures Affecting the Export of Civilian Aircraft , adopted on
20 August 1999, WT/DS70/R, para. 9.124.
352 The Panel is mindful of the of the findings of the panel in United States – Section 301-310 of the
Trade Act of 1974 , adopted on 27 January 2000, WT/DS152/R, which was adopted after the issuance of the
interim report in the present case.  However, we do not consider that the reasoning of the panel in that case
affects our reasoning in the present case.WT/DS136/R
Page 129
(b) The possibility of interpreting the 1916 Act in a WTO-compatible manner
6.85 Concerning the argument according to which US courts have interpreted in the past and/or
could in the future interpret the 1916 Act in a manner consistent with the WTO obligations of the
United States, the United States relies to a large extent on the panel report on United States –
Measures Affecting the Importation, Internal Sale and Use of Tobacco .353 In our opinion, the
United States refers to that case for essentially two reasons.  First, the United States relies on the
United States - Tobacco  case to argue that a law which can be interpreted in a WTO-consistent
manner is a law that does not mandate a WTO-illegal action.  Second, the United States claims that, in
accordance with that report, the EC bears the burden to prove that there is no possibility to interpret
the 1916 Act in a WTO-consistent manner.
6.86 The issue here is primarily, like in the United States – Tobacco case, a question of
interpretation of an ambiguous text. However, in our opinion, similarities are limited to that aspect.  In
the United States – Tobacco  case, the panel had to deal with the question whether the ambiguous term
at issue mandated a violation of Article VIII of th e GATT 1947.  In the present case, what is at issue
is whether the terms of the 1916 Act are such as to make Article VI applicable  to that law. We are
consequently at an earlier stage of our analysis than the panel in the United States – Tobacco  case.
Moreover, in the  United States – Tobacco case, the United States had as yet neither changed the fee
structure nor promulgated rules implementing the law at issue. In the present case, the 1916 Act did
not require any implementing measures from the US government and, contrary to the law at issue in
the United States – Tobacco  case, it has been applied in a number of instances by US courts.
Consequently, the situations faced by this Panel and the panel in the United States – Tobacco  case are
factually different.
6.87 These differences have implications for the burden of proof.  In the United States – Tobacco
case, the extensive burden of proof imposed on the complainants was obviously related to the absence
of any application of the ambiguous term by the executive branch of the US government at the time of
the findings. Since the United States had so far applied its law in conformity with Article VIII of the
GATT 1947 and since there was no evidence that the United States intended to apply the law in aGATT-incompatible manner, the principle in dubio mitius  logically applied.
354
6.88 In contrast, several courts have interpreted and applied the 1916 Act. In fact, reaching a
decision on the US argument requires the Panel to determine whether the interpretation of the 1916
Act by US courts has been such as to actually make the 1916 Act WTO-compatible by making it fall
outside the scope of Article VI of the GATT 1994.  In such a context, the EC only needs to prove thatthe 1916 Act, as it has been interpreted and applied so far by US courts, meets the conditions to fall
within the scope of Article VI. If the EC succeeds in proving it, we will proceed with a review of the
compatibility of the 1916 Act with Article VI.
6.89 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.  Since the 1916 Act has actually been
applied and has been subject to interpretation by US courts, the issue before us is (i) whether
Article VI is found to be applicable to the 1916 Act on the basis of the current court interpretation and
(ii) whether a violation of Article VI by the 1916 Act as currently applied is identified.   
6.90 Even if we were to consider that the factual circumstances in the present case and in the
United States – Tobacco  case are comparable, we recall that, in United States – Tobacco , an important
                                                     
353 Op. Cit., hereinafter " United States – Tobacco ".
354 See Appellate Body Report in EC – Hormones, Op. Cit., footnote 154, where the Appellate Body
held that this principle is widely recognised in international law as a "supplementary means of interpretation".WT/DS136/R
Page 130
element in the finding of the panel had been the presence of an ambiguity  in the text of the law under
review.  The term "comparable" could be interpreted in GATT-compatible as well as in GATT-
incompatible ways.  Assuming that the reasoning of the panel in the United States – Tobacco  case
could be extended to the present situation in spite of  the differences highlighted above, if we find that
no such ambiguity exists regarding the applicability of Article VI to the text of the 1916 Act itself oras interpreted by the US courts, (i) we will not have to apply the burden of proof which the
United States alleges was applied in the US - Tobacco  case and (ii) we will conclude that the 1916 Act
falls within the scope of Article VI and will address it as any other legislation.
355
(c) Mandatory/non-mandatory nature of the 1916 Act
6.91 Concerning the discretion enjoyed by the US Department of Justice to initiate or not criminal
proceedings under the 1916 Act, we recall that the European Communities have claimed that the
discretion to initiate an investigation was found insufficient under the Tokyo Round Agreement on
Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs
and Trade356 and the Tokyo Round Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade357 to consider as "non-mandatory" a law reviewed under those
agreements.
6.92 We have undertaken a preliminary review of the panel reports referred to by the EC. 358 We
note that the issue of the "mandatory/non-mandatory" nature of a law has apparently been addressed
differently under Article VI of the GATT and the Tokyo Round subsidies and anti-dumping
agreements than under Ar ticle III of the GATT. In order to avoid making unnecessary findings, we
find it appropriate to address this issue once we have determined whether the 1916 Act falls within the
scope of Article VI or not, a determination to be made in any event for the reasons mentioned in theprevious paragraphs.
2. Does the 1916 Act fall within the scope of Article VI of the GATT 1994?
(a) Issue before the Panel
6.93 The European Communities claims that the 1916 Act is an anti-dumping law subject to the
disciplines of Article VI of the GATT 1994 because Article VI refers (i) to rules targeted at importsand by the fact of their importation; and (ii) to practices defined by reference to price discrimination
in the form of lower prices in the market of th e importing country than those practiced on the market
of the country of export. It is only dumping meeting the definition in Article VI that is to be
condemned, and then only in the stated circumstances of injury, threat of injury or material retardation
of the establishment of a domestic industry.
                                                     
355 If we conclude that the 1916 Ac t falls within the scope of Article VI, we will not need to take
position on the issue whether the reasoning in the United States – Tobacco  report, which was adopted under the
GATT 1947, would still be valid after the entry into force of the WTO Agreement, in light of Article XVI:4 ofthe Agreement Establishing the WTO.
356 Hereinafter the "Tokyo Round Subsidies Agreement".
357 Hereinafter the "Tokyo Round Anti-Dumping Agreement".
358 See Panel on  United States Definition of Industry Concerning Wine And Grape Products , adopted
on 28 April 1992, BISD 39S/436 (hereinafter " United States – Definition of Wine Industry ") and the report of
the panel on EC – Anti-Dumping Duties on Audio Tapes in Cassettes Originating in Japan , ADP 136,
28 April 1995 (hereinafter " EC – Audio Cassettes "). The latter was not adopted.  However, we recall that in its
report on Japan – Taxes on Alcoholic Beverages , adopted on 1 November 1996, WT/DS8; 10; 11/AB/R, p. 15,
the Appellate Body confirmed that "a panel could nevertheless find useful guidance in the reasoning of an
unadopted panel report that it considered to be relevant."WT/DS136/R
Page 131
6.94 The United States claims that Article VI does not state that its disciplines govern any law
based upon the concept of price discrimination regardless of any other elements required to be proven
under the law.  Article VI only addresses actions taken for the purpose of offsetting or preventing
injurious dumping, not actions that are not designed to offset or prevent injurious dumping, as is the
case with the 1916 Act.  According to the United States, the EC seems to read in Article VI thelimitation that all laws with any type of international price discrimination component must conform to
the anti-dumping rules.  If it were to be the case , this would extend these rules into the realm of anti-
trust and, therefore, Member's other anti-trust laws prohibiting various forms of discriminatory or low
pricing would be WTO-inconsistent to the extent that those laws address attempted monopolization or
an abuse of dominance undertaken through predatory, cross-border pricing practices.  The negotiatinghistory and subsequent practice under the GATT 1947 support the contention that Article VI of the
GATT 1994 is not intended as a remedy for "predatory pricing".
6.95 The EC contends that one of the clearest targets of Article VI of the GATT 1994 is precisely
"predatory" dumping.  The EC does not argue that Article VI and the Anti-Dumping Agreement
govern any international price discrimination regardless of the other elements of the law.  Theapproach in Article VI is confirmed by the basic theory of anti-dumping which recognises a particular
problem posed by price discrimination of this type, requiring an analysis distinct from that applying to
price discrimination within the same market.
6.96 The United States contests that the distinction between anti-trust and anti-dumping should be
based upon whether price discrimination occurs within a single market or across markets. Moreover,
the United States considers that Article VI and the Anti-Dumping Agreement do not govern
competition laws simply because those laws incorporate the element of price discrimination.  Theexistence of an anti-trust objective in a law regulating cross-border price discrimination should
remove it from the scope of Article VI of the GATT 1994.
6.97 Since the EC made claims of violation of Article VI and, separately, of the Anti-Dumping
Agreement, we would like to clarify how we see the relationship between these provisions. Just as the
panel in the India - Quantitative Restrictions
359 case did not analyse Article XVIII:B in isolation from
the Understanding on Balance-of-payments Provisions of the General Agreement on Tariffs and
Trade 1994, this Panel has no intention to address Article VI in isolation from the Anti-Dumping
Agreement.  In our opinion, Article VI and the Anti-Dumping Agreement are part of the same treaty
or, as the panel and the Appellate Body put it in Argentina – Safeguard Measures on Import of
Footwear  with respect to Article XIX and the Agreement on Safeguards, an "inseparable package of
rights and disciplines".360 In application of the customary rules of interpretation of international law,
we are bound to interpret  Article VI of the GATT 1994 as part of the WTO Agreement and the Anti-
Dumping Agreement is part of the context of Article VI.361 This implies that Article VI should not be
interpreted in a way that would deprive it or the Anti-Dumping Agreement of meaning. Rather, we
should give meaning and legal effect to all the relevant provisions.362 However, the requirement does
not prevent us from making findings  in relation to Article VI only, or in relation to specific provisions
of the Anti-Dumping Agreement, as required by our terms of reference.
6.98 The Panel also considers that its role, pursuant to Article 3.2 of the DSU, is to clarify the
meaning of Article VI in order to determine whether it applies, as claimed by the European
                                                     
359 Op. Cit., footnote 305 above.
360 Adopted on 12 January 2000, WT/DS/121/AB/R, para. 81.
361 See, in this respect, our reasoning in para. 6.195 below.
362 See, e.g., the reports of the Appellate Body on Argentina – Safeguard Measures on Import of
Footwear, Op. cit., para. 81, Korea – Definitive Safeguard Measures on Import of Certain Dairy Products ,
adopted on 12 January 2000, WT/DS98/AB/R, para. 81 and United States – Standards for Reformulated and
Conventional Gasoline , adopted on 20 May 1996, WT/DS2/AB/R, p. 23.WT/DS136/R
Page 132
Communities, to the type of measures addressed by the 1916 Act.  For the sake of clarity, we will first
address the applicability of Article VI to the terms of the 1916 Act as such, in isolation from
subsequent interpretation(s).  We will then review the circumstances of the enactment of the 1916 Act
(including the legislative history) as well as the relevant US court case-law and determine to what
extent they affect the conclusions that we will have reached on the basis of the text only.
(b) Does the 1916 Act, on the basis of its terms only, fall within the scope of Article VI of the
GATT 1994?
(i) Approach of the Panel
6.99 We note that the views of the parties diverge as to the criteria that should be used to
determine the applicability of Article VI of the GATT 1994 to the 1916 Act.  For the EC, the 1916Act should be subject to the norms of Article VI because Article VI applies to imports by the reason
of their importation and addresses practices defined by reference to discrimination between the prices
of the imported products and domestic prices in the country of export or, in the absence of such
prices, export prices to a third country or cost  of production. The United States considers that
Article VI only addresses actions taken for the purpos e of offsetting or preventing injurious dumping,
not actions that are not designed to offset or prevent injurious dumping, as is the case with the 1916
Act.
6.100  We consider that, in order to determine whether the 1916 Act falls within the scope of
Article VI of the GATT 1994, we need to define that scope by interpreting Article VI:1 on the basis of
the relevant provisions of the Vienna Convention and then compare those requirements to those of the
1916 Act. However, we note that we are called upon to consider the compatibility of a specific law
with Article VI of the GATT 1994, not to make an interpretation of the scope of that article inabsolute terms.  Thus, any assessment we may make of the scope of Article VI will be circumscribed
to the specific issues raised by the terms of the 1916 Act.
6.101  Finally, as recalled in paragraph 6.59 above, the mere description or categorization of a
measure under the domestic law as well as the policy purpose behind the measure cannot be a decisive
factor in the categorization of that measure under the WTO Agreement. We therefore do not consideras decisive the classification of the 1916 Act under the US Code or the fact that it is generally called
the "Antidumping Act of 1916". We consider that we should exclusively rely at this stage on what the
text of the law expressly says.  This does not mean that we should disregard the objective of the 1916
Act.  However, for now we will consider it only to  the extent that it results from the terms of the law
itself, to the exclusion of the legislative history or the subsequent court practice, which we willaddress later.
363
(ii) Scope of Article VI of the GATT 1994
6.102  Article VI:1 provides, in relevant parts, as follows:
"The contracting parties recognize that dumping, by which products of one country
are introduced into the commerce of  another country at less than the normal value ofthe products, is to be condemned if it causes or threatens material injury to an
established industry in the territory of a contracting party or materially retards the
establishment of a domestic industry.  For the purpose of this article, a product is to
                                                     
363 This also seems to be consistent with US court practice.  In Zenith I  (1975), Op . Cit., p. 246, Judge
Higginbotham stated that "as always, when a court is called to construe a statute, it is wise to begin by reading
the statute itself."WT/DS136/R
Page 133
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 to another
(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 of trade, 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." [notes Ad Article VI:1  omitted]
6.103  Considering the terms of Article VI in their ordinary meaning, we note that Article VI does
not regulate the practice of dumping itself, but the anti-dumping activities of Members. In other
words, Article VI concentrates on what Members may do in order to counteract dumping.  However,Article VI is based on a definition of dumpi ng, found at the beginning of Article VI:1:
" dumping, by which products of one country are introduced into the commerce of
another country at less than the normal value of the products"
364
The normal value is either the comparable price, in  the ordinary course of trade, for the like product
when destined for consumption in the exporting country, or, in the absence of such domestic price, the
highest comparable price for the like product for export to any third country in the ordinary course of
trade, or the cost of production of the product in the country of origin plus a reasonable addition forselling cost and profit.
6.104  Therefore, the conditions for "dumping" to exist are the following:
(i) there must be products imported and cleared through customs ("introduction into the
commerce"); and
(ii) those imported products must be priced at a price lower than their normal value, i.e.
their price in a foreign country, be it the country of production or another country of
export, or a constructed value based on a calculation of cost and profits.
In other words, there must be a price difference  between like products sold in two markets, one of
which is not within the jurisdiction of the same Member, their price in the country of exportationbeing lower that their price in the country of production or in a third country to which they are
exported.
 365
                                                     
