Document: WT/DS345/R Page A-1 ANNEX A EXECUTIVE SUMMARIES OF THE FIRST WRITTEN SUBMISSION OF THE PARTIES CONTENTS PAGE Annex A - 1 Executive Summary of the First Written Submission of the United States A-2 Annex A - 2 Executive Summary of the First Written Submission of India A-10
Document codes: WT/DS345/R
Complainant: India
Respondent: U.S.
Third parties: Brazil, China, EU, Japan, Thailand
Dispute stage: Appellate Body
Agreements cited: Art. 18.1, 1, 2.2, 2.3, 2.4, 7.1, 7.2, 7.4, 7.5, 9.1, 9.2, 9.3, 18.4, 18.5  Anti-dumpingArt. VI:2, VI:3, VI, X:1, X:2, I, II:1, XIII  GATT 1994Art. 32.1, 10, 1, 14, 32.5  Subsidies and Countervailing Measures (SCM)Art. XVI:4  Agreement Establishing the World Trade Organization

ANNEX A

EXECUTIVE SUMMARIES OF THE FIRST WRITTEN SUBMISSION
OF THE PARTIES

CONTENTS PAGE
Annex A - 1 Executive Summary of the First Written Submission of the
United States
A-2
Annex A - 2 Executive Summary of the First Written Submission of India A-10

ANNEX A - 1

EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF
THE UNITED STATES

(11 May 2007)

1. Introduction
1. This dispute centers on certain action taken by US Customs and Border Protection (CBP) to
address a serious and growing revenue collection prob lem. In 2003 and 2004, CBP determined that
importers were defaulting on hundreds of millions of dollars of antidumping and countervailing duties
lawfully owed to the United States. The duties in question were unsecured by cash deposits, sufficient
bonds, or other guarantees: thus, when an importer defaulted, CBP could not recover the duties owed
from the sureties that ordinarily protect CBP from default risk. To address the problem, CBP began to
develop a new directive for increasing security requirements on merchandise with higher risk of default.
Its own analysis indicated that importers of agricu lture/aquaculture merchandise in particular were the
source of the bulk of the defaults.
2. During the same period, the US Department of Commerce (USDOC) and the US International
Trade Commission (USITC) were considering a petition to impose antidumping duties on another
agriculture/aquaculture product: certain shrimp from China, Thailand, India, Vietnam, Brazil, and
Ecuador. Imports of the merchandise subject to the petition were in 2003 valued at in excess of
$2.5 billion – itself an unprecedented figure for ag riculture/aquaculture merchandise subject to an
antidumping order.
3. If the defaults it experienced with respect to other agriculture/aquaculture importers occurred for
shrimp, CBP realized that its revenue collection problem could rapidly grow into a crisis. Therefore, after
considerable analysis and consideration, it decided to apply the new directive to shrimp. The directive
provides for an importer-specific risk assessment as the basis for additional bond amounts. Importantly,
this means that CBP has tailored the process to ensure that, if a company subject to the directive does not
itself pose a collection risk, it need not provide additional bond amounts. Even with this mechanism in
place, India asserts that the directive is impermissible under various provisions of the WTO Agreements.
In effect, India ask this Panel to find that the United States may not collect duties lawfully owed to it.
4. India's complaint focuses on the question of what the WTO Agreements permit a revenue
collection authority to do when faced with a collection problem involving antidumping and countervailing
duties. As discussed below, in its effort to a pply the disciplines contained in the Agreement on
Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping
Agreement) and the Agreement on Subsidies and Countervailing Measures (SCM Agreement) to the
action in question, India mischaracterizes both the ob ligations that Agreement contains and key facts
about the directive, its content and how it operates. If accepted, India' s arguments would suggest that
ordinary revenue collection strategies may not be applied to importers subject to antidumping and
countervailing duties, and in so doing would serious ly compromise the ability of Members' customs
authorities to collect duties lawfully owed the Member. These arguments do not accord with the text of
the Agreements, which expressly permit authorities to require "reasonable security" to collect
antidumping and countervailing duties.
5. India additionally makes the extraordinary claim that ordinary customs laws and regulations are
themselves inconsistent with the WTO Agreements si mply because they give CBP the "authority" to
require additional security. India' s arguments in this regard are unsupported by the text of the
Agreements, at odds with the reasoning contained in a long line of panel and Appellate Body reports, and,
if accepted, would have profound implications for the WTO Membership as a whole.

2. Factual Background
6. CBP is the US agency responsible for collection of customs duties. Under the US system, goods
are permitted to enter the customs territory of th e United States without having paid duties or other
liabilities imposed by law. In this manner, the United States expedites the entry of goods and does not
make the importer wait on the final determination of duties owed or other liabilities under the law.
However, since the goods will have been long since released from CBP' s custody and not available for
return to satisfy any obligations of the importer when they are legally determined to be due, it is necessary
for CBP to have some security against payment of amounts lawfully owed. Consequently, CBP requires
single transaction bonds or continuous bonds for entries of merchandise as a matter of course. As a rule,
all entries must be accompanied by evidence that a bond is posted with CBP to cover any potential duties,
taxes, and charges that may accrue. Pursuant to CBP' s regulatory authority, a port director may require
additional bond amounts or other additional security in order to ensure that the acceptance of an entry will
be adequately protected against any duties or other liabilities imposed by law.
7. CBP establishes the minimum amount of the bond that the importer must obtain from a surety.
The United States is the third party beneficiary to the contract between the surety and the bond principal,
but is not itself a party to the contract. CBP does not set the fees charged by the sureties for the bonds
they provide.
8. It is not uncommon for Members to require security in this manner, pending final assessment of
customs liability. Under India' s customs law, for example, when final duty liability cannot be determined
upon entry, customs officers may assess provisional duties if the importer "furnishes such security as the
proper officer deems fit for the payment of the deficiency, if any, between the duty finally assessed and
the duty provisionally assessed." Security requirements such as these ensure that customs authorities are
able to collect duties lawfully owed upon final assessment.
9. Surety systems are contemplated by, among other provisions, Article 13 of the Agreement on
Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (Customs Valuation
Agreement), which provides that Members shall allow importers to withdraw goods from customs
pending final determination of customs value if the importer "provides sufficient guarantee in the form of
a surety, a deposit or some other appropriate instrument, covering the ultimate payment of customs duties
for which the goods may be liable." In addition to Article 13 of the Customs Valuation Agreement, surety
systems are explicitly provided for in the Kyoto Convention on the Simplification and Harmonization of
Customs Procedures. The Convention, like the Cu stoms Valuation Agreement, encourages the early
release of merchandise, and permits the adoption of surety systems to ensure compliance with regulatory
undertakings, as well as to ensure collection of any additional import duties and taxes that might become
chargeable. Thus, the Convention explicitly contemplates that, as a necessary consequence of the early
release of merchandise, it might become necessary to impose bond requirements to ensure the collection
of assessed duties beyond the estimated duties for which an importer might be liable based on information
at the time of entry.
10. The bond requirements imposed by the United States do not entail any payments to the United
States Government. Rather, importers must provide evidence that they have obtained either single
transaction bonds or continuous entry bonds (or cash or an authorized obligation of the United States in
lieu of surety on a bond) for the entry or entries in question. These bonds are obtained from private surety
companies, which charge the importers based on the risk involved with the transaction.
11. With respect to merchandise subject to an antidumping or countervailing duty order, the Anti-
Dumping Agreement
 provides Members with the flexibility to adopt a variety of systems to deal with the
assessment of antidumping duties. The United Stat es has adopted a retrospective system of duty
assessment. In the US system, an antidumping duty liability attaches at the time of entry, but duties are
not actually assessed at that time. Once a year (dur ing the anniversary month of the order) interested

