Document: WT/DS345/R Page B-1 ANNEX B EXECUTIVE SUMMARIES OF THE SECOND WRITTEN SUBMISSION OF THE PARTIES CONTENTS PAGE Annex B - 1 Executive Summary of the Second Written Submission of the United States B-2
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 B

EXECUTIVE SUMMARIES OF THE SECOND WRITTEN SUBMISSION
OF THE PARTIES

CONTENTS PAGE
Annex B - 1 Executive Summary of the Second Written Submission of the
United States
B-2
Annex B - 2 Executive Summary of the Second Written Submission of India B-11

ANNEX B - 1

EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF
THE UNITED STATES

(9 July 2007)

1. The Additional Bond Amount Constitutes "R easonable Security" Within the Meaning
of the Ad Note to GATT 1994 Articles VI:2 and VI:3.
1. A central question before this Panel is wh ether any provisions of the Agreement on
Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("AD Agreement"),
SCM Agreement, or the GATT 1994 govern a secu rity requirement for the payment of an
antidumping or countervailing duty assessed after an order has been imposed, such as that
contemplated by the enhanced bond directive. As the United States has demonstrated in its previous
submissions, the Ad Note to Article VI is the sole provision that specifically limits security
requirements of this type.
2. As the United States has explained in previous submissions, the "final determination of the
facts" in the Ad Note refers to the determ ination of the facts with respect to the " payment of
ant-dumping or countervailing duty." In the context of a retrospective duty assessment system, the
"determination of the final liability for payment of anti-dumping duties," referenced in Article 9.3.1,
must be made in order for the facts with respect to payment to be determined. Thus, the "final
determination of the facts" in the Ad Note follows an assessment review as described in Article 9.3.1.
This interpretation is consistent with the immediate context in which the phrase appears. The Ad
Note refers to "security for payment" and "other cases in customs administration" – in other cases in
customs administration, security for payment of duties is required upon entry when the actual amount
of liability is not known, and this security is requi red until the duties are finally assessed and paid. It
is also consistent with GATT 1994 Article VI:2 and 3, the provisions to which the Ad Note is
appended, and the AD Agreement. GATT 1994 Arti cle VI:2 and 3 address "levy[ing]" antidumping
and countervailing duties. In the AD Agreement and SC M Agreement, the term "levy" refers to "the
definitive or final legal assessment or collection of a duty or tax." The "final determination"
referenced in the Ad Note thus pertains to secur ity pending final legal assessment of duties – an event
that in a retrospective duty assessment system does not normally occur until after the completion of
the assessment review.
3. The context provided by the AD Agreement also s upports this interpretation of the Ad Note.
AD Agreement Article 9.2 allows Members to colle ct antidumping duties "in the appropriate amounts
in each case." Article 9.3 states that "[t]he amount of the antidumping duty shall not exceed the
margin of dumping as established under Article 2." The "margin of dumping" established following
the assessment review de scribed in Article 9.3.1 is a margin of dumping "as established under
Article 2" – meaning, a margin of dumping calcula ted in accordance with the general requirements of
Article 2. India is thus incorrect in asserting that this means a "margin of dumping" from the
investigation proceeding. The cash deposit and bond secure payment of this amount of duty and
ensure that the United States is able to collect du ties in that amount, in accordance with Article 9.2.
Article 9.3.1 makes clear that "final" liability for payment of antidumping duties occurs at the end of
an assessment period – the terminology used coincides with the reference to the "final" determination
of the facts with respect to "payment" in the Ad Note, further supporting the view that the Ad Note
addresses security pending completion of assessment.
4. Finally, as explained in the US Responses to Pane l Questions, this interp retation is consistent
with the manner in which the United States administ ered its antidumping law at the time the Ad Note
was negotiated. The Antidumping Act, 1921, est ablished a retrospective duty assessment system,

whereby assessment or appraisement of antidumping duties was withheld pending the determination
of whether and to what extent dumping had o ccurred on individual transactions subject to an
antidumping "finding". The 1921 Act, also include d provisions for security pending final assessment,
which prior to enactment of the Tr ade Agreements Act of 1979 was us ually required in the form of "a
bond equal to the estimated value of the merchandise."
5. India offers a reading of both the Ad Note a nd the AD and SCM Agreements that is at odds
with their plain language and irreconcilable with the context in which the relevant language appears.
First, with respect to the Ad Note, India ar gues that dumping cannot be "suspected" after an
antidumping duty order is imposed following the comple tion of the investigation, and thus no case of
suspected dumping can exist at that time. This interpretation does not, however, conform to the
ordinary meaning of the term "suspected" or the cont ext in which the term app ears. In the Ad Note,
"suspected" dumping refers to dumping that is "ima gined to be possible or likely." The immediate
context provides that security in such a case ma y be required for "payment" "pending final
determination of the facts." In a retrospective system of duty assessment, whether and in what
amount duties are owed on a given entry is no t known until completion of assessment, and thus
dumping – in the context of payment – is "suspected" during the intervening time. Dumping (if any)
with respect to a given set of entries is not "known" until assessment of those entries is completed.
6. India attempts to rely on the phrase "existence of dumping," which is nowhere used in the Ad
Note, to support its assertion that the Ad Note does not govern security after issuance of an
antidumping duty order in an investigation. However, as the United States has explained, while the
"existence of dumping" is confirmed at the conclusion of the investigation, whether a given entry has
been dumped, and thus whether duties are owed, is not determined until completion of the assessment
review. The "final determination of the facts" is used in the Ad Note in connection with the "payment
of anti-dumping or countervailing duty," which in a retrospective system is not established at the
conclusion of the investigation.
7. To read the Ad Note and the AD Agreement as India suggests would lead to an absurd result:
it would mean that "security for payment of antidumping and countervailing duty" must be released
after completion of an investigation (the moment when it has been established that it is likely that
some duties will be owed) – and before the amount of duties owed is finally established and those
duties have in fact been paid. The United Stat es is not aware of any customs authority that
administers security requirements in this manner.
8. Furthermore, India offers an interpretation of the Ad Note in relation to the AD Agreement
and SCM Agreement that is inconsis tent with the terms of those agreements and fails to give the Ad
Note any meaning or legal effect, contrary to the relationship between the GATT 1994 and other
WTO agreements contemplated by the Marrak esh Agreement Establishing the World Trade
Organization ("WTO Agreement"). As a threshold matter, the GATT 1994, including the Ad Note to
Article VI, is an "integral part" of the WTO Agreemen t. As past panels and the Appellate Body have
noted, Article VI is "part of the same treaty" as the AD Agreement, and "should not be interpreted in a
way that would deprive it or the Antidumping Agreement of meaning." A panel "should give
meaning and legal effect to all the relevant provisions," including the Ad Note to Article VI. Instead
of "reading Article VI in conjunction with the Antidumping Agreement," as the Appellate Body in
US – 1916 Act suggested, India, through a misreading of Articles 7 and 9 of the AD Agreement,
attempts to read Article VI and the Ad Note out of the covered agreements entirely, depriving both
provisions of any meaning.
9.
 India's analysis of AD Agreement Article 9 in connection with the US cash deposit
requirement illustrates the b asic flaws in its approach. First, to argue that Article 9, and not the Ad
Note, is the relevant provision applicable to cash deposit requirements, it asserts that the term "cash
deposit" is the same as the term " duty" – a position that cannot be reconciled with the text of the AD

