UNITED STATES – CUSTOMS BOND DIRECTIVE FOR MERCHANDISE SUBJECT TO ANTI-DUMPING/COUNTERVAILING DUTIES
Document: Request for the Establishment of a Panel by India
Date: 16 October 2006
Document codes: WT/DS345/6
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

UNITED STATES – CUSTOMS BOND DIRECTIVE FOR MERCHANDISE
SUBJECT TO ANTI-DUMPING/COUNTERVAILING DUTIES

Request for the Establishment of a Panel by India

 The following communication, dated 13 Octobe r 2006, from the delegation of India to the
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

 On 6 June 2006, the Government of India re quested consultations with the United States
pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (the "DSU"), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (the
"GATT"), Article 17 of the Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994 (the "AD Agreement") and Article 30 of the Agreement on Subsidies and
Countervailing Measures (the "Subsidies Agreement"). This request was circulated to the WTO
Members on 12 June 2006 as document WT/DS/345/1, " ". Consultations were held in Geneva on
31 July 2006 and in Washington, D.C. on 18 Septem ber 2006. However, the parties could not arrive
at a mutually agreed solution to resolve the dispute.

 Therefore, the Government of India respectfu lly requests that a panel be established pursuant
to Article XXIII of the GATT, Articles 4 and 6 of the DSU, Article 17 of the AD Agreement and
Article 30 of the Subsidies Agreement.

 The measures at issue include (i) Cust oms Bond Directive 99-3510-004 on Monetary
Guidelines for Setting Bond Amounts issued on 23 July 1991, as amended by the Amendment to
Bond Directive 99-3510-004 for Certain Merchandi se subject to Antidumping/Countervailing Duties
dated 9 July 2004
1, (ii) the document entitled "Clarification to July 9, 2004 Amended Monetary
Guidelines for Setting Bond Amounts for Special Cate gories of Merchandise Subject to Antidumping
and/or Countervailing Duty Cases" 2, (iii) the document entitled "Current Bond Formulas" 3, and (iv)
any amendments, clarifications or extensions to these measures and all related or implementing
measures (together, the "Amended Bond Directive" ). India understands that the Amended Bond
Directive was adopted pursuant to the laws and re gulations of the United States that authorize the
United States Customs and Border Protection Service ("US Customs") to administer customs laws and

1 Posted on the Internet Website of the United States Customs and Border Protection Service at
http://www.cbp.gov/xp/cgov/import/add_cvd/bonds/07082004.xml (last accessed on 12 October 2006).
2 Posted on the Internet Website of the United St ates Customs and Border Protection Service at
http://www.cbp.gov/linkhandler/cgov/import/add_cvd/bonds/bond_clarification.ctt/bond_clarificaiton.doc (last
accessed on 12 October 2006).
3 Posted on the Internet Website of the United States Customs and Border Protection Service at
http://www.cbp.gov/linkhandler/cgov/import/communications_to_trade/pilot_program/current_bond.ctt/current_
bond.doc, on 9 July 2004 (last accessed on 12 October 2006).

regulations including 19 U.S.C. §1484, 19 U.S.C. §1502, 19 U.S.C. §1505, 19 U.S.C. §1623, and
19 U.S.C. §1673g, and the regulations governing th e amount and imposition of bonds codified at
19 C.F.R. 113.13, 19 C.F.R. 113.40, 19 C.F.R. 113.62 and 19 C.F.R. 142.2.

 Prior to the Amended Bond Directive, the Un ited States required importers-of-record in the
United States ("importers") incl uding importers of merchandise s ubject to anti-dumping duties or
countervailing duties to furnish continuous entry bonds ("Conti nuous Bonds") only for an amount
equal to 10 per cent of the duties, taxes and f ees paid by the importer on the same merchandise
imported in the previous year as general security fo r compliance with customs regulations. Under the
Amended Bond Directive, however, the United States may require importers of certain merchandise
subject to anti-dumping or countervailing duties designated by US Customs as a "Special Category"
or a "Covered Case" within a Special Category to replace their existing Continuous Bonds with
Continuous Bonds for a larger amount that would, in addition, cover the total estimated anti-dumping
duties or countervailing duties on the value of impor ts of such for the previous 12 months (the
"Continuous Bond Requirement"). Th is requirement is in addition to the obligation under the anti-
dumping and countervailing duty laws of the United States to provide bonds or make cash deposits at
the time of importation equal to the estimated an ti-dumping or countervailin g duties on imports of
such merchandise.

