WT/DS345/R 
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  ANNEX C 
 
EXECUTIVE SUMMARIES OF THE FIRST WRITTEN SUBMISSION  
OF THE THIRD PARTIES 
 
 
CONTENTS PAGE 
Annex C - 1 Executive Summary of the First Written Submission of Brazil  C-2 
Annex C - 2 Executive Summary of the First Written Submission of China C-7 
Annex C - 3 Executive Summary of the First Written Submission of the  
European Communities C-12 
Annex C - 4 Executive Summary of the First Written Submission of Japan C-16 
Annex C - 5 Executive Summary of the First Written Submission of Thailand C-19 
 WT/DS345/R 
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  ANNEX C - 1 
 
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF  
BRAZIL 
 
(18 May 2007) 
 
1. Introduction 
1. In this submission, Brazil sets out its views on the reasons why the special bonding 
requirement applied by the United States against im ports of certain frozen warm-water shrimp subject 
to anti-dumping duties, originating in Brazil, China, Ecuador, India, Thailand and Vietnam 
("Enhanced Bond Requirement" or "EBR")1 violates Articles 18.1 and 1 of the Agreement on 
Implementation of Article VI of the GATT 1994  (the "AD Agreement") and Articles VI:2 and II:1(b) 
of the GATT 1994, or in the alternative Articles 9 a nd 1 of the AD Agreement.  Further, the EBR is 
not "reasonable security" under Note 1 Ad Article VI:2-3 and cannot be justified pursuant to 
Article XX(d) of the GATT 1994.     
2. The Measures At Issue  
2. Responding to a report by US Customs and Border Protection ("CBP")2 on fiscal year 2003 
uncollected anti-dumping and countervailing duties,  on 9 July 2004 CBP amended its the existing 
Bond Directive governing Customs bonding requirements, and set new formulas for calculating minimum continuous bond amounts for importers of  agriculture/aquaculture products subject to 
anti-dumping or countervailing duty (CVD) orders.
3  This EBR requires a bond for 10 per cent of 
duties, taxes and fees paid by the importer in the prior 12 months (i.e., the normal continuous bond amount), plus 100 per cent of the cash deposit ra te established in the anti-dumping order (or most 
recent administrative review), multiplied by the value of  the importer's entries of that product over the 
previous 12 months.
4  Pursuant to a clarification issued by CBP on 10 August 2005, the EBR applies 
to "shrimp covered by anti-dumping or counter vailing duty cases", the only designated "Covered 
Cases" within the only designated "Special Ca tegory", agriculture/aquaculture merchandise.   
3. In October 2006, an in-depth examination of  the EBR by the US Government Accountability 
Office ("GAO") concluded that this bonding requi rement "represented a significant change from 
CBP's traditional method of setting bond amounts," and was "inconsistently impl emented" as between 
shrimp importers, due to a lack of  "clear and transparent guidance".5  Days before the US Court of 
International Trade ("USCIT") issued a stinging judgment against CBP in domestic litigation on the 
EBR,6 CBP issued a 24 October 2006 Federal Register notice further modifying the EBR by 
identifying the factors it would consider in dete rmining, prospectively for individual importers, 
whether to reduce a bond amount.7 
                                                      
1 Frozen warmwater shrimp from Brazil, Thailand, India and these other countries subject to 
anti-dumping duties is referred to herein as "subject shrimp." 
2 Continued Dumping and Subsidy Offset Act (CDSOA) annual report for fiscal year 2003,  Exhibit 
THA-11 (WT/DS343). 
3 Exhibit IND-8 (internal exhibit 17). 
4 Exhibit IND-6.  The EBR is specific to subject sh rimp, but if any other goods were subject to the 
EBR but not to AD/CV duties, they would have no cash deposit rate, and the bond amount would be the same as 
under a normal continuous bond.     
5 Exhibit THA-10 (WT/DS343) at 7. 
6 Exhibit IND-16.   
7 Exhibit IND-6.  WT/DS345/R 
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  3. The Enhanced Bond Requirement Is Inconsistent  "As Such" With Articles 18.1 and 1 of 
the Anti-Dumping Agreement  
4. The EBR should be analyzed as a separate measure, and as constituting "specific action" 
imposed "against" dumping inconsistent with Articles 18.1 and 1 of the AD Agreement.   
(b) The Enhanced Bond Requirement Is "Specific Action" and Is Imposed "Against Dumping" 
5. As the Appellate Body stated in US – Offset Act (Byrd Amendment) , if a measure "may be 
taken only when the constituent elements of dumping ... are present", it is a "specific action" within 
the meaning of Article 18.1.8  The CBP notices imposing or clarifying the EBR state that it applies 
only to goods subject to a US anti-dumping or CVD orde r.  Since US law only permits such orders to 
be imposed where the US authorities have determin ed that the constituent elements of dumping or 
subsidization are present, the EBR is a "specific action against dumping."   
6. The EBR corresponds to the fines on importers pr ovided by Article 93V of Mexico's Foreign 
Trade Act, which the panel in Mexico – Anti-Dumping Measures on Rice condemned under 
Article 18.1.  That panel also found that by threatening  to impose fines on importers of a product 
subject to an anti-dumping or CVD investigation, Article 93V provided for a "specific action" not 
permitted by the AD or SCM Agreements.9 
7. The United States asserts that the EBR responds to "noncollection risk.10  Yet Customs is not 
acting against all importers whose circumstances i ndicate high noncollection risk - it is only acting 
against those who import subject shrimp.    
8. The EBR is specific action "against" dumping b ecause, in effect, it punishes importers for 
importing subject shrimp.  The EBR indisputably meet s the test explained by the Appellate Body in 
US – Offset Act (Byrd Amendment) .11  It imposes a much larger bond requirement, and thus a 
significantly greater financial burden12, on certain importers simply because they import shrimp 
subject to anti-dumping measures.  Furthermore, the 10 August 2005 notice makes it clear that the 
bond requirement may be altered if the importer can show that it has ceased importing subject shrimp, 
as also acknowledged by the USCIT.13   
(c) The Enhanced Bond Requirement Is Not a Permissible Response to Dumping 
9. The EBR is also not taken "in accordance with the provisions of GATT 1994, as interpreted 
by [the AD] Agreement". The only permissibl e responses to dumping are definitive anti-dumping 
duties, provisional measures and price undertakings - and the EBR is none of these.  It is therefore 
inconsistent with Article 18.1 of the AD Agreement.    
                                                      
8 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 239. 
9 Panel Report, Mexico – Anti-Dumping Measures on Rice , paras. 7.276, 7.278 . 
10 United States' first written submission (Thailand, WT/DS343), para. 35. 
11 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 250. 
12 The United States contends that the prohibitive cost of an enhanced bond, including the requirement 
of collateral, is a matter between the surety and the importer and not the responsibility of the United States. 
However, because surety companies must have sureties for customs bonds authorized and certified by the US 
Government in order to be permitted to write such bonds, and CBP may collect duties from the surety if the 
principal defaults, the United States has a direct interest in the amount of security required by sureties.   
13 Exhibit THA-1 to Thailand's third party submission, para. 183. WT/DS345/R 
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  10. The EBR on subject shrimp is inconsistent  with Article 18.1 of the AD Agreement  "as such".  
It is a "rule or norm" attributable to a WTO Me mber, which mandates enhanced bonding requirements 
on subject shrimp and which has general and prosp ective application on imports of subject shrimp.14   
4. The Enhanced Bond Requirement Does No t Constitute "Reasonable Security" 
Permitted by Note 1 Ad Article VI:2-3  
11. The United States places the weight of its defence in this dispute on the assertion that the 
EBR is a "reasonable" surety system permitted under Note 1 Ad paragraphs 2 and 3 of GATT 
Article VI.  However, the EBR falls outside the scope of the Ad Note.  The text of the Note refers to 
security for payment of anti-dumping or countervai ling duties "pending final determination of the 
facts in any case of suspected dumping or subsidization", i.e . the Note only applies during an 
anti-dumping investigation, and does not apply beyond the date of the final anti-dumping 
determination and order.  The US argument that the "final determination of the facts" does not arrive 
until the final duty assessment15 is misplaced.  The Note refers to security in cases of "suspected 
dumping", but dumping is only "suspected dumping" before  the anti-dumping investigation has 
concluded.  The US imposed the EBR on importers of subject shrimp only after final anti-dumping 
measures were imposed on 1 February  2005, and over two years later the EBR continues in effect.   
12. Even assuming that the EBR falls within th e scope of the Ad Note, the EBR does not 
constitute "reasonable security" under that provision.  The use of "or" in "bond or cash deposit" in the 
Ad Note gives the importing Member a choice between either bond or cash deposit as a "reasonable 
security" – not both at once.  Furthermore, the re asonableness of any "security for the payment of 
anti-dumping or countervailing duties" must relate to  a risk-based standard fo r the need for security 
against non-payment.  The decision to apply the EBR to shrimp was not based on any evidence of 
actual default; moreover, to date, CBP continues not to apply the EBR to imports with proven high 
default rates without providing any explanation, cont inues to apply the EBR to importers without any 
default history and refuses to reduce the am ounts of enhanced bonds already provided.16  Remarkably, 
the USCIT itself has issued a preliminary injunc tion (although only for eight importers) on the basis 
that the EBR is likely to be found "arbitrar y and capricious" – confirming that the EBR is 
unreasonable.17  
13. Brazil concurs with the policy concerns expressed by India in respect of the limitless 
arguments made by the United States in support of the EBR.18    
5. The Enhanced Bonding Requirement is Also In consistent with Articles VI:2 and II:1(b) 
of the GATT and Article 1 of the Anti-Dumping Agreement  
14. The fees and interest costs associated with the duplicative requirements to pay a cash deposit 
and provide an enhanced bond also have the result that the total duty burden on the importer will 
exceed the amount of the dumping margin in violati on of Article VI:2 of the GATT.  Panels have 
recognized that the fees and interest costs associated  with a bonding requirement are a real cost to 
importers.19  Because the EBR is applied other than under the circumstances provided for in 
                                                      