Agreement or the Ad Note, or the ordinary meani ng of either of the terms in question. A "cash
deposit" is security for a duty owed, but is not itself a duty. In both the GATT 1994 and the AD
Agreement, the term "cash deposit" is used throughout to refer to a form of "security," not a "duty".
The Ad Note, for example, provides for "reasonabl e security (cash deposit or bond)" – it does not
characterize cash deposits as "duties". Article 7. 2 of the AD Agreement likewise distinguishes a
"cash deposit" as a form of "security" from "duties" in stating that "provisional measures may take the
form of a provisional duty or, preferably, a security – by cash deposit or bond ... ." Insofar as it
indicates a preference for requiring payment of cash deposits rather than duties, Article 7.2 suggests
that there is in fact a "substantive difference" between a cash deposit requirement and a duty.
10. The sole support India offers for its reading of the GATT 1994 and the AD Agreement in this
regard is a single reference by the Appellate Body in US – Zeroing (Japan) to cash deposits in its
description of an administering authority's right to "collect duties, in the form of a cash deposit."
India concedes that this statement was not made in the context of any finding with respect to cash
deposit requirements – and indeed, the Appellate Body report contains no analysis of the question of
whether cash deposits are in fact duties. A single clause in one sentence in an Appellate Body report,
in a different context and unsupported by any rele vant analysis, cannot justify a conclusion that
plainly contradicts the text of the GATT 1994 and the AD Agreement.
11. Moreover, India misinterprets the term "margin of dumping" in Article 9.3 to refer, alternately,
to the margin of dumping established in the investig ation or to the margin established for a previous
set of entries in a prior administrative review. This reading of Article 9.3, however, is both illogical
and inconsistent with the text of that provision a nd previous reports of the Appellate Body examining
that text. Inexplicably, India ignores the one margin of dumping that is based on actual analysis of the
particular entries in question and which is used to establish the "final liability" for payment of
antidumping duties, referenced in Article 9.3.1: the margin of dumping est ablished in the assessment
review. It is this margin (which, contrary to what India asserts, is a margin "as established under
Article 2") that is the "margin of dumping" refere nced in Article 9.3, and it is payment of duties
resulting from this margin that the cash deposit and bond are intended to secure.
12. Contrary to India's claim, the Appellate Body's findings in US – Zeroing (EC) are fully
consistent with this reading of AD Agreement Artic le 9. The "margin of dumping established for an
exporter or producer" referenced in that section of the Appellate Body's report is the margin of
dumping established in an assessment proceeding, not the margin of dumping established in an
investigation. Article 9.3 specifies the amount of "assessed" antidumping duties – an amount
determined through the administrative review. The ma rgin of dumping it describes is thus the margin
of dumping established in that review. Article 9.3 does not prescribe the specific methodology by
which duties should be assessed, nor the amount of security that a Member may require pending final
assessment.
13. Finally, India attempts to rely on Article 7 of the AD Agreement as a basis to read the Ad
Note out of the GATT 1994 entirely, asserting that the Ad Note is confined to "provisional measures"
and superseded by Article 7. However, nothing in th e text of the Ad Note suggests that it is limited to
"provisional measures" and nothing in the text of Article 7 supports the conclusion that it is intended
to address security requirements after the imposition of an order. Neither Article 7 nor the concept of
"provisional measures" existed at the time the Ad No te was negotiated. Article 7 contains rules with
respect to provisional measures – measures (including security) taken prior to a final determination in
an investigation. Article 7 does not, however, address security requirements imposed after a final
determination has been made, and there is no basi s to conclude that it places limitations on those
requirements beyond the limitations established in the Ad Note.
14. If India's arguments were accepted, Members would not be permitted to maintain security
requirements pending final determination of liabilit y. To preclude a Member with a retrospective

system from requiring the posting of security prior to the determination of fi nal liability would create
a disparity between retrospective and prospective syst ems. The nature of prospective systems is that
the duties billed at importation are treated as final. Thus, no security need be required. If an importer
refuses to pay the antidumping duties owed, the Me mber maintaining a prospective system may deny
entry to the merchandise in question. Members with prospective systems therefore are not required to
bear the risk of unsecured liability in the way th at Members with retrospective systems would if
India's interpretation were accepted. Nothing in the GATT 1994 or AD Agreement suggests that one
system is favored over another, and the Appellate Bo dy has confirmed that this is the case. Members
with retrospective systems should not be penalized fo r deferring determination of final liability to the
end of the review period.
15. The evidence demonstrates that the additiona l bond amount satisfies the requirements of the
Ad Note: it constitutes "reasonable security" for th e payment of antidumping or countervailing duty.
The United States imposed the additional bond requirem ent after it identified a serious and growing
problem: when the assessment rate resulting from the administrative review exceeded the cash
deposit rate at the time of entry, many importers were not paying the duties lawfully owed. This
liability was unsecured by cash deposit, bond, or other security. As a result, the United States has
been unable to collect over $600 million in antidumping duties lawfully owed to it. The additional
security reflects an assessment of the multiple factor s typically considered in establishing security
requirements, including the amount of potential liability in the event of default and the likelihood of
default. For shrimp, the amount of potential add itional liability was significant, as was the risk of
default. In excess of $2.5 billion worth of sh rimp imports had entered the United States from
countries subject to antidumping duty orders during cal endar year 2003. This quantity of shrimp far
exceeded that of imports subject to previous anti dumping duty orders that had resulted in significant
unpaid duties. Because antidumping duties are assessed on an ad valorem basis, the sheer quantity of
shrimp imports alone increased the likelihood that , all other things being equal, the potential
unsecured liability for shrimp would be substantial. No party to this proceeding disputes the fact that
rates do increase. Even if the likelihood that ra tes for shrimp would increase was no greater than the
historical norm, the fact that shrimp imports were so substantial in value supported CBP's decision to
require greater security for shrimp, as it suggested significantly greater unsecured liability in the event
of an increase.
16. As for the risk of default, CBP determined that importers of agriculture/aquaculture
merchandise subject to antidumping 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. CBP provides
importers subject to the enhanced bond directive w ith individualized risk assessments, if they so
request. In that event, the bond amount reflects an individualized assessment of risk of default.
Importers have requested and received individual bond amounts – often substantially lower than those
prescribed by the formula – through this process.
2. The Additional Bond Directive Is Not Inconsistent with AD Agreement Article 18.1 or
SCM Agreement Article 32.1.
17. India has failed to demonstrate that the additi onal bond directive is "specific action against
dumping" or a "subsidy" – it is neither "specific" to dumping or a subsidy nor "against" dumping or a
subsidy. As the United States explained in its s ubmissions, the directive is a reasonable means of
ensuring payment of duties ultimately assessed. Ha ving identified a serious collection problem, CBP
took action to secure unsecured liability, as it would in any case in which such liability exists that
presents a risk to the revenue, whether or not th e "constituent elements of dumping or a subsidy are
present." The design of the directive, including the criteria for applying it to particular orders and
establishing a bond amount based on individual risk, all pertain to securing against risk of uncollected
duties, not the "constituent elements of dumping". Thus, while the directive may be "related to"

