WORLD TRADE ORGANIZATION
-
Download in Adobe PDF for printing: Australia_rebuttal_submission.pdf (57 KB)
Panel established pursuant to Article 6 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes
UNITED STATES – CONTINUED DUMPING
AND SUBSIDY OFFSET ACT OF 2000
(WT/DS217)
(WT/DS234)
Second Submission of Australia
Geneva, 27 February 2002
TABLE OF CONTENTS
B. the act is a “specific action against dumping / a subsidy”
D. the obligations of articles 4.10 and 7.9 of the scm agreement
I. INTRODUCTION
1. In its First Submission, Australia demonstrated that the Continued Dumping and Subsidy Offset Act of 2000 (“the Act”) is mandatory legislation that is inconsistent with provisions of the Anti-Dumping Agreement, the SCM Agreement, the GATT 1994 and the WTO Agreement.
2. The United States has not countered or refuted the prima facie case made by Australia in respect of any of its claims. In this Submission, Australia will address the defensive arguments put forward by the United States. Australia will show that, contrary to the assertion by the United States that Australia has misunderstood the structure of the Act and the operation of United States trade laws,[1] it is the United States which has misunderstood and/or ignored the essential elements of Australia’s case.
II. A MEMBER’S SOVEREIGN RIGHT TO APPROPRIATE LAWFULLY ASSESSED AND COLLECTED ANTI-DUMPING AND COUNTERVAILING DUTIES MUST ACCORD WITH ITS WTO OBLIGATIONS
3. According to the United States:
- Australia has essentially argued that “WTO Members cannot enact a law which permits the distribution of revenues generated from AD/CVD duties to any recipient other than the national treasury”;[2] and
- Australia has called on the Panel “to adopt arguments that go well beyond the clarification of existing provisions and preservation of rights and obligations that DSU Article 3.2 envisions” and “would have the Panel create new rights and obligations for the Members or, in other words, act ex aequo et bono”.[3]
4. In fact, what Australia has done is to ask the Panel to find that the Act is a specific action against dumping or a subsidy otherwise than in accordance with GATT 1994 as interpreted by the Anti-Dumping Agreement and/or the SCM Agreement, contrary to the obligations already accepted by the United States under those Agreements. The assertions by the United States are a clear misrepresentation of Australia’s case. Australia is not arguing that Members can’t distribute anti-dumping or countervailing duties otherwise than to the national treasury. There is nothing in the First Submission of Australia – or any other complainant – to suggest otherwise. Neither is Australia, nor any other complainant, asking the Panel to act ex aequo et bono. The United States has put forward voluminous material to refute arguments that have not been made. That material is not pertinent to this dispute.
5. Moreover, the United States recognises that “WTO Members have agreed to exercise their sovereignty according to their WTO Agreement commitments” [4], and “Members are free to pursue their own domestic goals through spending so long as they do not do so in a way that violates commitments made in the WTO Agreement” [5]. Australia endorses these statements wholeheartedly. It is the precise nature of Members’ existing commitments under the WTO Agreement in relation to “specific action against dumping / a subsidy” that is at issue in this dispute.
6. The issue of restricting a Member’s sovereign right to appropriate lawful revenues ex aequo et bono simply does not arise in this dispute. Rather, this dispute concerns whether the United States is acting in a manner that violates commitments already made in the WTO Agreement.
III. THE INCONSISTENCY OF THE ACT WITH ARTICLE 18.1 OF THE ANTI-DUMPING AGREEMENT, IN CONJUCTION WITH ARTICLE VI:2 OF THE GATT 1994 AND ARTICLE 1 OF THE ANTI-DUMPING AGREEMENT, AND WITH ARTICLE 32.1 OF THE SCM AGREEMENT, IN CONJUNCTION WITH ARTICLE VI:3 OF THE GATT 1994 AND ARTICLE 10 OF THE SCM AGREEMENT
7. The United States argues that “because it does not mandate the imposition of antidumping or countervailing measures, or any other type of specific action against dumping or subsidies, on imports or their importers, the [Act] is not within the scope of GATT Article VI, or the various provisions of the Antidumping and SCM Agreements cited by the complaining parties”.[6] The United States further argues that the Act “is simply a statute authorizing governmental payments”[7] (emphasis in original). The United States then purports to apply the reasoning of the Appellate Body in US – 1916 AD Act to show that, because the offset payments under the Act are “not based upon” the constituent elements of dumping or a subsidy and because the Act is not an action “against” dumping or a subsidy, the Act does not constitute “specific action against dumping / a subsidy”.[8] However, the United States’ arguments are unsustainable.