14 Appellate Body Report, US – Zeroing (EC),  para. 198.  See also Appellate Body Report, US – 
Zeroing (EC) , para. 188, and Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 82. 
15 United States' first written submission,, paras. 22- 27. Brazil also notes the striking difference 
between the texts of Ad Note 1 ( final determination of facts ) and Article 9.3.1 of the AD Agreement , cited by the 
United States in support of its argument ( determination of the final liability for payment of anti-dumping duties ). 
16 India's first written submission, para. 100. 
17 Exhibit IND-16, p. 46-47, 53, 57-61. 
18 India first written submission, para. 83. 
19 See, e.g., EEC – Minimum Import Prices,  para. 4.6 (accepting that in terest charges and costs in 
connection with the lodging of a security associated with  an import certificate were in excess of bound duties).    WT/DS345/R 
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  Article VI, it constitutes a breach by the United St ates of its obligations under Article 1 of the AD 
Agreement  and Article VI of the GATT.  As a conse quence, the EBR and the anti-dumping measures 
on subject shrimp are not an "anti-dumping or c ountervailing duty applied consistently with the 
provisions of Article VI," within the meaning of  GATT Article II:2(b), and these measures therefore 
impose an "other duty or charge" in breach of  US obligations under GATT Article II:1(b).   
6. In the Alternative, the Enhanced Bond Re quirement is Inconsistent as such with 
Articles 9 and 1 of the Anti-Dumping Agreement  
15. In the alternative, even if the EBR is to be  analyzed together with the anti-dumping measures 
it enforces, it is inconsistent with Article 9 of the AD Agreement, because the United States is 
collecting duties in excess of the amounts permitted  thereunder. The EBR is inconsistent with 
Article 9.1, because the charges imposed by the US are not the "full margin of dumping or less"; with 
Article 9.2, because the anti-dumping duty collected  by the United States is not collected in the 
"appropriate amounts"; and Article 9.3, because the amount of the anti-dumping duty exceeds the 
margin of dumping.  
16. In consequence, the US anti-dumping measures on subject shrimp are imposed inconsistently 
with the United States' obligations under Article 1 of  the AD Agreement.  As  a further consequence, 
the EBR and the anti-dumping measures on subject sh rimp fall outside GATT Article II:2(b) and are 
in breach of GATT Article II:1(b) for the reasons set forth in the preceding paragraph.     
17. While the United States may have a right to co llect cash deposits, it has no right to require 
both a cash deposit equivalent to the full amount of the dumping margin and a bonding requirement as 
an anti-dumping enforcement measure.   
7. The Enhanced Bond Requirement Cannot be Justified under Article XX(d) of the 
GATT 1994  
(a) The Enhanced Bond Requirement Is Not "Nece ssary to Secure Compliance" Within the 
Meaning of Article XX(d) of the GATT 1994 
18. The United States has not demonstrated that the EBR satisfies the requirements of 
Article XX(d).20  The United States has done no more than  make unsubstantiated assertions that 
agriculture/aquaculture products in genera l, or shrimp in particular, create per se  a critical risk of 
default in AD/CV duty collection.  General, abstra ct allegations such as these are insufficient to 
satisfy the burden of proof under Article XX.   
19. Moreover, the GAO's finding that when the CBP examined AD and CVD cases to evaluate 
the risk of uncollected duties, 67 per cent of the time, duty rates decreased  or stayed the same 
between the time of entry and final liquidation21 contradicts the United States' general assertion that 
there is a need to impose untargeted surety require ments to guarantee increased future duty payments. 
20. The United States suggests that its decision to  designate the shrimp anti-dumping orders as 
"Covered Cases" is "due in part to low capitaliza tion and high turnover rates in the industry as a 
whole"22, and a belief "that importers of agricult ure/aquaculture merchandise tended to be 
                                                      
20 United States' first submission, paras. 83-97. The United States bears the burden of proof to 
demonstrate that the conditions of Article XX(d ) are fulfilled. 
21 Exhibit THA-10 (WT/DS343), at 16.  Where no administrative review of an order is requested on the 
anniversary of the order or no administrative review is c onducted, liquidation is set at the rates set by the final 
determination and order.  It is only when an admini strative review is conducted that a rate may change. 
22 United States' first written submission, para. 27. WT/DS345/R 
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  undercapitalized.23  Yet importers of agriculture and aqu aculture products do not necessarily have low 
capitalization.  Conversely, any consumer goods indu stry where the importer is a middleman rather 
than a user of the product imported is likely to be  characterized as thinly capitalized and subject to 
high turnover rates.  Thus, the US concerns do not apply to all agriculture and aquaculture importers, 
and can apply to importers in many other sectors. 
21. Even assuming that the United States can demonstrate that particular features of aquaculture 
and agriculture imports warrant particular surety measures, the United States had at its disposal less 
trade restrictive measure that it could reasonably employ (e.g . more frequent investigation, raising the 
cash deposit rate immediately upon making a prelimin ary finding in an anti-dumping administrative 
review, etc.).24   
22. Finally, Brazil recalls that, as the GAO Report states, the adoption of the EBR – by 
transferring the burden of higher bond to foreign-based  supplier – is already giving rise to results that 
defeat , rather than make a contribution to, the purpose allegedly pursued by the US Customs 
authorities.25 
(b) The Enhanced Bond Requirement Does Not S ecure Compliance with Measures That Are 
"Not Inconsistent" With the WTO Agreement 
23. Furthermore, the adoption of the EBR was directly related to enforcement of the Byrd 
Amendment26 in defiance of the adopted Panel and Appe llate Body reports condemning that illegal 
measure and in disagreement with the US's stated intentions to comply with the DSB's rulings and 
recommendations.27  The explicit nexus traced by the US  authorities between the EBR and the Byrd 
Amendment constitutes undeniable evidence of a bias th at no legitimate reading of Article XX can 
support.  
8. Conclusions 
24. Brazil respectfully requests that the Panel find that the EBR is inconsistent as such with 
Articles 18.1 and 1 of the AD Agreement, and Articl es VI:2 and II:1(b) of the GATT 1994, or in the 
alternative with Articles 9 and 1 of the AD Agreement.   Brazil further requests that the Panel find that 
the EBR does not constitute "reasonable security" unde r Note 1 Ad Article VI:2-3 of the GATT 1994, 
and that the EBR cannot be justified under Article  XX(d) of the GATT 1994.  Brazil supports the 
request of India that the Panel, pursuant to its authority under Article 19.1 of the DSU, recommend 
that the United States bring its measure into conformity with its WTO obligations. 
                                                      
23 United States' first written submission, para. 14. 
24 Thailand's first written submission (WT/DS343), para. 84-89. 
25 Exhibit THA-10 (WT/DS343), at p. 6.  See also  Exhibit THA-1 to Thailand's third party submission, 
at p. 35, 43-44; India's first written submission at p. 41. 
26 Exhibit THA-1 to Thailand's third party submission, paras. 94-97. 
27Dispute Settlement Body, Minutes of the M eeting of 27 January 2003 (WT/DSB/M/142, 
6 March 2003), para. 60.  At the time the "9 July 2004 Amendment" was adopted by the US Customs authorities, 
almost 18 months had passed from the date on which the United States announced its intention to implement the 
DSB’s rulings and recommendations in the Byrd Amendment dispute.  WT/DS345/R 
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  ANNEX C -2 
 
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF  
CHINA 
 
(21 May 2007) 
 