dumping – as the Appellate Body in US – Offset Act (Byrd Amendment) described various measures
not inconsistent with Article 18.1 – it is not "specific" to it.
18. With regard to India's claim that the directiv e is action "against" dumping, neither previous
Appellate Body reports examining that term nor the evidence in this proceeding supports this
conclusion. The bond is security for the final asses sed duty, which itself may be an action against
dumping, but the security as such simply allows the United States to obtain payment of duties
lawfully owed to it. As the Appellate Body noted in US – Offset Act (Byrd Amendment ) , "a measure
cannot be against dumping or a subsidy simply becau se it facilitates or induces the exercise of rights
that are WTO-consistent." The GATT 1994 and th e AD Agreement do not proh ibit the United States
from obtaining payment for the antidumping duties in question, and the bond requirement facilitates
its ability to do so.
19. As for India's claim that the directive was "against" dumping because it adversely affected
imports from countries subject to the antidumping orde r, the evidence demonstrates otherwise. Aside
from seasonal fluctuations, imports from most count ries subject to the AD order appear to have
remained steady or increased. India asserts that "t he impact of the bond directive was magnified in
the case of" Brazil, China, and India "because they suffered higher antidumping duty rates than the
other three countries subject to antidumping duties." Even if the evidence supported this claim – and
a review of the data for these three countries shows no consistent trend – India fails to explain how the
effects of the bond directive can, as the US Go vernment Accountability Office ("GAO") put it,
"readily be isolated from other changes occurring at the same time, such as the imposition of AD
duties." In theory, higher duties th emselves may also result in a greater impact on trade, yet India
fails to show how the directive itself adversely affected imports.
20. With regard to costs to importers, the mere fact that additional security is required and results
in additional costs does not support the conclusion th at the security requirement itself is designed to
"counteract" dumping. All security requirements, including cash deposits and other reasonable
security for the payment of antidumping and counterva iling duties, may result in some added cost. If
accepted, India's argument would mean that an y measure that increases the cost of importing for
importers subject to antidumping and countervailing duties is an action "against" dumping. This
interpretation is not supported by the analysis of the Appellate Body in US – Offset Act . Increasing
the cost of importing alone does not necessarily create, as the Appellate Body put it in US – Offset Act,
an "incentive not to engage in the practice of expor ting dumped or subsidized products or to terminate
such practices" – indeed, import data for shrimp suggest that no such incentive exists.
21. Even if considered "specific" action "against " dumping or subsidy, the security requirements
in question are permitted by the Ad Note and t hus are "in accordance with the provisions of
GATT 1994, as interpreted by the Anti-dumping Agreem ent." Again without any textual support or
analysis, India refers to a single sente nce in the Appellate Body report in US – 1916 Act to assert that
security requirements contemplated by the Ad No te are "not permitted" responses to dumping or
subsidy. The statement quoted by India does not, however, support the proposition for which it is
cited. The Appellate Body report in question cont ains no analysis of th e Ad Note, or security
requirements generally, and to the extent it discu sses Article VI and the AD Agreement, it is fully
consistent with the US reading of Article 18.1 an d SCM Agreement Article 32.1. For example, the
Appellate Body stated that "‘the provisions of GATT 1994' referred to in Article 18.1 are in fact the
provisions of Article VI of the GATT 1994 concer ning dumping," and then proceeded to analyze
whether the measure in question "falls within the scope of application of Article VI of the GATT
1994." The Ad Note to Article VI is a provision of Article VI "concerning dumping," and the security
requirements at issue fall within its scope. As explained above, the AD Ag reement does not contain
additional limits on security requirements such as t hose contemplated by the Ad Note. Thus, if a
security requirement is consistent with the Ad No te, it is "in accordance with the provisions of GATT
1994, as interpreted by" the AD Agreement.

22. To suggest, as India does, that Article 18.1 and SCM Article 32.1 mean that measures
permitted by Article VI are no longe r permitted unless specifically provided for in the AD Agreement
or SCM Agreement, is at odds with the text of both provisions and, as noted previously, the
relationship between the covered ag reements set forth in the WTO Agreement. Were India's reading
correct, there would be no need for Article 18.1 or SCM Article 32.1 to refer to the GATT 1994 at all
– yet both provisions do refer to GATT 1994. India's assertion that, ev en if the security requirement
is "reasonable security" within the meaning of the Ad Note, it "would remain inconsistent with
Article 18.1," in effect reads the qualifying phrase out of the text entirely. This reading of the text is
not consistent with its terms, and contradicts the principle contained in the WTO Agreement that each
of the texts, including GATT 1994, shall be integral to it. Moreover, India's interpretation incorrectly
presumes that, unless a measure is specifically permitted by the AD Agreement, it is prohibited. The
AD Agreement, however, contains rules regarding certain aspects of antidumping and countervailing
duty measures. As the Appellate Body has observed, the covered agreements are not exhaustive, and
if an action is not expressly pr ohibited, taking that action does not breach the WTO agreement in
question. To read Article 18.1 and SCM Agreement Article 32.1 as broadly as India suggests would
impermissibly extend the disciplines of the AD Agreement and SCM Agreement beyond their terms.
3. The Additional Bond Directive Does not B reach GATT Article I, GATT Article II,
GATT Article XI, or GATT Article XIII.
23. GATT Article I
. Contrary to India's assertions, the additional bond directive does not
improperly discriminate between products origina ting in India and products originating in other
countries. The directive has been applied to all im porters of shrimp subject to the AD orders, and the
US action of increasing bond amounts merely addressed the particular risks associated with these
imports.
24. GATT Article II . As explained above, the additional bond directive does not constitute a
"duty" (antidumping or otherwise) or an "other charge." CBP does not charge for the bonds, nor does
it even require that security take the form of the additional bond. The implication of India's argument
that such bonds are "other charges" is that Members may not require bonds as a means to secure
importers' obligations unless the bonds are specifica lly included in a Member's Schedule. Yet many
Members do maintain such requirements, and several provisions of the WTO agreements contemplate
the use of bonds, suggesting that they are intended to be a device generally available to Members to
secure their obligations. Finally, India's assertion that the bond results in a "contingent tariff liability"
is incorrect. The bond is security for liability resulting from the antidumping duty order; it does not
itself result in tariff liability, "contingent" or otherwise.
25. GATT Article XI. As was the case with th e bond measure at issue in Dominican Republic –
Cigarettes, the bond directive does not prevent importers from importing shrimp into the United
States. Indeed, import data demonstrates that significant quantities of shrimp subject to the AD orders
continue to be imported into the United States, and there is no evidence that the bond directive has
had any appreciable impact on imports. India's argument that a "limiting effect" of the type
referenced in India – Autos exists simply when a measure may result in costs to importers proves too
much: it would render any bond requirement inconsis tent with Article XI. The directive does not
mandate an increased bond amount – as noted prev iously, importers can obtain individual bond
determinations and, depending on their ability to pay and history of compliance with US customs laws
and regulations, may not be required to obtain a higher bond. Virtually all importers that have made a
request have received individualized bond amounts pursu ant to this process that are lower than those
contemplated by the formula. Importers have a rang e of mechanisms available to them to import into
the United States without being subject to the add itional bond directive, including single entry bonds,
cash deposits or security other than a continuous entry bond.

26. GATT Article XIII . Contrary to India's assertion, the title of Article XIII is "Non-
discriminatory Administration of Quantitative Restri ctions." Thus by its terms Article XIII governs
"quantitative restrictions." Article XIII has in the past been applied to analyze tariff-rate quotas,
safeguards, and other measures that contain quantitative restrictions on trade; measures that do not
restrict trade in this manner are not covered by it. The enhanced bond directive is not a "quantitative
restriction." Furthermore, India's interpretation of "r estriction" in the context of Article XIII fails for
the same reason as it does with respect to Article XI: it suggests that any bond requirement is a
"restriction" and thus implicated under Articles XI and XIII.
4. The Additional Bond Directive Is Not Inconsistent with GATT 1994 Article X:3(a).
27. With regard to GATT 1994 Article X, India h as failed to establish a breach. Article X does
not govern the substance of a measure, yet India cont inues to cite aspects of the measure's substance –
including the formula used to establish bond amounts absent an individual risk analysis – in support
of its claim that Article X was breached. With respect to the application of the directive, CBP did not
apply the directive in a nonuniform, partial, or unr easonable fashion. It required the bond of shrimp
importers because, using the criteria in the directiv e, CBP determined that the risk of substantial
unsecured liability was high in the case of shrimp. Th e fact that CBP opted to apply the directive to
importers of covered merchandise subject to new orders, rather than preexisting orders, does not
render its application "nonuniform, partial or unrea sonable," as India claims. CBP considered that
applying the new directive to a new order would fa cilitate its ability to monitor and administer the
new bond requirement at its inception. Article X does not prohibit a Member from implementing a
new measure in this fashion.
28. Even under India's theory that Article X a pplies, the evidence demonstrates that CBP
administers the bond directive in a "uniform, im partial and reasonable" manner. The directive
contains various criteria for identifying importers of merchandise with elevated default risk, and CBP
applies these criteria uniformly. CBP faced in excess of $2 billion in imports of shrimp newly subject
to an antidumping order. It had experienced $225 m illion in defaults on impor ters in industries that,
like shrimp, were characterized by low capitalization rates and relatively low barriers to entry and exit,
had very little history of paying customs duties pr ior to imposition of the order, and were highly
leveraged. All of these factors suggested that, as with other agriculture/aquaculture merchandise,
there was a significant risk of default associated with importers of shrimp. Finally, contrary to India's
suggestion, the October 2006 Notice makes the procedures for requesting an individual bond amount
clear, and does not impose significant costs on importers to do so. The procedures for requesting an
individual bond amount are set forth in the Notice, which itself was published in the Federal Register.
5. India's "As Such" Claims
29. As the United States has demonstrated, India's cl aims with respect to certain customs laws
and regulations are not within th e Panel's terms of reference, nor are they consistent with any
reasonable reading of the provisions of the agreements in question. Contrary to India's assertion that
"it is a Member's panel request (and not its request for consultations) that governs a panel's terms of
reference," it is well established that a Member ca nnot advance claims with respect to a measure
included in its panel request, if it failed to include that measure in its request for consultations. In
determining whether the consultation requirement has been met, panels are limited to evaluating the
request for consultations, not what may or may not have taken place during consultations. Where a
Member has provided no indication in its consultati on request of the measures at issue, it is well
established that the Member may not advance claims with respect to that measure, having failed to
request consultations. Nowhere in India's consultation request is there a single reference to the statute
and regulations it now seeks to challenge. India is not "focusing the scope of the matter," as it now
asserts, but rather is impermissibly expanding the matter before the Panel to include measures that
were not included in its request for consultations.

