World Trade Organization: Standard of Review and Impact of Trade Remedy Rulings
Published: 2003-07-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: World Trade Organization (WTO) members rely on trade remedies in the form of duties or other import restrictions to protect their industries from injury due to unfair foreign trade practices or unexpected import surges. There is congressional concern that the WTO, created in 1995 to administer trade rules, is interfering with this ability. There is also congressional concern that the WTO is not treating the United States fairly in resolving trade remedy disputes. A congressional requester asked GAO to identify trends in WTO trade remedy disputes since 1995, including the outcomes of these disputes and how they affected members' ability to impose trade remedies. The requester also asked GAO to discuss the standards of review that the WTO applies when ruling on trade remedy disputes and to present U.S. agencies' and legal experts' views on the WTO's application of these standards and related trade remedy issues. In their comments on a draft of this report, the Department of Commerce and the U.S. International Trade Commission stated that the report needed to put more emphasis on U.S. agencies' concerns about the potential adverse impact of WTO rulings on the U.S.'s use of trade remedies. The U.S. Trade Representative provided only technical comments on the report. GAO modified the report as appropriate.
section_title: What GAO Found
paragraphs: About a third of the cases filed in the WTO dispute settlement system from 1995 through 2002 challenged members' trade remedies, with the ratio of such cases increasing over time. Although a relatively small proportion of WTO members' trade remedy measures were challenged in the WTO, the United States faced substantially more challenges than other WTO members. The WTO generally rejected members' decisions to impose trade remedies in the 25 trade remedy disputes resolved from 1995 through 2002. However, GAO found that the WTO ruled for and against the U.S. and other members in roughly the same ratios. Overall, WTO rulings resulted in few changes to members' laws, regulations, and practices but had a relatively greater impact on those of the United States. While U.S. agencies stated that WTO rulings have not yet significantly impaired their ability to impose trade remedies, they had concerns about the potential future adverse impact of WTO rulings. Of the legal experts GAO consulted, a majority concluded that the WTO has properly applied standards of review and correctly ruled on major trade remedy issues. However, a significant minority strongly disagreed with these conclusions. U.S. agencies also said that the WTO has not always properly applied the standards and has, in some cases, imposed obligations on members that are not found in WTO agreements. Nonetheless, the experts almost unanimously agreed that the WTO was not treating the United States any differently than other members.

section_title: Letter
paragraphs: The World Trade Organization (WTO) provides the institutional framework  for the multilateral trading system. Established in January 1995, the WTO  administers rules of international trade and provides a forum for  conducting trade negotiations. In addition, the WTO has a dispute  settlement system with panels and an Appellate Body that provides a  multilateral forum for resolving trade disputes among WTO members. A  dispute arises when one WTO member believes another member has  violated a WTO agreement and initiates a dispute settlement proceeding  through the WTO.
Many disputes in recent years have pertained to WTO members’ use of  trade remedy measures. Members impose trade remedies in the form of  duties or import restrictions after determining that a domestic industry has  been injured or threatened with injury by imports. Specifically, member  governments impose antidumping or countervailing duties when they find  that imports are priced at less than normal value, or benefit from a foreign  subsidy, and that such imports injure their domestic industry. Similarly,  members impose safeguard measures after finding that import surges have  seriously injured or threatened serious injury to domestic industry. The  WTO permits its 146 members to impose such trade remedy measures but  requires them to follow certain rules before doing so, as set forth in various  WTO agreements. Domestic agencies usually make a number of “domestic  agency determinations.” When a trade measure is challenged in the WTO  dispute settlement system and a dispute settlement panel is established,  the panel reviews the domestic agency determinations supporting the  measure to determine whether they are consistent with the relevant WTO  agreements. In addition to cases challenging WTO members’ domestic  determinations to impose specific trade remedy measures, WTO members  sometimes directly challenge other members’ trade remedy laws.
Over the past several years, Congress has raised concerns that some WTO  panel and Appellate Body rulings have adversely affected the U.S.’s ability  to impose trade remedy measures. For example, in the Trade Act of 2002,  Congress voiced concern about certain WTO rulings on trade remedies,  including how the WTO has applied standard of review—that is, how the  WTO evaluates and defers to the factual and legal determinations of WTO  members’ domestic agencies. In addition, some Members of Congress are  concerned that some WTO rulings have created new obligations for WTO  members beyond those found in the WTO agreements. For example, a  Senate report accompanying the Trade Act of 2002 stated that WTO panels  and the Appellate Body have substantially rewritten part of the WTO  Agreement on Subsidies and Countervailing Measures in ways that are  disadvantageous to the United States.
Accordingly, you asked us to conduct a review of WTO dispute settlement  activity during the past 8 years, focusing on trade remedy disputes.  Specifically, in this report we (1) identified the major trends in WTO  dispute settlement activity concerning trade remedies; (2) analyzed the outcome of WTO rulings in completed trade remedy cases; (3) assessed  the major impacts of these rulings on WTO members’ laws, regulations,  practices, and measures and on members’ ability to impose trade  remedies; (4) identified the standards of review for trade remedy cases and  Appellate Body guidance on how the standards should be applied; and (5)  summarized legal experts’ views and U.S. agencies’ positions on standard  of review and other trade remedy issues.
To address these objectives, we created a database using WTO data on  dispute settlement complaints filed from 1995 through 2002; reviewed WTO  and U.S. government documents; and interviewed U.S., WTO, and  European Union (EU) officials. In addition, we reviewed WTO panel and  Appellate Body reports in the 25 completed trade remedy cases through  2002. Finally, we interviewed 18 U.S. and foreign legal experts, including  practitioners, academics, and advisors on WTO-related trade remedy  issues. Appendix I contains a full description of our scope and  methodology, and appendix II contains summaries of the 25 completed  trade remedy cases. Appendix III contains the names and affiliations of the  18 legal experts we interviewed. Appendixes IV and V contain agency  comments and our responses. Appendix VI identifies the major  contributors to this report.
subsections: section_title: Background
paragraphs: The 1994 Uruguay Round agreements created the WTO dispute settlement  system. The new system replaced the one under the General Agreement on  Tariffs and Trade (GATT), the predecessor to the WTO. The Uruguay Round  created a stronger dispute settlement system that, unlike the system under  the GATT, discourages stalemates by not allowing parties to block  decisions. In addition, the new system established a standing Appellate  Body, with the aim of making decisions more stable and predictable.
The WTO dispute settlement system operates in four major phases:  consultation, panel review, Appellate Body review (when a party appeals  the panel ruling), and implementation of the ruling. To initiate, or file, a  dispute, a WTO member requests consultations with the defending  member. If the parties do not settle the case during consultations, the  complainant may then request that a panel be established. Nonpermanent,  three-person panels issue formal decisions, or reports, for cases that are  appealed; three members of a permanent, seven-member Appellate Body— comprised of individuals with recognized standing in the field of law and  international trade—review panel findings. The Dispute Settlement Body,  which is comprised of representatives of all WTO members, approves all  final reports, and only a consensus of the members can block decisions.  Thus, no individual member can block a decision.
When a WTO member challenges a trade remedy measure, the panels and  the Appellate Body apply standards of review, outlined in certain WTO  agreements, to evaluate members’ factual and legal determinations  supporting these measures. In the United States, the Department of  Commerce and the International Trade Commission (ITC) investigate  whether the United States should impose antidumping or countervailing  duties to offset unfair foreign trade practices. The ITC also investigates  whether the conditions exist for the United States to invoke safeguards in  response to import surges.
section_title: Trade Remedy Cases Increased Over Time, but Few Measures Were Challenged
paragraphs: From 1995 through 2002, WTO members brought 198 formal dispute  settlement cases against other members. One-third (64 cases) involved  members’ trade remedies, and the ratio of trade remedy cases filed, versus  all other types, generally increased over the time period. Among WTO  members, the United States has been by far the most frequent defendant in  trade remedy cases but relatively less active in filing complaints. Overall,  however, WTO members have challenged a relatively small share of the  trade measures that their fellow members imposed, although the  proportion of U.S. trade measures challenged was larger.
subsections: section_title: About One-third of All Cases Involved Trade Remedies, and Ratio Increased Over Time
paragraphs: Overall, about one-third (64) of all WTO cases involved members’ trade  remedies. From 1995 to 2000, an increasing proportion of the cases filed  pertained to trade remedy measures and laws, as shown in figure 1. In 2001  and 2002, there was somewhat of a shift in this trend.
section_title: United States Has Been the Most Frequent Defendant, but Less Active as a Complainant
paragraphs: In comparing WTO members’ participation in the trade remedy cases, the  United States by far has been the most frequent defendant but less active as  a complainant. As shown in figure 2, the United States was a defendant in  30 (47 percent) of the 64 trade remedy cases, a majority of which were filed  since January 2000. The next most frequent defendants were Argentina,  which defended 6 cases, and the EU, a defendant in 5 cases. On the other  hand, the United States was less active than other WTO members in filing  trade remedy cases. As figure 2 also shows, the EU was the most frequent  complainant in the 64 trade remedy cases, filing 16 complaints. Six WTO  members each filed more complaints than the United States.
U.S. agency officials said that it was not surprising that the United States  had been a defendant more often than a complainant in WTO disputes since  (1) the United States has the world’s biggest economy and most desirable  market and (2) U.S. laws and procedures are more detailed and transparent  than those of other members that are large users of trade remedies. These  officials also pointed to the easy availability in the United States of trade  lawyers, who could assist in bringing trade remedy actions, as another  factor.
section_title: Few Imposed Measures Were Challenged, but U.S. Measures Were Challenged Most
paragraphs: Although members notified the WTO that they imposed 1,405 trade remedy  measures from 1995 through 2002, only a small percentage of these  measures were challenged in the dispute settlement system. Specifically,  WTO members challenged only 63 (4 percent) of the 1,405 measures, but  nearly one-half of these challenges involved U.S. trade measures. Over the  same period, as shown in figure 3, the United States imposed the most  trade remedy measures (239) and had the biggest number and share (29, or  12 percent) of its measures challenged by other WTO members. On the  other hand, India, the next biggest user of trade remedy measures, had  none of its 226 measures challenged. WTO members challenged 4 (2  percent) of the EU’s 182 trade remedy measures and 7 (6 percent) of  Argentina’s 127 trade remedy measures.
section_title: Domestic Determinations Generally Were Rejected, but Statutes Were Upheld
paragraphs: While the 25 WTO trade remedy rulings completed from 1995 through 2002  generally rejected domestic agency determinations supporting trade  measures, the rulings upheld a vast majority of the trade remedy laws that  were challenged. The WTO rejected at least half of the domestic agency  determinations in most of the 21 cases dealing with such determinations.  The WTO also rejected roughly the same proportion of U.S. and non-U.S.  domestic determinations. The 21 rulings addressed issues ranging from  whether domestic agencies adequately justified imposing a trade remedy  measure to whether WTO members followed proper procedures in  initiating the disputes. Regarding WTO rulings on members’ laws, only U.S.  laws were challenged during the period. The WTO upheld more than three- quarters of the U.S. laws challenged in 9 cases involving 13 challenges.
subsections: section_title: WTO Rejected Majority of Domestic Determinations; U.S./Non-U.S. Rejection Ratios Were Similar
paragraphs: The WTO made findings on a total of 175 domestic agency determinations  in 21 of the 25 trade remedy cases completed through 2002. As shown in  figure 4, in 17 of the 21 cases the panels rejected 50 percent or more of the  domestic agency’s determinations—rejecting all determinations in 5 cases.  In all 21 cases, the WTO found at least one aspect of a measure to be  inconsistent with WTO requirements.