364 We note that this definition is close to the definition of dumping given by Jacob Viner in Dumping,
A Problem in International Trade, Op . Cit., p. 3, i.e. "price-discrimination between national markets." The court
in Zenith III, Op. cit., p. 1213, refers to the 1966 edition which includes, at p. 4, a slightly revised definition:
"price discrimination between purchasers in different national markets."
365 The existence of a price difference between two markets located in two different Members , together
with a lower price in the importing country  than in the country of production are essential features toWT/DS136/R
Page 134
6.105  It is this practice that "is to be condemned", provided certain conditions are met.  Thereafter
follow certain substantive (i.e. material injury366 and causality) and procedural requirements; but they
do not qualify the original definition of "dumping".367 While "dumping" can be subject to sanctions
only if it causes material injury, this does not affect the fact that, on the basis of the structure ofArticle VI, "dumping" within the meaning of the definition of Article VI:1 has to be found in the first
place.
6.106  Neither the context of Article VI, nor the object and purpose of the GATT 1994 or the WTO
Agreement contradicts this assessment.  On the cont rary, Article VI:1(a) and (b) confirm that there is
no requirement that the export price be above or below fixed or variable costs or that priceundercutting, price suppression or price depression be identified for "dumping" to exist, even though
they may be considered for injury purposes.  Article VI:2 supports the view that Article VI is about
what Members are entitled to do when they counteract dumping within the meaning of Article VI.  So
does Article 1 of the Anti-Dumping Agreement, by referring to "anti-dumping measure[s] " which
may be applied by Members.
368 The supplementary means of interpretation of Article 32 of the
Vienna Convention, in particular the travaux préparatoires , confirm that Article VI of the GATT was
about what category of dum ping could be subject to counteracting measures.369
6.107  We therefore reach the conclusion that a law that would counteract "dumping" as defined in
Article VI:1 would fall within the scope of Article VI.  However, as mentioned in paragraph 6.100
above, we are not called upon to make findings in  the absolute.  We therefore proceed to review more
specifically the 1916 Act on the basis of the scope of Article VI as defined above.
(iii) Examination of the 1916 Act on the basis of the scope of Article VI
Similarities
6.108  We note that the 1916 Act contains a transnational price discrimination test:
"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
                                                                                                                                                                    
differentiate dumping from other forms of price discrimination and pricing practices. In this respect, see also
Viner, Op . Cit., pp. 2-3.
366 Throughout these findings, the term "material injury" shall be taken to refer to "material injury to an
established industry in the territory of" a Member, threat th ereof or material retardation of the establishment of a
domestic industry, within the meaning of Article VI:1 of the GATT 1994.
367 We do not read the language "For the purpose 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 productexported from one country to another…" as qualifying anything but the term "normal value". Additional
conditions have been introduced in the Anti-Dumping Agreement, such as the de minimis  requirement for the
margin of dumping (Article 5.8 of the Anti-Dumping Agreement) but they do not affect the original definition tosuch an extent that they would change our conclusions.
368 Article 1, first sentence, of the Anti-Dumping Agreement provides that:
"An anti-dumping measure shall be applied only under the circumstances provided for in
Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordancewith the provisions of this agreement."
369 See U.N. Doc. EPCT/C.II/48 (1946), p. 1, "the discussion had shown that there were four types of
dumping: price, service, exchange and social. Article 11 permitted measures to counteract the first type.  Itwould obligate members not to impose anti-dumping duties with respect to the other three types".  See also
Jackson: World Trade and the Law of GATT, p. 402 and 404.WT/DS136/R
Page 135
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 which they are commonly
exported after adding to such market value or wholesale price, freight, duty, and othercharges and expenses necessarily incident to the importation and sale thereof in the
United States…" (emphasis added)
This test includes requirements similar to the introduction of the dumped product into the commerce
of one Member since it refers to "import or sell or cause to be imported or sold […] within the
United States".  We further note that the 1916 Act is premised on a comparison between two prices,one in the United States, the other one in the country of production of the product or in a third country
where the product is also sold. There is consequently a very strong similarity between the definition of
dumping in Article VI and the transnational price discrimination test found in the 1916 Act.
6.109  This said, would there be elements in the text  of the 1916 Act that would lead us to conclude
that the transnational price discrimination test in the 1916 Act nevertheless does not meet the
definition of dumping in Article VI?  We note that the 1916 Act relies not only on the actual market
value but also on wholesale price.  It also refers to the "principal markets of the country of […]
production [of the imported merchandise]" or of "other foreign countries to which they are commonly
exported".  We do not find the nature of these requirements to be different from those of Article VI:1
to such a degree as to make them fall outside the concept of "comparable price, in the ordinary course
of trade, for the like product when destined for consumption in the exporting country" found inArticle VI:1(a). The 1916 Act also refers to sales on the "principal markets" of "other foreign
countries to which they are commonly exported". This may not be the "highest comparable price for
the like product for export to any third country in the ordinary course of trade" found in
Article VI:1(b) but, once again, its nature does not, in our view, depart to a significant degree from the
criteria of Article VI:1 and it does not relate to other concepts which, by their nature, could bedifferentiated from those found in Article VI:1.  Finally, we note that the 1916 Act does not provide
for the possibility to use a "constructed" normal value, within the meaning of Article VI:1(b)(ii).
However, this only makes the transnational price discrimination test in the 1916 Act "narrower" than
the definition of "dumping" in Article VI:1, without making it fall outside its scope.  We also note that
the 1916 Act provides for adjustments. Even thoug h these adjustments are not those found in the last
sub-paragraph of Article VI:1, they do not affect the scope of the price discrimination test in the 1916
Act in relation to Article VI.  On the contrary, they confirm the similarity of the two texts as far as the
criteria for the identification of the practice at issue is concerned.
6.110  This does not mean that the criteria for establishing price discrimination under the 1916 Act
would always be compatible with the requirements  of Article VI of the GATT 1994.  This means only
that we do not find in these criteria anything that would make us consider that the 1916 transnational
price discrimination test would partly or totally fall outside the definition of "dumping" found in
Article VI:1.
Specific arguments of the United States
6.111  The United States argues that the 1916 Act is not merely about dumping and has additional
requirements compared with Article VI.  In the first place, the 1916 Act requires the price difference
to be "substantial" and the importation and sales to be done "commonly and systematically".
Secondly, the 1916 Act includes additional requirements that are not found in Article VI, which make
of it an instrument targeting specific forms of price discrimination in an anti-trust context.WT/DS136/R
Page 136
6.112  We do not consider that conditions which make the establishment of dumping more difficult,
such as the requirement of substantial price difference and of common and systematic dumping are
such as to make the price discrimination test of the 1916 Act fall outside the scope of the definition of
Article VI:1.  As long as the test of the 1916 Act requires a price difference between two markets,
each located in the territory of a different Member , the fact that additional requirements make a
finding of dumping more difficult does not affect the applicability of Article VI.  Members may not
exempt themselves from the rules and disciplines of the WTO Agreement when counteracting
dumping, but they remain free to apply requirements which make the imposition of measures more
difficult.
6.113  With respect to the other requirements of the 1916 Act, we recall that the price discrimination
addressed by the 1916 Act must be applied with the intent of (a) "destroying" or (b) "injuring an
industry in the United States", or of (c) "preventing the establishment of an industry in the
United States", or of (d) "restraining" or (e) "monopolizing any part of trade and commerce [in the
goods concerned] in the United States."  We note that the first three tests are quite similar to the
material injury and retardation tests of Article VI:1, while the two last ones are more of the type usedin an anti-trust context.
370  However, we found above that the existence of "dumping" within the
meaning of Article VI:1 is a  condition sine qua non  for a Member to take action under Article VI. We
note that, before identifying any intent under the 1916 Act, US judges would also have to establish
that there has been importation or sales at discriminatory prices of the type required by that law.371
We have been presented with no evidence that transnational price discrimination under the 1916 Actcould be presumed when the court had only established the existence of an intent to destroy, injure or
prevent the establishment of an industry in the United States, or to restrain or monopolise any part ofthe trade in the product concerned within the United States. Therefore, we conclude that the existence
in the 1916 Act of additional requirements which are not found in Article VI does not per se  suffice to
make the 1916 Act fall outside the scope of Article VI.
6.114  Moreover, we recall that dumping "is to be condemned if it causes or threatens" to cause
certain effects listed in Article VI:1.  Even though Article VI:1 does not read "dumping is to becondemned only if" it causes those effects, we consider that it should be interpreted as limiting the use
of anti-dumping measures to the situations expressly foreseen in Article VI.
372 In other words,
whenever a Member addresses a practice that meets the definition of Article VI:1, it has to abide by
the WTO rules governing anti-dumping.373 If, as the United States seems to argue, a Member could
                                                     
370 See Robinson-Patman Act, which provides that the "effect of such discrimination may be
substantially to lessen competition or tend to create a mo nopoly in any line of commerce, or to injure, destroy,
or prevent competition with any person who either grants or knowingly receives the benefit of suchdiscrimination or with customers of either of them."
371 See the statement of the court in In Re Japanese Electronic Products II  (1983), p. 324, that:
"The first element necessary to a finding of dumping under the 1916 Act is proof that a price
differential exists between two comparable products, one of which is imported or sold in the
United States and the other of which is sold in the exporting country."
See also Helmac II  (1993), p. 591,which recognised that "dumping: the pricing of goods on the
American market at a price lower than on the home market" was "the key to liability under the [1916] Act".
372 Such a limitation was clearly envisaged by the drafters of Article VI.  The Report of the Sub-
Committee at the Havana Conference which considered  the provision which was to replace the original
Article VI in the GATT 1947 noted that "The Article as agreed to by the Sub-Committee condemns injurious
'price dumping'  as defined therein and does not relate to other types of dumping." (emphasis added) (Havana
Reports, p. 74, para. 23, as reported in GATT, Analytical Index:  Guide to GATT Law and Practice, Updated 6th
Edition (1995), p. 222).
373 This is without prejudice to a Member choosing to address the effects of dumping, e.g. increased
imports, or its causes (e.g., subsidisation) through other legitimate means under the WTO Agreement, such asWT/DS136/R
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decide to apply other tests or other sanctions to counteract "dumping" practices within the meaning of
Article VI, this would be contrary to the terms of Article VI.  Also, alleging that the disciplines of
Article VI are only applicable to the extent a Member wants to address situations of material injury,
threat thereof or material retardation of the establishment of a domestic industry would undermine the
whole purpose of Article VI and the Anti-Dumping Agreement.  From the terms of Article VI, wededuce that the purpose of that provision is to define the conditions under which counteracting
dumping as such  is allowed.  This purpose is confirmed by Article 1, first sentence, of the Anti-
Dumping Agreement, which provides that:
"An anti-dumping measure shall be applied only under the circumstances provided
for in Article VI of GATT 1994  and pursuant to investigations initiated [footnote 1
omitted] and conducted in accordance with the provisions of this Agreement."
(emphasis added)
Article 18.1 of the Anti-Dumping Agreement also confirms this understanding:
"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. [footnote 24 omitted]
374" (emphasis added)
This implies that, by adopting Article VI and th e Anti-Dumping Agreement, Members have agreed to
use only one approach against "dumping" as such.  The interpretation suggested by the United States
would undermine the useful effect of the prov isions of Article VI and of the Anti-Dumping
Agreement.
6.115  For these reasons, we cannot consider that the existence of other "effect" tests than those
provided for under Article VI should be sufficient to exclude the 1916 Act from the scope of
Article VI.  The 1916 Act may be targeting particular effects of cross-border price discrimination, but
to the extent that such price discrimination meets the definition of "dumping" contained in
Article VI:1, it has to be subject to the disciplines of Article VI and the Anti-Dumping Agreement.375
6.116  Finally, the United States argues that the existence of an anti-trust objective in a law
regulating cross-border price discrimination removes it from the scope of Article VI of the GATT
1994.  While we agree that Article VI applies when Members have recourse to a given trade policy
instrument, i.e. anti-dumping action, we do not agree that the application of Article VI is dependent
on the objective pursued by the Member concerned. As we have demonstrated in the previousparagraphs, Article VI is based on an objective premise.  If a Member's legislation is based on a test
that meets the definition of Article VI:1, Article VI applies.  The stated purpose of the law cannot
affect this conclusion.
376
                                                                                                                                                                    
countervailing or safeguard measures.  However, it cannot choose to address "dumping" as such with
instruments or in ways that are different from those allowed in the WTO Agreement for that purpose.  This is, in
our view, the meaning of footnote 24 to Article 18.1 of the Anti-Dumping Agreement, which provides that "Thisis not intended to preclude actions under other relevant provisions of GATT 1994, as appropriate."
374 We did not overlook the terms of footnote 24.  Footnote 24, as we understand it, does not affect our
conclusion that, when dealing with dumping as such, Members must comply with Article VI of the GATT 1994
and the Anti-Dumping Agreement.
375 We understand that the United States did not argue that the tests at issue were less stringent than the
material injury/material retardation tests of Artic le VI.  Therefore, we do not address this point.
376 See Panel Report on EC – Parts and Components, Op. cit., at para. 5.6, where the panel examined
whether the policy purpose of a charge was relevant to determining the issue of whether the charge was imposed"in connection with importation", within the meaning of Article II:1(b) of GATT 1947.  The panel noted that:WT/DS136/R
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6.117  We therefore conclude that the fact that the 1916 Act may have an anti-trust objective or be
categorized in US law as an anti-trust law does not per se  make it fall outside the scope of Article VI,
unless it is demonstrated that this objective and this categorisation have an impact on the operation of
the 1916 Act. In light of our reasoning, this would require that the terms of the transnational price
discrimination test of the 1916 Act be understood in such a way that it would not meet the definitionof "dumping" of Article VI:1 of the GATT 1994.
(iv) Conclusion
6.118  We find that the 1916 Act, based on an analysis of its terms, objectively addresses a type of
transnational price discrimination that meets the definition of "dumping" contained in Article VI:1 of
the GATT 1994 and, thus, should be subject to the disciplines of Article VI.
6.119  However, our findings are based on the definition of dumping as found in Article VI:1 of the
GATT 1994 and on the terms of the 1916 Act in their current ordinary meaning.  As we recalled
above,
377 we must pay due regard to the fact that we are dealing with a text drafted more than eighty
years ago.  If, by the time it was enacted, the 1916 Act was not designed to address "dumping", in
other words if the terms found in the 1916 Act had a different meaning in 1916 than they appear tohave today, this should be apparent from the legislative history and the context of its enactment.
Since the United States refers to the legislative history of the 1916 Act as well as to the context of its
enactment, this aspect needs to be addressed.  The United States also claims that US courts have
interpreted the 1916 Act consistently with its anti-tru st purpose, and in such a way that it is removed
from the scope of application of Article VI.  Having regard to our conclusions in paragraph 6.117
above that this would require that the price discrimination test of the 1916 Act be interpreted in such a
way that it would no longer meet the definition of Article VI:1, we must also address this argument,
as well as the EC argument that, in fact, US courts have applied the 1916 Act as an anti-dumping
instrument.
(c) Impact of the historical context and of the legislative history of the 1916 Act
(i) Approach of the Panel
6.120  The United States and, to a lesser extent, the European Communities have referred the Panel
to the historical context of the law in general and its legislative history in particular, as it results, inter
alia, from the Congressional Records.  Our understanding is that the legislative history of an act of the
US Congress is an important tool for US courts to identify the "intent of Congress".
378  The legislative
history allows US courts to interpret a law in acco rdance with what they perceive to be the original
intent of the US Congress when the text of that law is not clear.  US courts may also use legislativehistory, when necessary, to confirm the clear meaning of a law.
379  Since, as mentioned above,380 we
                                                                                                                                                                    