30. With respect to the substance of India's clai ms, in its answers to Panel questions, India
contradicts itself when it describes how the laws and regulations purport to breach US obligations
under WTO Agreement Article XVI, AD Agreement Ar ticle 18.4 and SCM Agreement Article 32.5.
In one portion of its submission, India argues that the laws and regulations are "rules and norms of
general and prospective application that require US Customs to undertake impermissible specific
actions against dumping," but elsewhere it proceeds to argue that its claims are based on "the
discretion conferred by the Amended Bond Directive a nd 19 U.S.C. 1623 and 19 C.F.R. 113.13 to
take impermissible specific actions against dumping."
31. To the extent that India's claims are based on a "requirement" to act in a WTO-inconsistent
manner, these claims do not accord with the facts: nothing in the laws and regulations identified by
India requires the United States to act inconsisten tly with its obligations, and India has failed to
provide any explanation of how the text of these prov isions operate to do so. To the extent India's
claims are based on the existence of "discretion" to act in a WTO-inconsistent manner, the proposition
India advances – that a Member breaches Article XVI:4 merely by maintaining a law that provides it
with the discretion to act in a WTO-inconsistent manner – is contrary to the text of the WTO
Agreement and the conclusion drawn in numerous pr ior panel and Appellate Body reports, and would
substantially undermine the rights of Members.
32. Furthermore, setting aside the fact that nothing in the cited agreements suggests such an
analysis is relevant to demonstr ating WTO-inconsistency, India fails to explain which aspects of the
text of 19 U.S.C. 1623 and 19 C.F.R. 113.13 it refers to when it describes the purported "statutory
purpose and standards" that allegedly "guide the discretion of US Customs" and render these
provisions WTO-inconsistent. Instead, it cites to a CBP press release discussing the fact that CBP
"must collect the duties of whatever nature owed" – India's suggestion that CBP's obligation to collect
duties lawfully owed is somehow inconsistent with the WTO Agreement simply underlines the
incongruity of its claim. In addition to arguing th at the bond directive as applied to shrimp does not
constitute "reasonable" security within the meaning of the Ad Note, India further asserts that the bond
directive "as such" is inconsistent with the Ad Note to Article VI and various other provisions of the
AD and SCM Agreements and the GATT 1994. However, India offers absolutely no legal theory as
to how the directive "as such" is inconsistent w ith the Ad Note, and the only evidence it offers in
support of its 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.
33. With respect to India's "as such" claims under AD Agreement Articles 1 and 18.1 and SCM
Agreement Articles 10 and 32.1, India's argument likew ise falls short. India does not explain how the
directive "as such" is an action against dumping or subsidization. It claims that the directive
"requires" importers of merchandise subject to an antidumping order to furnish an enhanced
continuous bond, but again, the facts demonstrat e that the only instance in which such a bond has
been required is with respect to frozen warmwater shrimp subject to the antidumping orders issued by
USDOC in February 2005. India has offered no argument regarding how the directive "as such"
breaches SCM Agreement Articles 17, 19.2, 19.3, and 19.4 or AD Agreement Articles 7, 9.1, 9.2, and
9.3. Finally, India provides no legal theory, evidence, or even argumentation in support of its "as
such" claims under GATT 1994 Articles I, II, and XI.
6. The Additional Bond Directive Would Be Justified by GATT Article XX(d).
34. The directive is "necessary to secure complianc e" with US antidumping and countervailing
duty assessment laws, in particular 19 U.S.C. 167 3e(a)(1) governing the assessment of antidumping
duties, and general customs laws and regulations requiring the payment of duties owed to the US
Treasury. As evidenced by, among other things, th e criteria the directive uses to determine bond
amounts, the directive and its application to sh rimp secures compliance with this obligation and
general customs laws and regulations requiring payment of duties owed to the US Treasury.

35. As possible WTO-consistent alternatives, India cites US civil remedies or alternately
proposes requiring "commercial importers across the boa rd to demonstrate higher levels of financial
soundness before being permitted to undertake imports ." Civil recovery proceedings are not a
reasonable alternative to address the problem faced by CBP: like cash deposits, CBP has used civil
recovery to try to recover duties when an im porter defaults, yet notwithstanding these efforts,
uncollected duties have continued to accrue. Ci vil recovery produces no remedy if the importer
cannot be reached or has no attachable assets by th e time the proceeding has concluded. Thus, these
measures do not constitute reasonably available alternatives that "would preserve for" the United
States "its right to achieve ... the objective pursued." Finally, India's suggestion – that CBP require all
importers to demonstrate higher levels of fina ncial soundness – would imply that CBP can require
greater security in all cases, but cannot target particular areas – such as collection of antidumping
duties – with respect to which a specific problem has been found to exist.
36. The additional bond directive meets the requirements of the chapeau to Article XX. It has not
been applied in a manner that would constitute a "d isguised restriction on international trade" or "a
means of arbitrary or unjustifiable discrimina tion between countries where the same conditions
prevail." It has been administered uniformly, and does not discriminate.

ANNEX B - 2

EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF
INDIA

(9 July 2007)

1. Scope of the Measure at Issue
1. With respect to the United St ates' assertion that the statutory and regulatory provisions
included in India's Panel Request were not subject to consultations, India notes that it is the panel
request and not the request for consultations that defi nes the scope of the Panel's terms of reference.
There is no requirement of a precise and exact iden tity between the measures subject to consultations
and the measures identified in the Panel Request. In any case, India requests that the Panel make
findings and recommendations on India's "as such" claims with respect to the legal instruments that
comprise the Amended Bond Directive if not the statutory and regulatory provisions.
2. India acknowledges further that the scope of the measures with respect to which it has sought
findings of inconsistency under Article XVI:4 of the WTO Agreement, Article 18.4 of the
Anti-Dumping Agreement and Article 32.5 of the Subsidies Agreement is the same as the scope of the
measures with respect to which it has sought findings under Article 18.1 of the Anti-Dumping
Agreement and Article 32.1 of the Subsidies Agreem ent. India also has limited the scope of the
measure at issue to the statutory and regulatory provisions in 19 U.S.C. 1623 and 19 C.F.R. 113.13
and to the Amended Bond Directive.
3. Moreover, India agrees that its claims under Article XVI:4 of the WTO Agreement,
Article 18.4 of the Anti-Dumping Agreement and Article 32.5 of the Subsidies Agreement are
necessarily consequential to findings that 19 U.S. C. 1623, 19 C.F.R. 113.13 and the Amended Bond
Directive are inconsistent as such with other provisions of the covered agreements.
2. Specific Action against Dumping and Subsidization
(a) 19 U.S.C. 1623 and 19 C.F.R. 113.13 are inconsistent "as such" with Article 18.1 of the
Anti-Dumping Agreement and Article 32.1 of the Subsidies Agreement
4. In US – Sunset Policy Bulletin , the Appellate Body clarified that, under Article 3.3 of the
DSU, measures subject to dispute settlement include "acts setting forth rules or norms that are
intended to have general or pros pective application" and that "… the phrase ‘laws, regulations and
administrative procedures' [encompasses] the entire body of generally applicable rules, norms and
standards adopted by Members in connection with the conduct of antidumping proceedings. If some
of these measures could not, as such, be subject to dispute settlement under the Anti-Dumping
Agreement, it would frustrate the obligation of confor mity set forth in Article 18.4." In this case, it
cannot be disputed that the measures at issue contain rules or norms of general application. Moreover,
the United States has not disputed either their existence or their content.
5. Further, the United States has objected to India' s "as such" challenge to 19 U.S.C. 1623 and
19 C.F.R. 113.13 on the ground that these are mere authorizing provisions and that even India has
similar, general statutory provisions authorizing the taking of bonds as security. However, India's
statutory and regulatory requirements for antidumpi ng and countervailing duties do not permit India's
customs agencies to take bonds for amounts in excess of the dumping margin or the amount of the
subsidy found to exist.