When comparing rulings among WTO members on domestic  determinations, the United States and other WTO members fared similarly.  Overall, as shown in figure 5, the WTO rejected almost the same proportion  of the U.S.’s and other WTO members’ domestic determinations—57  percent and 56 percent, respectively.
section_title: All WTO Challenges to Trade Remedy Laws Involved U.S. Laws, but Most Laws Were Upheld
paragraphs: Although to date WTO members have challenged only U.S. laws, the WTO  upheld a large majority of these laws. As shown in table 1, in the 13  instances (in 9 cases), in which WTO members directly challenged U.S.  laws, the WTO upheld U.S. laws in 11 challenges and rejected U.S. laws in 2  challenges.
Addressing why only U.S. trade remedy laws were challenged, a U.S.  agency official said that U.S. laws tend to be more vulnerable because they  are more detailed than those of other members, and their language is not  the same as the language in the WTO agreements. In contrast, according to  the official, some WTO members essentially take the language in the  relevant WTO agreement and make it their law.
section_title: Rulings Resulted in Few Changes to Members’ Laws, Regulations, and Practices but Caused Numerous Changes to U.S. Measures
paragraphs: The 25 WTO trade remedy rulings completed from 1995 through 2002 did  not result in many changes to WTO members’ laws, regulations, or  practices. However, the rulings more often resulted in the onetime  revision to, or removal of, trade remedy measures. The rulings affected a  number of U.S. laws, regulations, practices, and measures; but for other  WTO members, no laws or regulations were affected, and only one practice  was subject to change. Furthermore, fewer foreign trade measures were  subject to removal or revision. Nonetheless, U.S. officials told us that the  rulings to date had not significantly impaired their ability to impose trade  remedies. However, they told us they were concerned about the potential  for rulings to have a greater adverse impact in the future. In addition, U.S.  agencies said that, with few exceptions, the rulings did not question U.S.  methodologies for determining whether to impose remedies but have  required them to provide fuller explanations and justifications for their  decisions.
subsections: section_title: Rulings Caused Few Changes to Members’ Laws, Regulations, or Practices
paragraphs: WTO rulings resulted in a small number of changes to members’ laws,  regulations, and practices, with all but one of those changes involving U.S.  trade remedies. In the 14 completed trade remedy cases in which the  United States was the defendant, two U.S. laws, one regulation, and three  practices were changed or are subject to change, as shown in table 2. In the  11 cases involving other WTO members, only one practice was subject to  change.
Specifically, the two U.S. laws subject to change are a section of the  Antidumping Act of 1916 and a section of the Tariff Act of 1930 involving  calculation of the “all others” rate. In the 1916 Antidumping Act case, the  WTO found the U.S. law to be in violation of GATT 1994 and the WTO  Antidumping Agreement because it authorized imposing fines,  imprisonment, and recovery of damages in response to the dumping of  products in the U.S. market—remedies that are not provided for in those  agreements. Both the U.S. Senate and the House of Representatives have  introduced legislation to repeal the 1916 Act. The proposed change to the  Tariff Act of 1930 involves making calculation of the “all others” rate  consistent with the WTO Antidumping Agreement. The WTO granted the  United States until the end of December 2003 to comply, but so far  Congress has not addressed this change.
The one change to a U.S. regulation stemmed from a case involving U.S.  antidumping duties imposed on imports of Korean dynamic random access  memory semiconductors (DRAMS). To implement the ruling, the United  States replaced its regulatory standard for revoking an antidumping  order—that dumping was “not likely” to occur—with the standard in the  WTO Antidumping Agreement—that “continued imposition of the  antidumping duty is necessary to offset dumping.”
The three changes to U.S. practices involved a revision of the “arm’s- length” methodology in antidumping cases and two privatization  methodologies that the Commerce Department used in countervailing duty  cases to calculate the extent to which the benefit of past subsidies are  passed on to private purchasers of state-owned enterprises. The United  States revised its “arms-length” methodology to conform to the WTO  Antidumping Agreement by expanding the scope of sales to an affiliated  business that could be considered to be made in the ordinary course of  trade. Commerce revised its countervailing duty methodology to conform  to the Appellate Body’s first privatization decision, but the Appellate Body  later ruled that the revised methodology was also inconsistent with the  Subsidies and Countervailing Measures Agreement. Commerce revised its  methodology a second time to reflect the Appellate Body’s finding that an  arm’s-length, fair market value sale of a subsidized, state-owned entity to a  private buyer creates a presumption that the privatized entity no longer  benefits from past subsidies.
Aside from the changes to U.S. laws, regulations, and practices, 1 case  resulted in a change to an EU practice. In that case, the WTO ruled that  the EU’s practice of “zeroing” was not permitted under the WTO  Antidumping Agreement. Zeroing in that case concerned the EU’s  changing negative dumping margins to zero when comparing dumping  margins of different models of like products—for example, comparing  dumping margins of high-end satin sheets with low-end polyester/cotton  blend sheets.
section_title: Rulings Brought about Increased Removals and Revisions of Specific Trade Measures
paragraphs: In contrast to the relatively few changes in members’ laws, regulations, and  practices, most of the rulings in the 25 completed trade remedy cases  involved a case-specific removal or revision of a WTO member’s trade  remedy measure. More U.S. measures were affected than those of all other  members. In the 14 completed cases brought against the United States, 21  U.S. trade measures were subject to revision or removal, while the 11  completed cases against other countries resulted in 7 trade measures being  subject to revision or removal, as shown in table 2.
Specifically, the United States reduced antidumping margins on measures  in response to 3 WTO rulings, removed countervailing duty measures in 1  case as a result of domestic litigation, and is revising countervailing duty  measures in 2 other cases. And in 3 cases, the United States removed, or  allowed to expire, safeguard measures that the Appellate Body found  inconsistent with the WTO Safeguards Agreement.
By contrast, other WTO members removed antidumping measures in 3  cases and are due to remove or revise antidumping measures in 2 cases.
In addition, other members removed safeguard measures as a result of 2  WTO rulings.
section_title: U.S. Officials Are Concerned about the Potential Impact of WTO Rulings on U.S. Ability to Impose Trade Remedy Measures
paragraphs: While U.S. officials told us that WTO trade remedy rulings had not yet  significantly impaired the U.S.’s fundamental right and ability to use its  trade remedies, they are concerned about the rulings’ potential to do so in  the future. For example, Commerce Department officials said that  implementing the second Appellate Body ruling on privatization may have a  substantial impact on similar proceedings in the future as well as existing  countervailing duty orders.
In addition, U.S. officials expressed concern about the potential negative  ramifications of the WTO ruling in the EU bed linen case. First, U.S.  officials said that although the United States did not change its “zeroing”  practice as a result of the ruling against the EU, they noted that the ruling  could affect a current Canadian dispute against the United States involving  U.S. zeroing practices. Furthermore, the EU has recently challenged 21  Commerce Department antidumping determinations with regard to the  U.S.’ zeroing practice. The EU alleged that U.S. application of its zeroing  practice is inconsistent with the WTO Antidumping Agreement and GATT  1994. The EU also asserted that U.S. laws and regulations providing for this  zeroing practice appear to be inconsistent with those agreements. As  shown by this challenge, U.S. officials believe that when the WTO strikes  down a practice, there is significant potential for WTO members to  challenge similar practices of other members. Accordingly, these officials  said they are monitoring WTO rulings and recommendations in cases not  involving the United States in order to prepare for similar, potential  challenges against the United States.
In the safeguards area, U.S. officials indicated that some WTO rulings  were confusing and extremely difficult to implement, particularly regarding  certain aspects of causation—the extent to which increases in imports  cause serious injury, or threaten serious injury, to domestic industry. U.S.  officials also said that they have had to increase the level of detail they  provide in explaining their analyses and how they apply their  methodologies in safeguard investigations. For example, they cited  safeguard rulings dealing with “nonattribution,” an aspect of causation  requiring that injury to domestic industry caused by factors other than  increased imports not be attributed to increased imports. U.S. officials  said that these rulings could be viewed as calling for domestic agencies to  quantify the amount of injury due to increased imports versus the amount  due to other factors—a task they consider to be difficult, if not impossible.  Moreover, the officials said they would now have to expend more  resources in conducting safeguard investigations.
section_title: Two Standards of Review Apply to WTO Trade Remedy Cases
paragraphs: WTO panels use two standards of review in evaluating the factual and legal  determinations of WTO members’ domestic agencies in trade remedy  cases. Article 11 of the WTO Dispute Settlement Understanding applies to  all cases brought under the WTO dispute settlement system and calls for an  objective assessment of domestic agency determinations. The Appellate  Body has stated that in applying article 11, panels should not conduct a  new review of domestic agency fact-finding nor totally defer to domestic  agency determinations. Article 17.6 of the Antidumping Agreement applies  only to antidumping cases and is more specific and deferential than article  11. Appellate body guidance on article 17.6 calls for panels first to apply  established international rules of treaty interpretation to interpreting  provisions of the Antidumping Agreement before deciding whether to  uphold a domestic agency’s interpretation. In the relatively few number of  instances in which the Appellate Body has considered standard of review  issues, it has found that panels have generally interpreted and applied both  standards of review correctly. Finally, panel and Appellate Body decisions  generally discuss the standards of review, but the extent of the discussion  varies by trade remedy area, case, and issue.
subsections: section_title: WTO Has Two Principal Standards of Review
paragraphs: The standard of review that WTO panels and the Appellate Body apply in  WTO dispute settlement cases refers to how they evaluate and defer to the  factual and legal determinations of domestic agencies of WTO members.  The two principal standards of review that WTO panels and the Appellate  Body use to evaluate these determinations are article 11 of the WTO  Dispute Settlement Understanding and article 17.6 of the WTO  Antidumping Agreement. Article 11 applies to cases brought under all the  WTO agreements that are covered by the dispute settlement system and  supplements article 17.6 in antidumping cases. Article 17.6 only applies to  cases brought under the Antidumping Agreement, which is the only WTO  agreement that has a specific standard of review.
section_title: Article 11 Calls for an Objective Assessment
paragraphs: Article 11 obligates a panel to make an “objective assessment of the matter  before it, including an objective assessment of the facts of the case and the  applicability of and conformity with the relevant” WTO agreement. The  Appellate Body has interpreted this requirement to mean that panels  should neither conduct a new review of domestic agency fact-findings,  often referred to as a “de novo review,” nor totally defer to domestic agency  determinations. In rejecting both these extremes, the Appellate Body has  found that the panels are poorly suited to engage in new reviews and  cannot ensure an objective assessment by totally deferring to domestic  agency determinations. What the panels should do in safeguards cases,  according to the Appellate Body, is ascertain whether domestic agencies  have evaluated all relevant facts and provided an adequate, reasoned, and  reasonable explanation about how the facts supported their  determinations.
section_title: Article17.6 Is More Specific and Deferential than Article 11
paragraphs: Article 17.6 is more specific than article 11 and calls for more deference to  domestic agency determinations. Article 17.6 is divided into two subparts— factual and legal—and establishes standards of review for panel  evaluations of domestic agency determinations. Under the factual standard  of review in article 17.6(i), panels must determine whether domestic  agencies have properly established the facts and evaluated them in an  unbiased and objective manner. When a panel finds that the domestic  agency has performed this task, the panel cannot overturn the domestic  agency’s determination even if it might have reached a different conclusion.  The Appellate Body has stated that the panel’s obligation under the factual  standard in article 17.6(i) closely reflects the obligation imposed on panels  under article 11.