A the act is action taken in response to situations presenting the constituent elements of dumping and a subsidy
8. According to the United States, “Article VI and the Antidumping and SCM Agreements do not apply to the [Act] because it is not based upon the constituent elements of dumping or a subsidy”[9] (emphasis added). It is not clear what the United States means by the phrase “not based upon”, or indeed the authority to which it refers for its interpretation of GATT Article VI and the Anti-Dumping and SCM Agreements.
9. In US – 1916 AD Act, the Appellate Body found that the phrase “specific action against dumping” is “action that is taken in response to situations presenting the constituent elements of dumping”[10] (emphasis added). The Appellate Body did not say “that the phrase ‘specific action against dumping’ … meant ‘action that is taken in response to the constituent elements of dumping’ ”, notwithstanding the United States’ repeated assertions otherwise. [11] The Appellate Body’s finding clearly recognised that specific action against dumping is not limited to action against the constituent elements of dumping, but that it “encompass[es] action that may be taken only when the constituent elements of ‘dumping’ are present[…]”[12] (emphasis in original). It was in this context that the Appellate Body then found that “the constituent elements of ‘dumping’ are built into the essential elements of civil and criminal liability under the 1916 Act”.[13] The Appellate Body’s findings in US – 1916 AD Act do not provide any support for the contention that Article VI and the Anti-Dumping and SCM Agreements are not applicable because the Act “is not based upon the constituent elements of dumping or a subsidy”.
10. Further, the United States contends that footnote 373 to the Panel Report in the EC complaint in US – 1916 AD Act confirms that “the scope of Article VI and the Antidumping Agreement extends to measures which address dumping as such” and that “dumping as such refers to action based upon the constituent elements of dumping”[14] (emphases in original). However, it is clearly evident from the text of footnote 373 that the Panel was distinguishing “dumping as such” from “the effects of dumping” in considering the meaning of footnote 24 to Article 18.1 of the Anti-Dumping Agreement. Again, the United States’ contention is not in fact supported by the Panel’s findings.
11. The United States concludes that, because the Act is not based upon a test that includes the constituent elements of dumping or a subsidy, the Act does not address dumping or subsidisation as such and is not within the scope of Article VI and the Anti-Dumping and SCM Agreements.[15] However, this conclusion ignores the fundamental fact that there must have existed a finding of dumping or subsidisation (as well as injury and a causal link) for an anti-dumping or countervailing duty order to have been issued. (Moreover, the United States’ argument also ignores that the availability of funds for disbursement as offset payments under the Act is conditional on continued dumping and subsidisation: if no anti-dumping or countervailing duties are collected, no payments are made.) In other words, a prerequisite for an offset payment under the Act is the existence of a situation presenting the constituent elements of dumping or a subsidy: an offset payment under the Act may be made only when the constituent elements of dumping or a subsidy are present.
B. the act is a “specific action against dumping / a subsidy”
12. According to the United States, “it is clearly possible for an action to be ‘in response to’ dumping or a subsidy but not be ‘against’ dumping or a subsidy”.[16] The United States also contends that “to consider a specific action as ‘against’ dumping or subsidization, the action must apply to the imported good or the importer, and it must be burdensome”.[17] Again, however, these arguments are not sustainable in a number of respects.
13. Firstly, the United States ignores that the Appellate Body’s finding on the meaning of the phrase “specific action against dumping” gave meaning to the word “against”, and did so in a way that encompasses other ordinary meanings of the word in context.
14. Secondly, the United States ignores that, consistent with the requirement of Article 3.2 of the DSU, the Appellate Body’s finding on the meaning of “specific action against dumping” gave meaning to the phrase, as well as to the word “against”, in their context and in light of the object and purpose of the broader framework of rules governing the imposition of anti-dumping and countervailing measures provided by GATT Article VI as interpreted by the Anti-Dumping and SCM Agreements in accordance with the customary rules of interpretation of public international law.
15. Thirdly, the United States’ arguments are premised on the repeated misquotation of the Appellate Body’s findings in US – 1916 AD Act that “specific action against dumping” is ‘action that is taken in response to the constituent elements of dumping’.[18]
16. Fourthly, the United States bases this argument on selective dictionary meanings of the word “against”: it asserts that “the ordinary meaning suggests that the specific action therefore must be in ‘hostile opposition to’ dumping/subsidization, and must ‘come into contact with’ dumping/subsidization”.[19] However, the word “against” has other, equally valid, ordinary meanings, including “in competition with”, “to the disadvantage of”, “in resistance to” and “as protection from”.[20] Moreover, none of these meanings, including those put forward by the United States, compel the conclusion that a specific action “against” dumping or subsidisation must apply exclusively to the imported good or to the importer, and must be burdensome to those goods or importers.