parties may request a review to determine the amou nt of duties owed on each entry made during the
previous year. Between the time that the good is entered and the time that duties are finally assessed
following this review, importers of merchandise s ubject to antidumping or countervailing duties are
required to provide (1) a cash deposit in the amount of the antidumping or countervailing duty rate
determined in the investigation; and (2) like importers of all goods, a bond to secure against duties, taxes
or charges that may accrue. Under its 1991 Bond Guidelines, CBP provides that the amount of this bond
should be equal to 10 per cent of the duties, taxes, and fees paid by the importer in the previous 12
months, or a minimum of $50,000. In general, an importer may obtain either a bond covering a single
entry (a single entry bond) or a continuous bond (a bond that provide security for all entries filed by the
bond principal during the period of time covered by the bond, usually one year) to satisfy this
requirement.
12. In 2003, CBP undertook a review of its overall duty collection program to identify areas in which
it was experiencing collection difficulties, so as to address significant problems. As part of that process,
CBP determined that, over the past few years, de faults on antidumping dut y supplemental bills had
increased substantially from previous years. While historically, annual uncollected duties from importers
have been relatively low (rarely exceeding $10 million a year), outstanding antidumping liability for 2004
alone reached an unprecedented $225 million. As of the end of fiscal year 2006, total uncollected
antidumping duties amounted to $629 million.
13. Facing a serious and growing noncollection problem, CBP reconsidered its general continuous
bond formula, which provides that the minimum continuous bond may be in an amount equal to the
greater of $50,000 or ten per cent of the amount of the previous year's duties, taxes and fees. On 9 July
2004, CBP published on its website a Memorandum announcing an enhanced customs bond amount for
those continuous bonds that secure the promise to pay all duties finally determined to be due on certain
merchandise subject to antidumping or countervailing duties (July 2004 Amendment). The formula set
forth in the July 2004 Amendment is the USDOC rate in the antidumping or countervailing duty order, or
the cash deposit rate at the time of entry, multiplied by the value of subject merchandise that the importer
entered during the previous year. The formula in effect ensured that, should the antidumping duty rate
actually assessed for an importer increase from that determined during the investigation, CBP would be at
least partially secured for the difference. The additi onal bond directive does no t apply to single entry
bonds.
14. CBP also determined that the principal entities responsible for uncollected duties were importers
of agriculture/aquaculture merchandise subject to antidumping duties, and in particular importers using
continuous entry bonds. Based on CBP's analysis, the noncollection problem with respect to this
merchandise appeared to be attributable to the fact that importers of agriculture/aquaculture merchandise
tended to be undercapitalized, and that by the time final liability was assessed (typically one or more years
after the goods had entered), the companies were no longer in operation. This was coupled with the fact
that the AD/CVD duties finally assessed on the merchandise often significantly exceeded both the cash
deposit rate and the ordinary bond amount typically required for all merchandise under the 1991 Bond
Guidelines. CBP was thus unable to collect the unsecured portion of the duties assessed, resulting in a
shortfall in CBP collections amounting to hundreds of millions of dollars.
15. On 1 February 2005, following a determination that certain shrimp from Thailand, India, and four
other countries were being dumped in the United States, and a finding by the USITC that the US domestic
industry was materially injured by imports of frozen warmwater shrimp, USDOC issued its final
determination imposing definitive duties on frozen warmwater shrimp. The shrimp order was the first
order imposed on agriculture/aquaculture merchandi se after issuance of the July 2004 Amendment.
Significantly, compared to previous agriculture/aquaculture cases, the overall value of shrimp imports
subject to the order was enormous - in calendar year 2003, imports of subject shrimp reached $2.5 billion.
 Given the volumes involved, even a modest in crease in the antidumping rate upon assessment could

result in substantial revenue losses if unsecured. Thus, viewing the shrimp order as an appropriate case
for application of the additional bond directive, CBP began applying the directive to shrimp importers.
16. On 10 August 2005, CBP published a clarification to the July 2004 Amendment (the
"Clarification"), in an effort to improve both importers' and customs officers' understanding of how the
additional bond directive would be applied and to improve transparency in the process by which CBP
identified covered cases and special categories of merchandise.
17. In a further effort to minimize burdens on importers resulting from the additional bond amount,
on 24 October 2006, CBP published a Notice in the Federal Register amending its procedure for
determining bond amounts for covered categories of merchandise. The October 2006 Notice "represents
the comprehensive and exclusive statement of the policy and processes expressed in" the July 2004
Amendment, the 2005 Bond Formulas, and the August 2005 Clarification. As described in the October
2006 Notice, importers are offered the opportunity to submit inform ation on their financial condition
related to the risk of non-collection for that importer and CBP determines bond amounts based on that
information, the importer's compliance history and other relevant information available to CBP. CBP will
evaluate this information promptly and provide an importer-specific bond sufficiency assessment for the
importer concerned. In the absence of this in formation, CBP calculates the bond amount using the
formulas. This procedure allows importers to obtai n an individualized determination, rather than a
determination based upon the formulas.
18. Since CBP issued the October 2006 Notice, by using the process outlined therein, several
importers currently subject to the additional bond formulas have requested and received individualized
bond amounts substantially lower than those CBP initially required under the additional bond formulas.
3. The Bond Directive Constitutes "Reasonable Security" Permitted by the Ad Note to GATT
Article VI:2 and 3
19. Under the Ad Note, a Member may require that an importer provide "reasonable security" for the
payment of antidumping or countervailing duties. As is evident from the clause that precedes it, the "final
determination of the facts" in the Ad Note refers to the determination of the facts with respect to the
"payment of anti-dumping or countervailing duty." In the context of a retrospective duty assessment
system, the "determination of the facts" referenced in the Ad Note is the determination that in Article
9.3.1 of the Anti-Dumping Agreement is referred to as the "determination of the final liability for payment
of anti-dumping duties."
20. Importantly, the Ad Note does not specify a par ticular amount of security that a Member may
require pending determination of the final liability for payment of anti-dumping duties, but rather provides
that the amount required must be "reasonable". Under India's line of reasoning, no amount of bond that
exceeds the margin of dumping established in the investigation phase of a proceeding can be "reasonable"
security. This interpretation of the term "reasonable" lacks a basis in the text, which, as noted, does not
specify a particular ceiling for the bond amount other than the requirement that it be "reasonable".
21. This interpretation also does not accord with ordinary customs practice, which provides context
through the Ad Note's prefatory reference to "many other cases in customs administration." A bond is
security against the prospect of a future liability . The additional bond amount is intended to secure
against additional liability that may accrue upon assessment. As with any insurance policy, to establish
the amount of security required, one must consider both the amount of potential liability in the event of
default and the likelihood of default. With respect to the amount of potential liability, in excess of $2.5
billion worth of shrimp imports had entered the United States from countries subject to the antidumping
order during calendar year 2003. With respect to the risk of default, after facing hundreds of millions of
dollars in uncollected antidumping and countervail ing duties, CBP determined that importers of
agriculture/aquaculture merchandise subject to antid umping or countervailing duty liability faced an