Under the legal standard of review in article 17.6(ii), panels must apply  established international rules in interpreting provisions of the WTO  Antidumping Agreement. These rules are set forth in articles 31 and 32 of  the Vienna Convention on the Law of Treaties and provide a method for  interpreting provisions of the Antidumping Agreement. When a panel  applies these rules and finds that there is more than one permissible way to  interpret a provision of the Antidumping Agreement, the panel must uphold  the domestic agency’s determination if it is consistent with one of the  permissible interpretations. The Appellate Body’s guidance to panels about  how they are to apply this standard is consistent with the sequence implied  above. Thus, panels should first use the international rules to interpret the  WTO provision in question, and only after completing this task should  panels then decide whether to uphold the domestic agency’s legal  determination. The Appellate Body has stated that application of the  international rules could give rise to at least two permissible  interpretations of some provisions of the Antidumping Agreement.
section_title: Appellate Body Generally Upheld Panels’ Treatment of Standards, but Treatment Was Seldom Challenged
paragraphs: WTO members did not often challenge panel interpretations and  applications of the standards of review, and most challenges involved  article 11. In most instances, the Appellate Body upheld the panels’  treatment of the standards. In the 14 instances in which the Appellate Body  specifically ruled on panel interpretations and applications of standard of  review, it found that the panels had correctly addressed the standards in 11  instances—9 involving article 11 and 2 involving article 17.6.
section_title: Panels/Appellate Body Discuss Standard of Review in Cases, but Extent Varied
paragraphs: As indicated above, panels have the responsibility for applying the  standards of review in articles 11 and 17.6 when evaluating determinations  of WTO member domestic agencies. The Appellate Body’s function is to  review how panels have interpreted and applied these standards and to  uphold, modify, or reverse panel actions. For the most part, Appellate Body  decisions in trade remedy cases have included longer and more detailed  discussions of standard of review than the panels.
Aside from differences between the panels and the Appellate Body, the  extent to which standards of review are discussed vary by trade remedy  area, case, and issue. Thus, standards of review are discussed, at least to  some extent, in all safeguard and antidumping cases involving  determinations of domestic agencies but are not mentioned in a number of  countervailing duty cases. In many of the safeguard and antidumping cases,  the panels discuss article 11 or article 17.6, respectively, at the beginning of  the case, indicating that they are the standards of review to be applied in  evaluating the domestic agency determinations involved, though the  amount of introductory discussion varies from case to case. The standards  of review are sometimes also discussed, or alluded to, later in panel and  Appellate Body reports in connection with evaluations of particular  domestic agency determinations. These allusions to the standards of  review involve use of language from the standards themselves or  interpretations of the standards rather than any specific mention of them.  For example, in the safeguard cases, panels often invoke Appellate Body  guidance about what kind of domestic agency explanation is necessary— an “adequate, reasoned, and reasonable explanation”—without mentioning  article 11. Similarly, in antidumping cases, panels sometimes refer to the  requirement in article 17.6(i) to conduct an “unbiased and objective”  evaluation of domestic agency fact-finding without specifically mentioning  17.6(i). Finally, for some issues, panels neither specifically mention nor  allude to standard of review provisions.
section_title: Expert Views and U.S. Agency Positions on Standard of Review and Other Trade Remedy Issues
paragraphs: How the WTO has interpreted and applied the standard of review in trade  remedy cases and how it has resolved important trade remedy issues are  highly controversial issues in the United States. Further, a number of these  important trade remedy issues are highly complex, technical, and not easily  explained, as evidenced by their lengthy treatment in WTO panel and  Appellate Body reports. Accordingly, we decided to interview a wide range  of WTO legal experts to obtain their views on these issues.
The most common concern identified by the experts with whom we spoke,  although a minority view, was about how the WTO was applying article  17.6(ii) in antidumping cases. Notwithstanding this concern, overall a  majority of the experts believed that the WTO had not exceeded its  authority in applying the standard of review in the trade remedy cases we  reviewed. Commenting on more general issues surrounding the WTO trade  remedy rulings, almost all of the experts believed that the United States  and other WTO members have received the same treatment in trade  remedy cases. In addition, a majority of the experts who responded  concluded that WTO decisions generally have not added to obligations or  diminished rights of WTO members and that it was appropriate for the  WTO to interpret vague and ambiguous provisions in WTO agreements,  sometimes referred to as “gap filling.” However, a significant minority of  experts strongly disagreed with this view about WTO members’ obligations  and rights and considered gap filling to be inconsistent with several  provisions of the Dispute Settlement Understanding. Regarding specific  rulings, a number of experts cited some safeguard rulings as confusing and  unclear.
In contrast to the majority views expressed above, the U.S. agencies most  involved in trade remedy activities believed that article 17.6(ii) has been  improperly applied in some trade remedy cases, mainly because the WTO  has not applied article 17.6(ii) in a way that allows for upholding  permissible interpretations of WTO members’ domestic agencies. They also  believed that in certain trade remedy cases, the WTO has found obligations  and imposed restrictions on WTO members that are not supported by the  texts of the WTO trade remedy agreements.
subsections: section_title: Significant Minority Expressed Concerns about WTO Application of Article 17.6(ii)
paragraphs: A common concern raised by a significant minority of experts with whom  we spoke was that the WTO was not properly applying the legal standard of  review in article 17.6(ii) of the Antidumping Agreement. Specifically, these  experts maintained that Appellate Body guidance calling for panels to first  apply international rules in the Vienna Convention on the Law of Treaties to  interpret provisions of the Antidumping Agreement before they evaluate  the domestic agencies’ legal determinations necessarily leads to only one  interpretation. Consequently, panels never reach the point of applying the  part of article 17.6(ii) that allows for multiple permissible interpretations  and upholding an agency determination that is based on one of these  interpretations. In fact, while several experts mentioned specific rulings  in which panels or the Appellate Body had upheld domestic agency  determinations as permissible, it was unclear whether this was due to these  bodies going through the article 17.6(ii) analysis or solely because they  agreed with the domestic agency. In this regard, in the trade remedy cases  we reviewed, no expert pointed to a clear instance in which a panel first  applied the Vienna Convention, found several permissible interpretations,  and then upheld the agency determination because it was consistent with  one of them. One expert, who was a former U.S. negotiator in the Uruguay  Round, stated that U.S. negotiators in the round had not fully appreciated  how application of the Vienna Convention would limit the possibility of  panels or the Appellate Body finding multiple permissible interpretations of  the Antidumping Agreement.
Some experts also believed that panels and the Appellate Body have not  applied the legal standard of review in article 17.6(ii) in the deferential way  intended by the United States, as expressed in the U.S. Statement of  Administrative Action (SAA) accompanying the U.S. Uruguay Round  Agreements Act. The SAA describes article 17.6 as a special standard of  review analogous to the deferential standard applied by U.S. courts in  reviewing actions by the Commerce Department and the ITC, commonly  referred to as the Chevron standard. Thus, from the U.S. perspective,  article 17.6 was intended to ensure that WTO panels neither second-guess  the factual conclusions of domestic agencies, even when panels might have  reached a different conclusion, nor rewrite, under the guise of legal  interpretation, the provisions of the Antidumping Agreement.
section_title: Majority Said WTO Did Not Exceed Its Authority in Applying Standard of Review
paragraphs: Despite the concerns expressed above, the majority of the experts with  whom we spoke indicated that the panels and the Appellate Body generally  had not exceeded their authority in applying the standards of review in  articles 11 and 17.6 in the trade remedy cases we reviewed. These experts  indicated that panels and the Appellate Body had properly applied article  11 in safeguards and countervailing duty cases as well as the factual  standard of review in article 17.6(i) in antidumping cases. Several of this  group even questioned whether article 11 was intended to be a standard of  review provision at all and, if it was, that it did not intend the same level of  deference as article 17.6. Majority support for how panels and the  Appellate Body applied the legal standard in article 17.6(ii) included  experts who thought the panels and the Appellate Body had generally  applied the article correctly and provided the right amount of deference,  those who believed the article was not particularly deferential, and those  who considered the article to primarily set forth a method for interpreting  provisions of the Antidumping Agreement rather than for conferring  deference. Finally, a number of experts, including a few with divergent  opinions about whether the legal standard in article 17.6(ii) had been  properly applied, stated that evaluation of panel and Appellate Body  decisions should focus on their substantive rulings and not the technical  issue of standard of review.
A majority of experts also maintained that the United States was not  successful in getting the standard of review it wanted in the Antidumping  Agreement and that the SAA only expresses the U.S.’s view about the intent  of article 17.6. They pointed out that while the United States was the main  proponent for having a strongly deferential standard included in the  Antidumping Agreement, numerous WTO members opposed the United  States on this issue. Although the experts agreed that the lack of written  negotiating history makes it difficult to determine how much deference  article 17.6 was intended to provide, a large number believed that the  language that was ultimately agreed to did not include the Chevron  standard.
section_title: Large Majority Said All WTO Members Were Treated the Same in Trade Remedy Cases
paragraphs: Experts with markedly divergent views on other issues were in near  unanimous agreement that the United States generally was being treated  about the same as other WTO members in trade remedy cases. Although  several experts pointed out that the United States was the most frequent  defendant and was losing more often than other WTO members, they  believed that the panels and the Appellate Body had ruled against other  WTO members with the same frequency and in the same or similar manner  as they had for the United States. Several experts also were emphatic in  describing the WTO as a plaintiff’s court in trade remedy cases and pointed  out that in nearly all trade remedy decisions and all the safeguards  decisions we reviewed, respondents were asked to take some action—for  example, to ensure that a safeguard measure was applied consistent with  the Safeguards Agreement. When asked why respondents usually lose trade  remedy cases, some experts cited a WTO free trade bias or bias against  trade remedies as the principal reason. Several others said that WTO  members only bring trade remedy actions in the WTO that they are  confident they can win. As to why the United States was the most frequent  defendant in trade remedy cases, several experts mentioned the fact that  the United States was the biggest market as well as the biggest user of trade  remedies. In addition, several experts believed that some of the Commerce  Department’s decisions to impose trade remedy measures were unfounded.
section_title: Majority Said No New Obligations or Diminished Rights, but Minority Strongly Disagreed
paragraphs: A majority of experts who responded to this issue agreed that panels and  the Appellate Body generally have not added to the obligations or  diminished the rights of the United States and other WTO members in trade  remedy cases. They believed panels and the Appellate Body generally had  ruled appropriately in these cases, including the rulings on issues that the  experts cited most frequently as being important and controversial— zeroing, facts available, nonattribution, unforeseen developments, and  privatization. A number of these experts believed that the panels and the  Appellate Body had both the authority and the need to interpret vague or  ambiguous provisions, or to fill gaps, in the trade remedy agreements  when no provision clearly deals with an issue. A number also cited article  3.2 of the Dispute Settlement Understanding, which calls for dispute  settlement to “clarify the . . . provisions of the  Agreements,” as  support for panel and Appellate Body interpretations of vague or  ambiguous provisions. Furthermore, a number stated that it is a common  and accepted practice for courts to interpret vague or ambiguous  provisions of laws and agreements, or to fill gaps, when the meaning of a  legal provision is unclear.