17. Fifthly, the United States’ argument is premised on meanings of “dumping” and “a subsidy” that have no basis in the relevant texts. Article 18.1 of the Anti-Dumping Agreement proscribes “specific action against dumping of exports from another Member” not in accordance with GATT 1994. It does not proscribe specific action “against dumped exports”, “against the dumpers of exports” or “against the importers of dumped goods” not in accordance with GATT 1994. Similarly, Article 32.1 of the SCM Agreement proscribes specific action “against a subsidy” not in accordance with GATT 1994. It does not proscribe specific action “against subsidised exports” or “against importers of subsidised goods” not in accordance with GATT 1994. The United States is in effect arguing that the Panel should create new rights and obligations under GATT 1994, the Anti-Dumping Agreement and the SCM Agreement or, in other words, act ex aequo et bono. To read the distinctions requested by the United States into the words of Articles 18.1 and 32.1 would not give the words their ordinary meaning in their context and in light of the object and purpose of the Anti-Dumping Agreement, the SCM Agreement and the GATT,[21] and would be contrary to the Panel’s obligation to clarify the provisions in accordance with the customary rules of interpretation of public international law as required by Article 3.2 of the DSU.
18. Finally, the United States ignores that the offset payments is likely to precipitate changed behaviour on the part of the producers and importers of dumped or subsidised goods, as well on the part of domestic producers, thereby altering the competitive relationship between imported goods and the domestic like products in ways not contemplated by GATT 1994 or the Anti-Dumping or SCM Agreements. (Moreover, the competitive relationship with goods that have not been found to be dumped or subsidised is also likely to be altered.) Thus, it cannot be said that the Act imposes no burden or liability on imported dumped or subsidised goods.
19. Contrary to assertions by the United States,[22] Australia has not argued that the offset payments under the Act constitute a specific action against dumping or subsidisation because they are paid directly from anti-dumping or countervailing duties. Rather, Australia has argued that the offset payments constitute specific action against dumping or subsidisation because they are conditional on the existence of situations presenting the constituent elements of dumping: they are payments that may be made only when the constituent elements of dumping or a subsidy are present.
20. The United States further argues that the “intent” of the law is the sole basis for Australia’s claim that the Act is a specific action against dumping and subsidisation.[23] Once again, however, the United States has ignored the essential element of Australia’s argument: that the Title of the Act and the accompanying Findings of Congress confirm that the Act is, and was intended to be, specific action against dumping / a subsidy.[24] The Act is a “specific action against dumping / a subsidy” on the basis of the substantive provisions of the Act: payments under the Act may be made only when the constituent elements of dumping and subsidisation are present.
21. In sum, the United States has presented an argument that has no basis in either the texts of GATT 1994, the Anti-Dumping or SCM Agreements or in the clarifications of the relevant provisions provided by previous WTO jurisprudence.
C. footnotes 24 and 56 cannot exclude the act from the scope of article vi of the GATT 1994 and the anti-dumping and scm agreements
22. The United States argues that, even if the Act is determined by the Panel to be “an action against dumping or a subsidy, footnotes 24 and 56 to Articles 18.1 and 32, respectively, operate to permit the [Act]”[25] as action under another relevant GATT provision (GATT Article XVI).[26] This argument, however, is unsustainable.
23. The footnotes to Articles 18.1 and 32.1 clarify the scope of those provisions: they do not create exceptions to that scope. As the Panel in US – 1916 AD Act found in response to the argument by the United States that footnote 24 does not lock a Member into levying anti-dumping duties when faced with a factual situation constituting injurious dumping and leaves the option of taking other measures that are in accordance with the GATT 1994:
If the interpretation suggested by the United States were to be followed, Members could address “dumping” without having to respect the provisions of Article VI of the GATT 1994 and the Anti-Dumping Agreement. Such an interpretation would deprive Article VI of the GATT 1994 and the Anti-Dumping Agreement of their useful effect within the framework of rules and disciplines imposed by the WTO Agreement.[27]
The Panel’s reasoning is equally applicable in the present case. To accept the United States’ argument that offset payments under the Act are permitted by footnotes 24 and 56 would be to reduce the prohibition in Articles 18.1 and 32.1 on “specific action against dumping / a subsidy” otherwise than in accordance with GATT 1994 to inutility and redundancy. This of course the Panel may not do.[28]
24. Moreover, GATT Article XVI cannot be an “other relevant provision of GATT 1994” within the meaning of footnote 56, as GATT Article XVI is one of the provisions of GATT 1994 interpreted by the SCM Agreement, in particular in Part III, within the meaning of Article 32.1 of the SCM Agreement. In US – 1916 AD Act, the Appellate Body found that the provisions of the GATT 1994 “interpreted” by the Anti-Dumping Agreement were those provisions of GATT Article VI concerning dumping, and that the “other relevant provisions of GATT 1994” in footnote 24 “can only refer to provisions other than the provisions of Article VI concerning dumping”.[29] By the same rationale, the other relevant provisions of GATT 1994 in footnote 56 can only refer to provisions other than the provisions of Article VI concerning countervailing duties and Article XVI.