6. 19 U.S.C. 1623 provides, in relevant part, that "… the Secretary of the Treasury may by
regulation … require … customs officers to require, such bonds or other security as he, or they, may
deem necessary for the protection of the revenue … ". 19 C.F.R. 113.1 delegates this authority to the
Commissioner of Customs. The United States has consistently stated both in the Amended Bond
Directive and in its first written submission that 19 U.S.C. 1623 and 19 C.F.R. 113.13 extend to the
taking of bonds to ensure collection of duties fina lly assessed in an administrative review. Further,
the United States has justified the Amended Bond Directive under Article XX(d) of the GATT 1994
as being necessary to ensure compliance with the mandate of 19 U.S.C. 1673e(a)(1) which requires
the collection of the final liability for duties assessed in an administra tive review. The effect of this
interpretation of 19 U.S.C. 1623 and 19 C.F.R. 113.13 is exactly the same as amending
19 U.S.C. 1673e(a)(1) to confer the discretion to take security for payment of antidumping or
countervailing duties finally assessed under the retrospec tive assessment system. Arguably, such an
amendment provides for an impermissible specific action against dumping and subsidization.
7. India has argued that the imposition of liability on importers in the form of a bond to secure
against a potential increase in duties amounts to a speci fic action against dumping or subsidization. If
the Panel accepts India's arguments, by the Unite d States' own admission, 19 U.S.C. 1623 and
19 C.F.R. 113.13 provide for precisely this type of specific action against dumping and subsidization.
In fact, in Mexico – Rice, the United States argued that a statutory provision conferring discretion on
the Government of Mexico to impose a fine on importers subject to anti dumping or countervailing
duties provided for impermissible specific action against dumping and subsid ization. The Panel
rejected Mexico's plea that the provision was no t mandatory, finding that, when the statutory
conditions are met, " … it is up to the Ministry responsible for the conduct of … investigations to
impose such fines."
8. Without prejudice to the foregoing, based on the report of the Panel in US – Section 301 ,
India notes that the provisions of 19 U.S.C. 1623, 19 C.F.R. 113.13 and of the Amended Bond
Directive must also be assessed together as a single, multi-layered measure providing for
impermissible specific action against dumping and s ubsidization. 19 U.S.C. 1623 clearly contains a
rule or norm that in every case in which a bond or security is not specifically required by law, the
Secretary of the Treasury may require customs offi cers to require bonds or security deemed necessary
for protecting revenue. Similarly, 19 C.F.R. 113.13 contains norms of general application that must
be applied in determining the sufficiency of a bon d. The Amended Bond Directive in turn sets out
norms or rules of general application for d esignating merchandise subject to antidumping or
countervailing duties in respect of which enhanced, continuous bonds must be taken.
9. In any case, the United States has stated in its first written submission that "[t]he [Amended
Bond Directive] refers throughout to 19 C.F.R. 113.13, which … provides that the amount to be
established must be ‘adequate to protect the re venue and insure compliance with the law and
regulations.' … Likewise, [U.S. Customs] establis hed the bond directive pursuant to its authority
under 19 U.S.C. 1623, which permits it to require that an importer provide "such bonds or other
security as … may [be deemed] necessa ry for the protection of the revenue …". Moreover, the Notice
states that "[a] key [U.S. Customs'] mission is to collect all import duties determined to be owed to the
United States …" and that US Customs "must colle ct the duties owed of whatever nature." The
Notice expressly states also that "Congress has provided [U.S. Customs] authority to require security
in order to ensure the payment of all duties …, including any revenue collection gaps between
estimated duty deposits and final assessed duties …". Th erefore, there is no force in the objection of
the United States that the Amended Bond Directive is discretionary and has been applied only once to
antidumping duties on shrimp. Moreover, in US – Sunset Policy Bulletin , the Appellate Body found
that the objective of protecting the security and pr edictability needed to co nduct future trade "…
would be frustrated if instruments setting out rules or norms inconsistent with a Member's obligations
could not be brought before a Panel … irrespective of any particular instance of application …".

(b) The Amended Bond Directive is "specific" to dumping and subsidization
10. In US – CDSOA , the Appellate Body further refined the test of "specificity" in US –
Antidumping Act of 1916 by clarifying that the key consideration is "… the degree of correlation
between the scope of application of the measure a nd the constituent elements of dumping or of a
subsidy" and it is sufficient if "… the constituent el ements of dumping or of a subsidy are implicit in
the measure". The Appellate Body agreed with the Pane l also that the real issue is whether there is "a
clear, direct and unavoidable connection" between th e determination of dumping or subsidization and
the measure at issue. In fact, in US – CDSOA, the United States argued that the CDSOA was not
specific because it does not "… impose any form of liability on importers/foreign producers when
dumping or subsidization is found …." In this case, however, the United States does not dispute that
the Amended Bond Directive imposes the liability of obtaining an enhanced bond on importers of
designated merchandise subject to antidumping or countervailing duties.
11. India considers the following elements of the instruments that comprise the Amended Bond
Directive important to establish that the constituen t elements of dumping a nd of subsidization are
inherent in these instruments: (a) the Amendmen t, the Clarification and the Notice state that the
purpose of the Enhanced Bond Requirement is to ensure collection of additional AD/CVD duties
determined to be due at liquidation; (b) each instru ment states expressly that it applies to merchandise
subject to antidumping and countervailing duties, more specifically "agriculture and aquaculture
merchandise subject to antidumping or countervailing duty cases", whether designated as Special
Category merchandise or Covered Cases; (c) each instrument (and the Bond Formulas Document)
states that it is the importers of merchandise subj ect to antidumping or countervailing duties who are
required to comply with the Enha nced Bond Requirement; (d) each tailors the application of the
Enhanced Bond Requirement to importers in different situations that arise only in an antidumping or
countervailing duty case, i.e., regular importers after a preliminary affirmative determination or the
issuing of an Order and new importers subject to antidumping or countervailing duties (only the
Notice does not mention the possibility of appl ying the Enhanced Bond Requirement after the
preliminary determination); (e) each instrument (except the Notice) provides for applying the
Enhanced Bond Requirement following either a prel iminary affirmative determination of dumping or
subsidization and injury or an Antidumping Or der or a Countervailing Duty Order; (f) the basic
formula for determining the amount of the bond is based on the applicable rate of duty under the
preliminary determination, the Antidumping Duty Order or the Countervailing Duty Order; and
(g) the Clarification states that in modifying bond requirements for importers who respond to a notice,
"any other relevant factors" will include "… whet her the importer can show that it has switched to a
new source of imports or a shift in the pattern of imports that [could lead] to a lower duty liability".
12. As a measure intended to ensure availability of collections for distribution of offset payments
under the CDSOA which the Appellate Body has found to be specific to dumping and subsidization,
the Enhanced Bond Requirement is also necessaril y specific to dumping and subsidization. The
Administrative Record confirms that this was the objective of the Amendment. That the Notice does
not refer to the CDSOA or that the United States intends to continue applying the Enhanced Bond
Requirement after the CDSOA is terminated cannot undermine the inferences to be drawn from the
stated purpose of the Amendment. Moreover, the Appellate Body found in US – CDSOA that it is
permissible to rely on the stated purpose of a measure as a consideration confirming the conclusion
that it is a specific action against dumping.
13. Accordingly, there is a "strong correlation" a nd a "clear, direct and unavoidable" connection
between the Amended Bond Directive and dumping and subsidization.