A significant minority of experts, however, strongly believed that panel and  Appellate Body findings on a number of important issues, including those  listed above, had added to obligations or diminished the rights of the  United States and other WTO members. For example, some in this group  believed that panels or the Appellate Body should have upheld the  domestic agency determinations on the antidumping issues of zeroing,  facts available, and nonattribution as permissible under the legal standard  of review in article 17.6(ii). In addition, they contended that gap filling was  prohibited by articles 3.2 and 19.2 of the Dispute Settlement  Understanding, both of which preclude the Dispute Settlement Body from  adding to obligations or diminishing the rights of WTO members as  provided in the WTO agreements covered by dispute settlement.  Furthermore, they believed that the WTO had engaged in improper gap  filling in its rulings regarding the aforementioned issues, including  privatization. They said that WTO provisions on these issues were unclear  and that privatization was not specifically referred to in the Subsidies and  Countervailing Measures Agreement. Finally, some experts concluded that  it was improper for the panels and the Appellate Body to rule on issues that  the negotiating members had intentionally left unclear. They believed that  the proper way to deal with vague and ambiguous language in the WTO  agreements was through additional negotiations rather than through panel  or Appellate Body rulings.
section_title: Experts Believed Some Safeguard Rulings Were Confusing and Unclear
paragraphs: A substantial number of experts stated that WTO rulings on the safeguard  issues of causation and unforeseen developments were confusing and  difficult to follow. This group included experts with sharply divergent  views on other trade remedy issues. Specifically, these experts believed  that the lack of clarity in the rulings on the causation issue of  nonattribution has made it difficult for domestic agencies to implement the  rulings. Some in this group were concerned that the rulings seemed to  require a quantitative analysis of each factor causing serious injury to  domestic industry to ensure the factors were not being improperly  attributed to increased imports, and several questioned whether domestic  agencies could perform this kind of analysis. The experts also had  concerns about how domestic agencies could implement the Appellate  Body rulings on the issue of unforeseen developments. Specifically, they  were unsure how WTO members would show that increased imports  causing serious injury resulted from developments they had not foreseen  when they made tariff concessions or assumed other obligations under  GATT. A few experts were surprised that the Appellate Body had  resurrected the GATT requirement on unforeseen developments, which  they thought had been abandoned and had not been specifically included in  the Safeguards Agreement.
section_title: U.S. Agency Positions on Standard of Review and Other Trade Remedy Issues
paragraphs: In its December 2002 report to Congress, the executive branch concluded  that, overall, the United States had fared well in WTO dispute settlement,  including in a number of trade remedy cases. Nevertheless, the report  raised concerns about how the WTO had applied standard of review in  trade remedy cases and stated that some rulings were troubling in “their  failure to recognize that agreement terms may be susceptible of multiple,  reasonable interpretations among which WTO members may properly  choose.” The report specifically criticized the Appellate Body ruling in  United States—Antidumping Measures on Certain Hot-Rolled Steel  Products from Japan for how it had applied the legal standard of review in  article 17.6(ii).
The executive branch report also stated that in certain trade remedy cases,  the WTO had found obligations and imposed restrictions on WTO members  that were not supported by the texts of the WTO agreements. The report  mentioned the rulings on facts available, unforeseen developments,  nonattribution, and several others as examples. The report qualified these  criticisms by stating that not all of the WTO findings it cited were based on  a problematical analytical approach or that the WTO would have  necessarily found in favor of the United States had the proper approach  been used. Nevertheless, the report emphasized that the problematic  findings were troubling due to their lack of grounding in the texts of the  negotiated agreements.
During the course of our work, the Commerce Department and ITC  officials reiterated these concerns. ITC officials indicated that they do not  agree that the WTO has properly applied standard of review in trade  remedy cases. Specifically, they stated that the WTO has applied article  17.6(ii) of the Antidumping Agreement in a manner that raises a question  about whether the second sentence of the provision, requiring the WTO to  uphold domestic agency determinations that rest on permissible  interpretations of the Antidumping Agreement, has real meaning. In these  officials’ view, the WTO has not allowed for more than one permissible  interpretation of the relevant provisions. In this regard, the United States  recently proposed that article 17.6 be considered as a topic for discussion  in the Negotiating Group on Rules in the ongoing WTO negotiations. In its  submission, the United States stated that panels and the Appellate Body  have not accepted WTO members’ reasonable, permissible interpretations  of the Antidumping Agreement.
ITC officials also stated that in some instances, the Appellate Body had  ruled incorrectly on important issues and created new obligations, which  do not appear in and are unsupported by the plain language of the relevant  agreements. One example involved the Appellate Body findings on the  nonattribution provision of the Safeguards Agreement. The ITC also found  it particularly significant that the WTO had enunciated systemic  requirements for this issue, as well as unforeseen developments, even  though they are not specifically covered by U.S. law.
section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this report from the Secretary of  Commerce, the Chairman of the U.S. International Trade Commission, and  the U.S. Trade Representative (USTR). The Commerce Department and the  ITC provided written comments, which are reprinted in appendixes IV and  V. We obtained oral comments from USTR officials, including the Assistant  U.S. Trade Representative for Monitoring and Enforcement.
The Commerce Department had three areas of concern regarding our  report. First, it emphasized the potential future impact of WTO trade  remedy rulings on the U.S.’s ability to impose trade remedies, noting that  this potential is far more significant than these rulings’ limited impact to  date. Commerce cited, in particular, the possible negative ramifications of  two WTO rulings. Specifically, it said that the ruling on privatization could  impact a significant number of U.S. countervailing duty orders, and that as  a result of the EU bed linen ruling, the EU has recently challenged more  than 20 U.S. antidumping investigations and reviews. As a result of this  increased emphasis, we modified the sections of this report that present  U.S. agency views on the potential future ramifications of WTO decisions  on the U.S.’s ability to impose trade remedies. Second, Commerce raised  concerns regarding the composition of the group of legal experts we  consulted and our characterization of their views as “majority” and  “minority.” However, we believe that our methodology for selecting these  experts was sound (see app. I). In addition, we believe that our report  sufficiently addresses the concerns of the minority of experts.  Nevertheless, we have made modifications to the relevant sections of our  report to ensure that majority positions and minority concerns are  presented in a balanced manner. Finally, Commerce expressed concern  that we did not adequately address the executive branch’s views on the  WTO’s application of standard of review and other trade remedy issues. As  a result, we modified our report to give more prominent treatment to U.S.  agency positions.
The ITC had two main areas of concern regarding the report. First, the ITC  said that the report understated the full effect of WTO rulings on the ability  of the United States to impose and maintain trade remedy measures in that  the full effect of WTO rulings likely has not yet been realized, citing for  example several systemic WTO requirements for safeguard determinations.  In response to this comment as well a similar comment from the  Commerce Department, we modified the relevant sections of the report as  discussed above and used examples that the ITC cited. Second, the ITC did  not agree that WTO panels and the Appellate Body have properly applied  the standard of review in article 17.6(ii) of the Antidumping Agreement. In  response to this concern, we have incorporated the ITC’s views in our  report.
In addition, we obtained technical comments from the Commerce  Department and the ITC, which we have incorporated into the report as  appropriate. For example, Commerce noted that we had included  challenges to WTO members’ sunset reviews in some of our statistics on  trade remedy measures. As a result, we eliminated the sunset review  challenges from our statistics.
USTR provided technical comments such as clarification of certain  terminology. For example, USTR noted that the term “domestic  determination” usually connotes a final decision by the appropriate agency  as to whether dumping has occurred or whether increased imports have  caused injury or are threatening injury to domestic industry. Accordingly,  we clarified our definition in this report and made other technical changes  as appropriate. USTR also noted that U.S. trade remedy measures had been  challenged more frequently than those of other WTO members in part  because U.S. trade remedy laws and investigations are more transparent.  We have added this point to our report.
We are sending copies of this report to interested congressional  committees, the U.S. Trade Representative, the Secretary of Commerce,  and the Chairman of the U.S. International Trade Commission. We will also  make copies available to others upon request. In addition, the report will be  available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-4128. Other GAO contacts and staff acknowledgments are  listed in appendix VI.
section_title: Objectives, Scope, and Methodology
paragraphs: The Ranking Minority Member of the Senate Committee on Finance asked  us to conduct a review of the World Trade Organization’s (WTO) dispute  settlement activity during the past 8 years, focusing on trade remedy  disputes. Specifically, in this report we (1) identified the major trends in  WTO dispute settlement activity concerning trade remedies; (2) analyzed  the outcome of WTO rulings in completed trade remedy cases; (3) assessed  the major impacts of these rulings on WTO members’ laws, regulations, and  practices and on their ability to impose trade remedies; (4) identified the  standards of review for trade remedy cases and Appellate Body guidance  on how they should be applied; and (5) summarized legal experts’ views  and U.S. agencies’ positions on standard of review and other trade remedy  issues.
To identify the major trends in dispute settlement activity during the last 8  years, we developed a database containing all members’ requests for  consultation (complaints) filed from 1995 through 2002. We obtained the  data for the database from the WTO Web site, including data on each  request for consultation; data on the complainant(s), defendant, and  complaint date; and a short title. To determine which disputes related to  trade remedies, we examined the short titles of the cases; the initial  complaint filed with the WTO; and WTO documents, including the Update  of WTO Dispute Settlement Cases, January 2003. Our analysis of trade  remedy cases focused exclusively on cases brought under the WTO trade  remedy agreements—the Antidumping Agreement, the Agreement on  Safeguards, the Subsidies and Countervailing Measures Agreement, and  parts of the General Agreement on Tariffs and Trade 1994.
To obtain the number 198 for formal dispute settlement cases filed with the  WTO from 1995 through 2002, we combined multiple complaints against  one WTO member on the same law, measure, or action into one distinct  case for the purposes of our analysis. We did this because multiple WTO  members can file complaints against one member. For example, 9 WTO  members filed complaints regarding 1 U.S. steel safeguard measure  imposed in March 2002. As a result, the 276 separate complaints filed from  1995 through 2002 resulted in 198 distinct cases.
To determine which WTO members imposed the most trade remedy  measures from 1995 through 2002, we used WTO data that were based on  the notifications filed with the WTO by each member. We excluded  challenges to WTO members’ sunset reviews in our data on trade remedy  measures in response to agency comments. For antidumping and  countervailing duty measures, we used summary data that the WTO  Secretariat compiled. Department of Commerce officials noted that these  WTO data differ from Commerce’s data on U.S. antidumping and  countervailing measures and recommended that we use Commerce data.  However, because the WTO is the only source of comparable data on the  use of trade remedy measures by all WTO members, we ultimately used the  WTO data. For safeguards, we analyzed the information contained in the  annual reports of the WTO Committee on Safeguards. These reports  included information on both preliminary and definitive safeguard  measures imposed.
