98/277/EC: Commission Decision of 16 April 1998 under the provisions of Council Regulation (EC) No 3286/94 of 22 December 1994 concerning the failure of the United States of America to repeal its Antidumping Act of 1916
Date: 1998-04-16
Institutions: European Commission
Subjects: United States, World Trade Organisation, anti-dumping legislation, trade restriction

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EN

Official Journal of the European Communities

28. 4. 98

COMMISSION DECISION

of 16 April 1998

under the provisions of Council Regulation (EC) No 3286/94 of 22 December 1994
concerning the failure of the United States of America to repeal its Antidumping
Act of 1916

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

(98/277/EC)

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 3286/94 of
22 December 1994 laying down Community procedures
in the field of the common commercial policy in order to
ensure the exercise of the Community’s right under inter-
national trade rules, in particular those established under
the World Trade Organisation (1), as
the auspices of
amended by Regulation (EC) No 356/95 (2), and in par-
ticular Articles 13 and 14 thereof,

After consulting the Advisory Committee,

Whereas:

(1)

(2)

(3)

A. PROCEDURE

On 10 January 1997 the Commission received a
complaint pursuant to Article 4 of Regulation (EC)
‘Regulation'). The
No 3286/94 (hereafter
complaint was lodged by Eurofer, the European
Confederation of Iron and Steel Industries, on
behalf of its members.

the

the so-called US
The complainant alleged that
Antidumping Act of 1916 (3)
(hereafter the ‘1916
Act') is inconsistent with several provisions of the
Agreement establishing the World Trade Organisa-
tion (hereafter ‘WTO Agreement') and its annexes
and that the United States’ failure to repeal this
legislation is causing adverse trade effects to its
member companies and threatening further adverse
trade effects. On that basis the complainant asked
the Commission to take the necessary actions to
convince the Untied States to repeal the 1916 Act.

The complaint contained sufficient prima facie
evidence to justify the initiation of a Community
examination procedure pursuant to Article 8 of the
Regulation.
examination
procedure was initiated on 25 February 1997 (4).

Consequently,

an

(1) OJ L 349, 31. 12. 1994, p. 71.
(2) OJ L 41, 23. 2. 1995, p. 3.
(3)

‘Act of September 8, 1996, 39 Stat. 756'. Title VIII of that Act
is codified at United States Code 71-74.

(4) OJ C 58, 25. 2. 1997, p. 14.

Following the initiation of the Community exam-
ination procedure the Commission conducted an
in-depth legal and factual investigation. Based on
the findings of this investigation the Commission
reached the conclusions which are indicated below.

(5)

(6)

B. FINDINGS REGARDING THE EXISTENCE OF

AN OBSTACLE TO TRADE

irrespective of

The US Antidumping Act of 1916 is still in force
and is applicable to the import and internal sale of
its origin,
any foreign product
including products originating in countries which
are WTO members. The 1916 Act exists in the US
statute books in parallel with the Tariff Act of 1930
which includes the US implementing legislation of
multilateral antidumping provisions.

The 1916 Act prohibits both the importation of
goods and their sale in the US market when the
price is lower than the one in the country of origin
or in other foreign countries where the goods are
exported. The wording of the Act is as follows: ‘It
shall be unlawful
for any person importing or
assisting in importing any articles from any foreign
country into the United States, commonly and
systematically to import,
sell or cause to be
imported or sold such articles within the United
States at a price substantially less than the actual
market value or wholesale price of such articles, at
the time of exportation to the United States, in the
principal markets of the country of their produc-
tion, or of other foreign countries to which they are
commonly exported after adding to such market
value or wholesale price, freight, duty, and other
charges and expenses necessarily incident to the
importation and sale thereof in the United States:
provided, that such act or acts be done with the
intent of destroying or injuring an industry in the
United States, or of preventing the establishment of
an industry in the United States, or of restraining or
monopolising any part of trade and commerce in
such articles in the United States.' Any violation of
the law leads to the granting of treble damages,
upon application of an injured party, as well as to
the imposition of criminal sanctions (fines and/or
imprisonment) on the responsible persons.