1. Introduction 
1. The People’s Republic of China appreciates th e opportunity to provide its third party 
submission regarding the present disputes.  In th is submission, China focuses on the Enhance Bond 
Requirement imposed and enforced by the US Customs1, and is of the view that the Enhance Bond 
Requirement is, as such, inconsistent with Article 18.1 of the Antidumping Agreement and 
Article 32.1 of the SCM Agreement. Additionally, China is of the view that the United States wrongly 
interprets Ad Note to GATT Article VI: 2 and 3, and its argument that the Enhanced Bond 
Requirement constitutes "reasonable security" permitted  by Ad Note to GATT Article VI: 2 and 3 is 
groundless. 
2. The Enhanced Bond Requirement is as such inconsistent with Article 18.1 of the 
Antidumping Agreement and Article 32.1 of the SCM Agreement. 
(a) The US Enhanced Bond Requirement constitut es a non–permissible specific action against 
dumping/ a subsidy. 
2. China is of the opinion that the Enhanced Bond Requirement cannot get through the three-
step analysis established by the Appellate Body in Byrd Amendment with regard to Article 18.1 of the 
Antidumping Agreement and Article 32.1 of the SCM Agreement 2 and therefore is inconsistent with 
both Articles. 
(i) The Enhanced Bond Requirement is a “sp ecific action” against dumping/a subsidy 
3. It is clear from its texts that  the Enhanced Bond Requirement is inextricably linked to, and 
strongly correlated with, the constituent elements of  dumping or of a subsidy in that the Enhanced 
Bond Requirement only applies to the imports subj ect to antidumping or countervailing duty orders. 
The texts indicate that the Enhanced Bond Requirement  is established for determination of continuous 
bond for importers of agriculture/aquaculture merc handise subject to antidumping or countervailing 
duty orders. It is also clear that only with the de termination that the constituent elements of dumping 
or subsidization are present, could the Enhan ced Bond Requirement be imposed. Therefore, the 
Enhanced Bond Requirement is a "speci fic action" against dumping/a subsidy. 
                                                      
1The Enhanced Bond Requirement in this submission re fers to the four instruments relied upon by the 
US Customs in imposition and enforcement of the Enhanced Bond Requirement, i.e., the "July 9 2004 
Amendment", the "January 25 2005 Formulas", the "August 10 2005 Clarification" and the "October 24 2006 
Notice" 
2 Appellate Body Report, US-Offset Act  ("Byrd Amendment") , para.236.The Appellate Body, in 
examining Article 18.1 of the Antidumping Agreement and 32 .1 of the SCM Ag reement, stated that there were 
"two conditions precedent that must be met in order for a measure to be governed by them. The first is that a 
measure must be ‘specific’ to dumping or subsidiza tion. The second is that a measure must be ‘against’ 
dumping or subsidization." If both of these conditions are met, the Appellate Body stated that, "it would then be 
necessary to move to a further step in the analysis a nd to determine whether the measure has been ‘taken in 
accordance with the provision of GAT T 1994’, as interpreted by the An ti-Dumping Agreement or the SCM 
Agreement. If it is determined that it is not the case, th e measure would be inconsiste nt with Article 18.1 of the 
Anti-Dumping Agreement or Article 32.1 of the SCM Agreement." WT/DS345/R 
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  4. The United States alleges in its first submission that the Enhanced Bond Requirement is not a 
"specific" action against dumping or a subsidy. Ch ina thinks the United States’ arguments are without 
any merit. Firstly, the United States confused "acti ons in response to dumping or subsidization" with 
"the intent of such actions".   China recalls the Appellate Body’s statement that  “the intent with which 
action against dumping is taken is not  relevant to the determination of  whether such action is ‘specific 
action against dumping’ of exports within the meaning of Article 18.1 of the Anti-Dumping 
Agreement."3  Secondly, the argument of the United Stat es is also meaningless with regard to the 
constituent elements of ‘dumping’ being not ‘built into the essential elements’ of the Enhanced Bond 
Requirement.  China notes that the Byrd Amendment  itself does not determine or calculate 
antidumping or countervailing duty margins, just as the Enhanced Bond Requirement does not do so. 
Nevertheless, the Appellate Body has ruled that the Byrd Amendment  is a specific action against 
dumping and subsidization.  Furthermore, since the Enhanced Bond Requirement is imposed upon the 
imported products subject to an tidumping or countervailing duty or ders following the determination 
of constituent elements of dumping or of a subsid y, the constituent elements of dumping or of a 
subsidy is "implicit in the express conditions for taking such action".4   
(ii)  The Enhanced Bond Requirement is a sp ecific action “against” dumping/a subsidy 
5. It is clear from the text of the Enhanced  Bond Requirement that, the Enhanced Bond 
Requirement is designed and structured in oppos ition to, has an adverse bearing on and, more 
specifically, has the effect of dissuading the prac tice of dumping or subsidization, or creates an 
incentive to terminate such practice. Therefore, the Enhanced Bond Requirement is in nature a 
specific action "against" dumping/a subsidy. Althoug h the United States attempts to argue that CBP 
neither requested nor encouraged sureties to require collateral with respect to the bonds at issue, and 
that CBP is only a third party beneficiary to the bond contracts, yet the importers, to satisfy the enhanced bond requirement, have to pay for it re gardless of who acts as the beneficiary and who 
charges them for the enhanced bond. Compared with  the Byrd Amendment, which has been ruled by 
the Appellate Body as an action "against" dumping or  subsidization, the Enhanced Bond Requirement 
at issue, which has direct adverse effect in na ture, cannot get through the "against" test either.
  
(iii)  The Enhanced Bond Requirement is a non-p ermissible response to dumping/subsidization. 
6. China recalls that, in both US – 1916 Act and US – Offset Act (Byrd Amendment), the 
Appellate Body found that the GATT 1994 and th e Antidumping Agreement "limit the permissible 
responses to dumping to provisional measures, pric e undertaking, and definitive antidumping duties".5 
In its First Written Submission, India has made exte nsive legal arguments in proving that the U.S. 
Enhanced Bond Requirement is not definitiv e anti-dumping/countervailing duties, provisional 
measures or price undertakings, to which China fully agrees. Moreover, the United States itself, in its 
First Submission, has confessed that "The bond directive……is not a ‘provisional measure’ within the 
meaning of Article 7 [of the Antidumping Agreement]."6  
                                                      
3 Appellate Body Report, US-1916 Act , para.122. In US – 1916 Act. See also Appellate Body Report, 
US – Offset Act (Byrd Amendment) , para.259, the Appellate Body stated that "the intent, stated or otherwise, of 
the legislators is not conclusive as to whether a measur e is against dumping or subsidies under Article 18.1 of 
the Anti-Dumping Agreement or Artic le 32.1 of the SCM Agreement". 
4 Appellate Body Report, US-Offset Act ("Byrd Amendment") , paras.244. The Appellate Body also 
stated that the "test" established in US – 1916 Act "is met not only when the constituent elements of dumping are 
‘explicitly built into’ the action at issue, but also where… they are implicit in the express conditions for taking 
such action." 
5 Appellate Body Report, US – 1916 Act , para. 137; Appellate Body Report, US – Offset Act 
(ByrdAmendment) , para. 265. 
6 DS 345 United States' first submission, para 30.  WT/DS345/R 
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  (b) The US Enhanced Bond Requirement can be ch allenged, as such, in WTO dispute settlement 
proceedings. 
7. As indicated in the texts of the Enhanced B ond Requirement, it is not vague that the precise 
content of the Enhanced Bond Requirement has been  identified; that the Enhanced Bond Requirement 
is attributable to the United States; and that it do es have general and prospective application. Just as 
the Appellate Body ruled in the past 7, China takes the view that the Panel is in a position to find that 
the U.S. Enhanced Bond Requirement may be challenged, as such. 
(c) India has met its burden of proof with regard to the as such claim based on Article 18.1 of the 
Antidumping Agreement and Article 32.1 of the SCM Agreement. 
8. In the present case, China is of the view that India has provided the evidence and put forward 
the arguments underlying a prima facie case.  Furthermore, nothing in the jurisprudence by the Appellate Body requires the complaining party to articulate a so called "legal theory" as the United 
States alleged in its First Submission.
8  Therefore, the United States failed to make a meaningful 
rebuttal against India’s as such claim in this respect. 
(d) The merit of the Mandatory and Discretionary Doctrine in the present dispute 
9. In the present case, India has met its burden of proof to provide a prima facie case concerning 
its as such claim based on Article 18.1 of the An tidumping Agreement and Article 32.1 of the SCM 
Agreement. In rebutting this, the United States seem s to put forward legal analysis on the Mandatory 
and Discretionary Doctrine9. In China’s view, if this panel chooses to go further and apply the 
Mandatory and Discretionary Doctrine as an analytical tool, the following aspects should be taken into consideration. 
10. Firstly , up to now, the following conclusions can be drawn from WTO case law regarding the 
the Mandatory and Discretionary Doctrine : 
i. The mandatory and discretionary doctrine  is now not relevant when determining a 
measure challengeable or not, as such, under the WTO Agreement
10, which is quite 
different from the GATT panel practice11. 
ii. The mandatory and discretionary doctrine ma y be relevant "only as part of the panel's 
assessment of whether the measure is, as such , inconsistent with pa rticular obligations."12  
iii. The mandatory and discretionary doctrine, as with any such analytical tool, the import of 
it may vary from case to case. The application of this distinction in a mechanical fashion 
should be cautioned against.13  
iv. The measure mandating particular action inc onsistent with a WTO obligation is of WTO 
inconsistency, while whether discretionary le gislation could be found inconsistent with 
                                                      
