To examine, in the light of the relevant provisions of the covered agreements cited by the European Communities in document WT/DS213/3, the matter referred to the DSB by the European Communities in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.
If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request.
1. the US CVD law in respect of sunset reviews: Section 751(c), as complemented by Section 752, of the Tariff Act of 1930 ("Tariff Act")8, as amended;
2. the accompanying Implementing Regulations: Procedures for Conducting Five-year ("Sunset") Reviews of Anti-Dumping and Countervailing Duty Orders, or "Sunset Regulations"9;
3. the accompanying statement of policy practices: Policies Regarding the Conduct of Five-year ("Sunset") Reviews of Anti-Dumping and Countervailing Duty Orders; Policy Bulletin, or "Sunset Policy Bulletin"10; and
4. their application in this instance, in the sunset review determination in respect of certain corrosion-resistant carbon steel flat products from Germany.11
1. infringe Article 21, paragraphs 3 and 1, as well as Article 10, of the SCM Agreement, by requiring that sunset reviews are automatically initiated for all existing CVD measures under the conditions specified therein;
2. violate Article 21, paragraphs 3 and 1, in conjunction with Articles 10 and 11, of the SCM Agreement, by applying expedited reviews, through automatic initiation and presumption of likelihood of continuation or recurrence;12
3. violate Article 21.3, in conjunction with Article 11, of the SCM Agreement, by requiring the automatic self-initiation of sunset reviews;
4. establish a standard of investigation for sunset reviews that violates the requirements of the SCM Agreement; and
5. violate Article 21.3, in conjunction with Article 21.1 and Article 11.9, of the SCM Agreement, by not requiring the application of the 1 per cent de minimis rule in sunset reviews and by enabling the continuation of CVDs for five more years in circumstances where there is no need to counter subsidisation which is likely to cause injury, and, because, in the present instance, the US authority continued a measure despite having found that the rate of subsidisation likely to prevail was less than 1 per cent.
6. the US procedure for the automatic self-initiation of sunset reviews by the DOC is not inconsistent with the SCM Agreement;
7. in not applying the 1 per cent de minimis standard of Article 11.9 of the SCM Agreement to sunset reviews, the United States has not acted inconsistently with its obligations under the SCM Agreement; and
8. the DOC sunset review determination in respect of certain corrosion-resistant carbon steel flat products from Germany is not inconsistent with US obligations under the SCM Agreement.
even measures maintained and imposed under the pre-WTO regime, and not subject to a review under Article 21.2 of the SCM Agreement, will ultimately be brought under WTO disciplines under this sunset provision32.
(1) The US procedure for the automatic self-initiation of sunset reviews by Commerce is not inconsistent with the SCM Agreement;
(2) In not applying the 1 per cent de minimis standard of Article 11.9 of the SCM Agreement to sunset reviews, the United States has not acted inconsistently with its obligations under the SCM Agreement;
(3) The Commerce sunset review determination in certain corrosion-resistant carbon steel flat products from Germany is not inconsistent with United States obligations under the SCM Agreement.
The legitimate expectations of the parties to a treaty are reflected in the language of the treaty itself. The duty of a treaty interpreter is to examine the words of the treaty to determine the intentions of the parties. This should be done in accordance with the principles of treaty interpretation set out in Article 31 of the Vienna Convention. But these principles of interpretation neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended.
(Emphasis added.) If the Members had actually agreed that various provisions of Article 11 should apply in sunset reviews carried out under Article 21, the text would reflect that agreement, just as it does with respect to the application of Article 12 to Article 21 reviews. The EC is improperly trying to have the Panel do what the negotiators did not.
(b) Are the negligible import volume and injury standards contained in Article 11.9 and the negligible injury standard contained in Article 15.3 applicable to reviews under Article 21.2?
(c) Are the negligible import volume and injury standards contained in Article 11.9 and the negligible injury standard contained in Article 15.3 applicable to reviews under Article 21.3?
(d) Are the negligible import volume standards for developing countries set out in Article 27.10 applicable to reviews under Article 21 in general, and to reviews under Article 21.3 in particular? Is the 2 per cent de minimis standard for developing countries set out in Article 27.10(b) applicable to reviews under Article 21 in general, and to reviews under Article 21.3 in particular? And is the 3 per cent de minimis level for certain developing countries set out in Article 27.11 applicable to reviews under Article 21 in general, and to reviews under Article 21.3 in particular?