"the policy purpose of charges is frequently difficult to determine objectively.  Many charges
could be regarded as serving both internal purposes and purposes related to the importation of
goods.  Only at the expense of creating substantial legal uncertainty could the policy purpose
of a charge be considered to be relevant in determining whether the charge falls under
Article II:1(b) or Article III:2."
377See section C.1. above.
378 In the Zenith III  case, p. 1213, the court mentioned that the US Supreme Court had "recently
observed that 'courts, in construing a statute, may with propriety recur to the history of the times when it was
passed; and this is frequently necessary in order to as certain the reason as well as the meaning of particular
provisions in it.' Leo Sheep Co. v. United States, 440 U.S. 668, 669, 99 S.Ct. 1403, 1405, 59 L.Ed.2d 677(1979)".
379 US courts had recourse to the legislative history of the 1916 Act in a number of cases.  See, e.g., the
Zenith I  (1975) and Zenith III  (1980) judgements.
380 See section C.1. above.WT/DS136/R
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have to identify how the 1916 Act is understood within the US legal system, we need to address the
arguments of the parties based on the historical context and the legislative history of the 1916 Act,
taking into account the use that US courts made of those interpretation tools in practice.
6.121  We have found that the key to the applicability of Article VI of the GATT 1994 to the 1916
Act is whether that law objectively addresses "dum ping" within the meaning of that article. We have
also found that the terms of the 1916 Act, on th eir face, showed that the transnational price
discrimination test in that law met the definitio n of "dumping" in Article VI:1 of the GATT 1994. We
consider that we now have to determine whether there is evidence in the legislative history or the
historical context of the enactment of the 1916 Act that we should understand the price discrimination
test of the 1916 Act differently than we have on the basis of the text of the law.
(ii) Review of the historical context and legislative history
6.122  Having reviewed the materials submitted by the parties, we have found no indication that the
terms of the price discrimination test found in the 1916 Act were understood differently at the time of
its enactment than we understand them today.  In its 1919 Information Concerning Dumping and
Unfair Foreign Competition in the United States and Canada's Anti-Dumping Law , at p. 9, the
United States Tariff Commission included a definition of "dumping" identical in substance to the
concept addressed by Article VI:
"Dumping may be comprehensively described as the sale of imported merchandise at
less than its prevailing market or wholesale price in the country of production.  The
definition derives particular importance from a not infrequent tendency to confuse
with dumping […] certain other trade practices which are generally considered
unfairly competitive."
This statement of the Tariff Commission shows that dumping was probably not the only price practice
which could be considered as unfairly competitive. However, the Tariff Commission added that
"The anti-dumping act of Congress of September 8, 1916, [footnote omitted]
somewhat modifies the above definition by condemning importation as well as sale, ifcommonly and systematically resorted to with the purpose specified in the law."
While not part of the legislative history of the 1916 Act as such, this document of the Tariff
Commission indicates that the practice addressed by the 1916 Act was already clearly understood to
be "dumping" as we define it today.   The Ta riff Commission definition of "dumping" is, with some
exceptions which we found not to affect the applicability of Article VI:1 of the GATT 1994,
381 similar
to the definition of transnational price discrimination in the 1916 Act. Therefore, it seems reasonable
to conclude that the US Congress, when it passed the 1916 Act, was fully aware of the fact that that
law addressed "dumping" and not another form of price discrimination.382
6.123  Moreover, even though the 1916 Act might pursue anti-trust objectives, we found no express
indication in the legislative history that price discrimination in the 1916 Act should be understood in
any particular anti-trust context.
6.124  The United States argues that the district court in Zenith III  (1980) held that, to give rise to a
violation of the 1916 Act, the products sold in the United States and the products sold in the foreign
                                                     
381 See para. 6.112 above.
382 In Zenith II  (1975), p. 258, the court stated that "The practice [of dumping] itself long outdated the
passage of the Antidumping Act  of 1916 […], which clearly implies that Congress knew whereof it wrote when
it enacted the statute."WT/DS136/R
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country had to be of "like grade and quality" as that phrase is used in Section 2 of the Clayton Act as
amended by the Robinson-Patman Act.  As a result, litigants under the 1916 Act were not "clothed
with the same discretion as the US Treasury  Department under the 1921 Antidumping Act"383 in terms
of the definition of the products to be compared.
6.125  First, in our opinion, the comparison with the 1921 Antidumping Act in Zenith III  was not
intended to differentiate the 1916 Act in terms of product comparison, since the range of products that
can be compared under the 1916 Act as interpreted in Zenith III  includes not only "identical"
products, but also "similar" products. The comparison was meant to specify that the 1916 Act did not
leave as much discretion as the 1921 Act in this respect.
6.126  Second, we also note that the conclusion in the Zenith III  case to which the United States
refers is only indirectly based on the legislative history of the 1916 Act.  It is the result of the
interpretation by the court of the intent of the US Congress that the purpose of the 1916 Act was to
complement the existing anti-trust laws.  It is from this "intent", not from specific statements relating
to the meaning of the words "such articles" in the 1916 Act or in any anti-trust law that the court
apparently deduced the application of the Clayton Act standard of "like grade and quality".  A furtherexamination of the court decision
384 shows that the court also relied on terms of the 1916 Act directly
imported from the Tariff Act of 1913 to reject the narrow interpretation of "such articles" advocated
by the defendants.
6.127  The court in the Zenith III  case apparently used both justifications without any distinction as
to their respective weight, even though it specified that it would hold that "there is no violation of the
1916 Act unless the standards of similarity of the customs appraisement law are met".385 In any case,
we note that neither affects the scope of the price discrimination test to such an extent that it would beremoved from the scope of the definition of "dumping" in Article VI:1 of the GATT 1994. By
accepting a comparison not only between "identical" products, but also between "similar" products,
the court interpretation in the Zenith III  case is probably broader than the Article VI comparison based
on "like" products. However, whether broader or narrower in terms of product comparison, the
transnational price discrimination test in the 1916 Act still meets the definition of Article VI:1 of theGATT 1994.
6.128  The United States also argues that the historical context and the legislative history show that
the 1916 Act was intended to supplement  or complement  the rules applicable to US products in an
anti-trust context.  The United States deduces from this that the 1916 Act is an anti-trust law not
subject to the disciplines of Article VI of the GATT 1994.  The United States refers, inter alia , to the
statement of Representative Claude Kitchin:
"We believe that the same unfair competition law which now applies to the domestic
trader should apply to the foreign import trader."
386
6.129  We also note that the US Secretary of Commerce William Redfield explained in 1915 that
"Unfair competition is forbidden by law in domestic trade, and the Federal Trade
Commission exists to determine the facts and abate the evil wherever found. The
                                                     
383 Op. Cit., p. 1197.
384 See pp. 1229-1230.
385 Ibid. p. 1197. See also In re Japanese Electronic Products II (1983), p. 324.
386 53 Cong. Rec. App. 1938 (1916), as quoted in Zenith III , p. 1222.WT/DS136/R
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door, however, is still open to "unfair competition" from abroad which may seriously
affect American industry for the worse."387
The two statements refer to the extension of "unf air competition" rules applicable to US domestic
commerce to imports.  We have noted above that the US Congress had used in the 1916 Act a
definition of transnational price discrimination which was already at that time understood as"dumping".  We have also concluded in paragraph 6.116 above that the fact that the 1916 Act had an
anti-trust objective was not relevant and did not make the 1916 Act fall outside the scope of
Article VI of the GATT 1994. Likewise, we are not convinced that the fact that the 1916 Act was
presented at the time of its enactment as "supplementing" or "complementing" the existing anti-trust
laws necessarily requires that the 1916 Act be interpreted as an anti-trust law.  In our opinion, theargument of the United States is only valid if the United States can prove that the historical context
and the legislative history of the 1916 Act give indications that anti-trust and anti-dumping were
already separate legal concepts. If the two were not clearly identified but, rather, were still part of one
single notion of "unfair competition", the US argument should be rejected.
6.130  We note that, at the time of the enactment of the 1916 Act, the current distinction between
anti-trust and anti-dumping did not apply in the United States. We reviewed the materials submitted
by the parties and the extensive analysis of the legislative history of the 1916 Act in the Zenith III
case.  While it appears, inter alia  from the quotations above, that the US Administration and US
lawmakers of that time considered that the 1916 Act "complemented" or "supplemented" the unfair
competition rules applied to domestic products essentially under the Sherman Act and the Clayton
Act,
388 it also seems that no clear legal distinction had yet been made in the United States between
unfair competition resulting from dumping and unfair competition resulting from other practices, as it
is made today.389 Dumping as defined in Article VI:1 of the GATT 1994 was just one specific cause
of action under anti-trust law,390 as noted in 1923 by Jacob Viner:
                                                     
387 Annual Report of the Secretary of Commerce  43 (1915), as quoted in Zenith III , p. 1219.
388 See J. Viner, Dumping: A Problem in International Trade (1923), Op . Cit.; pp. 242-243:
"[The Wilson Administration] therefore recommended that any measure adopted to meet the
problem should be divorced from customs legislation [in the sense of imposition of highertariffs] and should take the form of a further extension to those engaged in the import trade of
the restraints  against unfair competition which had been imposed on domestic commerce."
See also the excerpt from the letter of Samuel J. Graham, Assistant Attorney General, to the New York Times,
4 July 1916, included in a footnote to the above quotation.
389 Even though dumping is now subject to specific international disciplines and may have acquired
other purposes, the origins of anti-trust and that of anti-dumping were essentially the same, as highlighted by the1974 report of the Ad Hoc  Committee on Antitrust and Antidumping of the American Bar Association Section
on Antitrust Law, which stated as follows:
"Both U.S. antidumping and antitrust law and policy have historic roots, and both were
intended to protect and engender the fund amental U.S. economic policy of free and fair
competition.
[…] antidumping policy seeks to accommodate the legitimate need for legislation which
protects American competition from unfair price discrimination by foreign concerns."
43 Antitrust L.J. 653, 691-93 (1974), as reproduced in J. H. Jackson & W. Davey, Legal Problems of
International Economic Relations, 2d Ed. (1986). This is an additional reason for not deciding on the
applicability of Article VI of the GATT 1994 to the 1916 Act on the basis of the general objective of the law.
390 In that context, the statement of the court in the Zenith III  case, at p. 1220, that "the political and
legal history of the era supports our conclusion from the statutory text that the 1916 Act was an antitrust basedWT/DS136/R
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"This antidumping provision, beyond the fact that it makes the participation of the
importer both as to act and intent in predatory dumping specifically unlawful and not
merely unlawful by construction as a practice by which competition can be restrained
or monopoly established , adds nothing to the Sherman Act.  Beyond the fact that it
makes unnecessary the proof of conspiracy between the importer and others, it addsnothing to the Wilson Act of 1894" (emphasis added).
391
6.131  Even if we were to agree with the United States that the objective of the law is decisive, the
historical context and legislative history do not confirm that the 1916 Act had a purely "anti-trust"
purpose, within the meaning of that concept today. Rather, it appears that anti-dumping as it is known
today in international trade law and anti-trust laws  dealing with predatory pricing were part of the
same notion of  "unfair competition."
(iii) Conclusion
6.132  We note that evidence from the historical context of the 1916 Act supports our finding that
the 1916 Act transnational price discrimination test  corresponds to "dumping" within the meaning of
Article VI.  We also note that, at the time of the enactment of the 1916 Act, there would have been noneed to give any different meaning to that test in or der to make it fall within the scope of US anti-trust
law because, at that time, "dumping" had not yet been conceptually isolated from the body of US anti-
trust laws.  In any event, the United States has not submitted evidence from the historical context or
the legislative history of the 1916 Act that the terms of the transnational price discrimination test of
the 1916 Act were understood differently because of the anti-trust objective of the law or that that
objective was such as to make the 1916 Act fall outside the scope of Article VI.
6.133  We therefore conclude that the historical context and the legislative history of the 1916 Act,
while showing that there was an intent to parallel  the rules applicable to US and foreign companies,
do not lead us to conclude any differently than we have on the basis of the terms of the 1916 Act as
such.  Therefore, we proceed to review the im pact of the US case-law relating to the 1916 Act.
(d) Impact of the US case-law relating to the 1916 Act
(i) Approach of the Panel
6.134  We recall our findings under Section C.1 above on how we should consider the various court
decisions regarding the 1916 Act and their interrelationship.  We note that the United States claims
that the case-law is evidence that the 1916 Act has been applied as an anti-trust statute. We would like
to make two preliminary remarks in relation to this argumentation of the United States.
(a) First, as already mentioned, the categorisation of the 1916 Act as an anti-trust law or
an anti-dumping law by the US courts should not be decisive in determining the
WTO-compatibility of that law.
392 Since the point of our review of the US case-law is
to ascertain the actual meaning of the 1916 Ac t in order to assess its conformity with
the WTO Agreement, the classification of this law by US courts can only be of
                                                                                                                                                                    