(c) The Amended Bond Directive operates "against" dumping and subsidization
14. In US– CDSOA , the United States argued that the CDSOA could be characterized as
operating "against" dumping or subs idization "… only if it applies directly to the dumped or
subsidized imported good or an entity responsible for the dumped or subsidized imported goods, and
if it burdens the dumped or subsid ized imported good, or an entity responsible for the dumped or
subsidized imported good". In this case also, the Amended Bond Directive singles out certain
designated merchandise that is dumped or subsid ized and imposes the liability specifically on
importers to provide enhanced, continuous bonds.
15. The burden imposed on importers under the Amended Bond Directive is significant. Further,
as stated in the Notice, the maximum time between the initiation of an administrative review and
liquidation is not limited to 545 days, because "…the administrative and judicial process for
determining the appropriate ra te of duty for AD/CVD merchandise may significantly delay …
liquidation …". Therefore, the bond initially gi ven immediately following the Antidumping or
Countervailing Duty Order will be ex hausted and fresh bonds will be required prior to liquidation.
This "stacking" of bonds further compounds the pr oblem faced by importers and magnifies the effect
of the dumping margin or amount of subsidy. The US Court of International Trade has catalogued the
serious adverse effects suffered by importers of shrimp subject to antidumping duties as a result of the
Enhanced Bond Requirement. By making the dumping margin the basis of the amount of the
enhanced, continuous bond that an importer must furnish, US Customs also punishes and dissuades
dumping because the higher the dumping margin, the higher the amount of the bond. Because of the
"stacking" of bonds, even Indian exporters committe d to the US market are forced to abandon it over
time. This is demonstrated by the steep decline in India's exports by quantity and value and the total
number of Indian exporters between 2004 and 2006.
16. The United States has relied on the GAO Report, which concludes that imports declined
because of imposition of antidumping duties and not because of the Enhanced Bond Requirement.
However, the GAO Report did not take into account data on imports from all countries subject to
antidumping duties and included imports from Indonesia, which did not suffer antidumping duties.
Further, the monthly data on imports of shrimp into the United States provided by India establishes
that the higher the dumping margins, the more exports suffered. Imports from Brazil, China and India,
with the highest margins, suffered the most, wh ile exports from Ecuador, Thailand and Vietnam did
not.
17. Further, US Customs dispensed with the E nhanced Bond Requirement where the importer
agreed to shift its source of imports to countries not subject to antidumping duties. That this has not
ceased after the Notice is clear from a bond waiver letter submitted by India as evidence to the Panel.
18. In US – CDSOA , the Appellate Body found relevant the fact that the CDSOA effects a
transfer of financial resources from producers/expo rters of dumped or subsidized goods to their
domestic competitors. India's evidence demonstr ates that one association of domestic shrimp
producers in the United States, the SSA, entered in to agreements with exporters to withdraw its
request for administrative review if the exporter paid a percentage of the value of its total exports
during the period of review to the SSA. Exporters have never made such payments in the past. Brazil
has placed before the Panel a document published on the website of the LSA, another association of
domestic shrimp producers, establishing the basis on which exporters were forced to make payments
to the SSA in the present case on account of the Enhanced Bond Requirement.
19.
Even if the amount of the bond is reduced by US Customs based on individualized
consideration of the risk posed by an importer af ter the Notice, the fact remains that any liability
imposed on an importer operates against dumping and subsidization. In this respect, there is no

difference between the Enhanced Bond Requireme nt as implemented under the Amendment and the
Clarification, on the one hand, and the Notice, on the other.
20. Moreover, the assertion of the United States that surety fees and collateral demanded by
sureties cannot be attributed to it runs directly contrary to the finding of the Panel in US – Import
Measures that an enhanced bonding requirement remain s a governmental measure even if the charges
are paid to an independent private entity.
(d) The Amended Bond Directive is inconsistent with the provisions of Article VI of the
GATT 1994 "as interpreted by this Agreement"
21. The logic of the United States' argument that it is sufficient if the Amended Bond Directive
complies with the requirements of the Ad Note is similar to that advanced by the United States in
US - CDSOA that the CDSOA is in accordance with Article VI:3 of the GATT 1994 and the
provisions of Part V of the Subsidies Agreem ent because these provisions do not encompass all
measures taken against subsidization. The Appellate Body rejected this argument by finding that the
argument would render Article 32.1 of the Subsidi es Agreement "redundant or inutile" because it then
would not provide any "additional discipline". In this case too, accepting the United States' arguments
based on the Ad Note would have the same consequence.
(e) The Amended Bond Directive is inconsistent with Article VI:2 of GATT 1994 and Articles 1
and 18 of the Anti-Dumping Agreement as applied to importers of shrimp from India
22. Based on India's arguments above and those in its first submission and first oral statement, it
is clear that the Enhanced Bond Requirement as a pplied to shrimp constitutes impermissible specific
action against dumping.
3. Conformity of Laws, Regulations and Administrative Procedures with WTO
Obligations
23. India's claims under Article XVI:4 of the WTO Agreement with respect to the laws,
regulations and administrative procedures of the United States are broader than its claims under
Article 18.4 of the Anti-Dumping Agreement and Ar ticle 32.5 of the Subsidies Agreement because
India has also made claims under various provisions of the GATT 1994.
24. India agrees that findings of inconsistency of a Member's laws, regulations and administrative
procedures with Article XVI:4 of the WTO Agreem ent, Article 18.4 of the Anti-Dumping Agreement
or Article 32.5 of the Subsidies Agreement always w ill be consequential to fi ndings of inconsistency
as such with other provisions of these Agreements or of the GATT. Nevertheless, the Panel should
not refuse to render findings under these provisions because it would render these provisions
"redundant or inutile" despite being framed in term s of binding, enforceable obligations. The United
States has stated in its first written submission that "[u]nder the directive, goods that carry similar
collection risk as shrimp are ‘similarly prohibited or restricted' insofar as the directive provides for
CBP to … establish … additional bond amounts for othe r merchandise…". India should not be forced
to resort again to the WTO dispute settlement system merely to confirm again that the United States
breaches its obligations. Further, both in US – Antidumping Act of 1916 and in US – CDSOA, the
panels and the Appellate Body found that the legislation at issue in those disputes was inconsistent as
such with Article XVI:4 of the WTO Agreemen t, and Article 18.4 of the AD Agreement (and
Article 32.5 of the Subsidies Agreement in the case of the CDSOA). India considers that they did so
because these disputes involved the inconsistency of legislation with the obligation to refrain from
impermissible specific actions against dumping and subsidization.