elevated risk of default, due in part to low capitalization and high turnover rates in the industry as a whole.
 Since issuing the directive, CBP published additional mechanisms so that any additional bond amount
required is tailored to individual importers' risk of default, mechanisms that even India concedes introduce
an "indicia of apparent reasonableness" to the directive.
22. India appears to conflate the requirement of reasonable security contained in the Ad Note with
Article 7 of the Anti-Dumping Agreement regarding provisional measures (i.e., measures taken prior to a
final determination of dumping or subsidization). The bond directive, however, is a security requirement
imposed after the final determination of dumping or subsidization, pending "determination of the final
liability for payment of anti-dumping duties." It is not a "provisional measure" within the meaning of
Article 7. India offers absolutely no legal theory as to how the directive "as such" is inconsistent with the
Ad Note, and the only evidence it offers in support of either claim relates to the single instance in which
the directive has been applied – frozen warmwater shrimp subject to the antidumping orders issued by
USDOC in February 2005.
4. Additional Bond Directive Is Not a "Specific Action Against Dumping" or "Subsidy"
23. As explained above, the additional bond directive serves to secure an otherwise unsecured debt
owed to the US government in the form of assessed antidumping duties that exceed cash deposits. It was
issued after CBP identified a serious noncollection problem with respect to these duties. As it would in
any case in which there exists an unsecured liability that presents a risk to the revenue, CBP issued the
additional directive to provide fo r an increase in the amount of security on certain transactions and
thereby address the noncollection concern. The sole reason the directive is designed to secure
antidumping liability is because the vast majority of unsecured liability that has resulted in noncollection
happens to be antidumping duty liability. Of the $589 million in uncollected duties outstanding since
fiscal year 2003, $513 million (87 per cent) have been antidumping duties. The fact that the additional
bond directive is based on noncollection risk, rath er than the constituent elements of dumping or
subsidization, is evident in the text of the directive itself and associated materials.
24. The sole evidence that India cites in support of its argument that the directive operates "against"
dumping is either inaccurate or irrelevant. The additional bond directive does not meet the second prong
of the test set forth by the Appellate Body under Article 18.1: it is not an action taken "against" dumping
or subsidization. First, India claims that the di rective reduced shipments from countries subject to it.
However, the record simply does not support this assertion. According to a study prepared by the
Government Accountability Office (GAO), after the petition was filed in late 2003, but before the bond
directive was announced , the share of imports from Thailand decreased from 30 per cent of total US
shrimp imports to 15 per cent. After the bond directive was announced in July 2004, Thailand' s share of
shrimp imports actually increased significantly, returning to approximately 30 per cent. Based on GAO' s
analysis, there is no evidence that the bond directive in fact adversely affected imports of merchandise
subject to the antidumping order. Second, India cites a number of actions by sureties and other private
parties as evidence that the directive itself is an action "against" dumping or subsidization, including
sureties' fees and collateral requirements associated with these imports. As noted previously, CBP does
not set surety fees, nor does it require importers to post collateral in support of bonds. CBP is a third
party beneficiary to bond contracts, which are priv ate contracts negotiated between the surety and the
importer.
25.
In order for India to prevail on its claim that the directive is "action against dumping", it also must
demonstrate that the directive is not "in accordance with the provisions of GATT 1994." It has failed to
do so. As explained above, the additional bon d amounts required under the directive constitute
"reasonable security" within the meaning of the Ad Note to GATT Article VI and therefore the directive
is "in accordance with the provisions of GATT 1994."

26. With respect to India's claim that the direc tive "as such" is an action against dumping or
subsidization, India again fails to so much as articulate a legal theory as to why the directive "as such"
breaches US obligations under Article 1 and 18.1 of the Anti-Dumping Agreement, and Article 10 and
32.1 of the SCM Agreement. Furthermore, India misstates the facts, asserting incorrectly that the
directive "requires" importers of merchandise subject to an antidumping or countervailing duty order to
furnish an enhanced continuous bond. In fact, the directive does not so require.
5. India Fails to Demonstrate that Customs Laws and Regulations Are Inconsistent "As Such"
with Article 18.4 of the Anti-Dumping Agreement, Article 32.5 of the SCM Agreement or
Article XVI:4 of the WTO Agreement
27. Arguing that "[t]he old distinction between 'mandatory' and 'discretionary' under the GATT 1947
does not survive any longer," Indi a identifies nine laws and regulations in particular as measures
"inconsistent as such" with Article XVI:4 of the WTO Agreement, Article 18.4 of the Anti-Dumping
Agreement, and Article 32.5 of the SCM Agreement. India argues that these laws and regulations create
"the very existence of discretion" to act in a WTO-inconsistent manner, and therefore are impermissible.
India's argument, however, does not accord with the text of the Agreement, is at odds with a long line of
panel and Appellate Body reports, and if accepted, would mean that a single WTO-inconsistent
administrative act could serve as the basis for fi nding a Member's entire legal system to be WTO-
inconsistent.
28. As the complaining party to this proceeding, India bears the burden of presenting evidence and
arguments sufficient to establish that the customs laws and regulations it cites are inconsistent with the
provisions of the WTO Agreements that it invokes. India, however, provides no support for its claims in
this regard. Under India's logic, any law granting "authority" to collect revenue – ranging from Article 8
of the United States Constitution to the 1789 Act of Congress establishing the US Treasury Department –
would be implicated in this dispute, as they also "authorize" CBP to secure the revenue, including through
bonds.
29. Article XVI:4 means that, if a Member's law, regulation, or administrative procedure does not
conform with its obligations as provided in the annexed Agreements
, that Member has an affirmative
obligation to bring it into conformity. Conversely, however, if those laws, regulations and administrative
procedures conform with its obligations, it need undertake no further action. Thus, the ordinary meaning
of Article XVI:4 is that a law, regulation or admini strative procedure is not inconsistent with Article
XVI:4 unless it is also inconsistent with a separate obligation of a covered agreement. The laws and
regulations of the United States are not inconsistent with any such provision – nor does India so assert –
and are therefore consistent with Article XVI:4.
30. India further argues that it should be permitted to challenge the measure s at issue "as such"
because if it is unable to do so "it will only lead to 'multiplicity of litigation' in future." The prospect of
having to present an argument in the future does not, however, excuse India from proving its case in the
instant proceeding. A measure that is not itself inconsistent with a WTO provision may not be found in
breach simply because at some date in the futu re it may be relied up as "authority" for a WTO-
inconsistent act. The distinction between ma ndatory and discretionary action in GATT/WTO
jurisprudence was a basic element of the practice of the GATT 1947 Contracting Parties in interpreting
the GATT 1947, and remains a basic element of the practice of WTO Members in interpreting the WTO
Agreement.
6. The Additional Bond Directive Is Not Inconsistent with GATT Article X:3(a)
31. India has failed to establish a breach of Article X. Even under India's theory that GATT Article X
applies, the evidence demonstrates that CBP administers the bond directive in a "uniform, impartial and
reasonable" manner. The directive contains vari ous criteria for identifying importers of merchandise