unfair competition law, not a protectionist one" does not support the US position.  From the paragraphs
preceding that conclusion, we understand it as meaning that the court opposed the use of selective "unfair
competition" instruments to the application of  higher tariffs as part of a protectionist policy.
391 J. Viner, Dumping: A Problem in International Trade (1923), Op . Cit.; p. 244.
392 See EC – Parts and Components, Op. Cit., para. 5.19.  In that context, the statement of the court in
Zenith III  (1980) that the 1916 Act is an anti-trust, not a protectionist statute is for us of limited assistance if this
statement is not followed by specific conclusions in terms of interpreting the price discrimination test of the
1916 Act.WT/DS136/R
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limited impact for the purpose of the present case.  For the Panel, it is the reasoning,
if any, behind the classification that matters.
(b) Second, we found that the 1916 Act price discrimination test met, on its face, the
definition of Article VI:1 of the GATT 1994, and that the other tests of the 1916 Act
based on the "intent" of the exporter engaged in "dumping" do not have any bearingon that conclusion.  As a result, we are of the view that we need not consider any
court interpretation of the 1916 Act relating to any other test than the transnational
price discrimination test.
We must therefore identify the instances, if any, where US courts, in applying the 1916 Act, have
addressed the "dumping" test contained in that law and determine whether those courts haveapplied/interpreted that test in such a way that it would no longer meet the definition of Article VI:1
of the GATT 1994.
6.135  Since we have already found that the text of the 1916 Act, on its own, supports the conclusion
that Article VI is applicable to that law, we consid er that, in order for that conclusion to be confirmed,
it is not necessary for the EC to demonstrate that there was no court decision that applied the 1916 Act
in a WTO-consistent manner.  If we find that the US court practice is not sufficiently well established,
or that there is no prevailing interpretation, or no sufficiently clear reasoning regarding the way the
transnational price discrimination test of the 1916 Act should be applied, we shall rely on the text of
the law itself.  However, for the United States to prevail, it would be sufficient in our view to show
that there is one definitive interpretation supporting its position.  As a result, we first determine
whether there is any relevant Supreme Court decision which would provide us with a definitiveauthority at the highest level of jurisdiction.  If not, we will review the circuit court decisions.
(ii) The US Supreme Court and the 1916 Act
6.136  We first note that the US Supreme Court has not  yet been called upon to interpret the text of
the 1916 Act.  However, as highlighted by the United States, in the  Cooper case,
393 the Supreme
Court described the 1916 Act as "supplemental" to the Sherman Act, as part of an illustration that"Congress had in mind the distinction between public and private remedies".  The United States
concludes from this that the 1916 Act is an anti-trust instrument.  However, the Supreme Court also
referred to the 1916 Act as "the antidumping prov isions of the Revenue Act of 1916". Even if the
Supreme Court regarded the 1916 Act as an anti-trust law, the fact that it refers to "anti-dumping
provisions" leaves the issue of the interpretation of the price discrimination test of the 1916 Act open,since US courts may well apply the 1916 Act as an anti-trust law when it comes to the "intent" test,
while applying the price discrimination test without any additional requirements than those contained
in the text of the 1916 Act.
6.137  What the Supreme Court meant by "supplemental" is not clear in the absence of an agreed
technical definition under US law.  The 1916 Act could be "supplemental" to anti-trust statutes in anumber of other ways than that suggested by the United States.  For instance, an anti-dumping law
could "supplement" a domestic predatory pricing law.  The context of the statement in the decision is
of limited use.
394
                                                     
393 Op. Cit., p. 308.
394 The term "supplemental" was also used by US Secretary of Commerce Redfield in his legislative
proposal of 1915 ( Annual Report of the Secretary of Commerce  (1915), Op  Cit.) when he said "I also
recommend that legislation supplemental to the Clayton Antitrust Act be enacted…" However, we alreadyexpressed the view when we addressed the historical context and the legislative history of the 1916 Act that the
borderline between anti-dumping and anti-trust was not so clear at that time, if only because anti-dumping wasWT/DS136/R
Page 144
6.138  Therefore, we are not in a position to draw any definitive conclusion from the US Supreme
Court statements in the Cooper  case.  Even if the Supreme Court had expressly stated that the 1916
Act was an anti-trust or an anti-dumping law, this statement would have no relevance for this Panel as
long as it was not supported by an explanation of the reasons why the Supreme Court thought that
way, or of the implications of that statement on the interpretation of the transnational pricediscrimination test of the 1916 Act.
6.139  As a result, any conclusion on the basis of the US case-law becomes delicate because there is
no unambiguous authority at the highest level of US jurisdiction.  This does not mean that we will not
find an unanimous interpretation, or even a prevailing interpretation that would be convincing.
Indeed, many judgements are final as a practical matter at the level of the circuit court of appeals,inter alia,  because the possibility to appeal before the Supreme Court is not automatically granted.
(iii) The interpretation of the transnational price discrimination test of the 1916 Act at the circuit
court level
"Dumping" as an international trade concept applied in an anti-trust context
6.140  Considering the other cases mentioned by the parties and decided either at the district court
level or at the court of appeals level, the Panel notes that the court in Zenith III  (1980) stated that the
1916 Act
 "should be interpreted whenever possible to parallel the "unfair competition" law
applicable to domestic commerce.  Since the 1916 Act is a price discrimination law, it
should be read in tandem with the price discrimination law, section 2 of the Clayton
Act, which was amended by the Robinson-Patman Act of 1936 in 1936."
6.141  The United States relies heavily on this and other similar statements
395 to argue that the 1916
Act should be interpreted similarly to the Robinson-Patman Act.  However, as outlined above, the fact
that the 1916 Act was adopted for anti-trust purposes and the fact that it mixes "dumping" with other
tests which are typical of US anti-trust legislation are of no relevance in this case.  What matters for
us is the way transnational price discrimination has been addressed by US courts. At the district court
level, the United States relied substantially on the 1980 Zenith III judgement.  We note, with respect
to price discrimination stricto sensu , that the court, after having recalled Viner's definition of
dumping, stated that "to restate the obvious, the Antidumping Act of 1916 is a prohibition of
international price discrimination."  This would tend to confirm that the court applied the
transnational price discrimination test of the 1916 Act without reading into it additional anti-trust-like
requirements which would modify its meaning.  The Court also recalled that "as a price discriminationstatute, the Antidumping Act of 1916 is functionally similar to the price discrimination statutes which
are applicable to domestic business." However, this was before the introduction - implicitly in the In
Re Japanese Electronic Products III  case or explicitly in the Brooke Group case - of the predatory
pricing/recoupment test. We have no clear evidence that, before those judgements, the price
discrimination test of the 1916 Act was applied differ ently from what is mentioned in the Act itself.
6.142  When examining the historical context and the legislative history, we addressed the
conclusion of the court in Zenith III  regarding product comparison to the effect that the products sold
in the United States and the products sold in the foreign country had to be of "like grade and quality"
as that phrase is used in Section 2 of the Clayton Act as amended by the Robinson-Patman Act. We
note that the Court of Appeals in In Re Japanese Electronic Products II  (1983) confirmed that the
                                                                                                                                                                    
at an early stage of development and because it was pr obably not yet perceived in the United States as a trade
instrument separate from anti-trust.
395 See Zenith III , p. 1223.WT/DS136/R
Page 145
phrase "actual market value or wholesale price of such articles" was a term of art borrowed from the
Tariff Act of 1913 and defined in that Act.396 The conclusions we drew from the historical context
when we addressed the product comparison aspect of the transnational price discrimination test of the
1916 Act397 are not affected by the court decisions which subsequently addressed it.
6.143  We have not found in the decisions referred to by the United States other elements which
would demonstrate that the price discrimination test of the 1916 Act, as such, was affected by
attempts to parallel the Robinson-Patman Act.  In fact, the court in Zenith II  (1975) largely used
"standard dictionary definitions" to interpret the te rms of the 1916 Act that had been challenged by the
defendants on grounds of vagueness.  This was the case for the terms "commonly and systematically",
and "other charges and expenses necessarily incident to the importation and sale". Regarding the term"substantially", the court only referred to the case-law regarding the Clayton Act to conclude that if
the term "substantially" in "substantially to lessen competition" in the Clayton Act was not found
unconstitutionally vague the term " substantially less" in the 1916 Act cannot be either.  Finally, the
court also referred to the 1913 Tariff Act to interpret the phrase "actual market value or wholesale
price."
6.144  The United States also mentions that every final and conclusive US court decision has
supported the Zenith III  analysis. We note however that a number of these cases were concerned with
the issue of locus standi  in a 1916 civil action
398 or more generally with the problem of establishing a
cause of action.399 I f  t h e y  c o n f i r m  Zenith III , it seems to be essentially by reason of not expressly
objecting to its conclusions, which we have found not to affect our provisional findings based on the
terms of the 1916 Act alone. In fact, it seems that courts have concentrated their efforts on other
aspects of the 1916 Act, such as the standing and damages provisions, which were found "essentiallythe same as those applicable to the antitrust laws under section 4 of the Clayton Act" and the criminal
penalty clause which is "virtually identical to, and specifies the same penalties as, the corresponding
clauses of the Sherman Antitrust Act as then in force."
400
6.145  Other elements tend to show that courts approached the transnational price discrimination test
found in the 1916 Act as "dumping" within the m eaning of Article VI of the GATT 1994.  For
instance, a number of those decisions, including the cases cited by the United States in support of its
position, refer to the definition of dumping by Jacob Viner, i.e. "price discrimination between
purchasers in different national markets"401 and generally address the price discrimination test found
in the 1916 Act as "dumping", without any further qualification.  In this respect, the court in Zenith II
did not find it necessary to look any further than that definition and the popular title of the 1916 Act toconclude that:
"An economic regulatory statute could scarcely acquire the designation of an
'antidumping Act' unless the business community to which the statute was addressed
knew what 'dumping' was."
402
                                                     
396 See In Re Japanese Electronic Products II,  p. 324.
397 See paras. 6.124-6.126 above.
398See Schwimmer v. Sony Corp. of America (1979), Op . Cit.;  Schwimmer v. Sony Corp. of America
(1980), Op . Cit.; Western Concrete Structures Co. v. Mitsui & Co.  (1985).
399 Jewel Foliage Co. v. Uniflora Overseas Florida  (1980), Op. cit.; Outboard Marine Corporation v.
Pezetel  (1978), Op . Cit.
400 Zenith III , p. 1214.
401 J. Viner, Dumping: A Problem in International Trade, 1966 edition, p. 4.  See, e.g., Zenith II  (1975),
Outboard Marine Corporation v. Pezetel  (1978), p. 408; Zenith III  (1980); In re Japanese Electronic Products
II (1983), p. 321
402 Zenith II , p. 258.  See also the statement of the court in Zenith III , p. 1196:WT/DS136/R
Page 146
6.146  These examples are evidence that some US courts, irrespective of their interpretation of the
other parts of the 1916 Act, considered that the transnational price discrimination test had to be
interpreted as "dumping", as it is also understood in international trade, and on the basis of US trade
law standards.
The Brooke Group  recoupment test
6.147  The United States claims that, since the 1986 Third Circuit Court of Appeals decision  In Re
Japanese Electronic Products III  and the 1993 Supreme Court decision in Brooke Group Ltd. v.
Brown & Williamson Tobacco Corporation ,403 courts have applied to the 1916 Act the anti-trust
predatory pricing/recoupment test developed in those cases.404
6.148  We understand the predatory pricing/recoupment test in the Brooke Group  case to require that
(i) the complainant establish that the prices complained of are below an appropriate measure of its
rival's costs and that (ii) the complainant demonstrate that the competitor had a reasonable prospect of
recouping its investment in below-cost prices.405  The Supreme Court further held that evidence of
below-cost pricing is not on its own sufficient to permit an inference of probable recoupment and
injury to competition.  Determining whether recoupment of predatory losses is likely requires anestimate of the cost of the alleged predation and a close analysis of both the scheme alleged by the
plaintiff and the structure and conditions of the relevant market.
406
6.149  It is not clear whether the recoupment test should be analysed as part of the transnational
price discrimination test or as part of the "intent" test of the 1916 Act.  As a result, in order to consider
the applicability of the Brooke Group  test to the price discrimination test of the 1916 Act, we have to
assume that price recoupment is more related to the type/amount of price discrimination that can be
achieved by the importer than to its intent to affect the US market. If  the Brooke Group  test relates to
the "intent" test of the 1916 Act, it cannot affect the transnational price discrimination test of the 1916
Act.
6.150  This said, regarding the first criterion of the Brooke Group  test, i.e. below cost prices, we do
not consider that the introduction of a below-cost  price test would make Article VI of the GATT 1994
                                                                                                                                                                    
"We also have occasion to compare the 1916 Act,  which creates a private right of action for
treble damages and provides criminal penalties for dumping, with the Antidumping Act of1921"
The terms used by the court and the subsequent developments in the judgement show that "dumping" in the1916 Act and in the 1921 Act, which was the US anti-dumping law based on administrative investigations
applied until the implementation of the Tokyo Round, we re not understood differently.  The fact that the
understanding of the meaning of "dumping" by US courts corresponds to the definition of that concept inArticle VI:1 of the GATT 1994 is confirmed by the following statement of the court in In Re Japanese
Electronic Products II , at p. 324:
"The first element necessary to a finding of dumping under the 1916 Act is proof that a price
differential exists between two comparable products, one of which is imported or sold in the
United States and the other of which is sold in the exporting country."
See also Helmac II  (1993), p. 591, which recognised that the key to liability under the 1916 Act was "dumping:
the pricing of goods on the American Market at a price lower than on the home market".
403 509 U.S. 209, 118 S.Ct. 2578, hereinafter the " Brooke Group  case".
404 Even though the parties have discussed the implication of the court decision In Re Japanese
Electronic Products III,  we do not find it necessary to determine whether the court actually applied in that case
the predatory pricing/recoupment test later established by the Supreme Court in the Brooke Group  case.  For the
sake of our analysis, we will assume that the court in In Re Japanese Electronic Products III  actually applied a
standard similar to the Brooke Group  test.
405 Op. cit., pp. 2587-2588.
406 Ibid., p. 2589.WT/DS136/R
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no longer applicable to the 1916 Act, essentially because the definition of dumping in Article VI:1
does not incorporate a notion of magnitude of price difference.  We are aware that Article 5.8 of the
Anti-Dumping Agreement provides that there "sha ll be immediate termination in cases where the
authorities determine that the margin of dumping is de minimis ", i.e. that it is less than 2 per cent,
expressed as a percentage of the export price.  We have no evidence that this de minimis  dumping
margin bears any link with any kind of below-cost test as applied in anti-trust. The application of a
below-cost price test in the 1916 Act may make the establishment of a transnational price difference
more difficult, but it does not affect the basic requirement that a price difference has to be established
under the 1916 Act, which is also the basic requirement of Article VI:1 of the GATT 1994.
6.151  As far as the cost recoupment criterion is concerned, we do not believe either that the
introduction of a recoupment requirement under th e 1916 Act would make Article VI of the GATT
1994 no longer applicable to the 1916 Act for essentially two reasons.  First, the definition of
dumping set out in Article VI:1 would still apply.  Even if a cost recoupment were to be required in
addition to a price difference, a price difference must always be found in the first place. The second
reason is more of an economic nature. Since, in transnational price discrimination, an exporter maybenefit from an isolated domestic market, which is often considered to be one of the reasons why
dumping is possible in the first place, recoupment on the export  market may not always occur in a
situation of international predatory pricing.  The recoupment requirement, which may be justified in
cases of price discrimination within the United States, may be an economically questionable
requirement in cases of transnational price discrimination, at least whenever the exporter does not
need to recoup its costs on the US market.
407  Indeed, the company exporting at dumping prices may
benefit from a simultaneous recoupment of its "dumping" costs through its sales on its domesticmarket.
6.152  However, this Panel is called on to clarify WTO provisions, not to discuss specific anti-trust
issues.  Therefore, having expressed the above-mentioned reservations, we proceed to consider if,
effectively, the Brooke Group  test has been actually and consistently applied by US courts in their
interpretation of the 1916 Act.
6.153  If the Supreme Court decision in Brooke Group  is applicable to the 1916 Act, one would
expect the other courts which had to consider complaints under the 1916 Act to apply that test. We
have no clear evidence that this has been the case, even if one assumes that the test was already
applicable since In Re Japanese Electronic Products III  (1986), as it would appear from the reaction
of the courts in the Geneva Steel  
408and Wheeling-Pittsburgh  cases.409
6.154  In that context, the parties have discussed the content of the Helmac I  case (1992).  We
understand that the court in the Helmac I  case concluded that the complainant did not have to
establish recoupment.  On the contrary, the court noted the importance of the difference in
terminology between the 1916 Act and the US anti-trus t statutes.  According to the court, the 1916
Act
"focuses upon intent while the antitrust statutes focus upon effect.  Beside injury to
competition, the Antidumping Act also provides a cause of action when the defendant
attempts to, among other things, injure an industry in the United States."410
                                                     