Please explain in detail.
Q2. The Panel notes the European Communities' argument regarding the presumption of termination of all countervailing duties ("CVDs") contained in Article 21 of the SCM Agreement and the claim that the US law and statement of policy practice in reviews under Article 21.3 disregard this presumption through the automatic initiation of reviews under Article 21.3, and thereby violate Article 21.3. In what precise manner would the US law and statement of policy practice have had to be different for them to be WTO-consistent? Please respond in light of the phrase "in a review initiated... on their own initiative" contained in Article 21.3 of the SCM Agreement.
· An applied CVD order shall terminate 5 years after its imposition and will not be reviewed unless the authorities, at the time of initiating the review, possess an amount of relevant evidence that is the same or equivalent to that required in original investigations;
· The burden of providing such evidence is placed on domestic industry or the authorities themselves;
· No reverse or negative inference is drawn from the fact that foreign exporters or producers or third countries do not participate at the initial call for the sunset review, except where Article 12.7 is applicable.
Q3. How, if at all, do the European Communities' own statutory and regulatory provisions in respect of the initiation of reviews under Article 21.3 give meaning to the presumption of termination of all CVDs that the European Communities considers is contained in Article 21 of the SCM Agreement?
Q4. Does the European Communities consider self-initiation of reviews under Article 21.3 by investigating authorities to be in and of itself WTO-inconsistent?
Q5. The Panel notes the European Communities' arguments contained in paragraph 15 of its oral statement at the first meeting of the Panel.
(a) Does the European Communities consider that there is a presumption in the SCM Agreement that all provisions of the Agreement are applicable to reviews under Article 21.3?
(b) In what circumstances might some provisions of the Agreement not apply to reviews under Article 21.3?
(c) If there are particular provisions that, in the view of the European Communities, do not apply to reviews under Article 21.3, what are they, and why do they not apply?
– Article17 regarding provisional measures can only apply to new investigation, where no measure is yet in force. Provisional measures can be imposed when a preliminary determination is made that a subsidy exists and there is injury. It is mainly intended to prevent injury during the remainder of the investigation and also serves to provide interested parties with an opportunity to comment on the preliminary finding regarding subsidies and injury. It is obvious that this provision is not relevant to a sunset review, where a duty is already in force and can remain effective pending the outcome of the review.
– Article 20 covers issues of retroactive collection of duties. This provides for the retroactive collection of provisional duties, and in critical circumstances, retroactive assessment for up to 90 days prior to the provisional stage. Since in a sunset review the duty is already in force this provision does not apply.
Q6. With respect to reviews under Article 21.3, does the European Communities consider that:
(a) All the requirements of Articles 11.4, 11.5, and 11.11 apply to the initiation or self-initiation of reviews under Article 21.3? Why or why not?
(b) Article 13.1 applies to reviews under Article 21 in general, and to reviews under Article 21.3 in particular? Why or why not?
(c) Article 19.4 applies to reviews under Article 21 in general, and to reviews under Article 21.3 in particular? Why or why not?
Q7. The Panel notes the European Communities' arguments contained in paragraph 37 of its oral statement at the first meeting of the Panel.
(a) Could the European Communities explain its view that the object and purpose of reviews under Article 21.3 and original investigations is the same, in light of the fact that an original investigation determines the existence of subsidization and injury ab initio, while a review under Article 21.3 occurs in the context of the existence of a prior finding of subsidization and injury?
(b) Could the European Communities address specifically the difference, if any, between a finding of "the existence of and amount of the subsidy and that, through the effects of the subsidy, the subsidized imports are causing injury", so as to justify imposition of a CVD under Article 19.1, and a finding that "expiry of the duty would be likely to lead to continuation or recurrence of subsidization and injury" sufficient to justify continuation of the CVD under Article 21.3?
Q8. The European Communities refers, in paragraph 3 of its oral statement at the first meeting of the Panel, to the fact that CVD measures are exceptional, non-MFN measures. The European Communities further relies on a characterization of continuation of a measure after a review as an "exception" in arguing that the provisions of Article 21.3 must be strictly interpreted.
(a) First, does the European Communities consider that this requirement of strict interpretation applies to the entirety of Part V of the SCM Agreement?