with elevated default risk, and CBP applies these criteria uniformly. "Impartial" means "[n]ot partial; not
favouring one party or side more than another; unprejudiced, unbiased; fair." Treatment in an unbiased
and fair manner is distinguishable from identical tr eatment. Using the criteria described above, CBP
determined that importers of shrimp were particularly risky – the potential losses were significant, as was
the likelihood of default. Insofar as CBP treated shrimp importers differently from others, it did so based
on neutral, "impartial" criteria. "Reasonable" mean s "[i]n accordance with re ason; not irrational or
absurd." Here, CBP's reason for applying the additional bond directive to shrimp subject to the February
2005 orders is clear: it faced $2 billion in imports of shrimp newly subject to an antidumping order, had
experienced $225 million in defaults on similar merchandise when antidumping orders were imposed in
the past, and believed that, due to low capitalization rates in the industry and other factors, these imports
posed a serious risk to the revenue. Thus, India fails to demonstrate that the additional bond directive
represents unreasonable, partial, or nonuniform administration of US customs laws, within the meaning of
GATT Article X.
7. The Additional Bond Directive Does not Breach GATT Article XI
32. With respect to GATT Article XI, as was the case with the bond measure at issue in Dominican
Republic – Cigarettes , the bond directive does not prevent importers from importing shrimp into the
United States. The directive does not mandate an increased bond amount – as noted previously, importers
can obtain individual bond determinations and, de pending on their ability to pay and history of
compliance with US customs laws and regulations , may not be required to obtain a higher bond.
Furthermore, even those importers that have not demonstrated an ability to pay or have not complied with
US customs laws in the past are able to import even without participating in the process outlined in the
directive or providing additional bond amounts.
8. The Directive Is Not Inconsistent with GATT Article II
33. The additional bond directive itself does not constit ute a "duty" (antidumping or otherwise).
Likewise, the additional bond directive does not constitute an "other charge." First, CBP does not charge
for the bonds, nor does it even require that security take the form of the additional bond. Second, India's
argument that such bonds are "other charges" woul d mean that Members may not maintain bonds as a
means to secure importers' obligations unless th e bonds are specifically included in a Member' s
schedule. However, as noted above, customs bonds are specifically contemplated in various WTO
provisions, including the Ad Note to Article VI and Article 13 of the Customs Valuation Agreement. This
context supports the conclusion that bonds are a tool that is generally available to the Members, and not
simply to those Members which have scheduled them. For this reason as well, bonding requirements are
not an "other charge."
9. The Directive Is Not Inconsistent with GATT Article XIII
34. The directive does not restrict the quantity of shrimp that may be imported into the United States,
and thus does not constitute a "quantitative restriction" within the meaning of GATT Article XIII. India
provides no support for its assertion that the United States has breached Article XIII, other than its
argument that the directive "severely restricts imports " into the United States of subject merchandise.
This statement is not a sufficient basis to conclude that the directive is a "quantitative restriction", and, as
noted previously, is simply incorrect.
10. The Directive Is Not "As Such" Inconsistent with GATT Articles I, II or XI
35. Even more dramatically than with respect to its other "as such" claims, with respect to GATT
Articles I, II, and XI, India offers absolutely no legal theory, evidence, or even argumentation to explain
how the directive "as such" is inconsistent with these provisions. India has not even attempted to meet, let
alone met, its burden with respect to its "as such" claims under GATT Articles I, II, and XI.

11. The United States Did Not Act Inconsistently with Article 18.5 of the Anti-Dumping
Agreement or Article 32.6 of the SCM Agree ment by Not Notifying the Amended Bond
Directive
36. The bond directive modified CBP's 1991 Bond Guidelines regarding bond amounts for all
merchandise. That directive is not a "law or regulation" relevant to the Anti-Dumping or SCM
Agreements, nor does it relate to the administration of those laws and regulations.
12. The Additional Bond Directive Is Justified by GATT Article XX(d)
37. As the United States has demonstrated, the additional bond directive is not inconsistent with US
WTO obligations. Article XX of the GATT 1994 makes this even clearer.
38. The additional bond directive is "necessary to secure compliance" with US antidumping and
countervailing duty assessment laws, in particular 19 USC. 1673e(a)(1) governing the assessment of
antidumping duties and general customs and regulations requiring the payment of duties owed to the US
Treasury. The fact that the directive and its application to shrimp secures compliance with this obligation
and general customs laws and regulations requiring payment of duties owed to the US Treasury is evident
on its face. The directive is "necessary" to secure compliance with US laws and regulations. Revenue
collection is among the most fundamental responsib ilities of governments. As explained above, the
directive secures an otherwise unsecured liability in the form of additional antidumping duties owed upon
assessment that exceed cash deposits, and thus permits collection of revenue that in the past has been
subject to unprecedented default.
39. The additional bond directive also meets the requirements of the chapeau to Article XX, as it has
not been applied in a manner that would constitute a "disguised restriction on international trade" or "a
means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail."

ANNEX A - 2

EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF INDIA

(30 March 2007)

1. Introduction
1. In this dispute, India is challenging the requirement imposed by the United States on importers of
certain designated merchandise subject to antidumping or countervailing measures that they must post, in
addition to the bonds or cash deposits required under such measures, a bond for an amount calculated at
100 per cent of the antidumping or countervailing duties payable on their total imports during the previous
one year (the "Enhanced Bond Requirement").
2. The measure at issue in this dispute includes the instruments issued by the United States Customs
and Border Protection Service ("US Customs") that provide for the imposition of the Enhanced Bond
Requirement and describe its operation (the "Amended Bond Directive") and the laws and regulations that
authorize US Customs to impose the Enhanced Bond Requirement.
2. Legal Argument
3. India considers that the Amended Bond Directive and the laws and regulations that authorize it
are not consistent, both as such and as applied to imports of shrimp subject to antidumping duties, with
the obligations of the United States under the provisions of the WTO Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement"), of the
WTO Agreement on Subsidies and Countervailing Measu res (the "Subsidies Agreement") and of the
General Agreement on Tariffs and Trade, 1994 (the "GATT 1994").
(a) The Amended Bond Directive provides for specific action against dumping and subsidization that
is inconsistent as such with the provisions of the GATT 1994 as interpreted by the Anti-Dumping
Agreement and the Subsidies Agreement, respectively.
4. The Enhanced Bond Requirement constitutes an impermissible "specific action" against dumping
and subsidization that is inconsistent with the obligations of the United States under Articles 1 and 18.1 of
the Anti-Dumping Agreement and Articles 10 and 32.1 of the Subsidies Agreement. According to the
Appellate Body ruling in US – CDSOA, a three-step analysis is necessary to determine whether a measure
constitutes impermissible specific action against dumpi ng or subsidization. The two basic conditions
precedent are that the measure must be (a) "specifi c" to dumping or subsidization, and (b) "against"
dumping or subsidization. If these two conditions ar e met, it is necessary to determine whether the
measure has been taken in accordance with the provisions of Article VI of the GATT 1994 as interpreted
by the provisions of the Anti-Dumping Agreement and the Subsidies Agreement.
5. The Enhanced Bond Requirement is "specific" to dumping or subsidization because the Amended
Bond Directive expressly states that it applies only to importers of designated merchandise that is subject
to antidumping or countervailing duties, i.e., when all the conditions for imposition of antidumping or
countervailing duties have been fulfilled. As the United States itself has admitted in US- CDSOA, a
measure such as the Enhanced Bond Requirement that " … imposes … liability on importers/producers/
exporters when dumping or subsidization is found … " will constitute "s pecific action" with respect to
dumping and subsidization. In addition, one important element of the formula for calculating the bond
liability amount is the amount of antidumping or countervailing duties owed based on the dumping
margin or the individual net subsidy rate. Therefore, there is clearly an inextricable link between the
Enhanced Bond Requirement and the constituent elements of dumping or of a subsidy.