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(7)

The practice regulated by the 1916 Act corresponds
to that described in Article VI of
the General
Agreement on Tariffs and Trade (hereafter ‘GATT
1994') and in the Agreement on implementation of
Article VI of the General Agreement on Tariffs and
Trade 1994 (hereafter ‘WTO Antidumping Agree-
ment').

(8)

Several aspects of the US Antidumping Act of 1916
cannot be reconciled with multilateral trade rules.

(9) With relation to Article VI of GATT 1994 and the
WTO Antidumping Agreement the Commission
considers that there exist in particular infringe-
ments related, but not limited, to the following
provisions:

(cid:190) Article V(1)(a) and (b) of GATT 1994 and
Articles 2.1 and 2.2 of the WTO Antidumping
Agreement insofar as they set the actual price
in the exporting country as the first and priv-
ileged criterion for
the
normal value whereas the criteria mentioned in
the 1916 Act are fully interchangeable,

the calculation of

(cid:190) Article VI(1) of GATT 1994 and Article 2(1) of
the WTO Antidumping Agreement insofar as
they require the introduction of products into
the commerce of another country as a pre-
requisite for dumping to take place whereas
under the 1916 Act actual sales on the US
market are not necessary and a simple quota-
tion from a foreign company is considered to
be sufficient,

(cid:190) Article VI(2) of GATT 1994 specifying that
antidumping duties
are the only possible
remedy to dumping whereas the 1916 Act is
having recourse to treble damages and fines
and/or imprisonment,

(cid:190) Article I of the WTO Antidumping Agreement
requiring the carrying-out of an investigation
(which has to respect a set of procedural rules)
prior to the imposition of any duty whereas
under
the 1916 Act measures are applied
immediately with no investigation taking place,

(cid:190) Article VI of GATT 1994 and Article 3 of the
WTO Antidumping Agreement insofar as they
specifically define and qualify the concept of
‘material injury' whereas the 1916 Act merely
refers to an unqualified injury criterion,

(cid:190) Article VI of GATT 1994 and Article 4 of the
WTO Antidumping Agreement insofar as they
impose standing requirements with relation to
the complaining domestic industry whereas an
action under the 1916 Act can be brought by
any private party.

(10)

(11)

(12)

(13)

the 1916 Act, even
The continuing effect of
following the implementation of the results of the
Uruguay Round in domestic US law, through the
Uruguay Round Agreement Act, and following the
entry into force of the WTO Agreement and its
annexes is violating Article XVI(4) of the WTO
Agreement whereby ‘Each Member shall ensure the
conformity of its laws, regulations and adminis-
trative procedures with its obligations as provided
in the annexed Agreements'.

The violations mentioned above read in conjunc-
tion with Article XVI(4) of the WTO Agreement as
well as the Community’s potential export interest
in respect of
the product at stake confer locus
standi to the European Community.

In addition, the 1916 Act, insofar as it leads to
applying stricter disciplines to the sale of imported
products at low prices than for the sale of domestic
products, could also be challenged on the basis of
other WTO provisions such as Article III:4 of
GATT 1994.

The simultaneous existence and applicability of the
the US Tariff Act of 1930
1916 Act and of
containing the conventional US Antidumping
legislation confers a supplementary protection to
the US industry which goes beyond the degree of
protection authorised by WTO rules.

(14) Under

circumstances
the Commission
these
considers that
the complainant’s allegations are
well-founded and that the United States’ failure to
repeal its Antidumping Act of 1916 constitutes an
obstacle to trade within the meaning of Article 2(1)
of the Regulation, that is ‘a practice adopted or
maintained by a third country in respect of which
international trade rules establish a right of action'.

(15)

The Commission nonetheless considers that refer-
ence to the above legal bases does not rule out
recourse to any other pertinent provision of the
WTO Agreement and of the Agreements annexed
to it, which could be of use in procedures before
the WTO.