25. The United States itself said: “In sum, the ordinary meaning of the phrase ‘not intended to preclude action under other relevant provisions of GATT 1994’ in footnotes 24 and 56 is to permit action involving dumping or subsidies (but not specifically against) that is consistent with GATT provisions other than GATT Article VI”[30] (emphasis added). Australia agrees. It is the scope of “specific action against dumping / a subsidy” that is the issue and this has already been clarified by the Appellate Body.
26. The fact that the offset payments under the Act might not be inconsistent with GATT Article XVI – an issue which need not be addressed here – is irrelevant. For so long as the Act constitutes “specific action against dumping / a subsidy”, that is, action that may be taken only when the constituent elements of dumping are present, it will be inconsistent with Articles 18.1 and 32.1.
D. the obligations of articles 4.10 and 7.9 of the scm agreement
27. Australia does not intend to pursue further arguments in relation to Articles 4.10 and 7.9 of the SCM Agreement.
E. conclusion
28. The arguments of the United States that the Act is not within the scope of GATT Article VI or the provisions of the Anti-Dumping and SCM Agreements at issue in this dispute and that the Act is simply a government payment program are without merit. The Act is a clear and systematic extension of the United States’ statutory framework for the imposition of anti-dumping and countervailing duties. Offset payments under the Act are conditional, inter alia, on findings that there exist situations presenting the constituent elements of dumping or a subsidy. The Act is a “specific action against dumping / a subsidy” within the meaning of Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement respectively that is not in accordance with the provisions of the GATT 1994 as interpreted by the Anti-Dumping / SCM Agreements.
IV. THE INCONSISTENCY OF THE ACT WITH ARTICLE 5.4 OF THE ANTI-DUMPING AGREEMENT AND ARTICLE 11.4 OF THE SCM AGREEMENT
29. In its First Submission, Australia argued that:
- the Act creates a systemic bias in favour of domestic producers of a like product who support an application for an investigation, making it easier for the needed levels of industry support to be reached;
- the Act contravenes the fundamental principle that the legal framework of a rules-based system must be impartial and objective;
- Articles 5.4 and 11.4, read in their respective contexts, require that domestic industry express its support for, or opposition to, an application for an anti-dumping or countervailing duty investigation on the basis of evidence of: dumping or subsidisation; injury, threat of injury, or retardation; and a causal link between the dumping or subsidisation and injury;
- the Act distorts, or threatens to distort, the requirement that an application be made “by or on behalf of the domestic industry”; and
- by so doing, the Act frustrates the intent of Articles 5.4 and 11.4 to establish whether an application is truly being made by or on behalf of the domestic industry.
30. The United States has offered little to refute Australia’s argument. The United States says: “It is highly unlikely that the complaining parties could ever summon credible evidence that the [Act] has distorted the decisions of companies in supporting petitions … To establish such distortion, the complaining parties would have to show that, ‘but for’ the distributions, domestic producers would not otherwise have filed a petition or supported an investigation, and that the participation of those producers was necessary to establish standing in that investigation”.[31]
31. The United States’ view of what is necessary to establish distortion of domestic producer decisions cannot be correct. If it were, it would mean that the United States could enact legislation – to the opposite effect of what it has done – imposing substantial monetary penalties on domestic producers who do not support an investigation. Yet in such circumstances it would never be possible to “summon credible evidence” – as defined by the United States – to demonstrate that such legislation has distorted the decisions of companies.
32. The United States also argues that it is generally irrational for domestic producers to oppose relief.[32] However, there could well be occasions when it will be perfectly rational that at least some domestic producers will not support, or will oppose, relief, for example, if a domestic producer considered that a domestic competitor would be likely to receive a higher offset payment and thus gain a financial advantage.
33. The United States further argues “it is rare for domestic producers in the United States not to have sufficient industry support in filing antidumping or countervailing duty petitions. … Thus, if there is sufficient support anyway, it cannot be said that the [Act] will affect the number of cases meeting the thresholds of Articles 5.4 and 11.4, even if such an increase could constitute a breach of those articles”[33] (emphasis added).