6. Moreover, one of the stated purposes of the E nhanced Bond Requirement is to ensure that
antidumping and countervailing duties are collected for payment to domestic industry under the US
Continued Dumping and Subsidy Offset Act (the "CDSOA"), which the Appellate Body has found to be a
"specific action" against dumping or subsidization. Regulations or administrative procedures by US
Customs to implement the CDSOA such as the Ame nded Bond Directive also, therefore, constitute
specific action against dumping or subsidization.
7. Further, the Enhanced Bond Requirement also clearly acts "against" dumping and subsidization.
It has a serious, adverse impact on importers and, therefore, on dumping or subsidization. The demand of
100 per cent collateral by sureties acceptable to US Customs to issue enhanced bonds and high bond
premiums and other charges associated with providing the collateral impose a heavy burden on importers.
 The bonds initially posted by importers inevitably ge t exhausted or saturated well before the first
administrative review and liquidation of entries are completed. As a result, importers are forced to post
additional, enhanced bonds. Sureties again subject them to additional demands for collateral and high
bond premiums, which results in further charges and further depletion of their capital and credit. Thus, as
found by the US Court of International Trade, importers are forced to incur serious losses in profits and
business opportunities. This in turn has a serious deterrent effect on exports of the merchandise subject to
the Enhanced Bond Requirement as is evident from the sharp drop between 2005 and 2006 in the quantity
and value of shrimp exported from India as well as in the total number of exporters from India.
8. There are further disincentives that distort the structure of the Anti-Dumping Agreement and the
Subsidies Agreement as is evident from the agreements betw een exporters of shrimp subject to
antidumping duties and a group of US domestic shrimp producers known as the "Southern Shrimp
Alliance". Exporters are forced to forgo their right under US law to have their dumping margins
determined in an administrative review because liquidation is ordered immediately upon termination of
administrative review at the rate set out in the Orde r. In addition, the linkage between agreeing not to
import the subject shrimp and being exempted from the Enhanced Bond Requirement in the agreements
entered into by US Customs and importers of shrimp confirms that it has the effect of dissuading imports
of dumped products into the United States. It cannot be disputed, therefore, that the Enhanced Bond
Requirement has a serious adverse bearing on dumping and subsidization.
9. The last step in the analysis is to determ ine whether the Enhanced Bond Requirement accords
with the requirements of Article VI of the GATT 1994 as interpreted by the provisions of the Anti-
Dumping Agreement and the Subsidies Agreement. In US – AD Act of 1916, the Appellate Body found
that the Anti-Dumping Agreement limits the permissi ble responses to dumping to (a) definitive anti-
dumping duties, (b) provisional measures and (c) price undertakings. Similarly, in US – CDSOA, the
Appellate Body found that there are only four perm issible responses to subsidization: (i) definitive
countervailing duties; (ii) provisional measures; (iii) price undertakings; and (iv) multilaterally sanctioned
countermeasures under the dispute settlement system.
10. In this case, by definition, the Enhanced Bond Requirement does not involve the collection of a
definitive (antidumping or countervailing) duty or a pr ice undertaking by exporters. It is also not a
provisional measure to the extent that it is applie d (a) in addition to, and on top of, the provisional
measures contemplated by Article 7 of the Anti-Dumping Agreement and by Article 17 of the Subsidies
Agreement, and (b) even after the provisional measures contemplated by these provisions have run their
course and the decision to impose definitive duties has been taken under Article 9.1 of the Anti-Dumping
Agreement or Article 19.2 of the Subsidies Agreement, as the case may be. Even otherwise, the
Enhanced Bond Requirement is clearly inconsistent with the requirements of Articles 7 and 9 of the Anti-
Dumping Agreement and of Articles 17 and 19 of the Subsidies Agreement.
11. Accordingly, it is clear that the Enhanced Bond Requirement is inconsistent as such with the
obligations of the United States (a) under Article VI:2 of the GATT 1994 and Articles 1 and 18.1 of the

Anti-Dumping Agreement; and (b) under Article VI:3 of the GATT 1994 and Articles 10 and 32.1 of the
Subsidies Agreement.
12. Further, the United States cannot rely on footnote 24 to the Anti-Dumping Agreement or on
footnote 56 to the Subsidies Agreement to justify the Enhanced Bond Requirement under other provisions
of the GATT 1994. Footnote 24 qualifies Article 18.1 of the Anti-Dumping Agreement just as footnote
56 qualifies Article 32.1 of the Subsidies Agreement by stating that neither provision is " … intended to
preclude action under other relevant provis ions of GATT 1994, as appropriate." In US – CDSOA, the
Appellate Body clarified that these provisions only "… confirm what is implicit in Article 18.1 of the
Anti-Dumping Agreement and in Article 32.1 of the SCM Agreement, namely, 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 nevertheless related to dumping or subsidization, is not prohibited by Article 18.1
of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement". Therefore, it is clear that a
measure that constitutes specific action against dumping or subsidization cannot be justified under either
footnote 24 to the Anti-Dumping Agreement or footnote 56 to the Subsidies Agreement. The Enhanced
Bond Requirement clearly constitutes specific action against dumping and subsidization. Accordingly,
the United States cannot justify it as being permissible under any other provision of the GATT 1994.
(b) The Enhanced Bond Requirement is also inconsistent with the provisions of Article VI:2 of the
GATT 1994 and Articles 1 and 18 of the Anti-Dump ing Agreement as applied to importers of
shrimp from India.
13. The application of the Enhanced Bond Require ment has had a serious adverse impact on
importers of shrimp from India. After many US importers ceased to import shrimp from India, Indian
exporters were forced to export shrimp either on a duty-paid basis or were forced to register themselves as
importers of record with US Customs. In the month of February 2005, the US Customs issued notices to
several importers that their existing continuous bon ds were insufficient and directed them to post
enhanced continuous bonds ranging from $1 million to $5 million. US Customs made it clear that the
provisions in the Clarification and the Notice relati ng to modification of the bonds to account for the
circumstances of individual importers will not result in discharging enhanced bonds already previously
furnished to US Customs. Further, the bonds were required to be given only by surety companies
approved by the US Treasury in the United States, which demanded 100 per cent collateral from their
banks in India. US Customs have also detained shipments of imported shrimp from India for not
complying with the Enhanced Bond Requirement. For these reasons and thos e set out above in the
context of India's "as such" claim under Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of
the Subsidies Agreement, the Enhanced Bond Requireme nt is also inconsistent with the provisions of
Article VI:2 of the GATT 1994 and Articles 1 and 18.1 of the Anti-Dumping Agreement as applied to
importers of shrimp from India.
(c) The Amended Bond Directive and the laws and regulations of the United States that authorize it
are inconsistent with the obligations of the United States under Article XVI:4 of the Marrakesh
Agreement Establishing the World Trade Organization (the "WTO Agreement"), Article 18.4 of
the Anti-Dumping Agreement and Article 32.5 of the Subsidies Agreement.
14. US Customs is authorized to impose the Enhanced Bond Requirement under, among other
provisions, 19 USC. § 1623(a), 19 C.F.R. § 113.1 and 19 C.F.R. § 113.13. India considers that these laws
and regulations together with the Amended Bond Directive are inconsistent as such with the obligations of
the United States under Article XVI:4 of the WTO Agreement, Article 18.4 of the Anti-Dumping
Agreement and Article 32.5 of the Subsidies Agreement because the Enhanced Bond Requirement
constitutes "specific action" against dumping and subs idization that does not fall within any of the
permitted responses to dumping under the Anti-Dumping Agreement or to subsidization under the
Subsidies Agreement. The imposition of the Enhan ced Bond Requirement is also inconsistent with
various other provisions of the Anti-Dumping Agreement and of the Subsidies Agreement.