25. Judicial economy is premised upon the inherent discretion of a panel not to render findings on
issues that do not contribute to a positive solution. India respectfully submits that the Panel would
contribute to a positive solution in this dispute by rendering a finding of inconsistency with Article
XVI:4 of the WTO Agreement, Article 18.4 of the Anti-Dumping Agreement and Article 32.5 of the
Subsidies Agreement. This would provide the necessary guidance to the Un ited States on how to
"protect the security and predictability needed [by its trading partners] to conduct future trade".
4. Article 9 of Anti-Dumping Agreement and Article 19 of Subsidies Agreement
26. Based on the Appellate Body's findings in US – Antidumping Act of 1916 that Article 9.1 of
the Anti-Dumping Agreement gives Members a choi ce between imposing or not imposing duties and
between imposing an anti-dumping duty equal to the dumping margin or a lower duty, India submits
that the Amended Bond Directive is inconsistent with Article 9.1 of the Anti-Dumping Agreement in
two ways: first, it provides for taking a bond instead of the collection of definitive duties; second, the
bond secures an amount in addition to the amounts coll ected by the United States to the extent of the
dumping margin determined in the final affirmative determination.
27. The Amended Bond Directive is also inconsistent with Article VI:2 of the GATT 1994 read in
conjunction with Articles 1, 18.1 and 9.2 of the Anti-Dumping Agreement and Article VI:3 of the
GATT 1994 read in conjunction with Articles 10, 32.1 and 19.3 of the Subsidies Agreement.
28. In response to a specific request from India to identify the sp ecific provision in the Anti-
Dumping Agreement and in the Subsidies Agreement that confers the right on the United States to
collect duties after the final assessment of duties under the retrospective system of assessment, the
United States responds only that "… as with all WT O Agreements, Members maintain the ‘right' to
take a particular action provided it is not prohibited by the Agreement in question". In its answers to
the Panel's questions, however, the United States app ears to concede that the right to collect duties
finally assessed under the retrospective system of a ssessment is governed by Articles 9.2 and 9.3 of
the Anti-Dumping Agreement (and presumably by Articles 19.3 and 19.4 of the Subsidies Agreement).
29. The further argument of the United States that it is permitted to take security because
Article 9 of the Anti-Dumping Agreement and Article 19 of the Subsidies Agreement are silent on the
taking of security misses the point that the taking of security as a provisional measure is certainly a
specific action against dumping and subsidization under Article 7 of the Anti-Dumping Agreement
and Article 17 of the Subsidies Agreement. Moreover, both Article 1 of the Anti-Dumping
Agreement and Article 10 of the Subsidies Agreem ent (albeit with some differences in language)
basically provide that the provisions of the r espective Agreements govern the application of
Article VI of the GATT 1994. Therefore, silence of the relevant provision in either of these
Agreements is no basis to infer a right to take a specific action against dumping or subsidization not
contemplated by these Agreements. The plain mean ing of Articles 1 and 18.1 of the Anti-Dumping
Agreement and of Articles 10 and 32.1 of the Subsidies Agreement is that the taking of specific action
against dumping or subsidization must be in accordance with the provisions of these Agreements.
30.
 Even under the retrospective system of assessme nt, therefore, the only provision in the Anti-
Dumping Agreement that confers a right on a Member to collect definitive duties is Article 9.2.
Under Article 9.2 of the Antidumping Agreement, th e only option available to a Member even under
the retrospective system of assessment is to coll ect antidumping duties to the extent of the dumping
margin determined in the final determination th at precedes the imposition decision under Article 9.1
of the Antidumping Agreement. The correspondi ng provisions in the Subsidies Agreement that
recognize the retrospective system of assessment a nd provide for countervailing duties to be "levied"
to the extent of the dumping margin are footnote 52 and Article 19.3, respectively. In US – Zeroing
(Japan), the Appellate Body found that:

…The Anti – Dumping Agreement is neutral as between different systems for levy
and collection of antidumping duties. Th e Agreement lays down the "margin of
dumping" as the ceiling for the collection of duties regardless of the duty assessment
system adopted by a WTO Member, and provides for a refund if the ceiling is
exceeded. It is therefore in correct to say that the Anti – Dumping Agreement favours
one system, or places another system at a disadvantage.
 It is clear, therefore, that the Anti-Dumpi ng Agreement (and, by extension, the Subsidies
Agreement) provides a ceiling for the collection of duties including after the final determination and
prior to the determination of the final liability unde r the retrospective assessme nt system. Therefore,
it is not permissible for the United States to ta ke security for the potential liability under the
retrospective system of assessment.
31. Finally, pursuant to Article 9.3 of the Antidum ping Agreement, it is clear that antidumping
duties collected under Article 9.2 could never exceed the margin of dumping. Similarly, pursuant to
Article 19.4 of the Subsidies Agreement, counterva iling duties could never exceed the amount of the
subsidy found to exist.
32. The United States has applied the Enhanced Bond Requirement to importers from India of
shrimp subject to antidumping duties in addition to requiring cash deposits to the full extent of the
margin of dumping found in the final affirmative determination of dumping and injury and set out as a
deposit rate in the Antidumping Orde r dated 1 February 2005. Therefore, the application of the
Enhanced Bond Requirement to importers of shrimp is inconsistent with the provisions of Articles 9.1,
9.2 and 9.3 of the Antidumping Agreement.
5. Article 7 of Anti-Dumping Agreement and Art. 17 of Subsidies Agreement
33. The United States has now admitted in response to a question from the Panel that US
Customs requested 28 importers of shrimp to provi de enhanced, continuous bonds prior to the final
affirmative determination on 1 Febr uary 2005 and that 15 importers, in fact, furnished such bonds.
None of these bonds have been discharged or cancelled to date. Accordingly, India requests the Panel
to find that the Amendment, the Current Bond Formulas Document and the Clarification are
inconsistent as such with the provisions of Articl es 7.1, 7.2 and 7.4 of the Anti-Dumping Agreement
and with Articles 17.1, 17.2 and 17.4 of the Subsidi es Agreement. India also requests the Panel to
find that the application of the Enhanced Bond Requ irement to importers of shrimp is inconsistent
with the provisions of Articles 7.1, 7.2 and 7.4 of the Antidumping Agreement.
6. The Ad Note
34. On the United States' interpretation of the phrase "f inal determination of the facts in a case of
suspected dumping or subsidization" in the Ad Note , there would be as many final determinations as
there are import shipments by each exporter. However, whether a particular shipment is dumped or
subsidized is premised on an analysis of all the ship ments by that exporter during the period of review
and not on each individual import shipment. Further, if no request for administrative review is made
or if it is withdrawn, duties are finally assessed on the basis of the final determination and not the
administrative review. Finally, under footnote 22 to the Antidumping Agreement, "a finding in the
most recent assessment proceeding under subparagraph 3 of Article 9 that no duty is to be levied shall
not by itself require the authorities to terminate the definitive duty".
35. Article 1 of the Anti-Dumping Agreement provides that "the provisions of the Anti-Dumping
Agreement govern the application of Article VI of GATT 1994 in so far as action is taken under anti-
dumping legislation or regulations". Because the Ad Note is an interpretative note to paragraphs 2
and 3 of Article VI and supplements these provi sions, any action taken under the Ad Note is

necessarily also a "specific action against dumping" for purposes of Article 18.1 of the Antidumping
Agreement. The same conclusion must follow in the case of countervailing duties from the provisions
of Article 10 and 32.1 of the Subsidies Agreement.
36. The United States concedes that the Ad Note woul d have been available to take security prior
to the final determination but for the disciplines cont ained in Article 7 of the Antidumping Agreement.
Provisional measures under these provisions are one of the specific actions against dumping and
subsidization. Therefore, security taken under the Ad Note for payment of duties, whether before or
after the final determination, is necessarily also a specific action against dumping or subsidization. As
neither the Anti-Dumping Agreement nor the Su bsidies Agreement contemplates the taking of
security after the final determination, it follows th at security for ensuring payment of antidumping or
countervailing duties under the retrospective assessm ent system is also an impermissible specific
action against dumping and subsidization.
37. In fact, the thesis of the United States – that the Ad Note is intended to permit the United
States to safeguard itself against "non-collection risk " – suffers from a fundamental contradiction. To
the extent that it is premised on the use of the te rm "security" in the Ad No te, Article 7 of the Anti-
Dumping Agreement and Article 17 of the Subsid ies Agreement already pr ovide for safeguarding
Members against one form of "non-collection" risk by permitting the taking of security after a
preliminary determination and prior to the final a ffirmative determination. If provisional measures
constitute one of the permitted sp ecific responses, the United States cannot now argue that the
Enhanced Bond Requirement is not a specific response to dumping and subsidization.
38. India has set out in its first oral statement th e reasons why the Panel should reject the United
States' argument that the preliminary results of the administrative review in the case of shrimp
establish the necessity for the Amended Bond Directive. Based on India's analysis of the preliminary
results, the 17 exporters who were assigned an antidumping duty rate of 82 per cent based on "adverse
facts available" in the preliminary results are respons ible for exports of shrimp valued at only about
$2,000,000, which represents only 0.5 per cent of the total value of shrimp exported from India during
the period of review. In the case of the three larg est exporters, assuming that the preliminary results
are confirmed in the final results, one comp any will be entitled to a refund of $2,900,000
approximately and the other two companies will have to pay about $1,000,000 and $325,000
approximately. India notes further that the total unsecured liability based on the preliminary results
would be only about $2,000,000 as against th e huge amount of the bonds (about $30,000,000)
demanded from all Indian exporters up to the end of the period of review. India notes also that the
"all others" industry rate is expected to come down for exporters from India in the final results based
on corrections in the calculations of dumping margins of some of the larger exporters selected for
review.
7. Notification Requirements
39. With respect to the notification requirements in Article 18.5 of the Anti-Dumping Agreement
or Article 32.6 of the Subsidies Agreement, India not es that the real issue is the substance and effect
of the law or regulation and not whether it is fo rmally called a customs law or regulation or an
antidumping or countervailing duty la w or regulation. If the taking of security in the form of cash
deposits or bonds as a provisional measure is a fundamental part of the antidumping and
countervailing duty regulati ons of the United States, taking security to ensure collection of
antidumping and countervailing duties finally assessed in an administrative review also involves
administration of the antidumping and countervailing duty laws and regulations of the United States.
The United States itself attempts to justify the Amended Bond Directive as being necessary to secure
compliance with 19 U.S.C. 1673e(a)1, which is part of its antidumping and countervailing duty statute.
Therefore, the United States should have notifie d the Amended Bond Directive to the Committee on
Antidumping Practices and to the Committee on S ubsidies and Countervailing Measures. The