7 Appellate Body Report, US –Laws, Regulations and Methodology for Calculating Dumping Margin 
("Zeroing") , para.198.Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para.81. The 
Appellate Body indicated that "in pr inciple, any act or omission attributable to a WTO Member can be a 
measure of that Member for purposes of dispute settlement proceedings." 
8 DS 345 United States first submission, para.49. 
9 DS345 United .States' first submission, para.50. 
10 Appellate Body Report: US - Corrosion-Resistant Steel Sunset Review, para. 89 
11 Panel Report, Canada – Aircraft , para 9.124, citing GATT Panel Report, US – Tobacco , para 118. 
12 Appellate Body Report: US. - Corrosion-Resistant Steel Sunset Review,  para. 89. 
13 Appellate Body Report: US - Corrosion-Resistant Steel Sunset Review, para. 93 (footnote omitted). WT/DS345/R 
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  WTO provisions or not may vary from case to case.14 Discretionary legislation may also 
be found inconsistent with WTO provisions in some certain special cases depending on 
whether it is enough to create a "chilling effect " on trade, regardless of its discretionary 
nature.15 
11. Secondly , China believes that the Enhanced Bond Requi rement is mandatory in nature and is 
therefore of WTO inconsistency. First, CBP is mandated in imposing and enforcing the Enhanced 
Bond Requirement only with regard to agri culture/aquaculture merchandise subject to 
antidumping/countervailing duty orders , and merchandise or products out side the scope of agriculture 
/aquaculture sector will not be subject to the En hanced Bond Requirement..  Second, the Port 
Directors will be required to review continuous bo nds for importers involved.  The term "be required 
to review" indicates that the Enhanced Bond Requirement, in this respect, is mandatory.  Third, any increase in bond liability will become effective when the USDOC issues its Order on the case; the 
alteration of the bond amount could take place only after the imposition of the enhanced continuous 
bond subject to many conditions.  Fourth, China notes that the United States, by introducing the 
"October 24 2006 Notice", seems to argue that the Enhanced Bond Requirement is not mandatory 
because the directive of CBP has offered importers a customized alternative to the application of the 
formulas in the directive by providing importers  with the ability to obtain bonds based on 
individualized assessments of risk.
16  China does not agree in this regard. In the case that the 
importers fail to submit informati on on their financial condition related to the risk of non-collection 
for that importer, or fail to submit the information correctly as required, CBP will be required  to 
apply enhanced bond in accordance with the Enha nced Bond Requirement. (emphasis added)  
12. Thirdly , even if the panel finds that the Enhanced Bond Requirement is discretionary in 
nature, the panel should continue to  make further study on the effect  of the challenged measure. China 
is of the view that, even if the Enhanced Bond Requirement is discretionary, it still poses a threat to, 
or has a "chilling effect"17 on, the trade of products subject to  antidumping/countervailing duty, and is 
therefore as such inconsistent with Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of 
the SCM Agreement. 
3. The U.S. Argument that its Enhanced Bond Requirement constitutes “Reasonable 
Security” permitted by Ad Note to GATT Article VI: 2 and 3 is groundless under WTO 
rules. 
13. China believes that, the phrase "reasonable secur ity (bond or cash deposit) for the payment of 
anti-dumping or countervailing duty pending final determination of the facts in any case of 
suspected dumping or subsidization " of the Ad Note, is not equal or similar to "reasonable security 
                                                      
14 Appellate Body Report, US-1916 Act . In para.99, the Appellate Body  specifically stated that it did 
not need to consider whether Article 18.4 of the Anti-Dumping Agreement had 'supplanted or modified' the 
mandatory-discretionary distinction because the 1916 Act was clearly not discretionary.  
In US – Countervailing Measures on Certain EC Products , the Appellate Body stated in the 
footnote 334 that: "We are not, by implication, preclud ing the possibility that a Member could violate its WTO 
obligations by enacting legislation granting discretion to its authorities to act in violation of its WTO 
obligation".  
China is of the view that these findings provide to some extent possibility for the discretionary 
legislation to be found inconsistent with WTO provisions. 
15 Panel Report, US- Section 301 Trade Act .  The Panel considered that a law permitting a government 
to take unilateral measures contrary to the DSU woul d "constitute an ongoing threat and produce a 'chilling 
effect' causing serious damage" to ot her Members with less power in the WTO regime and to the market-place 
itself, by possibly stunting investment or trade. Paras. 7.86-91. 
16 DS345 United States' first submission, para.51 
17 In US- Section 301 Trade Act , the panel established the so called "chilling effect test" in determining 
whether or not a discretionary legislation is inconsistent with WTO provisions.  WT/DS345/R 
 Page C-11 
 
 
  (bond or cash deposit) for the payment of anti-dumping duty pending determination of final liability 
for payment of anti-dumping duties " in the context of a retrospective duty assessment system. The 
United States’ rebuttal18 in this regard is groundless.  The "reasonable security" provided in the Ad 
Note could only refer to the phase of antidumpi ng (or countervailing) investigation after the 
preliminary determination is made and prior to the fi nal determination.  Therefore, what Ad Note to 
Article VI: 2 and 3 means is the illustration of the forms of provisional measures a Member may 
usually take after the preliminary determinatio n and prior to the final determination of any 
antidumping or countervailing investigation.19  Therefore, China does not agree with the United States 
that the Enhanced Bond Requirement constitutes "reasonable security" permitted by Ad Note to 
Articles VI:2 and 3 of GATT 1994. (Emphasis added)   
4. Conclusion 
14. China thanks the Panel to provide this opportunity  to comment on the issues involved in this 
proceeding, and hopes the above comments will prove to be helpful. 
 
 
 
                                                      
18 DS345 United States' first submission, para.23. 
19 In the stage demonstrated by the Ad Note , no final affirmative determination has been made of 
dumping/subsidy and consequent injury to a domestic industry since there are only facts of suspected dumping 
or subsidization which await further investigation in the fo llowing final determination.  In the final phase of any 
antidumping/countervailing investigation, the suspicion of any facts of dumping or subsidization must be 
removed and the positive evidence must be discovered  before a final affirmative determination is made. WT/DS345/R 
Page C-12 
 
 
  ANNEX C -3 
 
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF  
THE EUROPEAN COMMUNITIES 
 
(16 May 2007) 
 
1. Enhanced Bond Requirement  
(a) Principal factual features of the EBR which affect the EC legal analysis 
1. As explained by India (and not disputed by the US) the Enhanced Bond Requirement 
("EBR")1 applies in addition  to the cash deposit rate.2  Hence, the EBR is not supposed to ensure the 
collection of dumping duties assessed at the rate initially determined by the US investigating 
authorities (as the collection of these duties is ensure d by the cash deposit rate).  The EBR is designed 
to ensure collection of final anti-dumping duties that would be due in case dumping would increase 
dramatically from one year to another.3  The EBR is therefore a measure designed to address a 
hypothetical  problem in the collection of a hypothetical  dumping duty reflecting a hypothetical 
dramatic increase in dumping (up to 100 per cent) fr om the level of dumping that has been initially 
determined by the investigating authorities.  
(b) Measure designed to ensure collection of an anti-dumping duty cannot be more onerous that 
the anti-dumping duty itself 
2. In the European Communities' view, one of the main reasons behind the existence of 
Article VI GATT and the Anti-Dumping Agreement was a desire to create a set of anti-dumping 
disciplines acceptable to all Member s and capable of curbing the possibilities of a misuse – deliberate 
or not – of anti-dumping policies by Members.  Yet, what would be the purpose of creating these 
rather detailed and carefully balanced rules, su ch as those on the calculation of dumping margin and 
the amount of anti-dumping duty, if the effect on trade of the duties determined pursuant those rules 
could be in practice much less important that the impact of measures ensuring the collection of those 
duties? 
3. By definition, measures designed to ensure th e collection of anti-dumping duties are merely 
ancillary  to the duties themselves.  If no dumping is dete rmined which would give a rise to an anti-
dumping duty, there cannot be an ancillary measure that is supposed to ensure the collection of such duty.  Moreover, even if a margin of dumping is  determined and a corresponding anti-dumping duty is 
assessed, the mechanism for securing the collection of that anti-dumping duty cannot impose a burden 
which would be greater than the duty itself – othe rwise the Anti-Dumping Agreement  would contain 
detailed rules only on the determination of a colle ction mechanism and not on the determination of 
dumping.  
4. The temporary nature of EBR (the fact that , once the margin of dumping for the period 
covered by EBR is definitely de termined and the anti-dumping duties finally collected, the remaining 
                                                     