407 We find relevant the view expressed in Note, Rethinking the 1916 Anti-Dumping Act , Harvard Law
Review, Vol. 110, No. 7, May 1997, p. 1555, at p. 1566, submitted by the EC.
408 Op. Cit.  See para. 6.158 below.
409 Op. Cit.  See para. 6.160 below.
410 Helmac I, Op. Cit., pp. 575-576.WT/DS136/R
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The court only stated as a possibility that the adoption of the recoupment theory would be appropriate
if Helmac, the complainant in that case, had claimed that the defendant's conduct injured competition .
Since Helmac alleged an attempt to injure an industry  in the United States, the court concluded that
proving ability to recoup losses was not necessary.411 In the Helmac II decision (1993) the court
differentiated between liability, of which a finding of dumping was the key, and the calculation of the
harm caused to the domestic industry.412
6.155  Therefore, we consider that we do not have sufficient evidence of the actual application of the
Brooke Group  test to 1916 Act cases in relation to the establishment of the price discrimination
required by that law.
The interlocutory decisions relied upon by the European Communities
6.156  The EC alleges that two interlocutory judgements in the Geneva Steel and the Wheeling
Pittsburgh cases support its claims that the 1916 Act addresses dumping within the meaning of
Article VI of the GATT 1994. The United States argues that these two decisions are neither final nor
conclusive under US law.  Therefore, they cannot, at the present time, be considered by the Panel asauthoritative interpretations of US law.
6.157  We are fully aware of the fact that these decisions are only interlocutory judgements. We
consider that our review of the other - final - judgements referred to by the parties already shows that
US courts did not interpret the transnational price discrimination test of the 1916 Act in such a way
that it would fall outside the scope of Article VI of the GATT 1994. However, we recall that we are
required to make an objective assessment of the facts of the case.  Since these two interlocutory
judgements have, like the Zenith  cases, actually discussed in detail the origin, objectives and practical
operation of the 1916 Act, we found it relevant to consider also those cases. We also note that these
two cases are subsequent to the Zenith  cases and the Supreme Court decision in the Brooke Group
case.  Considering them is appropriate in light of the arguments of the United States based on those
decisions. Finally, as mentioned in paragraph 6.134(a) above, we are interested in the reasoning
followed by the US courts as a clarification of how  the transnational price discrimination test of the
1916 Act operates. If this reasoning is convincing, we feel justified in taking it into account in our
examination.
6.158  In Geneva Steel , the district court addressed the question whether the 1916 Act always
requires evidence of antitrust-like predatory pricing. Since the intent of predatory pricing in our
opinion does not affect the transnational price disc rimination test of the 1916 Act, we do not consider
that judgement to be directly relevant to our case. However, we note that the court considered that
"By the words it chose, Congress protected United States industry from unfair dumping."
413 Having
regard to our conclusions regarding the use of the word "dumping" in other judgements, we assume
that the court consciously used the word "dumping" in the same meaning as this word is given in
Article VI:1 of the GATT 1994.
6.159  Other reasonings of the court are relevant in so far as they seem to confirm our understanding
of the case-law. For instance, the court in Geneva Steel  considered the conclusion in Zenith III  that the
1916 Act was "an antitrust, not a protectionist statute" and stated that such conclusion did not appear
to be necessary for the finding of the court in the Zenith III  case that the term "such articles" included
also "similar" articles. 414  This view is close to that of this Panel that the finding of applicability of the
Clayton Act "like-grade and quality" standard in Zenith III  was not necessary when it had already
                                                     
411 Ibid., p. 575.
412  Helmac II , Op. Cit., at p. 591.
413 Geneva Steel , Op. cit.  p. 1217.
414 Ibid., p. 1218.WT/DS136/R
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been established that the relevant text in the 1916 Act had been imported from the 1913 Tariff Act,
which provided for a "similarity" standard. We also note that the court in Geneva Steel  found the
terms of the 1916 Act unambiguous,415 as we did when we considered the text of the 1916 Act in
isolation.
6.160  The court in the Wheeling-Pittsburgh case did not address the price discrimination test of the
1916 Act as such, but the question whether predatory intent had to be demonstrated.  Its reasoning is
therefore less relevant for this case, except for its discussion of the inclusion of the predatory
pricing/price recoupment test in the 1916 Act. 416  In that respect, like in the Geneva Steel  case, the
court in Wheeling-Pittsburgh  rejected the application of this test with respect to certain circumstances
of application of the 1916 Act because it created a double burden of proof for the complainants.Indeed, the court considered that, to the "intent" to injure or destroy or prevent the establishment of a
domestic industry contained in the text of the 1916 Act, the court in Zenith III  had added "an antitrust
type of predatory pricing, including the reasonable prospect of resultant market control and price
recoupment."
417
6.161  The Geneva Steel  and Wheeling-Pittsburgh  cases shed additional light on the interpretation of
the pricing/recoupment test because they have addressed quite specifically the question of its
application. They also represent additional evidence that some district courts do not find themselves
compelled, at least at an early stage of consideration of an issue, to apply the Brooke Group  predatory
pricing/price recoupment test to claims under the 1916 Act.
(iv) Conclusion
6.162  We conclude that the assessment made by courts of the price discrimination test of the 1916
Act was based essentially on the text of the 1916 Act itself, without any significant additions.  Wealso conclude that, at best, we have no clear evidence of the relevance and of a consistent application
of the cost recoupment test – or any other "anti-trust" standards, such as below-cost prices - in the
implementation of the transnational price discrimination test of the 1916 Act.  In accordance with our
approach,
418 we find that the US case-law supports our original conclusion that the 1916 Act
addresses "dumping" within the meaning of Article VI:1 of the GATT 1994.
3. Conclusions on the applicability of Article VI of the GATT 1994 to the 1916 Act
(a) The 1916 Act falls within the scope of Article VI of the GATT 1994
6.163  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 thatthe transnational price discrimination test incorporated in that law falls within the definition of
"dumping" of Article VI:1 of the GATT 1994.  On the basis of our interpretation of Article VI, we
have also found that none of the additional conditions or requirements contained in the text of the
1916 Act is such as to make the transnational price discrimination test of the 1916 Act fall outside the
scope of the definition of "dumping" in Article VI :1 or otherwise modify our conclusions. We found
                                                     
415 Ibid. , p. 1222-1223.
416 The Court in Wheeling-Pittsburgh  (1999) gave its views as to why the "predatory pricing" part of
the Brooke Group  test could not apply to cases under the 1916 Act.  The court stated that "by requiring a
plaintiff to prove 'intent to injure a domestic industry' by below-cost-pricing, the Antidumping Act of 1916 doesrequire proof of predatory intent, albeit of a different kind." However, since its reasoning was based only on the"intent" requirement of the 1916 Act, we do not find it necessary to address it.
417 Wheeling-Pittsburgh , Op. cit. , p. 605.
418 See paras. 6.134-6.135 above.WT/DS136/R
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no convincing evidence in the legislative history that  should lead us to understand the terms of the
price discrimination test of the 1916 Act differently than we have.  Finally, our review of the US court
decisions submitted by the parties did not show that courts interpreted the transnational price
discrimination test of the 1916 Act in such a wa y that it would no longer meet the definition of
Article VI:1 of the GATT 1994.
6.164  This conclusion also disposes of the argument of the United States that the 1916 Act has been
interpreted in such a manner that it falls outside the scope of Article VI of the GATT 1994.
6.165  Having found that Article VI of the GATT 1994 applies to the 1916 Act, we note that
Article 1 of the Anti-Dumping Agreement provides that an anti-dumping measure shall be applied
only pursuant to investigations initiated and conducted in accordance with the provisions of thatAgreement.  Article 1, second sentence, also provides that
"the [provisions of the Anti-Dumping Agreement] govern the application of
Article VI of GATT in so far as action is taken under anti-dumping legislation or
regulations."
Given the link between Article VI of the GATT 1994 and the Anti-Dumping Agreement, we find that
the applicability of Article VI to the 1916 Act also implies the applicability of the Anti-Dumping
Agreement.
(b) The 1916 Act is a mandatory law within the meaning of GATT 1947/WTO practice
6.166  With respect to the discretion enjoyed by the US Department of Justice which would,
according to the United States, make the 1916 Act non-mandatory, we recall our reasoning in
paragraph 6.92 above.
6.167  The EC claims that we should rely on the panel report on United States – Definition of Wine
Industry  and conclude that "trade remedy legislation" is not "non-mandatory" merely because the
administration enjoys a discretion to initiate an  investigation or not. We consider that, in United States
– Definition of Wine Industry , the panel did not address the mandatory/non-mandatory nature of the
United States countervailing duty legislation.  However, it stated that its mandate instructed it toreview the conformity of the legislation at issu e with the provisions of the Tokyo Round Subsidies
Agreement, "as required by its Article 19:5(a)."
420  On that basis, the panel proceeded to review
Section 612(a)(1) of the Trade and Tariff Act of 1984 as such.
6.168  The EC also refers to the panel report in EC – Audio Cassettes , which was not adopted.421
This report stated why the mere fact that the initiation of anti-dumping investigations was
discretionary would not make the EC legislation non-mandatory. The panel stated that:
"[it] did not consider in any event that its task in this case was to determine whether
the EC's Basic Regulation was non-mandatory in the sense that the initiation of
investigations and impositions of duties were not mandatory functions.  Should
                                                     
420 Op. Cit., para. 4.1.  Article 19.5(a) of the Tokyo Round Subsidies Agreement was the equivalent of
Article 16.6(a) of the Tokyo Round Anti-Dumping Agreement (see footnote 423 below).
421Op. Cit.  On the legal value of unadopted panel reports, see footnote 358 above and its reference to
the Appellate Body report on Japan – Taxes on Alcoholic Beverages.WT/DS136/R
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panels accept this approach, they would be precluded from ever reviewing the content
of a party's anti-dumping legislation."422
The EC – Audio Cassettes  panel based its reasoning on the fact that this would undermine the
obligation contained in Article 16.6 of the Tokyo Round Anti-Dumping Agreement. That provision
provided that parties had to bring their laws, regulations and administrative procedures intoconformity with the provisions of the Tokyo Round Anti-Dumping Agreement.
423  We note that
almost identical terms are found in Article 18.4 of the WTO Anti-Dumping Agreement, which reads
as follows:
"Each Member shall take all necessary steps, of a general or particular character, to
ensure, no later than the date of entry in to force of the WTO Agreement for it, the
conformity of its laws, regulations and administrative practices with the provisions of
this Agreement, as they may apply to the Member in question."
Since we found that Article VI and the WTO Anti-Dumping Agreement are applicable to the 1916
Act, we consider that the reasoning of the panel in the EC – Audio Cassettes  case should apply in the
present case.  Interpreting the provisions of Article 18.4 differently would undermine the obligations
contained in that article and would be contrary to the general principle of useful effect by making all
the disciplines of the Anti-Dumping Agreement non-enforceable as soon as a Member would claim
that the investigating authority has discretion to initiate or not an anti-dumping investigation.
6.169  We therefore conclude that the discretion enjoyed by the US Department of Justice to initiate
a case under the 1916 Act should not be interpreted as making the 1916 Act a non-mandatory law.
6.170  As a result, we consider that the United States, as the party having raised this defence, failed
to supply convincing evidence that the 1916 Act should be considered as a "non-mandatory
legislation" within the meaning of GATT 1947/WTO practice.424  We therefore find that the 1916 Act
cannot be considered to be a "non-mandatory law" which would have the effect that we would not be
entitled to review its conformity as such with the relevant provisions of the WTO Agreement, but onlyto review its conformity in particular instances of application.
425
(c) Concluding remarks on the applicability of Article VI to the price discrimination test of the
1916 Act
6.171  The United States warned the Panel of the implications of an interpretation of the price
discrimination test of Article VI that would be so br oad that it could make Article VI applicable to all
                                                     
422 Op. Cit., para. 362.
423 Article 16.6(a) ("National Legislation") of the Tokyo Round Anti-Dumping Agreement provided as
follows:
"Each government accepting or acceding to this Ag reement shall take all necessary steps, of a
general or particular character, to ensure , not later than the date of entry into force of this
Agreement for it, the conformity of its laws, regulations and administrative procedures withthe provisions of this Agreement as they may apply to the Party in question."
424 We recall that we found in para. 6.87 above that the burden of proof established by the United States
– Tobacco  panel was not applicable in the present case.  We also note that, even though the issue originated in a
question of the Panel, the United States developed it as a defence in its second submission and thereafter.  In
application of the rules on burden of proof recalled in pa ras. 6.37-6.39 above, we consider that it was up to the
United States to provide sufficient evidence to establish a prima facie  case of defence.
425 Having found that the 1916 Act cannot be considered as "non-mandatory" legislation within the
meaning of that concept under GATT1947/WTO practice, we do not find it necessary to address the arguments
of the parties on the impact of Article XVI:4 of the Agreement Establishing the WTO on the application of that
concept.WT/DS136/R
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anti-trust laws when such laws address situations of transnational price discrimination.  The EC
considered that no such risk existed as long as the law did not apply only to imports and did not use a
definition that copied that of Article VI of the GATT 1994.
6.172  We recall that we were requested to review the conformity of the 1916 Act with the
provisions of the WTO Agreement, not to address the general issue of the relationship between tradelaw and anti-trust law.  In order to assess the WTO-compatibility of the 1916 Act, we interpreted the
provisions of Article VI:1 of the GATT 1994 in conformity with the general principles of
interpretation of public international law, as embodied in the Vienna Convention.  This exercise led us
to conclude that the terms of Article VI, interprete d in their context and in the light of the object and
purpose of the GATT 1994 and the WTO Agreement, applied to the form of transnational pricediscrimination targeted by the 1916 Act.  The United States did not provide us with any evidence or
argument that would demonstrate that we should ha ve read in Article VI:1 a limitation addressing the
risk highlighted by the United States in the previous paragraph.
426 As recalled by the Appellate Body,
we are not to import into the text of the WTO Agreement conditions that do not appear from its terms
interpreted in accordance with the Vienna Convention.427 Our conclusion is, therefore, fully consistent
with our mandate.
6.173  Furthermore, we are not convinced that our conclusion, if applied outside the context of this
dispute, would generate the effect referred to by the United States.
6.174  First, we note that transnational price discrimination of the type covered by the definition of
"dumping" in Article VI:1 of the GATT 1994 is only one narrowly defined type of price
discrimination.  Other types of price discriminatio n, beginning with primary-line price discrimination
under the Robinson-Patman Act, do not fall within the scope of the definition of "dumping" inArticle VI:1.
428 In particular, the definition of Article VI:1 does not address price discrimination
within the territory of a given jurisdiction.
6.175  Second, under Article VI:1 of the GATT 1994, the identification of "dumping" is the starting-
point of any determination of injurious dumping. It is the only possible basis for the initiation of an
anti-dumping investigation by a Member.  Injury not causally linked to the dumping cannot beaddressed through anti-dumping.
429 Comparatively, under anti-trust law, the causes of a given market
                                                     