To analyze the outcome of WTO rulings in the completed trade remedy  cases, we compiled statistics on panel and Appellate Body findings about  whether domestic agency determinations and members’ laws were found  to be consistent or inconsistent with WTO trade remedy provisions. We  defined “completed” cases as those cases in which the Dispute Settlement  Body had adopted a panel or Appellate Body decision as of December 31,  2002. To analyze WTO findings about domestic determinations, for the  most part, we reviewed the concluding findings at the end of the panel and  Appellate Body reports. When several findings were included within a  single paragraph in the concluding findings, we generally counted each  finding separately. In the several instances in which concluding sections of  panel reports did not clearly indicate these findings, we obtained our  numbers by evaluating the full reports. For our statistics on findings about  domestic agency determinations, we did not distinguish between more  important issues—such as the causal relationship between increased  imports and injury to domestic industry—and those that seemed less  important—for example, notification requirements and certain evidentiary  issues. To analyze direct challenges to members’ laws in the completed  cases, we analyzed the full panel and Appellate Body reports.
To assess the major impacts of the WTO rulings in the completed trade  remedy cases on members’ laws, regulations, and practices, and on their  ability to impose trade remedies, we identified compliance actions taken,  or in the process of being taken, by WTO members as a result of the rulings.  First, we consulted the WTO Web site to find any and all official documents  filed in the completed trade remedy cases. WTO members and relevant  parties in the cases file such documents with the WTO to report actions  taken following the rulings and recommendations of adopted panel and  Appellate Body reports. Alternatively, some documents indicate only  agreements between the relevant parties for compliance actions to be  taken, or the status of any ongoing negotiations regarding compliance. For  cases where official documentation regarding compliance actions was not  found on the WTO Web site, we searched the Dispute Settlement Body  archives. We also consulted U.S. agency officials on the one case in which  the United States was the complainant.
For the cases in which the United States was the defendant, we also  consulted officials from the Commerce Department, the U.S. International  Trade Commission (ITC), and the U.S. Trade Representative (USTR). These  officials provided us the most up-to-date information on the status of  bilateral negotiations and U.S. intentions for certain completed cases  where compliance information was not yet publicly available. In addition,  we monitored congressional Web sites to glean information on the status of  legislation in cases involving challenges to U.S. laws. Finally, we obtained  copies of the changes to one U.S. regulation and two established practices  from the Federal Register.
For cases not involving the United States, for the most part, we did not  consult with foreign government officials. We relied primarily on official  documents that WTO members and relevant parties had filed with the WTO  to report their compliance actions and on pertinent comments from U.S.  agency officials.
To identify the WTO standards of review for trade remedy cases, we  analyzed the standards and obtained the views of legal experts, including  practitioners and academics (see below). To identify how the panels and  the Appellate Body were interpreting and applying the standards, we read  the panel and Appellate Body reports for the trade remedy cases completed  from 1995 through 2002 as well as Appellate Body reports for other relevant  WTO dispute settlement cases. In reading these reports, we identified  Appellate Body guidance on how the standards should be applied. Finally,  we also read the provisions of the Vienna Convention on the Law of  Treaties that the Appellate Body had identified as pertinent to how one of  the standards should be applied.
To obtain and summarize legal experts’ views on WTO standard of review  and other trade remedy issues, we conducted structured interviews with 18  legal experts, including practitioners, academics, and advisers on WTO- related trade remedy issues. In addition, we interviewed a current WTO  official and an European Union (EU) official; however, in response to  agency comments, we reviewed our decision rule on the composition of  our expert group and excluded the WTO official and EU representative  from our discussion of expert views, since we did not include U.S. agency  officials in this group.
To identify the legal experts for our study, we conducted literature  searches, read formal publications on WTO standard of review and trade  remedies, sought recommendations from other experts and the  International Trade Committee of the American Bar Association, and  attended seminars on issues surrounding standard of review and trade  remedies. Our main criteria for selecting the experts for our study were  that they (1) had past experience with WTO trade remedy cases; (2) had  been active in writing and/or speaking about issues pertaining to WTO  dispute settlement, including standard of review and trade remedies; and  (3) constituted a mix of experts representing or affiliated with U.S.  domestic interests, foreign interests, or both. We did not choose experts on  the basis of their expressed views, because we did not believe that this was  methodologically sound. To obtain the views of the experts, we conducted  structured interviews to ensure that we asked all of the experts the same  questions. We coded the answers to key survey questions to help us analyze  the experts’ views and assess the frequency with which particular views  were held.
To write the case summaries, we consulted the WTO Web site and reviewed  the panel and Appellate Body reports for the 25 completed trade remedy  cases. We also reviewed the dispute settlement commentaries on the  www.WorldTradeLaw.net Web site.
We performed our work from September 2002 to July 2003 in accordance  with generally accepted government auditing standards.
section_title: Summaries of Completed WTO Trade Remedy Cases
paragraphs: Between the inception of the World Trade Organization (WTO) in 1995 and  December 31, 2002, the WTO ruled on 25 cases involving the trade remedies  of antidumping, countervailing duties (CVD), and safeguards. Table 3 lists  the cases in order of their WTO dispute case number. It is followed by a  brief summary of each case that includes information on the case's  outcome and major issues.
subsections: section_title: GAO Case Number 1: Brazil – Measures Affecting Desiccated Coconut (DS 22)
paragraphs: In June 1994, Brazil initiated a countervailing duty (CVD) investigation to  determine whether imports of desiccated coconut and coconut milk from  Côte d’Ivoire, Indonesia, Malaysia, the Philippines, and Sri Lanka had been  subsidized. Brazil imposed provisional CVDs on imports of desiccated  coconut from all of these countries except Malaysia in March 1995 and final  CVDs in August 1995.
The Philippines challenged the Brazilian CVDs under various provisions of  the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the  World Trade Organization (WTO) Agreement on Agriculture. Brazil’s  principal argument was that none of the WTO provisions relied upon by the  Philippines applies in this case because the Brazilian subsidy investigation  was initiated on the basis of an application received prior to the date the  WTO Agreement entered into force.
subsections: section_title: Outcome
paragraphs: The Appellate Body upheld the panel finding that GATT 1994 provisions on  CVD investigations did not apply because this dispute involved application  of a Brazilian CVD measure based on an investigation initiated prior to  January 1, 1995—the date on which the WTO Agreement entered into  effect. Accordingly, the Appellate Body upheld the panel’s finding that the  dispute was not properly before it.
section_title: Compliance Action
paragraphs: No compliance action was necessary.
section_title: GAO Case Number 2: Guatemala – Antidumping Investigation Regarding Portland Cement from Mexico (DS 60)
paragraphs: Mexico challenged both the initiation of Guatemala’s antidumping  investigation of imports of grey portland cement from Mexico and various  decisions and conduct of the Guatemalan domestic authority during the  investigation. Guatemala’s principal claim was that Mexico’s panel request  did not identify any of the three measures listed in article 17.4 of the  Antidumping Agreement (ADA), and therefore the panel should not hear  the claim.
subsections: section_title: Outcome
paragraphs: The panel found that Guatemala had failed to comply with article 5.3 of the  ADA by initiating the antidumping investigation on the basis of insufficient  evidence of dumping, injury, and casual link between dumping and injury.  The panel also found that the matters referred to in Mexico’s panel request  for establishment of a panel were properly before it. The Appellate Body  reversed the panel and determined that the dispute was not properly before  the panel because Mexico’s panel request did not identify the measure it  was complaining about. Consequently, it did not consider the panel’s  findings on article 5.3.
section_title: Compliance Action
paragraphs: After the Appellate Body effectively dismissed this case, Mexico brought  the case again with a new panel request (see our case summary 11 of  Guatemala – Definitive Antidumping Measures on Grey Portland  Cement from Mexico, DS 156). The new panel considered many of the  same issues that were involved in this case.
section_title: GAO Case Number 3: Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products (DS 98)
paragraphs: European Union (EU)
subsections: section_title: Nature of Complaint
paragraphs: The EU challenged Korea’s imposition of a safeguard measure on imports  of skimmed milk powder preparations from the EU. The safeguard  measure was in the form of a quantitative restriction on imports of these  dairy products. The EU argued that Korea’s safeguard measure was  inconsistent with various provisions of the Safeguards Agreement as well  as article XIX:1 of GATT 1994. Generally, the EU contended that Korea had  not shown that increases in imports resulted from “unforeseen  developments,” had not examined all factors in its examination of serious  injury, and had not adequately considered the extent of application of the  safeguard measure.
section_title: Outcome
paragraphs: The Appellate Body upheld several panel findings that Korea had acted  inconsistently with the Safeguards Agreement because of its  determinations regarding serious injury. The Appellate Body also reversed  a panel finding on the issue of “unforeseen developments.” Accordingly, it  recommended that Korea bring its safeguard measure into conformity with  the Safeguards Agreement.
section_title: Compliance Action
paragraphs: Korea reported to the WTO that it had effectively terminated the safeguard  measure on imports of the dairy products on May 20, 2000. By lifting the  safeguard measure, Korea considers that it has implemented the  recommendations and rulings of the Dispute Settlement Body (DSB).
section_title: GAO Case Number 4: United States – Antidumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of One Megabyte or Above Originating from Korea (DS 99)
paragraphs: Korea challenged the U.S.’s failure to revoke an antidumping order on  Korean dynamic random access memory semiconductors (DRAMS) of one  megabyte or above. Korea contended that the U.S. regulatory standard  under which it refused to revoke the antidumping order with respect to two  Korean producers violated the ADA. Korea also challenged the Department  of Commerce’s rejection of certain cost information and its application of  the de minimis standard during the administrative review of the  antidumping order.
subsections: section_title: Outcome
paragraphs: The panel found that the U.S. regulatory standard for revoking an  antidumping order was inconsistent with the ADA. However, the panel also  upheld several aspects of the U.S.’s application of its antidumping laws.  The panel recommended that the DSB request that the United States bring  its regulatory standard for revoking an antidumping order, and the results  of its third administrative review, into conformity with its obligations under  the ADA. The parties did not appeal the panel findings.
section_title: Compliance Action
paragraphs: The United States took several compliance actions as a result of the panel’s  findings. The United States deleted the “not likely” criterion from its  regulation and replaced it with a requirement that the Secretary of  Commerce consider “whether the continued application of the  antidumping duty order is otherwise necessary to offset dumping.” Using  this modified standard, the United States found that the continued  application of the dumping order was necessary to offset dumping and,  accordingly, did not revoke the antidumping order. Korea asserted that  these actions failed to comply with the DSB’s recommendations and  rulings. During the compliance panel proceeding, however, the United  States revoked the antidumping order as a result of the U.S. sunset review  process, primarily because the petitioner withdrew from the proceeding.  The United States and Korea then notified the DSB of a mutually agreed- upon solution to the dispute, and the compliance panel proceeding was  terminated.
section_title: GAO Case Number 5: Argentina – Safeguard Measures on Imports of Footwear (DS 121)
paragraphs: European Union (EU)
subsections: section_title: Nature of Complaint
paragraphs: The EU challenged Argentina’s imposition of safeguards on imports of EU  footwear. The safeguard measure took the form of minimum specific duties  on these imports. For several years prior to this EU challenge, Argentina  had maintained various measures regarding imports of footwear and other  clothing and textiles. The EU contended that the safeguard measure  violated article XIX:1(a) of GATT 1994 and various provisions of the  Safeguards Agreement.
section_title: Outcome
paragraphs: The Appellate Body upheld panel findings that Argentina’s safeguard  investigation and determinations of increased imports, serious injury, and  causation were inconsistent with articles 2 and 4 of the Safeguards  Agreement, and thus there was no legal basis for applying safeguards. As a  result, it recommended that the DSB request that Argentina bring its  safeguard measures into conformity with its obligations under the  Safeguards Agreement.