 
1 In its first written submission, India refers to the US measures challenged in the present dispute as 
"Enhanced Bond Requirement" and "Amended Bond Direc tive". The US uses, in its first written submission, 
another set of abbreviations to refer to these measures , or some of those measures (as the reference does not 
seem to be always consistent).  For ease of refere nce and to prevent confusion, the European Communities 
refers in this submission to all the m easures at issue, identified by India,  as the "Enhanced Bond Requirement" 
or "EBR". 
2 India's first written submission, paras 29 – 30 and Exhibit IND-3. US first written submission, 
paras 12-14. 
3 This also is confirmed by statements made by the US authorities. See Ex hibit IND-8 (Exhibit-12).  WT/DS345/R 
 Page C-13 
 
 
  funds previously "frozen" in the enhanced bonds can be used for other purposes) does not affect this 
assessment.  To the contrary, it actually underlines it.  What sort of a temporary measure of an 
ancillary nature can be given such an effect whic h actually removes the very reason for the existence 
of and imposition the anti-dumping duties – namely the exports by dumping companies – by 
eliminating in practice these companies themsel ves (or their ability to export to the US)?4  
(c) EBR is inconsistent with the provisions of Article 9 Anti-Dumping Agreement 
5. The European Communities recalls the far-reachi ng nature of the EBR:  the EBR is not 
merely a "collection-ensuring mechanism", it is a measure against potential future  dumping which is 
put in place without any evidence and actual determin ation of dumping.  This contradicts a number of 
distinct provisions of Article 9 Anti-Dumping Agreemen t . Article 9, as indicated in its title, sets forth 
– for the purposes of the Anti-Dumping Agreement  – rules governing the imposition and collection 
of anti-dumping duties.  The first three paragraphs of  Article 9 set out rules governing this issue.  
6. First, following on the preceding provisions of  the Anti-Dumping Agreement , Article 9.1 
makes clear that that the determination of a marg in of dumping is an inherent pre-condition for the 
imposition of any anti-dumping duty. At any stage, an anti-dumping duty has to be calculated and 
imposed on the basis of  and in correspondence to  positive evidence of dumping.  The latter element – 
the existence of a corresponding  relationship between the evidenced margin of dumping and the 
amount of duty – is also reflected in the sec ond sentence of Article 9.1 of the Anti-Dumping 
Agreement : Members are encouraged to impose a l esser duty than the margin of dumping if such 
lesser duty would be adequate to remove the in jury to domestic industry. However, Members 
certainly cannot, under this provision, impose a duty which would be more  than the margin of 
dumping. 
7. Article 9.2 of the Anti-Dumping Agreement confirms the above understanding.  The 
reference to "appropriate amounts" in Article 9.2 follows  on the principle set out in Article 9.1: an anti 
anti-dumping duty imposed  (in accordance with Article 9.1)  shall also be collected in appropriate 
amounts .  
8. In other words, the rule resulting from Articles 9.1 and 9.2 is that the "appropriate amounts" 
have to correspond  to the imposed duty and the duty itself has to correspond  to the margin of 
dumping (or less than the margin of dumping, if deemed  sufficient to remove injury).  This principle 
is further elaborated in Article 9.3 of the Anti- Dumping Agreement . This provision states, in its 
chapeau , the fundamental principle that "[t]he amount of the anti-dumping duty shall not exceed the 
margin of dumping established under Article 2."  To  ensure that this principle is respected, 
Articles 9.3.1 and 9.3.2 of the Anti-Dumping Ag reement  set forth refund rules for both the 
retrospective and prospective systems.  The existe nce of these rules makes it clear that the collected 
anti-dumping duties may temporarily  exceed the actual contemporaneous margin of dumping (as 
opposed to the margin of dumping calculated during the original investigation) – for example if 
dumping decreases.  This is a natural implica tion of the technical mechanics of the dumping 
determination, nothing more. An attempt to read  into these refund rules a new rule, namely one 
allowing a temporary increase of collected anti-dumping duty bearing no relation to the margin of 
dumping actually ascertained would not be based on the text of these provisions.5  Both the text and 
context make clear that the purpose of Article 9.3.1 and 9.3.2 is to set forth refund rules and not to 
provide a ground for a departure from the principl es established in Articles 9.1 and 9.2 of the 
Anti-Dumping Agreement .  
                                                      
4 See, for instance, India's first written submission, para 53. 
5 Although the US has not made any explicit rebuttals of India's arguments on the provisions of 
Article 9 (especially Article 9.3.1), it seems that the US might actually be taking this position (cf. United States' 
first submission, para 23). WT/DS345/R 
Page C-14 
 
 
  9. To summarize: the EBR attempts to ensure th e collection of an anti-dumping duty for which a 
margin of dumping has not at all been established.  In that respect, the measure directly violates 
Articles 9.1, 9.2, 9.3 and 9.3.1 of the Anti-Dumping Agreement .  
(d) Ad Note to paragraphs 2 and 3 of Article VI  GATT confirms that EBR violates Article VI:2 
GATT and the Anti-Dumping Agreement 
10. The European Communities is of the view that  EBR is prohibited by Article VI:2 GATT for 
the same reasons as discussed above: the EBR requir es a surety with respect to anti-dumping duties 
based on dumping which had not yet b een determined and, in fact, had not occurred.  The Ad Note to 
paragraphs 2 and 3 of Article VI GA TT confirms this conclusion, as it allows a Member to "require a 
reasonable security (bond or cash deposit) for th e payment of anti-dumping or countervailing duty 
pending final  determination of the facts in any case of suspected dumping or subsidization".6  In many 
respects, this provision addresses the very matte r at issue.  The EBR is not a "security … pending  
final determination of the facts".  As the European  Communities mentioned at the outset, the EBR is 
targeted at a potential future dramatic increase (up to 100 per cent) in dumping beyond  the level of the 
dumping incurred in the past assessment period.  Hen ce, in contrast to a cash deposit applied by the 
US, the EBR is not a security required pending  the final determination of the facts in a case of 
suspected dumping.  A "final determination" implie s that there already has been a preliminary or 
initial determination of dumping which is then veri fied – and, if necessary, adapted – and becomes 
final.  Yet, when EBR is applied, there is no prel iminary or initial determination of the facts of 
dumping with respect to the dramatically increased dumping that is addressed by EBR.  
(e) Article 7.2 Anti-Dumping Agreement confirms that security cannot exceed the margin of 
dumping  
11. In the preceding section, the European Communiti es explained that EBR violates Article 9 as 
it attempts to ensure the collection of duties desi gned to offset dumping which has not yet occurred 
and has not been established.  This view is further confirmed by Article 7.2 Anti-Dumping 
Agreement.  While this provision relates to provi sional measures, the principle holds equally well 
with respect to the issue at hand: if there is a ma rgin of dumping determined, and if there is a duty 
assessed on the grounds of that margin, then a secu rity can be requested that, however, has to 
correspond to the amount of that duty .  In other words, the security cannot be determined in the 
absence of a margin of dumping and duty determinati on.  If this rule were not applicable beyond the 
stage of preliminary measures, then one would end up with a rather absurd result:  namely that the 
Anti-Dumping Agreement  for some reason only pr otects the preliminary phase against a misuse and 
that the main and principle part of the anti-dumping regime, which can and does last for years, is fully 
open to all kinds of measures which can bypass the anti-dumping duty and be, as far as their effect is 
concerned, much more onerous.  
(f) EBR violates Article 18.1 Anti-Dumping Agreement 
12. Like India, the European Communities is also of the view that EBR is a "specific action 
against dumping" which is not permitted by Article  18.1 of the Anti-Dumping Agreement .  Instead of 
repeating the arguments made by India, however, the European Communities would limit itself to 
pointing out a few factual and legal aspects of the E BR which it considers partic ularly relevant. First, 
there can be no doubt that the EBR is a "specifi c" action against dumping.  As the European 
Communities mentioned above, the EBR is a measur e ancillary to the anti-dumping duties, not the 
other way round.  Second, the EBR is a specific act ion "against" dumping. Under the Appellate Body 
case law, the legal test in this respect should focus on dumping (or subsidization) as "practices"7 and, 
                                                      