426 We note that, in any event, the scope of the WTO Agreement does not exclude a priori  restrictive
business practices.  Thus, the fact that the 1916 Act would be an anti-trust law would not per se  be sufficient to
exclude the application of WTO rules to that law.  We note that panels under GATT 1947 and the WTO have
addressed various aspects of restrictive business practices initiated by governments when such practices had the
effect of impeding market access of foreign products or entry of foreign enterprises (see e.g., Japan – Trade in
Semiconductors,  adopted on 4 May 1988, BISD 35S/116;  Japan – Photographic Films , adopted on
22 April 1998, WT/DS44R and M. Matsushita: Restrictive Business Practices and the WTO/GATT Dispute
Settlement Process in  International Trade Law and the GATT/WTO Dispute Settlement System, E.-U.
Petersmann Ed. (1997), p. 359. Consequently, we do not consider the dichotomy trade law/anti-trust law, to the
extent that it would be based on the assumption that WTO disciplines are not intended to apply to business
restrictive practices, to be a limitation to the application of WTO rules and disciplines.
427 See, e.g., Appellate Body Report in India – Patent (US) , Op. Cit., para. 45, where the Appellate
Body stated that the principles of interpretation contained in Article 31 of the Vienna Convention "neitherrequire nor condone the imputation into a treaty of word s that are not there or the importation into a treaty of
concepts that were not intended."
428 At our request, the United States confirmed that in order for the Robinson-Patman primary-line
price discrimination to apply, both commodities involved in the alleged price discrimination must be sold foruse, consumption or resale in the United States (see also Zenith I, Op. Cit., p. 246).
429 See Article 3.5 of the Anti-Dumping Agreement, which provides that injuries caused by certain
factors must not be attributed to the dumped imports and includes among those factors "trade restrictive
practices of and competition between the foreign and domestic producers".  This provision would seem to implyWT/DS136/R
Page 153
disruption can be several. When determining what co uld be at the origin of certain prices, anti-trust
investigators will try to identify specific practices such as price conspiracy or abuse of dominant
position. It is the understanding of the Panel that, under anti-trust law, transnational price
discrimination of the type covered by the defini tion of "dumping" in Article VI:1 of the GATT 1994
is not sufficient as such to  form the basis for a claim of violation of anti-trust law, even in thepresence of a price-based disruption on the export market. It is necessary to demonstrate other specific
practices, such as monopoly, abuse of dominant position, price agreement or concerted practices, of
which international price discrimination may at most constitute supporting evidence.
6.176  We therefore conclude that the likelihood that our findings with respect to Article VI:1 of the
GATT 1994 could affect the application of anti-tr ust laws of Members is very limited, since
transnational price discrimination as defined in Article VI :1 of the GATT 1994 is only one limited
form of price discrimination and it is unlikely to constitute by itself one of the practices which anti-
trust law would consider to be a cause for imposition of sanctions.
6.177  Having found that Article VI is applicable to the 1916 Act, we proceed to address the EC
claims of violation of Article VI:1 and VI:2 and the Anti-Dumping Agreement.  On the basis of our
findings, we will consider whether it is necessary to address the issue of the applicability and violation
of Article III:4 of the GATT 1994.
E. V
IOLATION OF ARTICLE VI:1 AND VI:2 OF THE GATT 1994
1. Violation of Article VI:1 of the GATT 1994
(a) Issue before the Panel
6.178  The EC claims that the 1916 Act violates Article VI:1 because that Article provides that
dumping is to be condemned if it causes or threatens to cause injury to a domestic industry.  We notein that context that the EC makes a similar claim under Article 3 of the Anti-Dumping Agreement.
The EC argues that Article 3 of the Anti-Dumping  Agreement lays down a detailed definition of the
notion of injury under that Agreement and how injury may be established and that there is nothing in
the 1916 Act which ensures that the injury shown must correspond to the "material injury" standard of
Article VI.1 of the GATT 1994 and Article 3 of the Anti-Dumping Agreement. The EC also arguesthat because other intents are relevant under the 1916 Act, in certain circumstances measures will be
authorized under the 1916 Act without any inquiry into the effects on the domestic industry.
(b) Analysis
6.179  We note that Article VI:1 of the GATT 1994 requires the establishment of material injury or a
threat thereof. We also note that Article 3 of the Anti-Dumping Agreement is part of the context ofArticle VI:1
430 which we are instructed to consider under Article 31 of the Vienna Convention when
interpreting Article VI:1.
                                                                                                                                                                    
that transnational price discrimination of the kind defined in Article VI:1 of the GATT 1994 is not considered to
be part of the "competition" practices between the foreign and domestic producers.
430 Footnote 9 to Article 3 provides that:
"Under this Agreement the term "injury" shall, unless otherwise specified, be taken to mean
material injury to a domestic industry, threat of material injury to a domestic industry ormaterial retardation of the establishment of such an industry and shall be interpreted in
accordance with the provisions of this Article."WT/DS136/R
Page 154
6.180  We note that Article VI:1 of the GATT 1994 requires the establishment of material injury or a
threat thereof.  The 1916 Act does not expressly refer to material injury or threat of material injury or
material retardation of the establishment of a domestic industry but to "the intent  of destroying or
injuring an industry in the United States, or of preventing the establishment of an industry in the
United States".431 In certain circumstances, an intent may be more difficult to prove than actual injury.
The United States executive branch early considered that the requirement of an "intent" made the
imposition of remedies under the 1916 Act almost impossible.432 However, identifying an "intent"
may not always require  a finding of actual injury or actual threat of injury. The Panel recalls that the
Supreme Court in Brooke Group  considered, with respect to corporate planning documents speaking
of a desire to slow the growth of a given segment of industry, that "even an act of pure malice by one
business competitor against another does not, without more, state a claim under the federal anti-trust
law". Thus, assuming that the Brooke Group  test applies to the 1916 Act, and assuming further that it
relates to the "intent" aspect of the law,433 evidence of predatory pricing and prospects of recoupment
are necessary, in addition to a statement of aggressive policy in an internal corporate document.
However, we are not convinced that such requirements could be interpreted as having replaced the"intent" test by an "actual effect" test in the 1916 Act.  Interpreting the term "injuring an industry or
[…] preventing the establishment of an industry in  the United States" as meaning "causing material
injury" might be possible under US law.  However, reading the "intent" requirement out of the 1916
Act would be a contra legem  interpretation of which we have seen no instance yet in relation to this
case.
(c) Conclusion
6.181  For that reason we find that the 1916 Act, to the extent that it provides for the identification of
an "intent" by the defendant rather than for the injury requirements of Article VI is not compatible
with Article VI:1 of the GATT 1994.
6.182  We now proceed to determine whether anti-dumping duties are the only remedies allowed
under Article VI.
2. Anti-dumping duties as sole remedy under Article VI
(a) Issues before the Panel
6.183  The European Communities argues that duties are the only remedies allowed against dumping
and that the United States reads Article VI:2 of the GATT 1994 out of context and contrary to its clear
purpose. The only reason why the word "may" in Article VI:2 was used, is because it was not
intended that WTO Members should be obliged to impose anti-dumping duties.  For the EC, thenegotiating history confirms that remedies under Article VI were intentionally limited to anti-
dumping duties. The introduction of Article 16.1 in the Tokyo Round Anti-Dumping Agreement
cannot be argued to have changed the meaning of Article VI. Indeed, it confirms it.  The reason for
this was that the Tokyo Round Anti-Dumping Agreement and the GATT 1947 were distinct sets of
rules, with different membership and separate means of enforcement.
                                                     
431 Emphasis added.
432 See Geneva Steel , Op . Cit., p. 1220, quoting a statement recorded in 56 Cong. Rec. 346
(Dec. 9, 1919):
"The Tariff Commission declares that [the 1916 Act] is not workable, for the reason that it is
almost impossible to show the intent on the part of the importer to injure or destroy businessin the United States by such importation or sale"
433 See our opinion in this respect in paras. 6.147-6.155 above.WT/DS136/R
Page 155
6.184  According to the EC, the adoption of the WT O Anti-Dumping Agreement has not changed
the context of Article VI.  Article 18.1 of the Anti-Dumping Agreement confirms the limitation of
remedies under Article VI to duties.  It is sufficient to rely on Article VI to claim that the 1916 Act
violates WTO rules by providing for remedies other than duties in order to counter dumping.  The EC
only mentions Articles 1 and 18.1 of the Anti-Dump ing Agreement as arguments. As held by the
Appellate Body in European Communities - Bananas, claims, not arguments, need to be mentioned in
a request for establishment of a panel. The Appellate Body statement in Brazil – Measures Affecting
Desiccated Coconut434 referred to by the United States rather supports the EC view that a separate
citation of the Anti-Dumping Agreement together with  Article VI is not necessary.  Indeed, in that
case the Appellate Body held that Article VI cannot be read independently from the Agreement onSubsidies and Countervailing Measures.
6.185  The United States argues that the terms of Article VI:2 do not support the claim of the EC that
duties are the only remedies allowed to counteract  dumping. Article VI:2 only states that a Member
"may" levy an anti-dumping duty to offset or prev ent dumping.  The directive in Article VI:2 is
permissive and unqualified.  In other paragraphs of  Article VI, such as paragraph 5 and 6(a), where
express prohibitions are stated, the word "shall" is used. For the United States, the negotiating history
is evidence that recourse to other remedies was allowed. It also notes that a paragraph similar to
paragraph 7 of Article VI, which had been removed at the early stage of the GATT 1947, was
reintroduced in Article 16.1 of the Tokyo Round agreement on anti-dumping.  This inclusion and that
of Article 18.1 in the WTO Anti-Dumping Agreement is evidence that Article VI:2 does not mean
what the EC claims it says.  The EC interpretation makes those provisions superfluous.  Moreover, in
application of the Appellate Body report in Brazil - Desiccated Coconut , any claim of violation must
now include an invocation of a particular provision of the Anti-Dumping Agreement. For the
United Statestates, the EC should not be allowed to bootstrap what are in reality new claims under
Articles 1 and 18.1 to cure a defective panel request.  In accordance with the Appellate Body report in
India – Patent (US) , the EC should have identified its claims under Articles 1 and 18.1 of the Anti-
Dumping Agreement.  In any event, the plain language of Articles 1 and 18.1 shows that theseprovisions do not merely interpret Article VI, but, rather, go beyond it by imposing a limitation on
anti-dumping measures where Article VI:2 has none.
6.186  We note that, as instructed by Article 3.2 of the DSU, we shall endeavour to clarify the
meaning of the relevant provisions by applying the general principles of interpretation of public
international law as embodied in the Vienna Convention.
6.187  We are aware of the fact that Article 31 of the Vienna Convention provides for one "General
Rule of Interpretation", as its title states.  We will nevertheless, for the sake of clarity, address one
after the other the factors to be reviewed pursuant to  that Article.  If necessary to confirm the meaning
resulting from the application of Article 31 or to determine the meaning when the interpretation under
Article 31 leaves the meaning ambiguous or obscure or leads to results manifestly absurd orunreasonable, we may have recourse to the supplementary means of interpretation under Article 32 of
the Vienna Convention.  However, in spite of the ex tensive reference of the parties to the negotiating
history of Article VI, we do not find it appropriate to take it into account at this stage.
(b) Ordinary meaning of the terms of Article VI:2 of the GATT 1994
6.188  The first sentence of Article VI:2 of the GATT 1994 provides as follows:
"In order to offset or prevent dumping, a contracting party may levy on any dumped
product an anti-dumping duty not greater in  amount than the margin of dumping in
respect of such product."
                                                     
434 Adopted on 20 March 1997, WT/DS22/AB/R (hereinafter "  Brazil – Desiccated Coconut ").WT/DS136/R
Page 156
6.189  In Article VI:2, the only term the meaning of which is actually debated by the parties is the
verb "may". The ordinary meanings of the verb "m ay" as an auxiliary verb include "have ability or
power to, can"435 Taken on its own, this verb could mean that Members have the possibility only to
impose duties or that they have a choice between duties and other types of measures.  If the word
"may" was used in the first meaning, it could be argued that the term "only" should have been addedright after it so as to limit its meaning. However, such an argument disregards the immediate context
of the word "may".  The terms "in order to offset or prevent dumping" set up the framework in which
the term "may" must be understood.  By specifying that the purpose of anti-dumping measures is to
"offset" dumping, not to impose punitive measures, Article VI:2, first sentence, limits the meaning of
the word "may" to giving Members the choice between a duty equal to the dumping margin and alower duty, not between anti-dumping duties and other measures.
6.190  In other words, the thrust of Article VI:2, first sentence, is to make the imposition  of duties
facultative and to limit in any event that amount to the dumping margin. If, as suggested by the United
States, the sentence had been meant to allow other measures than anti-dumping duties, it is reasonable
to expect that it would have been specified.  As mentioned in paragraph 6.103 above, Article VI wasmeant to regulate the use of anti-dumping by WTO Members.  It would have been logical to list the
other possible sanctions, especially if those sanctions could be more severe than the imposition of
offsetting duties.
436 We therefore conclude that the ordinary meaning of the terms of the first sentence
of Article VI:2 support the view that anti-dumping duties are the only type of remedies allowed under
Article VI.
(c) Context
6.191  The immediate context of Article VI:2 confirms our understanding of the word "may".  The
term "shall", as used in paragraphs 3 to 6 was not necessary in paragraph 2 if it was meant to be
permissive, not mandatory to impose  duties, and "shall" was not necessary either to express the idea
that only anti-dumping duties could be imposed.
6.192  The parties argued at length on the possibility for the Panel to consider Articles 1 and 18.1 of
the Anti-Dumping Agreement, since those provisions were not listed as claims in the request for
establishment of the Panel.  Article 1 provides as follows:
"An anti-dumping measure shall be applied only under the circumstances provided
for in Article VI of GATT 1994 and pursuant to investigations initiated [footnote 1]
and conducted in accordance with the provisions of this Agreement.  The following
provisions govern the application of Article VI of GATT 1994 in so far as action istaken under anti-dumping legislation or regulations."
Footnote 1 to Article 1 reads as follows:
"1 The term "initiated" as used in this  Agreement means the procedural action
by which a Member formally commences an investigation as provided in Article 5."
6.193  Article 18.1 provides as follows:
                                                     