15. Moreover, in the application of the Enhanced Bond Requirement to imports of shrimp from India,
US Customs has acted in an inflexible manner, re quiring every importer of shrimp to furnish a bond
calculated at exactly 100 per cent of the antidumpi ng duties payable on imports of shrimp during the
previous 12-month period. Even assuming that bond amounts are lowered in future pursuant to the notice
published by US Customs on 24 October 2006 in the Federal Register entitled "Monetary Guidelines for
Setting Bond Amounts for Importations Subject to Enhanced Bonding Requirements" (the "Notice"), it
still contains norms or rules that Port Directors of US Customs are required to apply while determining
bond liability amounts for importers subject to the Enhanced Bond Requirement. To the extent that this
liability is in addition to the provisional measure s permissible under Article 7 of the Anti-Dumping
Agreement and Article 17 of the Subsidies Agreement or definitive duties (in the form of cash deposits)
permissible under Article 9 of the Anti-Dumping Agreement and Article 19 of the Subsidies Agreement,
it is clearly inconsistent with Artic le 18.1 of the Anti-Dumping Agreement and Article 32.1 of the
Subsidies Agreement. Therefore, the Amended Bond Directive contains normative rules of conduct
enforced by US Customs that are inconsistent with the requirements of Article 18.4 of the Anti-Dumping
Agreement and Article 32.5 of the Subsidies Agreement.
16. The old distinction between "mandatory" and "discretionary" under the GATT 1947 does not
survive any longer. The very existence of discre tion to impose measures that represent impermissible
responses to dumping or subsidization renders such provisions in the laws, regulations and administrative
procedures of Members inconsistent with their ob ligations under Article 18.4 of the Anti-Dumping
Agreement and Article 32.5 of the Subsidies Agreement. This is also a salutary approach in light of the
obligation to perform treaty obligations "in good faith".
17. In US – Sunset Policy Bulletin , the Appellate Body noted that "… allowing claims against
measures, as such, serves the purpo se of preventing future disputes by allowing the root of WTO-
inconsistent behaviour to be eliminated." In the circumstances, India submits that the Panel should find
that the Amended Bond Directive and the underlying statutory provisions and regulations of the United
States that authorize it are inconsistent as such with Article XVI:4 of the WTO Agreement, Article 18.4 of
the Anti-Dumping Agreement and Article 32.5 of the Subsidies Agreement.
(d) The Enhanced Bond Requirement is inconsistent as such with Articles 9.1, 9.2, 9.3 and 9.3.1 of
the Anti-Dumping Agreement and with Articles 19.2, 19.3 and 19.4 of the Subsidies Agreement.
It is also inconsistent with Articles 9.1, 9.2, 9.3 and 9.3.1 of the Anti-Dumping Agreement as
applied to importers of shrimp from India.
18. To the extent that the US seeks to justify the Enhanced Bond Requirement as a measure
consistent with Article 9 of the Anti-Dumping Agreement or Article 19 of the Subsidies Agreement, it is
necessary to evaluate its consistency with these provisions for purposes of Article 18.1 of the Anti-
Dumping Agreement and of Article 32.1 of the Subsidies Agreement.
19. Under Article 9.2 of the Anti-Dumping Agreement
(or under Article 19.3 of the Subsidies
Agreement), the only possible measure that may be taken as a result of the decision to impose definitive
duties under Article 9.1 of the Anti-Dumping Agreement (or under Article 19.2 of the Subsidies
Agreement) is that duties shall be collected in the "appropriate amounts". Further, under Article 9.3 of the
Anti-Dumping Agreement (or under Article 19.4 of the Subsidies Agreement), the amount of the duty
shall not exceed the "margin of dumping" (or the "amount of the subsidy found to exist"). Therefore, it is
clearly impermissible to demand an enhanced, continuous bond in addition to the duties collected in an
amount equal to the dumping margin or the amount of the subsidy found to exist.
20. The United States cannot justify the Enhanced Bond Requirement on the basis that it follows the
retrospective system of assessment referred to in Article 9.3.1 of the Anti-Dumping Agreement.
Article 9.3.1 clarifies that the "final liability" for antidumping duties will be fixed at the stage of
administrative review and that any refund must be made normally within a period of 90 days from the

determination of the final liability. The terms "final liability" and "refund" in Article 9.3.1 of the Anti-
Dumping Agreement have the following implications:
First: There must be a prior liability that is not "fin al", which can only refer to the liability fixed at
the time of the decision to impose definitive duties in Article 9.1. That some liability is fixed at
the time of the Article 9.1 imposition decision is corroborated by the requirement in Article
12.2.2 that a public notice of the final dete rmination must include the dumping margins
established under Article 2.
Second: It is permissible under Article 9.3.1 for the United States to collect higher antidumping duties
after the administrative review under Article 9.3.1 than were collected under Article 9.2
consequent upon the imposition decision taken under Article 9.1.
Third: Article 9.3.1 could not have contemplat ed a refund unless some amounts have already been
collected prior to the determination of the final liability. However, the duties may be collected
only "in the appropriate amounts" consequent upon the imposition decision in Article 9.1.
Fourth: The absence of any referen ce to a discharge of bonds in Article 9.3.1 (unlike in Articles 10.4
and 10.5 of the Anti-Dumping Agreement), at least suggests, if not confirms, that no measure
other than the collection of definitive anti dumping duties (or cash deposits) in "appropriate
amounts" is contemplated after the imposition decision in Article 9.1 and prior to the
determination of final liability in Article 9.3.1.
 Even by implication, however, Article 9.3.1 of the Anti-Dumping Agreement does not confer any
special right, either expressly or impliedly, on Members that choose to follow the retrospective
assessment system to take any measure after the imposition decision in Article 9.1 of the Anti-Dumping
Agreement other than to collect antidumping duties.
21. Similarly, based on the provisions of Articles 19.2, 19.3 and 19.4 of the Subsidies Agreement, it
is clear that, after the decision to impose counterva iling duties referred to in Article 19.2, it is not
permissible to take any measure other than to collect countervailing duties not in excess of the amount of
the subsidy found to exist. Thus, the Enhanced Bond Requirement is clearly inconsistent with Articles
19.2, 19.3 and 19.4 of the Subsidies Agreement.
22. The ordering of the paragraphs of Article 9 of the Anti-Dumping Agreement makes it clear that
Articles 9.1 and 9.2 also govern the retrospectiv e assessment system. The imposition decision in
Article 9.1 must follow the final determination. The only permissible measure thereafter is the collection
of antidumping duties under Article 9.2 "in the appropriate amounts". That Article 9.3 and Article 9.3.1
follow after Article 9.2 does not mean that some additi onal right to take security exists in the case of
retrospective assessment systems. In fact, the first sentence of Article 9.3 prohibiting the collection of
antidumping duties in excess of the dumping margin clearly qualifies the "appropriate amounts" in which
antidumping duties may be collected under Article 9.2.
23. Moreover, it is important to keep in mind the policy consequences of conceding any right to take
enhanced, continuous bonds in ad dition to provisional measures or definitive measures that are not
governed by the strict disciplines contained in the Anti-Dumping Agreement or the Subsidies Agreement.
 Members may well demand a continuous bond amounting to 200 per cent or 300 per cent of antidumping
or countervailing duties payable on imports at the rate specified in the final affirmative determination for
the immediately preceding one-year period.