(b) Second, could the European Communities explain how, in its view, reading the text of Article 21.3 to include obligations not explicitly set out therein, but set out in Article 11.6 (or 11.9), is a "strict interpretation" of Article 21.3?
Q9. What precise evidentiary standards does the European Communities consider as being required for the initiation of reviews under Article 21.3, particularly in light of the linkages the European Communities sees between Articles 21.3 and 11.6? In the view of the European Communities, is there any difference between the evidentiary standards required for the initiation of original investigations and those required for the initiation of reviews under Article 21.3?
Q10. Please comment on the relevance, if any, of the retrospective and prospective nature of the assessment to be made, respectively, in original investigations and in reviews under Article 21.3. In particular, how is an assessment of the existence of injurious subsidization similar to and/or different from an assessment of the effects of the revocation of a duty in terms of injurious subsidization? How precisely would the European Communities suggest that the relevant subsidization rate for a review under Article 21.3 should be calculated?
Q11. Article 11.6 allows investigating authorities to proceed to initiation without having received a written application by or on behalf of a domestic industry "only if they have sufficient evidence of the existence of a subsidy, injury and causal link, as described in paragraph 2". Article 11.2 of the SCM Agreement sets out, in subparagraph (iii), that this evidence should include "evidence with regard to the existence, amount and nature of the subsidy in question". Could the European Communities comment on the proposition that the CVD order itself, or the results of the most recent review under Article 21.2, is evidence of the existence, amount, and nature of the subsidy in question, consistent with the requirements of Article 11.2(iii)?
Q12. Please respond to the following:
In the view of the European Communities, is there any similarity between the evidentiary standards required for the self-initiation of reviews under Article 21.2 ("where warranted") and those required for the self-initiation of reviews under Article 21.3?
(b) Could the European Communities explain its view – expressed in response to an oral question from the Panel at its first meeting – that the requirements for evidence necessary to justify self-initiation under Article 21.2 are lower than the requirements necessary to justify self-initiation under Article 21.3?
(c) Where in the SCM Agreement does the European Communities find the support for lower evidentiary standards applicable to self-initiation under Article 21.2?
(d) How is an assessment of the need for the continued imposition of the duty similar to and/or different from an assessment of the effects of the revocation of a duty in terms of injurious subsidization?
Q13. The European Communities argues that, "in order to initiate a sunset review on its own initiative, the domestic authorities should be in possession of the same level of evidence that would be required in a 'duly substantiated request' from the domestic industry".67
(a) What does the European Communities understand by the term "duly substantiated request"?
- the volume and value of domestic production
- the volume and value of the production of petitioners
- volume and value of total imports
- volume and value of subsidized imports
- evidence with regard to the existence, amount and the nature of the subsidy, plus -evidence relating to its continuation or recurrence
- information regarding the effect of imports on prices, production, lost sales
- causality between subsidized imports and injury, and evidence of why such injury will continue or recur.
Although the exact content of a duly substantiated request under Article 21.3 will differ in some ways from the content of an application under Article 11.2, since an Article 21.3 request will relate to a situation where measures are in force and injurious subsidization has already been established, the elements contained in an Article 11.2 should normally be present.
(b) In the view of the European Communities, is there any difference between the evidentiary standards required for the initiation of reviews under Article 21.3 upon request from the domestic industry and those required for the self-initiation of reviews under Article 21.3 by investigating authorities?
Q14. In paragraph 52 of its oral statement at the first meeting of the Panel, the European Communities comments that "a panel must not only revise the evidence submitted to it by the parties, but also all other evidence, including evidence it might consider necessary to get it [sic] itself under Article 13 DSU". Could the European Communities explain this view in light of the recent decision of the Appellate Body in United States – Cotton Yarn69 concerning the evidence a panel may consider in reviewing a determination by a Member?
Q15. The Panel notes the following US statement: "As a starting point for making its likelihood determination in the sunset review, Commerce considered the countervailable subsidies and programmes used, and the amount of the subsidy determined, in the original investigation. As explained in Commerce's preliminary sunset determination, the rationale for this approach is that the findings in the original investigation provide the only evidence reflecting the behaviour of the respondents without the discipline of countervailing measures in place".70 The Panel further notes the European Communities' arguments contained in paragraph 23 of its oral statement at the first meeting of the Panel. On what legal basis does the European Communities challenge the US Department of Commerce's ("DOC") use of the CVD rate from the original investigation (or a review under Article 21.2), and the rationale for the use of this rate?