section_title: Compliance Action
paragraphs: Argentina indicated to the WTO in February 2000 that it intended to  implement the DSB’s rulings and recommendations.
section_title: GAO Case Number 6: Thailand – Antidumping Duties on Angles, Shapes, and Sections of Iron or Non-Alloy Steel and H- Beams from Poland (DS 122)
paragraphs: Poland challenged Thailand’s imposition of antidumping duties on imports  of certain Polish steel products. The final antidumping duty was a  percentage of a determined value of these products. Poland contended that  Thailand’s injury and dumping determinations were inconsistent with  various provisions of the ADA.
subsections: section_title: Outcome
paragraphs: The Appellate Body affirmed the panel’s findings that Thailand had violated  the ADA with regard to Thailand’s findings about injury to domestic  industry and the causal relationship between dumped imports and injury to  domestic industry. Although the Appellate Body also upheld the panel’s  application of the standard of review in article 17.6(ii) of the ADA, it  reversed a panel interpretation of article 17.6(i). As a result of these rulings,  the Appellate Body recommended that the DSB request that Thailand bring  its antidumping measure into conformity with its obligations under the  ADA.
section_title: Compliance Action
paragraphs: Thailand reexamined aspects of the injury determination that the panel and  Appellate Body had found to be inconsistent with the ADA and found that  the antidumping measure should be maintained. Subsequently, in  December 2001, Thailand informed the WTO that it had fully implemented  the DSB’s recommendations. In January 2002, Poland and Thailand  announced they had reached agreement that this case should no longer be  on the DSB’s agenda.
section_title: GAO Case Number 7: Mexico – Antidumping Investigation of High- Fructose Corn Syrup (HFCS) from the United States (DS 132)
paragraphs: The United States challenged Mexico’s imposition of antidumping duties on  imports of two grades of high-fructose corn syrup (HFCS) from the United  States. The final antidumping measure imposed duties of up to $175.50 per  metric ton of imported HFCS and ordered the collection of duties  retroactive to the imposition of provisional duties. The United States  contended that both the initiation of the antidumping investigation and the  determination of threat of injury were inconsistent with the ADA.
subsections: section_title: Outcome
paragraphs: Although the panel upheld the way in which Mexico initiated its  antidumping investigation, it concluded that Mexico’s imposition of the  antidumping measure was inconsistent with various provisions of the ADA.  As a result, the panel recommended that the DSB request that Mexico bring  its antidumping measure into conformity with its obligations under the  ADA. The panel findings were not appealed.
section_title: Compliance Action
paragraphs: Mexico revised its antidumping determination following the panel report.  However, in a subsequent proceeding, Mexico again concluded that the  imports of HFCS constituted a threat of material injury to the domestic  sugar industry. As a result, the United States requested a compliance  review under article 21.5 of the DSU. In the article 21.5 proceeding, the  Appellate Body upheld panel findings that Mexico’s revised determination  was inconsistent with various provisions of the ADA. According to U.S.  officials, Mexico revoked the antidumping measure in May 2002.
section_title: GAO Case Number 8: United States – Antidumping Act of 1916 (DS 136/162)
subsections: section_title: Nature of Complaint
paragraphs: Japan and the EU separately challenged section 801 of the Revenue Act of  1916 (1916 Act) as being inconsistent with article VI of GATT 1994 and  various provisions of the ADA. Section 801 of the 1916 Act allows for  private claims against, and criminal prosecutions of, parties that import or  assist in importing goods into the United States at a price substantially less  than actual market value or wholesale price. The Japan and EU challenges  were to the law itself rather than to its implementation.
section_title: Outcome
paragraphs: The Appellate Body affirmed the panel conclusions that antidumping  legislation, including the 1916 Act, can be directly challenged, absent any  particular application. It also upheld the panel findings that the 1916 Act  itself was inconsistent with article VI of GATT 1994 and various provisions  of the ADA. Accordingly, the Appellate Body recommended that the United  States bring the 1916 Act into conformity with its obligations under these  agreements.
section_title: Compliance Action
paragraphs: The United States continues to work to enact legislation to implement the  WTO ruling. Although a number of bills have been introduced in the  Congress calling for repeal of section 801 of the 1916 Act, to date no  legislation has been passed. As of July 15, 2003, the latest bills were H.R.  1073, introduced in the House of Representatives on March 4, 2003; S. 1080,  introduced in the Senate on May 19, 2003; and S. 1155, introduced in the  Senate on May 23, 2003. The bills are somewhat different in that the repeals  under H.R. 1073 and S. 1155 would not affect pending cases, whereas the S.  1080 repeal would apply to them.
section_title: GAO Case Number 9: United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the
paragraphs: European Union (EU)
section_title: United Kingdom
paragraphs: (DS 138)
The United States imposed CVDs on imports of certain hot-rolled lead and  bismuth carbon steel products originating in the United Kingdom, as a  result of alleged subsidies the British Government granted to British Steel  Corporation, a state-owned company, between 1977 and 1986. The British  Government began the privatization of British Steel in 1986 and completed  it in 1988. The Commerce Department found the sale to be at arm’s length  for fair market value and consistent with commercial considerations.  Notwithstanding these factors, the Commerce Department imposed CVDs  on these United Kingdom imports, initially in 1993 and in subsequent  annual reviews, on the grounds that a certain proportion of the subsidies  granted to British Steel had passed through to the new entities. The EU  claimed that the U.S. methodology in calculating the amount of these  subsidies was inconsistent with several provisions of the WTO SCM  Agreement.
subsections: section_title: Outcome
paragraphs: The Appellate Body upheld the panel finding that the financial  contributions provided to British Steel did not confer a benefit on the new  owners. In doing so, the Appellate Body also upheld a panel finding that  faulted the Commerce Department’s methodology in presuming that a  benefit had been provided to the new owners. Accordingly, it found that the  U.S. CVDs were inconsistent with the SCM Agreement and recommended  that the DSB request that the United States bring its measures into  conformity with its obligations under that agreement. The panel suggested  that the United States take all appropriate steps, including revision of its  administrative practices, to prevent a violation of the SCM Agreement, but  the Appellate Body did not make this specific recommendation.
section_title: Compliance Action
paragraphs: Prior to the issuance of the Appellate Body report, the Commerce  Department revoked the CVD measure in response to a request from the  U.S. industry. However, the Commerce Department changed its  methodology as a result of related domestic litigation.
section_title: GAO Case Number 10: European Union – Antidumping Duties on Imports of Cotton-Type Bed Linen from India (DS 141)
paragraphs: European Union (EU)
subsections: section_title: Nature of Complaint
paragraphs: India challenged the EU’s imposition of antidumping duties on imports of  various types of cotton bed linens from India. Due to the high number of  domestic producers involved in its investigation, the EU established a  sample of domestic producers consisting of 17 of the 35 companies  identified as the EU industry. The dumping duties that were imposed  differed in amount depending on the exporter in question. India argued that  the imposition of antidumping duties was inconsistent with various  provisions of the ADA. One of the principal issues involved the EU’s  practice of zeroing in calculating antidumping margins.
section_title: Outcome
paragraphs: The Appellate Body affirmed the panel’s finding that the EU’s practice of  zeroing was inconsistent with the ADA. The Appellate Body also reversed  several panel findings and concluded that the EU had acted inconsistently  with the ADA in calculating amounts for administrative, selling, and general  costs and profits in its investigation. As a result, the Appellate Body  recommended that the DSB request that the EU bring its antidumping  measure into conformity with its obligations under the ADA.
section_title: Compliance Action
paragraphs: After the DSB adopted the Appellate Body report, the EU established lower  dumping margins for Indian imports of bed linens. Although it also  concluded that dumped imports from India were still causing material  injury to the EU industry, the EU suspended application of the duties for  these imports. In a subsequent proceeding, the EU determined that there  was a causal link between dumped imports from India and material injury  to the EU industry, but the EU continued to suspend imposition of the  antidumping duties. Because India believed that the EU had not complied  with the recommendations of the DSB, it brought a proceeding under  article 21.5 of the DSU contesting compliance. Although the panel in the  article 21.5 proceeding determined that the EU had implemented the  recommendation of the DSB, the Appellate Body reversed and found that  the EU was still acting inconsistently with the ADA. Accordingly, it  recommended that the DSB request that the EU bring its antidumping  measure into conformity with that agreement.
section_title: GAO Case Number 11: Guatemala – Definitive Antidumping Measures on Grey Portland Cement from Mexico (DS 156)
paragraphs: In 1999, Mexico challenged Guatemala’s imposition of an antidumping  measure on imports of portland cement from Mexico. The measure was in  the form of an antidumping duty of 89.54 percent that was imposed on  these imports. In its challenge, Mexico contended that the initiation and  conduct of the antidumping investigation and the imposition of the  measure violated article VI of GATT 1994 and various provisions of the  ADA.
Mexico’s challenge was a follow-up to an earlier Mexican challenge to  Guatemala’s imposition of antidumping duties on imports of the same  product (see case summary 2). Although the panel in that case ruled that  Guatemala had acted inconsistently with several provisions of the ADA and  recommended that Guatemala revoke the dumping order, the Appellate  Body reversed the panel and found that the dispute was not properly before  the panel.
subsections: section_title: Outcome
paragraphs: The panel determined that Guatemala did not properly determine that there  was sufficient evidence to justify initiation of the antidumping  investigation. It also found that Guatemala did not properly determine that  the imports under investigation were being dumped, that the domestic  producer of cement in Guatemala was being injured, or that the imports  were the cause of the injury. Accordingly, it concluded that Guatemala had  acted inconsistently with various provisions of the ADA. Under the  authority provided in article 19.1 of the DSU, the panel recommended that  Guatemala revoke its antidumping measure on these imports. However, the  panel rejected a Mexican request that the panel recommend that  Guatemala refund previously collected antidumping duties. The panel  findings were not appealed.
section_title: Compliance Action
paragraphs: In December 2000, Guatemala informed the WTO that it had removed the  antidumping measures in question and complied with its  recommendations.
section_title: GAO Case Number 12: United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities (DS 166)
paragraphs: European Union (EU)
subsections: section_title: Nature of Complaint
paragraphs: The EU challenged a United States safeguard measure imposed on imports  of wheat gluten from the EU. The safeguard measure consisted of a  quantitative restriction on these imports for 3 years. The United States  excluded products from Canada, a U.S. NAFTA partner, and from certain  other WTO members from the application of the safeguard. The EU  contended that the safeguard measure violated provisions of the  Safeguards Agreement and GATT 1994. The EU complaints were directed at  the U.S.’s serious injury determination, its causation analysis, and its  findings about the relationship between the members included in its  investigation and those covered by the safeguard measure.
section_title: Outcome
paragraphs: The Appellate Body found that the U.S.’s safeguard measure was applied  inconsistently with the Safeguards Agreement and GATT 1994 and  recommended that the DSB request that the United States bring the  measure into conformity with those agreements. Although the Appellate  Body upheld part of the panel findings on serious injury, it reversed the  panel findings on another serious injury issue and on an important aspect  of the panel’s causation analysis. In addition, the Appellate Body agreed  with the panel that the United States inappropriately excluded imports  from Canada from its safeguard measure after including such imports in its  injury investigation.
section_title: Compliance Action
paragraphs: The safeguard measure expired in June 2001.
section_title: GAO Case Number 13: United States – Safeguard Measures on Imports of Fresh, Chilled, or Frozen Lamb Meat from New Zealand and Australia (DS 177/178)
paragraphs: Australia and New Zealand challenged a U.S. safeguard measure imposed  on imports of fresh, chilled, and frozen lamb meat from New Zealand and  Australia. The measure was in the form of a tariff rate quota that was to  span 3 years. The safeguard measure did not apply to imports from Canada,  Mexico, certain other U.S. trading partners, and developing countries.  Australia and New Zealand contended that the safeguard measure violated  various provisions of the Safeguards Agreement and GATT 1994. Their  complaints were directed at U.S. findings about the definition of the  domestic lamb meat industry, the existence of serious injury, and the causal  relationship between increased imports and injury to the domestic lamb  meat industry.
subsections: section_title: Outcome
paragraphs: The Appellate Body found that the United States safeguard measure was  applied inconsistently with the Safeguards Agreement and GATT 1994 and  recommended that the DSB request that the United States bring its  measure into conformity with those agreements. Although the Appellate  Body upheld a number of important panel findings—including those  involving the definition of the domestic lamb meat industry, serious injury,  and a part of the panel’s causation analysis—it reversed the panel’s  interpretation of the causation requirements in the Safeguards Agreement.