34. However, the mere possibility that the Act could distort the requirement that an application be made “by or on behalf of the domestic industry” in any circumstances must be a breach of those Articles, notwithstanding that the incidence of insufficient industry support for an investigation is rare.
35. In US – Section 301, the Panel found that “the good faith requirement in the Vienna Convention suggests, thus, that a promise to have recourse to and abide by the rules and procedures of the DSU, also in one’s legislation, includes the undertaking to refrain from adopting national laws which threaten prohibited conduct”.[34] This finding is equally applicable to the current dispute. The principle of good faith “that informs the provisions of the Anti-Dumping Agreement, as well as the other covered agreements”[35] suggests that a promise to apply anti-dumping measures “only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated[…] and conducted in accordance with the provisions of”[36] the Anti-Dumping Agreement includes the undertaking to refrain from adopting national laws which threaten prohibited conduct.
36. Also pertinent to this dispute is the Appellate Body’s statement in US – Hot-Rolled Steel, in relation to Article 3.1 of the Anti-Dumping Agreement, that “investigating authorities are not entitled to conduct their investigation in such a way that it becomes more likely that, as a result of the fact-finding or evaluation process, they will determine that the domestic industry is injured”.[37] It is Australia’s view that the situation in the current dispute is analogous: the United States cannot be entitled to enact legislation that makes it more likely that the needed levels of domestic industry support will be reached in any investigation.
V. CONCLUSION
37. For the reasons presented in this Submission, Australia respectfully
maintains its request that the Panel make the findings and recommendations
set out at paragraphs 124-125 of its First Submission.
[1] First Submission of the United States, paragraph 2
[2] First Submission of the United States, paragraph 19
[3] First Submission of the United States, paragraph 28
[4] First Submission of the United States, paragraph 20
[5] First Submission of the United States, paragraph 25
[6] First Submission of the United States, paragraph 77
[7] First Submission of the United States, paragraph 77
[8] First Submission of the United States, paragraph 83
[9] First Submission of the United States, paragraph 86
[10] US – 1916 AD Act, Report of the Appellate Body, paragraph 122
[11] First Submission of the United States, paragraphs 81 and 84, referring to paragraph 122 of the Appellate Body Report in US – 1916 AD Act, and repeated in paragraphs 86, 87 and 89
[12] US – 1916 AD Act, Report of the Appellate Body, paragraph 122
[13] First Submission of the United States, paragraph 87, referring to paragraph 130 of the Appellate Body Report in US – 1916 AD Act
[14] First Submission of the United States, paragraph 88
[15] First Submission of the United States, paragraph 89
[16] First Submission of the United States, paragraph 91
[17] First Submission of the United States, paragraph 92
[18] See paragraph 9 above
[19] First Submission of the United States, paragraph 92
[20] The New Shorter Oxford English Dictionary, 1993, pp. 38-39, (L. Brown ed)
[21] United States – Standards for Reformulated and Conventional Gasoline, AB-1996-1, Report of the Appellate Body, WT/DS2/AB/R, page 17
[22] See, for example, First Submission of the United States, paragraph 19
[23] First Submission of the United States, paragraph 95
[24] First Submission of Australia, paragraphs 43-45 and 53
[25] First Submission of the United States, paragraph 101
[26] First Submission of the United States, paragraph 111
[27] US – AD 1916 Act, Report of the Panel (Complaint by the EC), paragraph 6.199
[28] In United States – Standards for Reformulated and Conventional Gasoline, page 23, the Appellate Body said: “One of the corollaries of the ‘general rule of interpretation’ in the Vienna Convention is that interpretation must give meaning and effect to all the terms of a treaty. An interpreter is not free to adopt a reading the would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.”
[29] US – AD 1916 Act, Report of the Appellate Body, paragraph 124-5
[30] First Submission of the United States, paragraph 108
[31] First Submission of the United States, paragraph 123
[32] First Submission of the United States, paragraph 124
[33] First Submission of the United States, paragraph 125
[34] United States – Sections 301-310 of the Trade Act of 1974, Report of the Panel, WT/DS152/R, paragraph 7.68
[35] United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, AB-2001-02, Report of the Appellate Body, WT/DS184/AB/R, 24 July 2001, adopted 23 August 2001, paragraph 101
[36] Anti-Dumping Agreement, Article 1
[37] United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, Report of the Appellate Body, paragraph 196
Download in Adobe PDF for printing: Australia_rebuttal_submission.pdf (57 KB)