24. For the reasons stated above, the Enhanced Bond Requirement is also clearly inconsistent with the
provisions of Articles 9.1, 9.2, 9.3 and 9.3.1 of the Anti-Dumping Agreement as applied to importers of
shrimp from India.
(e) The Enhanced Bond Requirement is inconsistent as such with the requirements of Article 7 of the
Anti-Dumping Agreement and of Article 17 of the Subsidies Agreement. It is also inconsistent
with Article 7 of the Anti-Dumping Agreement as applied to importers of shrimp from India.
25. India submits that the Enhanced Bond Requirement is inconsistent as such with Article 7 of the
Anti-Dumping Agreement and with Article 17 of the Subsidies Agreement.
26. Under Article 7.1(iii) of the Anti-Dumping Agreement and Article 17.1(c) of the Subsidies
Agreement, it is necessary that "the authorities concerned judge such measures necessary to prevent injury
being caused during the investigation". The stat ed reasons for introducing the Enhanced Bond
Requirement, however, do not mention injury being caused during the investigation at all and focus rather
on protecting revenue and ensuring that payments are made to domestic industry pursuant to the CDSOA.
 Therefore, if the Enhanced Bond Requirement is a provisional measure, it is clearly inconsistent as such
with Article 7.1(iii) of the Anti-Dumping Agreement and Article 17.1(c) of the Subsidies Agreement.
27. The Enhanced Bond Requirement is also incons istent with Article 7.2 of the Anti-Dumping
Agreement and with Article 17.2 of the Subsidies Agreement. A provisional measure, whether in the
form of a cash deposit or a bond, may not be for an amount in excess of the "provisionally estimated
margin of dumping" or the "provisionally calculated amount of subsidization", as the case may be.
However, under the Enhanced Bond Requirement, im porters are required to provide an enhanced,
continuous bond in an amount equal to the antidumping duties or countervailing duties payable on total
imports for the previous year at the applicable rate specified in the preliminary affirmative determination
rather than a single-entry bond for the amount of antidumping or countervailing duty owed on each
shipment. Combined with the fact that provisional measures are never permissible for a period in excess
of six months, the value of the enhanced bond for a year's worth of imports considerably exceeds the
amount of the provisionally estimated dumping marg in or the provisionally calculated amount of
subsidization. Thus, if the Enhanced Bond Requireme nt is a provisional measure, it is also clearly
inconsistent as such with the requirements of Article 7.2 of the Anti-Dumping Agreement and Article 17.2
of the Subsidies Agreement.
28. Moreover, Article 7.4 of the Anti-Dumping Agreement provides for limiting a provisional
measure to a period "not exceeding four months or , on the decision of the authorities concerned, upon
request by exporters … to a period not exceeding si x months" just as Article 17.4 of the Subsidies
Agreement provides for limiting it to "a period not exceeding four months". Accordingly, to the extent
that the Enhanced Bond Requirement on importers is introduced or remains in place on any date after six
months from the date on which provisional measures are first imposed in an antidumping case or after
four months in the case of a countervailing duty case, the Enhanced Bond Requirement constitutes a clear
inconsistency as such with the provisions of Article 7.4 of the Anti-Dumping Agreement and of Article
17.4 of the Subsidies Agreement.
29. For the same reasons, the Enhanced Bond Requirement is also inconsistent with the provisions of
Articles 7.1, 7.2 and 7.4 of the Anti-Dumping Agreement as applied to importers of shrimp from India.
(f) The Enhanced Bond Requirement is inconsistent with the Ad Note both as such and as applied to
imports of shrimp from India.
30. India considers that the United States cannot rely upon the Note Ad Paragraphs 1 and 2 of Article
VI of the GATT 1994 (the "Ad Note") to justify the Enhanced Bond Requirement independently of
Article 7 of the Anti-Dumping Agreement or Article 17 of the Subsidies Agreement to justify the

Enhanced Bond Requirement. In fact, it is clear that the "reasonable security (bond or cash deposit)"
referred to in the Ad Note is th e same as the provisional measures referred to in Article 7 of the Anti-
Dumping Agreement and in Article 17 of the Subsidies Agreement and that these provisions merely
elaborate upon the provisions of the Ad Note and impo se further disciplines in this regard. The final
determination of the facts referred to in the Ad Note can only be at the stage of the decision to impose
definitive antidumping duties under Article 9.1 of the Anti-Dumping Agreement and under Article 19.2 of
the Subsidies Agreement. Thus, the Ad Note clearly does not constitute a "general exception" in Article
VI of the GATT 1994 that operates independently of the disciplines in Articles 7 and 9 of the Anti-
Dumping Agreement and in Articles 17 and 19 of the Subsidies Agreement.
31. Further, the requirement in the Ad Note that any security taken must be "reasonable" is clearly not
satisfied in the case of the Enhanced Bond Requirement because the enhanced, continuous bond must be
furnished in addition to making cash deposits at the dut y rates specified in the Order. Therefore, the
Enhanced Bond Requirement imposed by the United States is per se unreasonable.
32. In addition, the Enhanced Bond Requirement is clearly not reasonable because it was motivated
by political considerations. Further, the designation of products by US Customs is also arbitrary and
capricious. The Amended Bond Directive does not c ite a single reason why there is a likelihood of a
higher rate of default in collection of antidumping duties on imports of shrimp as opposed to imports of
other agricultural or aquacultural merchandise. As imports of shrimp subject to antidumping duties were
not liquidated, there was no evidence of default by shri mp importers at the relevant time. Further, US
Customs at no time has offered any explanation of why importers of crawfish or garlic from China were
not subject to the Enhanced Bond Requirement.
33. It is clear also that US Customs does not engage in any analysis of the likelihood of an increase in
dumping margins which is the ostensible justification for applying the Enhanced Bond Requirement to
merchandise subject to antidumping or countervailing duties.
34. Moreover, the extent of the security demanded under the Enhanced Bond Requirement is clearly
excessive. As the US Court of International Trade found, the effects of imposition of the Enhanced Bond
Requirement include (a) a serious depletion of the cr edit of importers caused by the need to provide
collateral for the initial bond amount as well as subsequent increases in the bond amount to account for
delays in liquidation, (b) dropping or scaling back on product lines imported into the United States, (c)
preventing the addition of new product lines, (d) causing the loss of spot sales, (e) preventing participation
in bids from major supermarket chains, (g) forcing imports of shrimp on a delivered, duty-paid basis, thus
reducing profit margins, (h) adversely affecting customer and supplier relationships, (i) inability to fulfil
contractual orders because there are no substitutes for the merchandise subject to the antidumping or
countervailing duty orders. The extent of the harm suffered by shrimp importers as a result of the
Enhanced Bond Requirement is clear evidence of its unreasonableness.
35. In fact, in the case of shrimp, until the publicati on of the Notice in the Federal Register, US
Customs certainly did not take account of the financial soundness of individual importers at all, which
presumably should have been its primary concern in imposing the Enhanced Bond Requirement. This is
an obvious indicator of the extreme unreasonableness both in conception and in administration of the
Enhanced Bond Requirement. Although US Custom s now claims that it will take into account the
financial soundness of individual importers in fixing th e amount of the enhanced bond, they have also
clarified that they will not apply this analysis pendi ng liquidation to importers of shrimp to reduce the
value of enhanced, continuous bonds already furnished.
36. Accordingly, India considers that the Enhanced Bond Requirement is inconsistent with the
provisions of the Ad Note both as such and as applied to shrimp.