 At this time, US Customs has designated onl y agriculture and aquaculture merchandise as a
Special Category and only shrimp as a Covered Case to which a different standard or formula for
determining the bond amount will be applied.

 US Customs has imposed the Continuous B ond Requirement on importers of certain frozen
warmwater shrimp from India subject to anti-dum ping duties imposed pursuant to the anti-dumping
investigation with respect to imports of certain frozen and canned warmwater shrimp from India,
Brazil, Ecuador, Thailand, the People's Republic of China and the Socialist Republic of Vietnam.
4 On
28 July 2004, the United States preliminarily dete rmined that frozen and canned warmwater shrimp
imported from India was being dumped.5 On 23 December 2004, the United States published its final
determination of dumping 6, which was subsequently amended 7 to include only frozen warmwater
shrimp (the "subject merchandise") and to exclude canned warmwater shrimp. On 1 February 2005,
the United States imposed definitive anti-dumping measures and required importers of the subject
merchandise to make cash deposits equal to the estimat ed weighted-average dumping margins on
entries of the subject merchandise from India into the United States. 8 Even prior to the imposition of
definitive anti-dumping duties, in or around October 2004, US Customs requested certain importers of
the subject merchandise from India to provide enhan ced continuous bonds to cover the total estimated
anti-dumping duties on the total value of imports of the subject merchandise for the previous 12
months. In any case, all importers who wished to continue imports of the subject merchandise from
India were forced to comply with the Continuous Bond Requirement after the imposition of definitive
duties.

4 The investigation was initiated pursuant to the Initiation of Antidumping Duty Investigations: Certain
Frozen and Canned Warmwater Shrimp from Brazil, Ecuador, India, Thailand, the People's Republic of China
and the Socialist Republic of Vietnam, 69 Fed. Reg. 3876 (27 January 2004).
5 Notice of Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final
Determination, and Negative Critical Circumstances De termination: Certain Frozen and Canned Warmwater
Shrimp from India, 69 Fed. Reg. 47111 (4 August 2004).
6 Notice of Final Determination of Sales at Less Than Fair Value and Negative Final Determination of
Critical Circumstances: Certain Frozen and Canned Warmwater Shrimp from India , 69 Fed. Reg. 76916
(23 December 2004).
7 Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty
Order: Certain Frozen Warmwater Shrimp from India, 70 Fed. Reg. 5145 (1 February 2005).
8 Id.

 India understands that US Customs has actua lly applied the Continuous Bond Requirement
only to the subject merchandise. This singlin g out of the subject merchandise emphasizes the
arbitrary and discriminatory character of the Amended Bond Directive.

 The Government of India considers that the Amended Bond Directive and the laws and
regulations of the United States referred to above are inconsistent as such with the provisions of:

(a) Article 18.1 of the AD Agreement together w ith Article VI:2 of the GATT and Article 1 of
the AD Agreement because the Continuous Bond Requirement is a specific action against
dumping not in accordance with the provisions of the AD Agreement;

(b) Article 32.1 of the Subsidies Agreement togeth er with Article VI:3 of the GATT and Article
10 of the Subsidies Agreement because it is a specific action against subsidization not in
accordance with the Subsidies Agreement;

(c) Articles 2.2, 2.3 and 2.4 of the AD Agreement because the Continuous Bond Requirement is
not based on a calculation of the margin of dum ping in accordance with the requirements of
these provisions;

(d) Articles 1 and 14 of the Subsidies Agreemen t because the Continuous Bond Requirement is
not based on a calculation of the amount of subsidization in accordance with the requirements
of these provisions;

(e) Articles VI:2 and VI:3 of the GATT because it results in charges to importers in excess of the
margin of dumping or in excess of the amount of the subsidy determined to have been
granted, as the case may be;