argument of the United States – that Article 18.5 of the Anti-Dumping Agreement and Article 32.6 of
the Subsidies Agreement do not specify when cha nges must be notified – also cannot be accepted
because it would render these provisions redundant a nd inutile. Changes obviously have to be
notified within a reasonable period of time. In this case, more than three years have elapsed since the
United States instituted the Enhanced Bond Requirement. This is not a reasonable period of time.
8. Article X:3(a) of the GATT 1994
40. With respect to the objection of the United Stat es that India's claim under Article X:3(a) of
the GATT 1994 concerns the substantive content of the Amended Bond Directive and not its
administration, India notes that th e scope of the measures at issue as defined in India's Panel Request
includes not only the Amended Bond Directive but also 19 U.S.C. 1623 and 19 C.F.R. 113.13. The
Amended Bond Directive represents the discriminator y application of 19 U.S.C. 1623 and 19 C.F.R.
113.13 to imports of shrimp subject to antidumpi ng duties from India. The Amended Bond Directive
clearly is not a law or regulation. Moreover, in E.C. – Selected Customs Matters, the Appellate Body
clarified that there is "… no reason why a legal instrument that regulates the application or
implementation of that instrument cannot be examined under Article X:3(a) if it is alleged to lead to a
lack of uniform, impartial or reasonable administra tion of that legal instrument". The Panel in
Argentina – Bovine Hides, reached similar conclusions regarding the scope of Article X:3(a).
41. Further, apart from the fact that the enhanced bonds taken prior to the Notice have not been
discharged, even after the Notice dated 24 Oct ober 2006, US Customs has not issued notices
informing any importer of Indian origin that it may apply for reduction in its bond amounts. India has
also supplied to the Panel copies of bond waiver le tters issued to certain importers, which establish
that US Customs did not provide any reasons for determining a particular bond amount.
9. Articles I:1, II:1(a) and II:1(b) of the GATT 1994
42. At the outset, India notes that its claims under Articles I:1, II:1(a) and II:1(b) of the
GATT 1994 will not arise unless the United States successfully demonstrates that the Amended Bond
Directive does not provide for specific action agai nst dumping and subsidiza tion and is covered by
footnote 24 of the Anti-Dumping Agreement and footnote 56 of the Subsidies Agreement.
43. To the extent that the Enhanced Bond Require ment seeks to secure a contingent liability for
payment of antidumping or countervailing duties, it may be characterized as an "other duty" or
"charge" for purposes of Articles I and II of the GATT. There is considerable GATT and WTO
jurisprudence that establishes th e necessity of evaluating a bond requirement together with the
obligation that it purports to secure. In this case, the United States has no right to collect duties in
excess of the dumping margin or the subsidy found to exist until the final liability is established in an
administrative review under its retrospective assessm ent system. Further, Article II:2(b) makes an
exception to the requirement of Article II:1(b) in respect of "all other duties" only for "any anti-
dumping or countervailing duty applied c onsistently with the provisions of Article VI". To the extent
that the Enhanced Bond Requirement purports to secure the liability for duties that have not yet been
finally assessed under its retrospective assessment system , therefore, it is a contingent liability for an
"other duty" that is not covered by Article II:2(b).
10. Articles XI:1 and XIII of the GATT 1994
44. With respect to the United States' argument that the Enhanced Bond Requirement does not
limit imports, India notes that the Panel in EEC – Minimum Import Price rejected the argument of the
European Communities that its minimum import pr ice system, "… as enforced by the additional
security, for imports of tomato concentrates into the Community were allowed, but not below the
minimum price level" and found that it was "… a restri ction ‘other than duties taxes or other charges'

within the meaning of Article XI:1". Arguably, therefore, the Enhanced Bond Requirement also
constitutes a restriction on imports of the merchandise to which it applies. Based on Article 3.8 of the
DSU, India submits also that there is no legal requirement that India must establish, as a matter of fact,
that the Amended Bond Requirement restricts imports of shrimp. India refers also to the inadequacies
in the GAO Report relied upon by the United States for concluding that the Enhanced Bond
Requirement, in fact, does not restrict imports of shrimp.
11. Article XX:(d) of the GATT 1994
45. India notes that Article XX:(d) of the GATT 1994 is an affirmative defense and the United
States bears the burden of demonstrating that the Am ended Bond Directive is justified under it. The
Appellate Body noted in Korea – Beef that a measure that is "necessary" for purposes of Article XX(d)
must be one that is closer to "indispensable" than simply "making a contribution to". In order to
establish that the Amended Bond Directive is "necess ary," therefore, the United States must establish
both that its existing system of collection does not work and that the Enhanced Bond Requirement is
close to indispensable. However, the United States , which has operated its retrospective system at
least since 1979 and claims to have done so since 1921, did not find it necessary to impose the
Enhanced Bond Requirement until 2004.
46. To establish the necessity of the Enhanced Bond Requirement, the United States points only
to the incidence of default for a few years immedi ately preceding the Amendment in 2004. However,
defaults could also be attributed to the fact that they involved non-market economies and the
determination of margins based on adverse facts avai lable, to surety bankruptcies and to defaults by
new shippers from whom no security at all was take n. Further, it is important to note that the
Enhanced Bond Requirement is premised on both a risk of increases in dumping margins at
liquidation and default in payments by importers. US Customs has absolutely no expertise or any
basis to determine when dumping margins are likely to increase. The analysis of past history of
increases in duty rates, on which US Customs relies, shows that 67 per cent of the time, duties did not
increase at all. The United States also appears to concede that there was no basis for forecasting a
high likelihood of non-collection risk in the case of agricultural and aquaculture merchandise subject
to countervailing duties. Further, the US Court of International Trade found that there was no basis in
the record for designating shrimp as a likely non-collection risk.
47. Moreover, the Amended Bond Directive also does not satisfy the requirements of the chapeau
to Article XX. In US – Shrimp , the Appellate Body has interpreted the meaning of the phrase
"arbitrary or unjustifiable discrimination" in the chapeau to Article XX as including "… not only
when the detailed operating provisions of the meas ure prescribe the arbitrary or unjustifiable activity,
but also where a measure, otherwise fair and just on its face, is actually applied in an arbitrary or
unjustifiable manner". In this case, the Amended Bond Directive clearly involves arbitrary and
unjustifiable discrimination between countries where the same conditions prevail.