6 Emphasis added. 
7 US – Offset Act (Byrd Amendment) , Appellate Body Report, para 253.  WT/DS345/R 
 Page C-15 
 
 
  particularly, on the assessment of "whether the desi gn and structure of a measure is such that the 
measure … has an adverse bearing on … or, more  specifically, has the effect of dissuading the 
practice of dumping … or creates an in centive to terminate such practices".8  The effect of the 
measure in question on the competitive position of  the domestic industry vis-à-vis their foreign 
competitors subject to anti-dumping duties is at least one of the elements in the above test.9  T h e  
harmful effects of EBR on the competitors of the US domestic industry have been well documented in 
the submission of India.10  
(g) The EBR is inconsistent "as such" with the Anti-Dumping Agreement and Article VI:2 GATT 
13. Based on the above discussion, the European Co mmunities is of the view that the operative 
elements of EBR (in particular those which constitu te the principal factual aspects of the EBR as 
discussed above, such as the Amendment to Bond Directive 99-3510-004 of 9 July 200411) are 
inconsistent, as such and as applied , with Article VI:2 GATT and the Anti-Dumping Agreement  (in 
particular with Articles 9.1, 9.2, 9.3, 9.3.1 a nd 18.1 thereof).  Consequently, the EBR is also 
inconsistent with Article 18.4 of the Anti-Dumpi ng Agreement  and XVI:4 of the WTO Agreement.  
In this particular case, the distinction that the US makes between mandatory and discretionary 
legislation does not even play a role, since the app lication of EBR would always lead an inconsistency 
with WTO law.  
(h) Other claims raised by India and alternative measure ensuring collection of anti-dumping 
duties 
14. The European Communities does not address other a nd alternative claims raised by India in 
detail as it believes that a Panel finding made unde r the legal provisions discussed in the preceding 
section of this submission (i.e., provisions which pertain specifically to dumping) would correspond 
to and address more pertinently the problem at i ssue.  The European Communities notes, however, 
that it disagrees with the US view that the EBR can be justified under Article XX(d) GATT.12  In 
particular, contrary to what the US argues, the EBR is not "necessary to secure compliance" with US 
anti-dumping duty laws.  Alternative measures, such  as variable duties, are reasonably available13 and, 
if adopted, would lead to a considerably less onerous and restrictive impact upon trade.   
2. Conclusion 
15. The European Communities is of the view that  the EBR is inconsistent, as such and as 
applied, with Articles 9.1, 9.2, 9.3, 9.3.1, 18.1 an d 18.4 of the Anti-Dumping Agreement , with Article 
VI:2 GATT including the Ad Note to Paragraphs  2 and 3 of Article VI GATT and Article XVI:4 
WTO Agreement. 
 
                                                      
8 US – Offset Act (Byrd Amendment) , Appellate Body Report, para 254. 
9 US – Offset Act (Byrd Amendment) , Appellate Body Report, para 256. 
10 See, for instance, India's first written submission, para 53. 
11 Exhibit IND-3. 
12 United States' first written submission, paras 83 et seq . 
13 United States' first written submission, para 92. WT/DS345/R 
Page C-16 
 
 
  ANNEX C - 4 
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF  
JAPAN 
 
(18 May 2007) 
1. Introduction 
1. This dispute brought by India is about the Enhanced Bond Requirement (the "EBR") on 
certain products subject to antidumping or counterva iling duties introduced by the United States. India 
questions the WTO consistency of this measure in light of various provisions under the AD 
Agreement, the SCM Agreement, and the GATT 1994.  In this submission, Japan, as a third party, 
would like to focus on the following two issues based on its systemic interest in the interpretation of 
these agreements ensuring fair and objective application of them: 
– whether the EBR constitutes specific action against dumping and subsidization that is 
inconsistent with Article 18.1 of the AD Agreement and Article 32.1 of the SCM 
Agreement, respectively;  and 
– whether the EBR is inconsistent with the Ad Note 1 to paragraphs 2 and 3 of Article VI 
of the GATT 1994. 
2. Arguments 
(a) Consistency of the EBR with Article 18.1 of the AD Agreement and Ar ticle 32.1 of the SCM 
Agreement prohibiting specific actions against dum ping and subsidization  other than those 
permitted under those Agreements  
2. India submits that the EBR constitutes an impermissible specific action against dumping or a 
subsidy under Article 18.1 of the AD Agreement and Article 32.1 of the SCM Agreement.   
3. The Appellate Body stated that a Member's  measure constitutes a specific action against 
dumping or subsidization, where:  (1) the measure is  "specific" to dumping or subsidization; (2)  the 
action is taken "against" dumping or subsidization, i.e., to counteract dumping or a subsidy;  and (3) it 
is inconsistent with the provisions of GAT T 1994, as interpreted by AD Agreement or SCM 
Agreement.1  An action is "specific" where it is "inextricably linked to, or have a strong correlation 
with, the constituent elements of dumping or of a subsidy."2  An action is taken "against" dumping or 
subsidization if the action has the effect of di ssuading the practice of dumping or subsidization.3 
4. Regarding the "specific" requirement, Japan considers that the Panel should examine under 
what situations the EBR is imposed to see whethe r and how the measure is linked to the "constituent 
elements" of dumping or subsidy.  In Japan's view, to meet this requirement, it would be necessary 
that the EBR is imposed only where dumping or subsid y is found to exist.  In this connection, it 
appears that the bond requirement in question is  required only where the United States found the 
existence of dumping or subsidy, i.e., constituen t elements of dumping or subsidization.  Any 
additional requirements, such as the risk of non-co llection for individual importers, would not change 
such basic characteristics of the EBR. 
                                                      
1 See Appellate Body Report, US – Continued Dumping and Subsidy Offset Act of 2000 ("US-CDSOA 
(AB)") , WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003, para. 236. 
2 Ibid., para.239. 
3 Ibid., para.254.  WT/DS345/R 
 Page C-17 
 
 
  5. Regarding the "against" requirement, the Panel should examine at least the purpose as well as 
the design and structure of the EBR,  and its e ffect, that is, how the bond requirement would reduce 
shipments from subject countries.  In particular, th e United States admits that the EBR is to secure 
future duty collection in case that the antidumpi ng duty rate actually assessed increase from that 
determined during the investigation.4  By definition, the antidumping or countervailing duty is a 
measure "against" dumping or a subsidy.  As th e bond requirement in question is a measure to 
complement the imposition of antidumping or count ervailing duty, it must be a measure "against" 
dumping or a subsidy. 
6. The United States argues that the EBR is not an  action "against" dumping or subsidization, 
but "is designed to secure antidumping liability" only  because "the vast majority of unsecured liability 
that has resulted in noncollection happe ns to be antidumping duty liability."5  The United States also 
argues that it is just a third party beneficiary and "i s not itself a party to the contract" with a surety.6  
There is no dispute, however, that the EBR is an action taken by the United States to collect anti-
dumping or countervailing duties only with respect to imports for wh ich dumping or subsidization 
was found.  As discussed above, the bond requirement  at issue must be a "specific action against 
dumping or a subsidy". 
7. In such case, the Appellate Body clarifies that the permissible action under Article 18.1 of the 
AD Agreement  and Article 32.1 of the SCM Agreement is li mited to the imposition of (i) definitive 
anti-dumping or countervailing duties, (ii) provisiona l measures, (iii) undertakings, or, under the SCM 
Agreement, (iv) multilaterally-sanctioned count ermeasures under the dispute settlement system.7  The 
EBR is not either one of these four measures, and therefore impermissible under these provisions.    
8. The United States argues that the EBR is merely "related to" dumping or subsidies8, and 
therefore permissible.  The United States then re lied on the statement of the Appellate Body that 
footnote 24 of the AD Agreement  and footnote 54 of the SCM Agreement is to confirm that "an 
action that is not 'specific' within the meaning of Article 18.1 of the Anti-Dumping Agreement and of 
Article 32.1 of the SCM Agreement, but is neverthe less related to dumping or  subsidization, is not 
prohibited" by those Articles.9  As the bond requirement in question is "specific" action against 
dumping or a subsidy as discussed above, the requi rement would not be justified by any other 
provisions of GATT 1994.  
(b) Permissibility of the Enhanced B ond Requirement under the Ad Note 
9. The United States argues that the Ad Note 1 to  paragraphs 2 and 3 of  Article VI of the 
GATT 1994 justifies the EBR,10 arguing that the EBR is "security against the prospect of a future 
liability."11  India denies that the United States can rely  on the Ad Note, arguing that the Ad Note 
cannot be applied independently from Article 7 of the Anti-Dumping Agreement or Article 17 of the 
SCM Agreement, which provide for provisional measures.12  The United States rebuts that the bond 
requirement at issue is imposed  pending determination of the  final liability for payment of duties .  
According to the United States, in the context of its retrospective duty assessment system, the 
language "final determination of the facts" in the Ad Note means "determination of the final liability 
                                                      