435 See The New Shorter Oxford English Dictionary (1993), p. 1721.  It is evident that while we review
the ordinary meaning, our reading of the dictionary is al ready made selective by the broad context of  the term.
For instance, we left aside the definition of "may" as "have the possibility, opportunity or suitable conditions
to…" or the definition of "may" which, in the interpretation of some statutes means "shall, must".
436 We note in that respect that Article 7.2 of the Anti-Dumping Agreement, which provides for the
types of provisional measures that may be imposed, lists the measures that may be taken, i.e. "provisional duty
or, preferably, a security".WT/DS136/R
Page 157
"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. [footnote 24]"
Footnote 24 to Article 18.1 reads as follows:
"24 This is not intended to preclude action under other relevant provisions of
GATT 1994, as appropriate."
6.194  We consider that it is our duty under Article 3.2 of the DSU and Article 31 of the Vienna
Convention to look at any relevant context of Arti cle VI:2.  Indeed, our analysis would be incomplete
if we were to stop at the ordinary meaning of the word "may" or if we were to disregard the context ofthe terms to address immediately the negotiating history of Article VI:2. As recalled in paragraph 6.26
above, other panels have found it appropriate to rely on provisions mentioned by the parties as
arguments in their analysis of the context of a given provision.
437  By following this approach, we do
not think that we assist the EC in "curing a defective claim" under Article VI:2.  A clear distinction
must be made between a situation where a provision does not support at all the claim made in relationto it and the situation where, like in the present case, the ordinary meaning of the terms of the
provision at issue could, on its own, already be interpreted as supporting the claim. In this case, we
have reasonable grounds to believe that the terms of Article VI:2 could support the interpretation that
duties are the only remedies allowed against dumpi ng considered as such. We therefore find it
relevant to review other provisions of the other covered agreements, in particular the Anti-Dumping
Agreement, as context of Article VI:2.
6.195  The official title of the Anti-Dumping Agreement is "Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994".  This agreement is essential for the
interpretation of Article VI.  Articles 1 and 18.1 confirm the close link between Article VI and the
Anti-Dumping Agreement.  Moreover, as was recalled by the Appellate Body in the Brazil –
Coconuts  case,  the WTO Agreement is a single treaty instrument which was accepted by the WTO
Members as a single undertaking.  As a result, Article 18.1 of the Anti-Dumping Agreement is part ofthe context of Article VI since Article 31.2 of the Vienna Convention provides that "the context for
the purpose of the interpretation of a treaty shall comprise, […] the text [of the treaty], including its
preamble and annexes…".  We are therefore not only entitled to consider Articles 1 and 18.1 of the
Anti-Dumping Agreement even though the European Communities did not mention those provisions
as part of its claims in its request for establishment of a panel, but we are also required  to do so under
the general principles of interpretation of public international law.
438
6.196  In substance, we consider that the provisions of Articles 1 and 18.1 limit the anti-dumping
instruments that may be used by Members to those expressly contained in Article VI and the Anti-
Dumping Agreement. Except for provisional measures and price undertakings, the only type of
measures foreseen by the Anti-Dumping Agreement is the imposition of duties. We also note thatArticle 9.1 of the Anti-Dumping Agreement
439 establishes an intimate link between the calculation of
                                                     
437 See India – Quantitative Restrictions, Op. Cit.
438 Like the panel in India – Quantitative Restrictions , our intention is not to make findings under
Articles 1 and 18.1 of the Anti-Dumping Agreement in this context. As a result, the requirements of Article 6.2
and 7 of the DSU are not relevant in that situation.
439 Article 9.1 provides as follows:
"The decision whether or not to impose an anti-dumping duty in cases where all requirements
for the imposition have been fulfilled, and the decision whether the amount of the anti-dumping duty to be imposed shall be the full margin of dumping or less, are decisions to be
made by the authorities of the importing Member.  It is desirable that the imposition beWT/DS136/R
Page 158
a dumping margin provided for in Article 2 of the Agreement and the final measures that may be
imposed.  We therefore conclude that the context of Article VI confirms the provisional conclusion
we had reached on the basis of the ordinary meaning of that provision.
6.197  In our view, the argument of the United States does not seem to be incompatible with the fact
that Article 18.1 of the Anti-Dumping Agreement in the least states that duties are the only remediesallowed to counter certain forms of dumping  under Article VI of the GATT 1994 and the Anti-
Dumping Agreement .  Moreover, we understand that, in another dispute, the United States took the
view that the Article VI remedies had been limited to offsetting duties.
440 Therefore, we take the US
argumentation to be based on the premise that, if one looks at Article VI:2 exclusively, one cannot
conclude that only duties are allowed to counteract injurious dumping.  This may explain theopposition of the United States to the Panel even considering Articles 1 and 18.1 in its review of
Article VI:2 of the GATT 1994.  However, as mentioned above, the WTO Agreement is a single
Agreement.  Following the United States argume nt would not only have led to an unjustified
interpretation of the function of a panel mandate, it would also have required us to disregard essential
elements of interpretation of Article VI.  It would have been contrary to the rule of interpretation ofthe Vienna Convention to make a finding based on Article VI:2 only, in isolation from its context.
6.198  The United States argues that footnote 24 to Article 18.1 of the Anti-Dumping Agreement,
like footnote 16 to Article 16.1 of the Tokyo Round Anti-Dumping Agreement, does not lock a
Member into levying anti-dumping duties when faced with a factual situation constituting injurious
dumping.  Footnote 24 leaves the option of taking other measures that are in accordance with the
GATT 1994.  According to the United States, if the meas ure is of a nature that is simply not regulated
by the GATT 1994, as is the case for the 1916 Act, the measure is a fortiori  consistent with the GATT
1994.
6.199  We consider that footnote 24 does not prevent Members from addressing the causes or effects
of dumping through other trade policy instruments allowed under the WTO Agreement.  Nor does it
prevent Members from adopting other types of measures which are compatible with the WTO
Agreement.  Such a possibility does not affect our conclusion that, when a law of a Member addressesthe type of price discrimination covered by Article VI and makes it the cause for the imposition of
measures, that Member has to abide by the requirements of Article VI and the Anti-Dumping
Agreement.  In our opinion, the reason for the application of Article VI is not whether a Member
wants to counteract injurious  dumping or another effect of dumping.  Nor is it whether a Member
addresses dumping through the imposition of duties or  another type of remedies, with the implication
that Article VI applies only if a Member addresses dumping through  the imposition of duties.  It is
whether the practice that triggers the imposition of the measures is "dumping" within the meaning of
Article VI:1 of the GATT 1994. If the interpretation suggested by the United States were to be
followed, Members could address "dumping" without having to respect the provisions of Article VI of
the GATT 1994 and the Anti-Dumping Agreement. Such an interpretation would deprive Article VIof the GATT 1994 and the Anti-Dumping Agreement of  their useful effect within the framework of
rules and disciplines imposed by the WTO Agreement.
(d) Preparatory work
6.200  We could conclude our analysis based on the ru le of Article 31 of the Vienna Convention.
However, since the parties have discussed the meaning of the negotiating history at length, we
                                                                                                                                                                    
permissive in the territory of all Members, and that the duty be less than the margin if such
lesser duty would be adequate to remove the injury to the domestic industry."
440 See, e.g., Panel Report on United States – Imposition of  Anti-Dumping Duties on Imports of Fresh
and Chilled Atlantic Salmon from Norway , adopted on 28 April 1994, ADP/87, para. 75.WT/DS136/R
Page 159
consider it in order to determine if it confirms  the meaning of Article VI:2 of the GATT 1994 we
identified under Article 31.
6.201  The parties have referred to a number of documents relating to the negotiation of the Havana
Charter and the GATT.441  We do not consider it necessary to review all these materials since our
analysis under Article 31 of the Vienna Convention has not left the meaning of Article VI ambiguous
or obscure and has not led to a manifestly absurd or unreasonable result.  We recall, however, that the
parties have more particularly discussed the Report of the Working Party on Modifications to the
General Agreement, which was adopted by the CONTRACTING PARTIES on 1-2 September 1948.
This report mentions at paragraph 12 that:
"endorsing the views expressed by Sub-Committee C of the Third Committee of the
Havana Conference, [footnote omitted] [it] agreed that measures other than
compensatory anti-dumping and countervailing duties may not be applied to
counteract dumping or subsidization except in so far as such other measures are
permitted under other provisions of the General Agreement."442
6.202  We consider that the first part of the sentence ("measures other than compensatory anti-
dumping and countervailing duties may not be appl ied to counteract dumping or subsidization")
confirms our understanding of Article VI.  The second part of the sentence ("except in so far as such
other measures are permitted under other provisions of the General Agreement"), may be understood
as allowing members to counter dumping through other measures than anti-dumping duties.443 The
United States argues that a number of measures could be legally applied against dumping, such as
raising unbound tariffs, tariff renegotiation, safeguard measures or countervailing measures.  We note,
however, that even though those measures may be legally applied to address dumping, the basis fortheir imposition would not objectively be "dumping".  Safeguard measures or the increase of unbound
tariffs would apply on a most favoured nation basis.  So would the results of a tariff renegotiation.
Unless all Members were dumping, dumping could not be considered as the objective reason for the
imposition of the measures or of the renegotiated tariff vis-à-vis  each Member.  Countervailing
measures can only be imposed in relation to subsidies.  The fact that those subsidies may allow theirbeneficiaries to dump is not as essential for the imposition of the countervailing measures as the
existence of the subsidy itself. Therefore, this sentence can only be understood as having the same
meaning as footnote 24 to Article 18.1 of the Anti-Dumping Agreement.
444
                                                     
441 See section III.E.3. above.
442 BISD Vol. II, p. 41 (1952).
443 This seems to be the understanding of John H. Jackson in World Trade and the Law of GATT
(1968), p. 411, where it is mentioned that:
"Although Article VI carves out an exception to GATT obligations for anti-dumping or
countervailing duties, nevertheless, measures that do not violate other GATT provisions canalso be used to counteract dumping or subsidie s.  Thus, insofar as tariffs on a particular
product are not bound in a GATT schedule, a country that found that the product was beingdumped could raise its tariffs without limit to counteract the dumping, and go even further and
punish the dumper."
444 See para. 6.199 above. We also recall the reasons stated in the report of the Working Party
established by Sub-Committee C of the Third Committee of the Havana Conference (E/CONF.2/C.3/C/18, 22January 1948) for the deletion of paragraph 6 of Article 34 of the Geneva Draft Charter of the InternationalTrade Organisation.  Paragraph 6 was similar to paragraph 7 of the original Article VI of the GATT 1947 andread as follows:WT/DS136/R
Page 160
6.203  We conclude that the supplementary means of interpretation of Article 32 of the Vienna
Convention confirm our interpretation of Article VI:2 of the GATT 1994 based on the ordinary
meaning of its terms taken in their context.
(e) Conclusion on the violation of Article VI:2 of the GATT 1994
6.204  We therefore find that Article VI:2 provides that only measures in the form of anti-dumping
duties may be applied to counteract dumping as such and 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.
6.205  We also recall our remark in paragraphs 6.89 and 6.164 above.  Since we found a violation of
Article VI, paragraph 1 and paragraph 2, we do not find it necessary to determine what would be thelegal consequences of a consistent WTO-compatible interpretation of the 1916 Act by US courts in
the future .
3. Concluding remarks on burden of proof with respect to the violation of Article VI of the
GATT 1994
6.206  In paragraph 6.99 above, we noted the difference of approach of the parties regarding the
applicability of Article VI of the GATT 1994. Beca use of this difference, each party has concentrated
its efforts in terms of submission of evidence on different aspects, which sometimes did not
correspond to the Panel's division of its analysis.  However, we consider that the EC has established a
prima facie  case for each point addressed by the Panel in relation to the violation of Article VI.  The
United States did not sufficiently rebut them. Moreover, we consider that the United States did not
establish such a prima facie  case with respect to its defences, especially regarding its argumentation
based on the possibility to interpret the 1916 Act in a WTO-compatible manner and on the non-mandatory nature of the 1916 Act.
                                                                                                                                                                    
"No measures other than anti-dumping or countervailing duties shall be applied by any
contracting party in respect of any product of the territory of any other contracting party forthe purpose of offsetting dumping or subsidization."
The question had been prompted by the issue whether paragraph 6 should be deleted or amended in the event
that it could be interpreted so as to limit action perm itted under Articles 13 and 14 of the Geneva Draft. The
report stated that:
 "The Working Party was evenly divided as to whether the terms of paragraph (6) could be
construed as limiting the rights of Members under Articles 13 and 14.  It was in agreement,
however, that paragraph (6) was unnecessary and that its deletion would not effect any change
in substance."
These statements confirm the intent to restrict the measures allowed to counteract dumping as such  to offsetting
duties.  The fact that Article VI allows only for duties to  counteract dumping practices as such is also confirmed
by the Report of the Review Working Party on "Other Barriers to Trade", which mentions that:
"With respect to paragraph 3 of Article VI, the Working Party considered a proposal
submitted by New Zealand which would have permitted under certain circumstances the useof quantitative restrictions to offset subsid ization or dumping.  This proposal did not receive
the support of the Working Party, and has not been recommended." (BISD 3S/223, as quotedin GATT, Analytical Index: Guide to GATT Law and Practice, Updated 6
th Edition (1995), p.
238.)WT/DS136/R
Page 161
F. VIOLATION OF PROVISIONS OF THE ANTI-DUMPING AGREEMENT
1. Preliminary remarks
6.207  We have found a violation of Article VI:1 because the 1916 Act does not provide for an
"injury" test.  Moreover, we have found a violation of Article VI:2 because the 1916 Act imposes
other remedies than anti-dumping duties.  These findings address essential features of the 1916 Act.We could therefore consider exercising judicial economy at this stage.  We are however of the view
that findings under the Anti-Dumping Agreement would probably further assist the DSB in making
sufficiently precise recommendations and rulings so as to allow for prompt compliance by the
United States with those recommendations and rulings "in order to ensure effective resolution of
disputes to the benefit of all Members."
445 Indeed, we are of the view that "adapting" the 1916 Act to
the injury requirements of Article VI and replacin g the sanctions currently provided for in that law
with duties at the border may not be totally sufficient to make the 1916 Act WTO-compatible,446 as
will be seen from our findings below.
2. Review of the EC claims under the Anti-Dumping Agreement
(a) General comments regarding the EC claims under Article 1 and Article 2.1 and 2.2 of the
Anti-Dumping Agreement
6.208  The EC argues that the 1916 Act prohibits dumping  under different conditions than those laid
down in Article VI of the GATT 1994 and the Anti-Dumping Agreement and applies different
procedures and remedies than provided therein.  The EC claims the violation of Articles 1, 2.1, 2.2, 3,
4 and 5.5 of the Anti-Dumping Agreement.  As far as Article 1 is concerned, we note that if we find a
violation of other provisions of the Anti-Dumping Agreement, it will be demonstrated that an anti-
dumping investigation under the 1916 Act is not "initiated or conducted in accordance with theprovisions of this Agreement" and a breach of Article 1 will be established.
6.209  Regarding the violation of Article 2.1 and 2.2 of the Anti-Dumping Agreement, we note that
the European Communities simply states that "Articles 2.1 and 2.2 set forth amplified rules on the
substantive definition of dumping."  The EC did identify its claims under Article 2.1 and 2.2 in its
request for the establishment of a panel. However, we do not consider that it precisely set out andprogressively clarified its arguments on Article 2.1 an d 2.2 during the proceedings.  In particular, it
did not submit any argument or evidence as to which specific aspects of Article 2.1 and 2.2 were
violated, and why. We are of the view that we face a situation similar to that addressed by the
Appellate Body in Japan – Agricultural Products .
447 In the present case, the EC did not establish a
prima facie  case of violation of Article 2.1 and 2.2  . The fact that we found a violation of Article VI:1
of the GATT 1994 is not as such sufficient to conclude that Articles 2.1 and 2.2 of the Anti-Dumping
Agreement have been breached, in the absence of more specific arguments and evidence.  Indeed,
                                                     