C. FINDINGS REGARDING ADVERSE TRADE

EFFECTS

(16)

Eurofer mentioned in its complaint the fact that a
Court proceedings initiated in the United States,
under the 1916 Act, by a local steel producer is
pending against the US affiliate company of one of
its member companies which imported allegedly
dumped products from countries other than the
Member States of the European Community.

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(17)

(18)

(19)

The Court action currently pending in the United
States, which is still at a very early stage of the
procedure, has already resulted in important legal
costs for the defendant company and is disrupting
this company’s distribution activities in the United
States.
increase
costs will
throughout the procedure.

inevitably

Such

Should the defendant company be found liable
under the 1916 Act, then it would have to pay
damages which would impair its entire viability. At
present,
to USD
the damages claimed amount
90 000 000 and the plaintiff US company has still
the option to increase its claim by adding the
amount of imports which occurred after the filing
of the case. Further to the legal costs, the pending
Court action is therefore causing another actual and
direct adverse trade effect impeding the present
business of the defendant company.

further
There are substantiated indications that
Court actions under the 1916 Act could be brought
against several steel
the
occasion of imports of EC products. This would
render distribution of Community products in the
US very difficult.

including at

importers,

(20)

In addition, the 1916 Act is not limited to steel
products. US producers of any product can there-
fore decide to resort to it with potentially unlimited
impact on the economy of the Community.

(21) Under

circumstances
the Commission
these
considers that
the complainant’s allegations are
well-founded and that the United States’ failure to
its Antidumping Act of 1916 is causing
repeal
adverse trade effects within the meaning of Article
2(4) of the Regulation.

D. COMMUNITY INTEREST

(22)

Ensuring that WTO partners fully comply with
their obligations is of the utmost importance for
the Community which has committed itself to the
same obligations.

(23) More particularly the continuing effect of the 1916
Act raises the issue of one of the most important
horizontal disciplines introduced by the WTO
namely the members’ obligation to bring their

(24)

(25)

(26)

legislation into conformity with their multilateral
commitments.

The very broad scope of the 1916 Act and its
in
clearly protectionist nature, which results
granting to the domestic US industry a degree of
protection going beyond that authorised by WTO
rules, further justify a Community action with a
view to avoiding the risk that other US industrial
sectors decide to take advantage of the existence of
the 1916 Act, which could put at risk the export
interests of the Community industry at large.

E. CONCLUSIONS AND MEASURES TO BE

TAKEN

The investigation has established that no remedy
the 1916 Act appears
other than the repeal of
possible in order to eliminate the actual and poten-
tial adverse trade effects caused by its continuing
effect.

The WTO Agreement and its annexes were imple-
mented in the US through the adoption of the
Uruguay Round Agreement Act (URAA) of 1994.
This latter statute, which constitues the exclusive
instrument through which the WTO Agreement is
given effect in the United States, does not refer to
the 1916 Act. In addition, the URAA specifically
provides that US law prevails over WTO provisions.
There is therefore no means, including private lit-
igation, by which the US can ensure the respect of
its WTO commitments relating to dumping where
the 1916 Act is conflicting with them.

(27)

In these circumstances, it appears that the interests
of
for initiation of WTO
dispute settlement proceedings.

the Community call

HAS DECIDED:

Article 1

1.
The continued existence of the Antidumping Act of
1916 of the United States of America (1) appears to be
inconsistent with the obligations of that country under
the Marrakesh Agreement Establishing the World Trade
Organisation and constitutes an ‘obstacle to trade' within
the meaning of Article 2 of Regulation (EC) No 3286/94.

2.
The Community will commence action against the
United States of America under the Understanding on the
Rules and Procedures for the Settlement of Disputes and
other relevant WTO provisions with a view to securing
removal of the obstacle to trade.

(1)

‘Act of September 8, 1996, 39 Stat. 756'. Title VIII of that Act
is codified at United States Code 71-74.

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This Decision shall apply from the date of its publication in the Official Journal of the
European Communities.

Article 2

Done at Brussels, 16 April 1998.

For the Commission

Leon BRITTAN

Vice-President