(g) The United States has acted inconsistently with Article 18.5 of the Anti-Dumping Agreement and
with Article 32.6 of the Subsidies Agreement by not notifying the Amended Bond Directive.
37. The Enhanced Bond Requirement clearly represents a fundamental change in the administration
by the United States of its laws and regulati ons relevant to the Anti-Dumping Agreement and to the
Subsidies Agreement. Nevertheless, the United States has not informed the Committee on Anti-Dumping
Practices or the Committee on Subsidies and Countervailing Measures about the Amended Bond
Directive. India considers, therefore, that the United States has acted inconsistently with its obligations
under Article 18.5 of the Anti-Dumping Agreement and under Article 32.6 of the Subsidies Agreement.
(h) The Enhanced Bond Requirement is inconsiste nt with Article X:3(a) of the GATT 1994 as
applied to imports of shrimp from India.
38. India submits that the Enhanced Bond Requirement is inconsistent with Article X:3(a) as applied
to shrimp because it has not been administered in a uniform, impartial and reasonable manner as discussed
above. It has been applied only to importers of shrimp from the six countries subject to the Antidumping
Order in the shrimp case and not to other importers . Therefore, the Enhanced Bond Requirement is
clearly inconsistent with the requirements of Article X:3(a) as applied to shrimp.
(i) The Enhanced Bond Requirement is inconsistent with Articles I and II:1(a) and II:1(b) of the
GATT 1994 as such and as applied to imports of shrimp from India.
39. To the extent that the Enhanced Bond Requireme nt can be characterized legally as involving
duties, taxes or other charges, India submits that it is inconsistent with the obligations of the United States
under Articles I:1 and II:1(a) and II:1(b) of the GATT 1994. The Enhanced Bond Requirement certainly
involves charges by US surety companies, is "a method of levying … duties", and represents a "rule" and
"formality" in connection with importation. Therefore, it is clearly subject to the most-favoured nation
obligation in Article I:1 of the GATT 1994. To the extent that the Enhanced Bond Requirement is applied
in a discriminatory manner, therefore, to only those Members that are subject to antidumping or
countervailing duties in respect of certain designated merchandise, it is clearly inconsistent with the
obligations of the United States under Article I:1 of the GATT 1994.
40. Again, to the extent that the Enhanced Bond Requirement necessarily involves payment of (high)
charges to US surety companie s, it constitutes an inconsiste ncy with the second sentence of
Article II:1(b), which provides that the "… products [d escribed in Part I of the Schedule] relating to any
[Member] shall also be exempt from all other … ch arges of any kind imposed on or in connection with
the importation in excess of those imposed on the date of this Agreement or those directly and
mandatorily required to be imposed thereafter by legisl ation in force in the importing territory on that
date."
41. For the reasons stated above, the Enhanced Bond Requirement as applied to shrimp is inconsistent
with the provisions of Article I:1 and the second sentence of Article II:1(b) of the GATT 1994.
42. The duties associated with the Enhanced Bond Requirement are not antidumping or
countervailing duties authorized under the provision s of Article VI of the GATT 1994, of the Anti-
Dumping Agreement or of the Subsidies Agreement. To the extent that the Enhanced Bond Requirement
results in an increase in "contingent tariff lia bility" above bound levels for Members subject to
antidumping or countervailing duties, therefore, the Enhanced Bond Requirement is inconsistent with the
obligations of the United States under Article II:1(a) and the first sentence of Article II:1(b) of the GATT
1994. Moreover, the increase in contingent tariff liability is only in respect of certain Members whose
merchandise is subject to the Enhanced Bond Requirement . Therefore, it is also inconsistent with the
"most-favoured nation" treatment obligation of the United States under Article I:1 of the GATT 1994.

43. It is important to note that the bound rate for shrimp falling under tariff headings 0306.13.00 and
1605.20.10 in the Schedule of Concessions of the United States is "0.0%". Therefore, the Enhanced Bond
Requirement is inconsistent with Articles I, II:1(a) and II:1(b) as applied to shrimp as well.
(j) In the alternative, the Enhanced Bond Requireme nt is inconsistent as such and as applied to
imports of shrimp from India with Articles XI a nd as applied to imports of shrimp from India
with Article XIII of the GATT 1994.
44. Alternatively, to the extent that the Enhanced Bond Requirement may be legally characterized as
an import restriction and not as a "duty, tax or other charge," it is clearly inconsistent with Article XI:1 of
the GATT 1994 and is not saved by any of the ex ceptions contained therein. The Enhanced Bond
Requirement operates in a manner that severely restricts imports into the United States of merchandise
subject to antidumping or countervailing duties. A ccordingly, to this extent, the Enhanced Bond
Requirement is inconsistent with Article XI:1 of the GATT 1994.
45. Further, the Enhanced Bond Requirement inhere ntly discriminates against imports from some
Members because antidumping investigations almost always will only be against imports from some
Members that are found to have been dumped and to have caused injury and not imports from all
Members. In the case of shrimp, US Customs has applied the Enhanced Bond Requirement to imports of
shrimp only from the six countries subject to investigation: Brazil, China, Ecuador, India, Thailand and
Vietnam. Accordingly, India considers that the United States has acted inconsistently with its obligations
under Article XIII of the GATT 1994 by applying the Enhanced Bond Requirement to imports of shrimp
from India in a discriminatory manner.
3. Conclusion
46. For the reasons stated above, India respectfully requests the Panel to find that the laws, rules and
regulations of the United States that authorize the imposition of the Enhanced Bond Requirement and the
instruments comprising the Amended Bond Directive ar e inconsistent as such with the provisions of
Article VI of the GATT 1994 including the Ad Note, Articles 1, 7.1, 7.2, 7.4, 9.1, 9.2, 9.3, 9.3.1, 18.1,
18.4 and 18.5 of the Anti-Dumping Agreement, Articles 10, 17.1, 17.2, 17.4, 19.2, 19.3, 19.4, 32.1, 32.5
and 32.6 of the Subsidies Agreement, Article XVI:4 of the WTO Agreement and of Articles I:1, II:1(a)
and (b) or, alternatively, of XI:1 of the GATT 1994.
47. For the same reasons, India also respectfully requests the Panel to find that the Enhanced Bond
Requirement as applied to imports of shrimp from India is inconsistent with the provisions of Articles 1,
7.1, 7.2, 7.4, 7.5, 9.1, 9.2, 9.3, 9.3.1 and 18.1 of the Anti-Dumping Agreement, of Article X:3(a) and of
Articles I:1, II:1(a) and (b) or, alternatively, of XI:1 and XIII of the GATT 1994.
48. Accordingly, India respectfully requests that the Panel recommend to the DSB in accordance with
Article 19.1 of the DSU that the United States bring its measures into conformity with the provisions of
the Anti-Dumping Agreement, the Subsidies Agreement and the GATT 1994 within a reasonable period
of time.