The Appellate Body also concluded that the panel incorrectly applied the  standard of review in article 11 in evaluating the U.S.’s determination about  the existence of a threat of serious injury.
section_title: Compliance Action
paragraphs: In August 2001, the United States decided to end the application of the  safeguard measure on imports of lamb meat, effective in November 2001.
section_title: GAO Case Number 14: United States – Antidumping Measures on Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea (DS 179)
paragraphs: Korea challenged several aspects of the U.S. antidumping investigation and  measures on imports of stainless steel plate in coils (plate) and stainless  steel sheet and strip (sheet) from Korea. Specifically, Korea challenged the  U.S. treatment of currency conversions and of sales to U.S. companies that  failed to pay for the imports due to bankruptcy. Finally, Korea challenged  the U.S. calculation of the dumping margin.
subsections: section_title: Outcome
paragraphs: The panel found several aspects of the U.S. investigation to be inconsistent  with the ADA. It found that the currency conversions in the sheet  investigation were inconsistent with the ADA, though it also found that the  conversions in the plate investigation were consistent with the ADA. The  panel also found the U.S. treatment of sales for which payment was never  received and its use of multiple averaging periods in its calculation of  dumping margins were inconsistent with the ADA. Accordingly, the panel  recommended that the United States bring its antidumping duties on  Korean steel plate and sheet into compliance with the ADA. The panel  findings were not appealed.
section_title: Compliance Action
paragraphs: As of April 2003, the antidumping orders were still in effect. According to  officials from the Commerce Department, the United States made some  revisions in its calculation of dumping margins in this case.
section_title: GAO Case Number 15: United States – Antidumping Measures on Certain Hot-Rolled Steel Products from Japan (DS 184)
paragraphs: Japan challenged the U.S.’s imposition of antidumping duties on imports of  hot-rolled steel products from Japan. Japan claimed that certain provisions  of U.S. antidumping laws, regulations, and administrative procedures were  inconsistent with the ADA. For example, Japan challenged the U.S.’s  application of “facts available” and adverse facts as inconsistent with its  ADA obligations. Japan also challenged the U.S.’s statutory method for  calculating an “all others” rate as inconsistent with the ADA.
subsections: section_title: Outcome
paragraphs: The Appellate Body upheld panel findings of U.S. violations relating to the  use of facts available, adverse facts, calculation of all other rates, and  application of the arm’s-length test. The Appellate Body also reversed the  panel finding on the issue of nonattribution without specifically finding  against the United States on that issue. Although the Appellate Body upheld  a panel finding that United States law on captive production was consistent  with the ADA, it reversed the panel’s finding that the United States had  applied the law properly. As a result of the findings against the United  States, the Appellate Body recommended that the DSB request that the  United States bring its measures into conformity with the ADA. The  Appellate Body also made important statements about the standard of  review in article 17.6 of the ADA.
section_title: Compliance Action
paragraphs: In November 2002, the United States completed a new antidumping  determination that implemented the recommendations and rulings of the  DSB. As a result of the changes made to the dumping margin calculations,  the dumping margins for all three companies and all others were reduced.
The United States also revised its rules regarding its arm’s-length test to  determine if sales are “in the ordinary course of trade.” The United States  continues work to implement the recommendations and rulings regarding  the U.S. antidumping statutory provision on the “all others rate.” The  United States and Japan agreed to extend the deadline for implementation  to December 2003, or until the end of the first session of the next Congress,  whichever is earlier.
section_title: GAO Case Number 16: Argentina – Definitive Antidumping Measures on Imports of Ceramic Floor Tiles from Italy (DS 189)
paragraphs: European Union (EU)
subsections: section_title: Nature of Complaint
paragraphs: The EU challenged Argentina’s imposition of antidumping measures on  imports of ceramic floor tiles from Italy. The antidumping measures took  the form of specific antidumping duties that were based on the difference  between the actual import price and a designated minimum export price,  whenever the former was lower than the latter. The EU claimed that the  antidumping measures were inconsistent with various provisions of the  ADA. Among other things, the EU maintained that Argentina disregarded  important information provided by exporters, failed to allow for  differences in physical characteristics between models of tiles exported to  Argentina and those sold in Italy, and did not inform Italian exporters of  important facts that formed the basis for the decision to apply antidumping  measures.
section_title: Outcome
paragraphs: The panel found that Argentina acted inconsistently with various  provisions of the ADA and upheld most of the EU claims. As a result, the  panel recommended that Argentina bring its antidumping measures into  conformity with its obligations under the ADA. The panel findings were not  appealed.
section_title: Compliance Action
paragraphs: In May 2002, Argentina informed the DSB that on April 24, 2002, it had  revoked the antidumping measure at issue in this case.
section_title: GAO Case Number 17: United States – Measures Treating Export Restraints as Subsidies (DS 194)
paragraphs: Canada directly challenged a number of U.S. legal measures that it argued  required the United States to treat export restraints as financial  contributions, and thus potential subsidies, in violation of the SCM  Agreement. Canada argued that export restraints could result in providing  subsidies to other products that used or incorporated the restricted  product when the domestic price of the restricted product was affected by  the restraint. Canada’s challenge was only to U.S. legal measures and not to  a particular instance in which an export restraint had been the subject of a  CVD investigation.
subsections: section_title: Outcome
paragraphs: The panel found against Canada and concluded that U.S. CVD law is not  inconsistent with the SCM Agreement; U.S. law does not require that  export restraints be treated as financial contributions and thus subsidies.  In addition, the panel suggested that three of the legal measures Canada  contested could not be challenged independently of the relevant U.S.  statute. To facilitate its analysis of the challenge to the U.S. legal  measures, the panel first concluded that export restraints, as defined in the  dispute, do not constitute financial contributions within the meaning of the  SCM Agreement. The panel findings were not appealed.
section_title: Compliance Action
paragraphs: No compliance action was necessary.
section_title: GAO Case Number 18: United States – Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line
paragraphs: (DS 202)
Korea challenged the U.S. imposition of a safeguard measure on imports of  certain line pipe from Korea. The safeguard measure that was imposed was  in the form of a duty increase for 3 years. The measure applied to imports  from all WTO members except Canada and Mexico. Korea maintained that  parts of the U.S. investigation as well as the safeguard measure itself  violated provisions of the Safeguards Agreement and GATT 1994.
subsections: section_title: Outcome
paragraphs: The panel and the Appellate Body found several aspects of the U.S.  safeguard measure to be inconsistent with provisions of the Safeguards  Agreement and GATT 1994. This included U.S. determinations about  causation. The Appellate Body also reversed several panel findings about  exclusion of certain WTO members from the safeguard measure and the  extent of application of the measure, which resulted in findings against the  United States. The Appellate Body also reversed the panel on one of its  injury findings, which resulted in upholding a United States determination.  As a result of the findings against the United States, the Appellate Body  recommended that the DSB request that the United States bring its  measure into conformity with the Safeguards Agreement and GATT 1994.
section_title: Compliance Action
paragraphs: In July 2002, the United States and Korea agreed on several steps to  implement the recommendations of the DSB. They agreed that the United  States would increase the amount of imports exempt from additional  tariffs, beginning in September 2002 and ending in March 2003. The  measure then expired in March 2003.
section_title: GAO Case Number 19: United States – Antidumping and Countervailing Measures on Steel
paragraphs: (DS 206)
India challenged several aspects of the U.S. antidumping investigation for  imports of steel plate from India. Specifically, India challenged the U.S.  rejection of certain sales information and its reliance on facts available in  its investigation. India further challenged U.S. statutory provisions  governing the use of “facts available” and the U.S. treatment of India as a  developing country.
subsections: section_title: Outcome
paragraphs: The panel upheld the U.S. statutory provisions governing the use of “facts  available,” but found that the United States had not provided a legally  sufficient justification for rejecting some sales information during its  investigation. Accordingly, the panel recommended that the DSB request  that the United States bring its antidumping measure into conformity with  its obligation under the ADA. The panel also found that the U.S. “practice”  governing total facts available is not a “measure” that can violate the ADA.    The panel findings were not appealed.
section_title: Compliance Action
paragraphs: In February 2003, the United States informed the DSB that it had  implemented the WTO’s ruling by issuing a second determination regarding  antidumping duties imposed on imports of steel plate from India. Also in  February 2003, the United States and India came to an agreement regarding  the procedure to be followed if India believes that the United States has not  fully complied with the findings and recommendations of the DSB.
section_title: GAO Case Number 20: Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products (DS 207)
paragraphs: Argentina made two distinct challenges to Chilean restrictions on imports  of Argentine wheat, wheat flour, sugar, and edible vegetable oils. Thus,  Argentina challenged both Chile’s price band system, which Chile applied  to calculate tariff rates on these imports, and its imposition of safeguard  measures on these imports. In certain situations, the use of Chile’s price  band system resulted in tariff rates higher than the bound tariff rate in  Chile’s WTO schedule. Chile also used its price band system to calculate  the safeguard measures it imposed on the Argentine imports. Argentina  claimed (1) that Chile’s price band system violated GATT 1994 and the WTO  Agreement on Agriculture and (2) that Chilean safeguards violated various  provisions of the Safeguards Agreement as well as GATT 1994. Argentina’s  safeguards challenges were directed at how Chile evaluated increases in  imports, the causal connection between imports and injury to Chile’s  domestic industry, and the scope of the safeguard measures.
subsections: section_title: Outcome
paragraphs: With respect to the safeguards issues, the panel determined that Chile had  violated various provisions of the Safeguards Agreement and GATT 1994.  Nevertheless, the panel did not make a recommendation regarding removal  of the safeguard measures because they had been removed before the  panel published its report. Although the panel findings on safeguards were  not appealed, the Appellate Body upheld panel findings that Chile’s price  band system was inconsistent with GATT 1994 and the Agreement on  Agriculture. As a result, the Appellate Body recommended that the DSB  request that Chile bring its price band system into conformity with its  obligations under the Agreement on Agriculture.