Q16. Please respond to the following:
(a) Could the European Communities comment on the difficulty inherent in a review under Article 21.3 of making a forward-looking assessment, given that the data for the previous five years reflect government and exporter behaviour with "the discipline of countervailing measures in place"72?
"As facts, by their very nature, pertain to the present and the past, the occurrence of future events can never be definitively proven by facts. There is, therefore, a tension between a future-oriented "threat" analysis, which, ultimately, calls for a degree of "conjecture" about the likelihood of a future event, and the need for a fact-based determination. Unavoidably, this tension must be resolved through the use of facts from the present and the past to justify the conclusion about the future, namely that serious injury is "clearly imminent".73
Had the US used facts from the present, and if necessary from the past, to justify its conclusions about the future in the present case, there should have been only one possible outcome, i.e. the termination of the CVD order in question because the level of the subsidy would have been clearly below the 1 per cent ad valorem de minimis rule applicable in reviews.74 As explained time and time again, the CIG programme was determined by the US to be a non-recurring, declining subsidy. Applying the US’s own calculation methodology, the amount that would have continued after 2000 is equivalent to zero. No new subsidies have been shown by DOC to exist or were likely to be granted in the period in question. There were, therefore, clearly no present or past facts that could justify a conclusion about the future different from the need to terminate immediately the CVD order applicable to the products in question.
(b) What range of factors needs to be taken into account, in the view of the European Communities, in making this forward-looking assessment?
(c) In this regard, the Panel notes the view of the European Communities – expressed in response to an oral question posed by the Panel at its first meeting – that the CVD rate from the original investigation can only be "a starting-point". Please explain in detail.
Q17. Please explain what the European Communities understands by the term "total steel sales", contained in paragraph 5 of the European Communities' oral statement at the first meeting of the Panel, and how it applies to the calculation of likely ad valorem subsidy rates.
Q18. In the view of the European Communities, were the EC respondent parties given "ample opportunity [by the DOC] to present in writing all evidence which they consider[ed] relevant in respect of the investigation in question", within the meaning of Article 12.1:
(a) Prior to the DOC's determination of 20 October 1999 to conduct a full review under Article 21.3;
(b) Following such determination and prior to the DOC's preliminary determination of 27 March 2000; and
(c) Following such determination and prior to the DOC's final determination of 2 August 2000?
Why or why not?
Q19. Does the European Communities consider that a review under Article 21.3 must involve a full CVD investigation? Please explain.
Q20. In the view of the European Communities, does the SCM Agreement require the record of the original investigation, in its entirety, to be made part of the record of the review under Article 21.3? Please explain in detail.
The doctrine of de minimis non curat lex, that the law does not concern itself with trifles, is a basic tenet of Anglo-American jurisprudence, inherent in all US laws. With respect to the antidumping and countervailing duty laws, the Department has concluded that the potential benefits to domestic petitioners from orders on dumping margins or net subsidies below 0.5% are outweighed by the gains in productivity and efficiency provided by a de minimis rule. Even in price-sensitive markets, the effect of requiring a deposit or assessment of duty based on a rate of 0.5% ad valorem would be negligible. No party submitting comments has provided any information to support a different conclusion. Accordingly, it would be unreasonable for the Department and the US Customs Service to squander their scarce resources administering orders for which the dumping margins or the net subsidies are below 0.5%. The fact that the Department of Treasury and Commerce may not always have applied a uniform de minimis standard in the past is an additional reason supporting the adoption of a fixed standard which can be applied consistently in the future.
52 FR at 30661. In response to comments that the de minimis threshold be set at 1 per cent, Commerce also stated that,
After many years of applying a 0.5 per cent de minimis threshold, the Department has developed no basis to conclude that 1 per cent represents a level of benefit not worth the expense of investigations or annual reviews....
Questions 1(b) and (c)
Questions 29 and 30
"In a sunset review, the de minimis standard has particular application in several respects. For example, if Commerce determined in a sunset proceeding, based on the original investigation and any administrative reviews, that the existing countervailable subsidy programs had been terminated and that the likely net countervailable rate of subsidization was de minimis, Commerce normally would determine that there was no likelihood of continuation or recurrence of subsidization." (emphasis added)