(f) Note 1 Ad paragraphs 2 and 3 of Article VI of the GATT because the simultaneous imposition
of the Continuous Bond Requirement and the obligation to provide bonds or make cash
deposits for the payment of anti-dumping or countervailing duty under the anti-dumping and
countervailing duty laws of the United States does not constitute "… reasonable security
(bond or cash deposit) for the payment of an ti-dumping or countervailing duty pending final
determination of the facts in any case of suspected dumping or subsidization";

(g) Articles 7.1, 7.2, 7.4 and 7.5 of the AD Agr eement and Articles 17.1, 17.2, 17.4 and 17.5 of
the Subsidies Agreement because the Continuous Bond Requirement, to the extent that it is
applied after the imposition of provisional meas ures but prior to the imposition of definitive
anti-dumping duties or countervailing duties, as the case may be, does not comply with the
requirements of these provisions;

(h) Articles 9.1, 9.2 and 9.3 (including Article 9.3.1) of the AD Agreement and Articles 19.2,
19.3 and 19.4 of the Subsidies Agreement because the only permissible measure that may be
taken after the imposition of anti-dumping duties pursuant to Article 9.1 or the imposition of
countervailing duties pursuant to Article 19.2, as the case may be, is the collection of duties in
appropriate amounts not exceeding the margin of dumping determined pursuant to Article 2
of the AD Agreement or the amount of the subsidy determined pursuant to Articles 1.1 and 14
of the Subsidies Agreement;

(i) Article 18.4 of the AD Agreement, Ar ticle 32.5 of the Subsidies Agreement and
Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization
because the United States has not complied with its obligation to ensure conformity of its
laws, regulations and administrative procedures with the provisions of each of these
agreements;

(j) Articles X:1 and X:2 of the GATT because th e Amended Bond Directive (including any
clarifications and amendments), has not been published in the Federal Register or the
Customs Bulletin of the United States and Artic le 18.5 of the AD Agreement and Article 32.5
of the Subsidies Agreement because the Amende d Bond Directive has made changes in the
laws and regulations and/or in the administra tion of the laws and regulations of the United
States that are relevant to these agreements and that were required to be notified by the United
States to the relevant Committees;

The Government of India considers further that the Amended Bond Directive is inconsistent with:

(k) Article XI of the GATT to the extent that the Continuous Bond Requirement constitutes a
restriction other than "a duty, tax or other ch arge" and Article XIII of the GATT because it is
applied in a discriminatory manner; or

(l) Alternatively, Article I and Article II:1(a) and (b) of the GATT to the extent that the
Continuous Bond Requirement results in a duty or charge imposed on or in connection with
importation or is a method of levying duties a nd charges or is a rule or formality in
connection with importation.

 For the reasons stated above, the Government of India also considers that the Continuous
Bond Requirement under the Amended Bond Directiv e as applied to importers of the subject
merchandise from India is inconsistent with Articl es I:1, II:1(a) and (b), VI:2 (including Note 1
Ad Paragraphs 2 and 3 of Article VI), XI and XIII of the GATT and Article s 1, 2.2., 2.3, 2.4, 7.1, 7.2,
7.4, 7.5, 9.1, 9.2, 9.3, 9.3.1 and 18.1 of the AD Agreement. Further, the application of the Continuous
Bond Requirement only to importers of the subject merchandise from India and five other countries is
inconsistent with the requirement of Article X:3(a) of the GATT that the United States must
administer the laws, regulations, rulings and decisi ons referred to in Article X:1 of the GATT in a
uniform, impartial and reasonable manner.

 The Government of India has identified the sp ecific measures at issue and the legal bases for
its claims without prejudice to any arguments that it may develop and present to a panel regarding the
WTO-consistency of the measures at issue.

 Accordingly, the Government of India respec tfully requests the Dispute Settlement Body to
establish a panel pursuant to Article 6 of the DSU to examine this matter with standard terms of
reference as set out in Article 7.1 of the DSU. The Government of India requests that the
establishment of a panel in this matter be placed on the agenda of the meeting of the Dispute
Settlement Body on 26 October 2006.