section_title: Compliance Action
paragraphs: No action was required with regard to the safeguard measures. Chile’s  compliance with regard to its price band system involves the WTO  Agreement on Agriculture and is due by December 23, 2003.
section_title: GAO Case Number 21: Egypt – Definitive Antidumping Measures on Steel Rebar from Turkey (DS 211)
paragraphs: Turkey challenged Egypt’s imposition of antidumping duties on imports of  steel rebar from Turkey. The antidumping duties imposed ranged from  about 23 percent to 61 percent, depending on the exporter. Turkey  contended that Egypt’s determinations of injury and dumping and the  causal relationship between the dumped imports and injury to domestic  injury were inconsistent with the ADA. A number of Turkey’s claims  involved questionnaires that the Egyptian investigating authority sent to  respondent companies requesting information about sales prices and the  cost of producing rebar.
subsections: section_title: Outcome
paragraphs: Although the panel upheld 19 determinations of the Egyptian investigating  authority, it found that Egypt had violated articles 3.4 and 6.8 of the ADA.  Accordingly, the panel recommended that Egypt bring its definitive  antidumping measure on imports of steel rebar from Turkey into  compliance with the ADA. The panel findings were not appealed.
section_title: Compliance Action
paragraphs: In November 2002, Egypt and Turkey informed the WTO that they had  agreed Egypt would implement the DSB’s recommendations and rulings by  July 31, 2003. In May 2003, Egypt reported to the WTO that it was  reexamining the dumping calculations of two Turkish companies, and the  general injury assessment, in light of this case.
section_title: GAO Case Number 22: United States – Countervailing Measures Concerning Certain Products from the European Communities
paragraphs: European Union (EU)
section_title: (“Privatization”)
paragraphs: (DS 212)
The EU challenged U.S. CVDs resulting from 12 investigations on imports  of certain EU steel products. The steel products subject to these  proceedings were formerly produced by state-owned enterprises that had  been privatized in arm’s-length transactions for fair market value. The EU  complained that the two methodologies the United States used to  determine whether past subsidies continued to benefit the privatized  company violated the SCM Agreement. In addition, the EU claimed that a  provision of U.S. countervailing law—section 771(5)(F) of the Tariff Act of  1930—was, on its face, inconsistent with that agreement.
subsections: section_title: Outcome
paragraphs: The panel found that where a privatization is at arm’s length and for fair  market value, the benefit from a prior subsidy to a state-owned enterprise  is not passed on to the privatized entity. The Appellate Body affirmed the  panel’s finding that the Commerce Department’s privatization  methodologies were inconsistent with the SCM Agreement but disagreed  with the panel reasoning that a fair market value sale of a government  entity necessarily extinguishes prior subsidy benefits. The Appellate Body  reversed the panel and found that section 771(5)(F) of the Tariff Act of 1930  was consistent with the SCM Agreement.
section_title: Compliance Action
paragraphs: On June 23, 2003, the Commerce Department published in the Federal  Register its final modification to its privatization practice in order to  comply with the WTO’s rulings and recommendations. The parties have  agreed that the United States will use the new methodology in the 12  disputed investigations and reviews by November 8, 2003, and in future  cases. In addition, Commerce is evaluating how many other CVD orders  might be affected by this new methodology.
section_title: GAO Case Number 23: United States – Countervailing Duties on Certain Corrosion- Resistant Carbon Steel Flat Products from Germany (“Sunset”) (DS 213)
paragraphs: European Union (EU)
subsections: section_title: Nature of Complaint
paragraphs: The EU challenged provisions of U.S. countervailing law and regulations as  well as application of the law and regulations to a sunset review of a CVD  order on certain imports of carbon steel from Germany. The EU argued  that, among other things, the United States had acted inconsistently with  the SCM Agreement by automatically self-initiating the sunset review, by  failing to apply a 1 percent de minimis standard of subsidization set forth  in the SCM Agreement, and by applying an improper standard to determine  whether a continuation or recurrence of subsidization was likely.
section_title: Outcome
paragraphs: The Appellate Body upheld the panel findings that U.S. laws—regarding (1)  the automatic self-initiation of sunset reviews and (2) the obligation in the  SCM Agreement to determine the likelihood of continuation or recurrence  of subsidization in sunset reviews—were consistent with the SCM  Agreement. Nevertheless, with regard to the de minimis standard, the  Appellate Body reversed the panel and found that the 1 percent de  minimis standard applied only to initial CVD investigations and not to  sunset reviews of CVD orders. Accordingly, it found that U.S. law setting  forth a de minimis subsidization threshold for sunset reviews below that  set forth for original investigations, as well as its application, was  consistent with the SCM Agreement.
In an issue that was not appealed, the panel found that the United States  had acted inconsistently with the SCM Agreement in the sunset review by  failing to properly determine the likelihood of the continuation or  recurrence of subsidization. On the basis of this finding, the Appellate Body  recommended that the United States bring its CVD measure into  conformity with the SCM Agreement.
section_title: Compliance Action
paragraphs: The United States has agreed to implement the panel’s finding on the  likelihood of continuation or recurrence of subsidization. Commerce  Department officials said that implementation would require the agency to  conduct a new sunset analysis with respect to this particular German steel  order, but would not require a regulatory change.
section_title: GAO Case Number 24: United States – Section 129(c)(1) of the Uruguay Round
paragraphs: (DS 221)
Canada directly challenged section 129(c)(1) of the U.S. Uruguay Round  Agreements Act (URAA), claiming that it was inconsistent with provisions  of a number of WTO agreements. Canada specifically argued that section  129(c)(1) of the URAA has the effect of requiring the United States to act  inconsistently with or precludes the United States from complying with  various agreements.
subsections: section_title: Outcome
paragraphs: Canada failed to establish that section 129(c)(1) is inconsistent with WTO  rules. The panel findings were not appealed.
section_title: Compliance Action
paragraphs: No compliance action was necessary.
section_title: GAO Case Number 25: United States – Preliminary Determinations With Respect to Certain Softwood Lumber from Canada (DS 236)
paragraphs: Canada challenged the U.S. imposition of provisional CVD measures on  certain softwood lumber imports from Canada. Canada also claimed that  the U.S. law and regulations concerning expedited and administrative  reviews of CVD orders were, in several respects, inconsistent with the SCM  Agreement and Article VI of GATT 1994.
subsections: section_title: Outcome
paragraphs: Although the panel upheld the United States on several issues, including  the direct challenges to U.S. law, it found that the methodology the  Commerce Department used to determine the subsidy benefit was  inconsistent with the SCM Agreement. The panel also found that the  Commerce Department’s retroactive application of the provisional measure  was inconsistent with the SCM Agreement. Accordingly, it recommended  that the DSB request that the United States bring its provisional measure  into conformity with its obligations under that agreement. The panel  findings were not appealed.
section_title: Compliance Action
paragraphs: In November 2002, the United States notified the DSB that the CVD  measures challenged by Canada were no longer in effect and that the  provisional cash deposits had been refunded. Canada, however, argued that  Commerce’s final determination was substantially unchanged and  subsequently brought another WTO complaint challenging that  determination. The WTO panel’s decision in that case is due to be made  public around the time this report is issued.
section_title: Experts That GAO Interviewed for this Report
section_title: Comments from the Department of Commerce
paragraphs: The following are GAO’s comments on the Department of Commerce’s  letter dated July 14, 2003.
subsections: section_title: GAO Comments
paragraphs: 1. Our report presents data on changes to WTO members’ laws,  regulations, and practices that have resulted from WTO rulings through  December 2002.  The data clearly indicate there have been few changes  in WTO members’ laws, regulations, and practices to date.
2.
In response to the Commerce Department’s (and the ITC’s)  comment(s), we modified our characterization of U.S. agency views on  the impact of WTO rulings on the U.S.’s ability to impose trade  remedies.  The sections of this report that provide U.S. agencies’  viewpoints now reflect the agencies’ increased emphasis on the  potential future ramifications of WTO decisions indicated by the  Commerce Department (and ITC).  3. The Commerce Department states that our report’s presentation  implies that the impact of the WTO dispute settlement system on  members’ ability to impose trade remedies must be small based on  statistical information we present.  However, our report simply  provides data on the number of WTO members’ measures that were  notified to the WTO from 1995 through 2002 and the number that were  challenged.  Moreover, we have modified the report to reflect agency  concerns about the impact of the dispute settlement system on  members’ ability to impose trade remedies.  4. While our report provides aggregate data on the number of trade  remedy measures imposed by all WTO members from 1995 to 2002, it  was beyond the scope of our review to analyze trends in the growth of  these measures for individual WTO members and reasons for the  challenges to these measures.  5. While the Commerce Department raised concerns regarding the  composition of the group of legal experts we consulted, we believe that  our methodology for selecting these experts as outlined in appendix I is  sound.  As noted, we selected individuals who were identified as  leading experts on WTO dispute settlement.  These individuals— academics, practitioners, and advisors on WTO-related trade remedy  issues—have been active in writing and/or speaking about issues  pertaining to WTO dispute settlement.  Moreover, the Commerce  Department’s assertion that we only included three experts  representing domestic petitioners’ interests is incorrect.  Although we  did not choose experts on the basis of their expressed views because  we believe that approach would have been methodologically flawed,  our information indicates that of the nine practitioners we interviewed,  three represent domestic petitioners, three represent foreign  respondents, and three represent both.  Nevertheless, in responding to  agency comments, we reviewed our decision rule on the composition of  the group of experts we consulted.  Subsequently, we excluded the  views of the current WTO official and the EU representative from our  discussion of expert views since we did not include current U.S.  officials in this group.  However, we briefly noted the views of the  current WTO and EU officials.  6. While we believe that our report sufficiently emphasizes the concerns  of the minority of experts regarding standards of review and the other  trade remedy issues discussed in this report, we have made  modifications to the relevant sections of our report to ensure that  majority positions and minority concerns are presented in a balanced  manner. 7. See comment 2. 8.
In response to the Commerce Department’s (and the ITC’s)  comment(s), we added a section to our report presenting U.S. agencies’  positions on WTO dispute settlement issues, including the executive  branch’s position as outlined in its December 2002 report to Congress.
9.
In response to the Commerce Department’s comments, we have added  material to our report that discusses relevant aspects of the recent U.S.  submission to the WTO Negotiating Group on Rules.
section_title: Comments from the United States International Trade Commission
paragraphs: The following are GAO’s comments on the U.S. International Trade  Commission’s letter dated July 14, 2003.
subsections: section_title: GAO Comments
paragraphs: 1.
In response to the ITC’s (and Commerce’s) comment(s), we modified  our characterization of U.S. agency views on the impact of WTO rulings  on the U.S.’s ability to impose trade remedies. The sections of this  report that provide U.S. agencies’ viewpoints now reflect the agencies’  increased emphasis on the potential future ramifications of WTO  decisions.
2.
In response to the ITC’s comments, we have added some discussion of  the safeguards issues that the ITC raises in the report’s section on  expert views and U.S. agencies’ positions.
3.
In response to the ITC’s comments, we have added some discussion of  their views on article 17.6(ii) in the report’s section on expert views and  U.S. agencies’ positions.  4. See comment 1.
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, Jason Bair, Josey Ballenger, Sharron  Candon, Martin De Alteriis, Rona Mendelsohn, Mary Moutsos, Mark  Speight, and Laura Turman made key contributions to this report.
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