4 United States' first written submission , para.14. 
5 Ibid., para. 39. 
6 Ibid., para. 8. 
7 Appellate Body Report, US – Anti-Dumping Act of 1916 , WT/DS136/AB/R, WT/DS162/AB/R, 
adopted 26 September 2000,  para.137., US – CDSOA (AB), para. 269. 
8 United States' first written submission, para. 38. 
9 US – CDSOA (AB) , para. 262. (emphasis in original) 
10 United States' first written submission, paras. 21-29. 
11 Ibid., para. 26. 
12 India's first written submission, paras.92-94 WT/DS345/R 
Page C-18 
 
 
  for payment of anti-dumping duties"13.  Based on the following consideration, Japan is of the view 
that the "reasonable security" permitted under the Ad Note purports the provisional measures.  
10. First, the language "pending final determination of the facts" in the Ad Note must be read in 
the context of the subsequent language "in any case of suspected dumping or subsidization" (emphasis 
added).  The word "suspected" suggests that the facts concerning "dumping" or "subsidization" are 
still at an unproven stage.  Therefore, Japan unders tands that Ad Note contemplates a situation before 
the final determination of dumping or  subsidization in the original investigation.  The language of the 
Ad Note "determination of facts  in any case of suspected dumping or subsidization" does not support 
the United States contention that this "determination" concerns with  the final liability for payment of 
duties in a review.  The review, however, does not concern with the determination of the fact, or the 
existence, of dumping or a subsidy.  It merely reassesses the amount of dumping or subsidization.  
The determination in a review, thus, is not related to the "final dete rmination of the facts of dumping 
or subsidization" as set forth in the Ad Note.    
11. Japan considers that the "final determination"  in the Ad Note means that of dumping or 
subsidization as a prerequisite of deciding to im pose antidumping or countervailing duties.  Therefore, 
the measure permitted under the Ad Note should be the provisional measures to be taken before the 
final determination of dumping or subsidization, as provided in Article 7 of the AD Agreement or 
Article 17 of the SCM Agreement.   
12. Even in the retroactive system of duty assess ment in the antidumping regime, the United 
States issues the antidumping order, which embodies the administrative decision to impose antidumping duties on certain products upon affirmative final determination on the facts of dumping.  
The determination of the assessment of the final dut y liability may take place after the review process, 
if a request for a review is made.  The measure purpo rted in the Ad Note, however, is only related to 
the provisional measure to be taken before the issu ance of this order, not after the affirmative final 
determination on dumping in the original investigat ion, and not even before the completion of the 
final liability assessment in a subse quent review.  This interpretati on equally applies to the imposition 
of countervailing duties. 
13. The United States also quotes the reference to "many other cases in customs administration" 
to contend that the Ad Note permits the security  requirement for the payment of antidumping or 
countervailing duties apart from provisional measures.
14  However, the mere reference to customs 
administration does not give support for an interpre tation that the Ad Note would broadly permit 
security requirement, including those imposed even after  the final determination of dumping or 
subsidization.   
14. For the above reasons, Japan subm its that it considers that the Ad Note gives no legal basis 
for the imposition of the EBR. 
3. Conclusion 
15. Japan respectfully requests the Pa nel to examine carefully the f acts presented by the parties to 
this dispute in light of Japan's arguments above to ensure fair and objective application of the AD 
Agreement, the SCM Agreement and the  GATT 1994. 
 
                                                      
13 United States' first written submission, para.23 (emphasis added) 
14 United States' first written submission, para.26.  WT/DS345/R 
 Page C-19 
 
 
  ANNEX C -5 
 
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF  
THAILAND 
 
(21 May 2007) 
 
1. Introduction 
1. India's complaint is largely related to the same matter as Thailand's complaint in United States 
– Measures Relating to Shrimp from Thailand  (DS343).  The main measure at issue in both disputes – 
the imposition of enhanced bonding requirements by the United States on importers of subject shrimp 
products from Thailand and India – is substantively the same.  Many of the legal claims made by 
Thailand in United States – Measures Relating to Shrimp from Thailand  (DS343) overlap with the 
legal claims made by India in these proceedings. 
2. Thailand considers that the imposition of the enhanced bonding requirement to imports of 
subject shrimp from Thailand is inconsistent with WTO law.  The grounds for its view are contained 
in Thailand's First Written Submission to the Panel in United States – Measures Relating to Shrimp 
from Thailand  (DS343) attached as Exhibit THA-1 to Th ailand's third-party submission.  To the 
extent that the legal arguments of Thailand in Exhibit THA-1 relate to claims also made by India, they 
are equally relevant to an analysis of the imposition of the enhanced bonding requirement on 
importers of certain shrimp from India.  A summa ry of those legal arguments is provided below.1 
2. Legal Argument  
(a) The application of the Enhanced Bond Requireme nt to subject shrimp is inconsistent with 
Article 18.1 of the Anti-Dumping Agreement 
(i) The Enhanced Bond Requirement is  specific action against dumping 
 The Enhanced Bond Requirement is "specific action" against dumping   
3. The Enhanced Bond Requirement is "specific ac tion" against dumping within the meaning of 
Article 18.1 of the Anti-Dumping Agreemen t as it is "action that may be taken only when the 
constituent elements of 'dumping' are present".2  The application of the Enhanced Bond Requirement 
is limited to merchandise upon which US Depart ment of Commerce ("USDOC") has issued an 
anti-dumping order.  The United States Bureau of Customs and Border Protection ("CBP") has stated 
that "[a]ny increase in bond liability will become effective when the Depart ment of Commerce (DOC) 
issues its Order on the case".3  The Enhanced Bond Requirement is based on "specific guidelines for 
bonds covering certain merchandise subject to antidumping/countervailing duty cases ",4 and applies 
only to "covered cases" within "special categor ies" of merchandise.  The 24 October 2006 Notice 
confirms that relevant "Special Category merchandise … is merchandise subject to AD/CVD ".5  I n  
                                                      
1 Thailand's third-party written submission does not address legal claims made by India that do not 
overlap with the claims made by Thailand in US – Measures Relating to Shrimp from Thailand  (DS343). 
Thailand nonetheless reserves the ri ght to do so at the meeting of the Panel with the third parties. 
2 Appellate Body Report, US – 1916 Act , para. 122. 
3 9 July 2004 Amendment. Exhibit THA-2. 
4 10 August 2005 Clarification. Exhibit THA-4, p. 2. 
5 24 October 2006 Notice, Exhibit THA-5, p. 62276. WT/DS345/R 
Page C-20 
 
 
  fact, the formulae for calculating the amount of the Enhanced Bond Requirement all require the use of 
a USDOC-determined anti-dumping duty rate as the multiplier.6 
4. A recent decision of the US Court of Inte rnational Trade ("USCIT") found that "the 
administrative record indicates that the plaintiffs  are likely to succeed in showing that the bond 
formulas were applied to these plaintiffs for the so le reason that these plaintiffs were importers of 
shrimp subject to antidumping duty orders",7 and that "Customs did not consider each individual 
importer's financial condition or ability to pay prospe ctive antidumping duties, but rather appeared to 
base the application of the formulas on one critical factor – that the importer engages in the importation of subject shrimp."
8 
5. In addition, the CBP's stated policy reasons for introducing the Enhanced Bond Requirement 
confirm the clear connection to dumping.  These include "[d]ifficulties in collecting the antidumping duties" and "the impact of these collections on the amount of disbursements pursuant to the Continued 
Dumping and Subsidy Offset Act",
9 (i.e. disbursements previously found to be inconsistent with 
Article 18.1 of the Anti-Dumping Agreement).10  This is confirmed by the CBP's stated policy that it 
would alter the enhanced bond amount if importers stopped or limited imports of subject shrimp.11 
6. Finally, the Enhanced Bond Requirement does not  address circumstances other than dumping 
such as: (i) problems of default (because it has not been  applied in situations where there is a history 
of default, such as crawfish);  (ii) problems of su rety bankruptcies;  or (iii) problems that arise in new 
shipper situations (which have been addr essed separately through legislative action). 
The Enhanced Bond Requirement is specific action "against" dumping  
7. The application of the Enhanced Bond Requireme nt to subject shrimp acts "against dumping" 
as it has an adverse bearing on, and has the effect of dissuading, the practice of dumping. Thus, the 
10 August 2005 Clarification lists as a factor that may result in altering the amount of the enhanced 
bond "whether the importer can show that it has switc hed to a new source of imports or a shift in the 
pattern of imports".12  The USCIT found that "only those eight importers who promised not to import 
subject shrimp, or to limit such imports, were ab le to negotiate a lower minimum bond amount than 
the bond formulas required".13 
8. The GAO Report found that the Enhanced Bond Requirement would tend to "cause importers 
to change business practices" and to "reduce im ports from countries subject to AD/CV duties".14  The 
CBP itself confirmed that "NFI importers have in creased their sourcing from countries not affected by 
the antidumping order, from 21 per cent to 32 per cent".15 
                                                      