445 See Appellate Body Report on Australia – Measures Affecting Importation of Salmon , adopted on
6 November 1998, WT/DS/18/AB/R, para. 223.
446 While this statement is not made under Article 19.1 of the DSU, we note that, pursuant to that
provision, we are entitled to suggest ways in which the Member concerned could implement the Panel's
recommendations.
447 Op. Cit., para. 129.  In that case, the complainant had not made a specific argument.  The panel had
actually deduced it from the experts' answers to its ques tions.  The Appellate Body considered that, even though
Article 13 of the DSU and Article 11.2 of the SPS Agreement suggest that panels have significant investigativeauthority, this authority cannot be used by a Panel to rule in favour of a complaining party which has not
established a prima facie  case of inconsistency based on specific legal claims asserted by it.WT/DS136/R
Page 162
there could be several reasons to claim a violation of Article 2.1 and 2.2 which would be totally
independent from those we relied upon with respect to Article VI.448
6.210  We therefore conclude that we are not in a position to address the claims of the EC under
Articles 2.1 and 2.2 of the Anti-Dumping Agreement.
(b) Violation of Article 3
6.211  Since we found above that the 1916 Act violated Article VI:1 by not providing for an injury
test compatible with the terms of that Article and since Article 3 simply addresses in more detail the
requirement of "material injury" contained in Article VI:1, we do not find it necessary to make
specific findings under Article 3 and therefore exercise judicial economy, as we are entitled to do
under GATT panel practice and WTO panel and Appellate Body practice.449
(c) Violation of Article 4
6.212  The EC also claims that the 1916 Act fails to respect a number of procedural and due process
requirements set forth in Article 4450 of the Anti-Dumping Agreement, in particular the requirement
                                                     
448 For instance, the fact that the 1916 Act would not provide for the treatment of sales of the like
product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed
and variable) costs of production plus administrative, selling and general costs (Article 2.2.1).
449 See, e.g., Panel Report on Canada – Administration of the Foreign Investment Review Act , adopted
on 7 February 1984, BISD 30S/140, para. 5.16; Panel Report on Brazil – Desiccated Coconut, Op. cit.,
para. 293; Appellate Body Report on United States – Measures Affecting Imports of Woven Wool Shirts and
Blouses from India , Op. Cit., p. 19.
450 Article 4 provides as follows:
"4.1 For the purposes of this Agreement, the term "domestic industry" shall be interpreted
as referring to the domestic producers as a whole of the like products or to those of themwhose collective output of the products constitutes a major proportion of the total domesticproduction of those products, except that:
(i) when producers are related [footnote omitted] to the exporters or importers
or are themselves importers of the allegedly dumped product, the term "domestic industry"may be interpreted as referring to the rest of the producers;
(ii) in exceptional circumstances the territory of a Member may, for the
production in question, be divided into two or more competitive markets and the producers
within each market may be regarded as a separate industry if (a) the producers within such
market sell all or almost all of their production of the product in question in that market, and(b) the demand in that market is not to any substantial degree supplied by producers of the
product in question located elsewhere in the territory.  In such circumstances, injury may befound to exist even where a major portion of the total domestic industry is not injured,provided there is a concentration of dumped imports into such an isolated market and
provided further that the dumped imports are causing injury to the producers of all or almost
all of the production within such market.
4.2 When the domestic industry has been interpreted as referring to the producers in a
certain area, i.e. a market as defined in paragraph 1(ii), anti-dumping duties shall be levied
450
only on the products in question consigned for final consumption to that area.  When theconstitutional law of the importing Member does not permit the levying of anti-dumpingduties on such a basis, the importing Member may levy the anti-dumping duties withoutlimitation only if (a) the exporters shall have been given an opportunity to cease exporting at
dumped prices to the area concerned or otherwise give assurances pursuant to Article 8 andadequate assurances in this regard have not been promptly given, and (b) such duties cannot
be levied only on products of specific producers which supply the area in question.WT/DS136/R
Page 163
that a complaint be made on behalf of the domestic industry and be supported by a minimum
proportion of the domestic industry.
6.213  We note that civil proceedings under the 1916 Act are available to "any person injured in his
business or property" by reason of a violation of the 1916 Act. This term is nowhere qualified by a
statement that this person should be sufficiently re presentative of the industry of the United States,
within the meaning of Article 4 of the Anti-Dumping Agreement. We note that the 1916 Act refers to
the intent of destroying or injuring an industry  in the United States, or of preventing the establishment
of an industry  in the United States. However, we have no evidence that a minimum representation
level for a given industry must be established by the complainant before filing a case before a federal
court. On the contrary, we note that all cases so far have in fact been initiated by individual companiesunder their own responsibility.  In light of the terms of the 1916 Act and, in particular, the term "any
person injured in his business or property", which is particularly clear, we have no reason to believe
that US federal courts will be in a position to interpret that provision consistently with Article 4 of the
Anti-Dumping Agreement.
6.214  For that reason, we find that the 1916 Act, because it does not require a minimum
representation of a US industry, violates Article 4 of the Anti-Dumping Agreement.
(d) Violation of Article 5.5
6.215  The EC also claims that the 1916 Act fails to respect a number of procedural and due process
requirements set forth in Article 5.5
451 of the Anti-Dumping Agreement, essentially because it fails to
require that notice be given to the government of the exporting country before an anti-dumping case is
launched under the 1916 Act.
6.216  We note that the text of the 1916 Act as such does not provide for the notification required by
Article 5.5, neither under the "civil track", nor under the "criminal track".  The Panel was not made
aware of any other text or administrative pr actice which would imply a notification to the
governments concerned, either by the courts or by the executive branch of the US government. We
therefore conclude that the 1916 Act violates Article 5.5 of the Anti-Dumping Agreement.
3. Conclusion
6.217  For the reasons mentioned above, we find that the 1916 Act violates Articles 4 and 5.5 of the
Anti-Dumping Agreement.  In light of our findings and for the reasons mentioned in paragraphs 6.208
above, we also find that the 1916 Act violates Article 1 of the Anti-Dumping Agreement.
                                                                                                                                                                    
4.3 Where two or more countries have reached under the provisions of paragraph 8(a) of
Article XXIV of GATT 1994 such a level of integration that they have the characteristics of asingle, unified market, the industry in the entire area of integration shall be taken to be thedomestic industry referred to in paragraph 1.
4.4 The provisions of paragraph 6 of Article 3 shall be applicable to this Article."
451 Article 5.5 provides as follows:
"The authorities shall avoid, unless a decision has been made to initiate an investigation, any
publicizing of the application for the initiation of  an investigation. However, after receipt of a
properly documented application and before proceeding to initiate an investigation, the
authorities shall notify the government of the exporting Member concerned."WT/DS136/R
Page 164
G. VIOLATION OF ARTICLE III:4 OF THE GATT 1994
6.218  We recall that the EC requested us to make a finding of violation of Article III:4 of the GATT
1994 in the alternative or "if the Panel considers that all or any portion of the Act is consistent with
GATT Article VI and the  Anti-Dumping Agreement ".  Such finding would apply to the "portion of the
Act found to be consistent with GATT Article VI and the Anti-Dumping Agreement ."452
6.219  We recall that we decided to proceed first with a review of whether Article VI applied to the
1916 Act because Article VI seemed to address more specifically the terms of the 1916 Act. We
found that the 1916 Act, because it targets "dumping " within the meaning of Article VI of the GATT
1994, was fully subject to the provisions of Article VI of the GATT 1994 and the Anti-Dumping
Agreement and could not evade the disciplines of Article VI by the mere fact that it had anti-trustobjectives or included requirements of an anti-trust nature. We therefore find it unnecessary to
determine whether some elements of the 1916 Act could be subject to Article III:4.
6.220  We also found that the 1916 Act violates the provisions of Article VI and certain provisions
of the Anti-Dumping Agreement.  We consider these findings sufficiently complete to enable the DSB
to make sufficiently precise recommendations and ru lings so as to allow for prompt compliance "in
order to ensure effective resolution of disputes to the benefit of all Members."
453 Therefore, we are
entitled to exercise judicial economy in accordance with WTO panel and Appellate Body practice454
and decide not to review the EC claims under Article III:4.
H. VIOLATION OF ARTICLE XVI:4 OF THE AGREEMENT ESTABLISHING THE WTO
6.221  We note that the parties disagree as to the scope of Article XVI:4 of the Agreement
Establishing the WTO as it relates to this dispute. However, both parties agree that if a Member's law,
regulation, or administrative procedure does not confor m with its obligations as provided in the WTO
Agreement, that Member has an affirmative obligation to bring it into conformity.456
6.222  Article XVI:4 of the Agreement Establishing the WTO reads as follows:
"Each Member shall ensure the conformity of its laws, regulations and administrative
procedures with its obligations as provided in the annexed Agreements."
6.223  If Article XVI:4 has any meaning, it is that when a law, regulation or administrative
procedure of a Member has been found incompatible with the WTO obligations of that Member under
any agreement annexed to the WTO Agreement, that Member is also in breach of its obligations under
Article XVI:4.457 We found that the 1916 Act violates Article VI:1 and VI:2 of the GATT 1994.  The
GATT 1994 being one of the "annexed Agreements" within the meaning of Article XVI:4, we find
that, by violating those provisions, the United St ates violates Article XVI:4 of the Agreement
Establishing the WTO.
                                                     
452 Emphasis in the original.
453 See Appellate Body Report on Australia – Measures Affecting Importation of Salmon , Op . Cit.,
para. 223.
454 See footnote 449 above .
456 See arguments of the parties in paras. 3.358 and 3.361 above.
457We did not exercise judicial economy with respect  to Article XVI:4 because, in that context, a
violation of Article XVI:4 "automatically" results from the breach of another provision of the WTO Agreement.WT/DS136/R
Page 165
6.224  In light of our conclusion, we do not find it necessary to address the question of the violation
of Article XVI:4 of the Agreement Establishing the WTO as a result of the violation of Articles 1, 4
and 5.5 of the Anti-Dumping Agreement.
6.225  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 Agreement Establishing the WTO.
I. NULLIFICATION OR IMPAIRMENT
6.226  The EC claims that, by violating Articles XVI:4 of the Agreement Establishing the WTO,
Articles VI:1 and VI:2 of the GATT 1994, Ar ticles 1, 2.1, 2.2, 3, 4 and 5.5 of the Anti-Dumping
Agreement and Article III:4 of the GATT 1994, the United States has nullified or impaired benefits
accruing to the EC under those agreements.
6.227  We have found that the 1916 Act as such violates Article VI:1 and VI:2 of the GATT 1994, as
well as Articles 1, 4 and 5.5 of the Anti-Dumping Agreement. We also concluded that, by not
ensuring the conformity of the 1916 Act with its obligations as provided under the above-mentioned
provisions, the United States violates Article XVI:4 of the Agreement Establishing the WTO.  Since
Article 3.8 of the DSU provides that "In cases where there is an infringement of the obligationsassumed under a covered agreement, the action is considered prima facie  to constitute a case of
nullification or impairment" and as the United States has adduced no evidence to the contrary, we
conclude that the 1916 Act nullifies or impairs benefits accruing to the European Communities under
the WTO Agreement.
J. S
UMMARY OF FINDINGS
6.228  Our findings may be summarised as follows:
(a) in order to review the conformity of the 1916 Act with the provisions of the WTO
Agreement, we were entitled, consistently with the practice of the Appellate Body
and of other international tribunals, to carry out an examination of the US domestic
law, including a review of the relevant legislative history and an analysis of the
relevant case-law;
(b) Article VI:1 of the GATT 1994, interpreted in accordance with the Vienna
Convention, must be understood as applying to any situation where a Member
addresses the type of transnational price discrimination defined in that Article;
(c) on the basis of the terms of the 1916 Act, the transnational price discrimination test
found in that law meets the definition of Article VI:1 of the GATT 1994.  The
legislative history of the 1916 Act and the subsequent interpretation by US courts donot lead us to reach a different conclusion;
(d) by not providing exclusively for the injury test
458 provided for in Article VI, the 1916
Act violates Article VI:1 of the GATT 1994;
(e) by providing for the imposition of treble damages, fines or imprisonment, instead of
anti-dumping duties, the 1916 Act violates Article VI:2 of the GATT 1994;
                                                     
458 See footnote 366 above.WT/DS136/R
Page 166
(f) by not providing for a number of procedural requirements found in the Anti-Dumping
Agreement, the 1916 Act violates Articles 1, 4, and 5.5 of the Anti-Dumping
Agreement;
(g) by violating Articles VI:1 and VI:2 of the GATT 1994, the 1916 Act violates
Article XVI:4 of the Agreement Establishing the WTO;
(h) since violations have been established that have not been rebutted by the
United States, the United States nullifies or impairs benefits accruing to the European
Communities under the WTO Agreement.
VII. CONCLUSIONS AND RECOMMENDATIONS
7.1 We conclude  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.
7.2 We therefore recommend  that the DSB request the United States to bring the 1916 Act into
conformity with its obligations under the WTO Agreement.
__________