6 This rate is either the final determination dum ping rate, the most recent administrative review 
dumping rate, the preliminary determination dumping rate, or the applicable deposit rate. 
7 National Fisheries Institute, Inc., et al., v. Unite d States Bureau of Customs and Border Protection , 
Court No. 05-00683, Slip Op. 06-166, 13 November 2006, (Stanceu J.) (" NFI v. US "). Exhibit THA-9, p 58. 
8 Ibid ., p. 60.  See also Government Accountability Office, Customs' Revised Bonding Policy Reduces 
Risk of Uncollected Duties, but Concerns about uneven Impl ementation and Effects Remain, GAO-07-50 
(Washington DC: October 2006), (the "GAO Report"), Exhibit THA-10, p. 5. 
9 9 July 2004 Amendment, Exhibit THA-2, p. 1. 
10 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 318. 
11 See below, para. 7. 
12 10 August 2005 Clarification, Exhibit THA-4, para 3(g), p. 6. 
13 NFI v. US , Exhibit THA-9, pp. 52-53. 
14 GAO Report, Exhibit THA-10, p. 32. 
15 Declaration of Bruce W. Ingalls to the USCIT in NFI v. US , Exhibit THA-7, para. 17.  WT/DS345/R 
 Page C-21 
 
 
  9. The adverse bearing of the Enhanced Bond Re quirement is also demonstrated by the 
significant shift in trading patterns of Thai shrimp  exports: while 100 per cent of exports were made 
on a CIF basis in 2003, over 50 per cent of exports were made on a DDP basis in 2006.16  This shift to 
DDP exports "makes the foreign-based supplier the US  importer of record and shifts the burdens of 
the higher bonds to them".17 
10. The adverse effects of the Enhanced Bond Requi rement include costs associated with the 
enhanced bonds, such as the fees charged by sure ties of 10 per cent of the value of the bonds.18  These 
effects are compounded by the demands of sureties fo r 100 per cent collateral to secure the enhanced 
bonds19 and the "stacking" of bonds due to regular three to five year delays before final liquidation, 
which results in the tying up of assets and cash that forces companies to forego business 
opportunities.20 
(ii) The Enhanced Bond Requirement is not  a permissible response to dumping 
11. The Enhanced Bond Requirement is not a perm issible provisional measure, price undertaking, 
or definitive anti-dumping duty. 
12. The application of the Enhanced Bond Requirement  to subject shrimp does not take the form 
of a permitted provisional measure within the meaning of Note 1 to paragraphs 2 and 3, Ad Article VI 
of GATT 1994 or Article 7.1 of the An ti-Dumping Agreement as it is applied after the definitive 
determination of dumping. It is also not a provisional measure taken in accordance with Articles 7.2 
and 7.5 of the Anti-Dumping Agreement or Note 1, Paragraphs 2 and 3 to Ad  Article VI of the GATT 
1994, because it exceeds the amount of the provisional measures contemplated by those provisions. 
13. The Enhanced Bond Requirement is evidently not a voluntary price undertaking in 
accordance with Article 8 of the Anti-Dumping Ag reement and is of a fundamentally different 
character to an anti-dumping "duty" taken in  accordance with Article VI:2 of the GATT 1994  and 
Article 9 of the Anti-Dumping Agreement. 
(b) The Enhanced Bond Requirement is inconsistent with Articles XI:1, II:1(a) and II:1(b), and I 
of the GATT 1994 
14. The Enhanced Bond Requirement constitutes a "restriction" on the importation of subject 
shrimp within the meaning of Article XI:1 of  the GATT 1994, and cannot be characterised as a 
requirement to pay a duty, tax or charge, as it does not involve a monetary imposition that yields 
public revenue.  By imposing cons iderable additional financial co sts and procedural burdens on 
importers, the Enhanced Bond Requirement mak es the importation of subject shrimp more 
burdensome than the importation of goods not subj ect to anti-dumping duties and the importation of 
goods subject to other US anti-dumping measures.   
15. In the alternative, if the Enhanced Bond Requi rement is considered to constitute a duty or 
charge imposed on or in connection with importation, it is inconsistent with Articles II:1(a) and (b) of 
the GATT 1994. 
16. Imports of shrimp from India, Thailand a nd the four other countries subject to the 
anti-dumping measure are "like" shrimp products originating in other  countries .  Because the United 
                                                      
16 Thai Shrimp Industry Survey, Department of Foreign Trade, Exhibit THA-12. 
17 GAO Report, Exhibit THA-10, p. 6. 
18 Exhibit THA-18. 
19 GAO Report, Exhibit THA-10, p. 6. NFI v. US , Exhibit THA-9, at p. 38. 
20 GAO Report, Exhibit THA-10, pp. 6 and 35. NFI v. US , Exhibit THA-9, p. 31. WT/DS345/R 
Page C-22 
 
 
  States exempts "like" products from these other countries from the application of the enhanced 
bonding requirement, it fails to treat like products eq ually.  Such treatment cannot be reconciled with 
the United States' obligations under Article I:1 of the GATT 1994. 
(c) The selective application of the Enhanced Bond Requirement is inconsistent with 
Article X:3(A) of the GATT 1994 
17. In applying the Enhanced Bond Requirement only to importers of subject shrimp, the United 
States has failed to administer its laws and regula tions relating to import bonds  in a uniform, impartial 
and reasonable manner and therefore acts inconsis tently with Article X:3(a) of the GATT 1994. 
18. Importers of subject shrimp are being treat ed differently from other importers of goods 
subject to anti-dumping duties.  They are (1) s ubject to unique evidentiary burdens from which 
importers of all other goods subj ect to anti-dumping duties are exempt and (2) must post continuous 
bonds in higher amounts than importers of all other goods subject to anti-dumping duties.  This 
special and adverse treatment constitutes a failure by  the United States to administer these laws in a 
"uniform" manner within the meaning of Article X:3(a) of the GATT 1994 . 
19. The United States fails to administer its custom s laws and regulations relating to bonds in a 
"reasonable" manner.  The CBP should ensure that its bond amount assessments are reasonably 
related to the actual risk represented by imports of subject shrimp.  The fact that an importer imports subject shrimp does not, by itself, provide any reliabl e indication of any elevated risk of non-payment. 
The problems the United States has experienced in collecting anti-dumping duties have been 
concentrated almost exclusively in non-market economy cases and, in particular, anti-dumping duties 
on imports of crawfish and to a lesser extent garlic.  They also arise from new shipper reviews and 
isolated surety bankruptcies.  Circumstances that ha ve not arisen or do not apply in the context of 
imports of subject shrimp from Thailand. 
20. The evidence establis hes (1) that the CBP has used the E nhanced Bond Requirement to try to 
limit imports of shrimp subject to anti-dumping du ties, (2) that in applying the Enhanced Bond 
Requirement to subject shrimp the CBP "was motivated , at least in part, by domestic political pressure 
to take action directed against the shrimp importing industry"
21 and (3) that the CBP applied the 
Enhanced Bond Requirement only to the measures ag ainst subject shrimp even though there was no 
history of marked defaults or ot her problems with respect to these imports and in face of considerable 
problems with respect to other products and ot her anti-dumping orders.  This evidence cannot be 
reconciled with the requirement of impa rtiality contained in Article X:3(a).  
(d) The Enhanced Bond Requirement cannot be ju stified under Article XX(d) of the GATT 1994 
21. The Enhanced Bond Requirement is not "necessar y to secure compliance" within the meaning 
of Article XX(d) of the GATT 1994. 
22. The United States applies the Basic Bond Requirement to 98 per cent of anti-dumping orders 
currently in place.  The USCIT ruled that "[c]usto ms … did not articulate in the Amendment or the 
Clarification a reason why antidumping duties on shrimp imports are especially susceptible to 
under-collection, as opposed to duties on imports of ot her agricultural or aquacultural products subject 
to antidumping duty orders, or as opposed to  all products subject to such orders".22  It also ruled that 
"no record exists demonstrating that significant nu mbers of shrimp exporters are defaulting or have 
defaulted on any obligation to pay antidum ping duties on their imports of shrimp".23  I t  r e m a i n s  
                                                      
21 NFI v. US , p.57. 
22 Ibid., p. 54. 
23 Ibid., p. 54.  WT/DS345/R 
 Page C-23 
 
 
  unclear why it is "necessary" to impose more stringent bonding requirements on a class of importers 
who are not susceptible to and have no marked history of default.   
23. US problems with collecting anti-dumping duti es arise almost exclusively in non-market 
economy cases such as those involving crawfish and ga rlic, and were also attributable to isolated 
surety bankruptcies and exemptions (now removed)  from cash deposit requirements for new shippers 
of products subject to anti-dumping duties. 
24. Furthermore, the Enhanced Bond Requirement does not meet the conditions set out in the 
chapeau  to Article XX(d) of the GATT 1994 because th e manner in which it is applied constitutes 
"arbitrary" or "unjustifiable" discrimination and a "disguised restriction on international trade".  
__________