WTO panel finds that U.S.’s
Continued Dumping and Subsidy Offset Act of 2000 which provides for distribution
of anti-dumping and countervailing duty payments to “affected domestic
producers” constitutes unfair trade practices
In December 2000, Australia,
Brazil, Chile, the EU, India, Indonesia, Japan, Korea and Thailand asked for
consultations with the U.S. about an amendment to the U.S. Tariff Act of 1930
called the Continued Dumping and Subsidy Offset Act of 2000 (CDSOA). Congress
enacted it as part of the Agriculture, Rural Development, Food and Drug
Administration and Related Agencies Appropriations Act 2001, [Pub.L. No.
106-387, 114 Stat. 1549, sections 1001-1003] (also referred to as the “Byrd
Amendment”). Canada and Mexico later sought consultations regarding the same
matter. On October 25, 2001, the World Trade Organization (WTO) Dispute
Settlement Body (DSB) appointed a dispute settlement panel to address these
concerns.
The CDSOA amends Title VII of the
Tariff Act of 1930 by adding a new Section 754 entitled “Continued Dumping and
Subsidy Offset.” It provides that “Duties assessed pursuant to a countervailing
duty order, an anti-dumping duty order, or a finding under the Antidumping Act
of 1921 shall be distributed on an annual basis under this section to the
affected domestic producers for qualifying expenditures. Such distribution
shall be known as ‘the continued dumping and subsidy offset.’” According to an
EU press release, the U.S. distributed almost $207 million of the proceeds
collected pursuant to the Act in January 2002.
The Act defines “affected
domestic producer” as “a manufacturer, producer, farmer, rancher or worker
representative ... that (A) was a petitioner or interested party in support of
the petition with respect to which an anti-dumping duty order, a finding under
the Antidumping Act of 1921, or a countervailing duty order has been entered
...”
“Qualifying expenditures” is
defined as “expenditure[s] incurred after the issuance of the anti-dumping
finding or order or countervailing duty order in any of the following
categories: (A) Manufacturing facilities. (B) Equipment. (C) Research and
development. (D) Personnel training. ...”
The complainants argued that
these “offsets” constitute measures against dumping and subsidization which the
GATT does not contemplate. Neither does the Anti-Dumping Agreement (AD
Agreement), or the Subsidies and Countervailing Measures Agreement (SCM
Agreement).
In fact, these “offsets” provide
a strong incentive for U.S. parties to file or support anti-dumping and
anti-subsidy measures, thereby distorting the application of the AD and SCM
Agreements. Further, the “affected domestic producers” will have a vested
interest in receiving funds and this will impede any resolution of such trade
disputes.
The U.S. countered that CDSOA
authorizes “government payments” and that the distributions comport with GATT,
Article VI and the AD and SCM Agreements. Moreover, there is no evidence that
the U. S. will administer CDSOA in an unreasonable or partial manner (see
Article X:3(a) of GATT 1994) so as to affect anti-dumping and countervailing
duty investigations.
The various complainants argued
to the contrary. For example, Australia argued that the Act leaves no
discretion as to its implementation. Further, to the extent that a measure
provides for “specific action against dumping” other than permissible responses
under Article 18.1 of the AD Agreement, in conjunction with GATT Article VI:2
and Article 1 of the AD Agreement, it is at war with trading rules. The only
permissible responses are either a definitive anti-dumping duty, or a
provisional measure or a price undertaking.
Brazil asserted that the CDSOA
would unduly broaden the remedies (a) by providing monetary damages, and (b) by
subsidizing injured industries to allegedly offset damages from dumped or
subsidized imports. If the WTO accepts the CDSOA, other countries would follow
the U.S. lead and implement similar laws. This would lead to a chaotic
burgeoning of anti-dumping and countervailing duty investigations.In its Report
of September 16, 2002, the Panel agrees that the CDSOA violates trading rules.
The Panel makes two main findings. The first is that CDSOA is inconsistent with
AD Articles 5.4, 18.1 and 18.4, SCM Articles 11.4, 32.1 and 32.5, Articles VI:2
and VI:3 of GATT 1994, and Article XVI:4 of the WTO Agreement. On the other
hand, the CDSOA does not clash with AD Articles 8.3 and 15, SCM Articles 4.10,
7.9 and 18.3, and Article X:3(a) of GATT 1994.
Ultimately, the Panel noted that
the CDSOA is a new and complex law. If Members consider subsidization an
allowable response to unfair trade practices, they should work such matters out
through negotiation. In this case, the Panel suggested that the ideal solution
would be for the U.S. to repeal the CDSOA.
Citation: United States -
Continued Dumping and Subsidy Offset Act of 2000 (WT/DS217/R) (16 September
2002). [See Panel Report at “www.wto.org”; European Union in US news release
No. 50/02, September 16, 2002].
*** Mr. Kenneth Todd Wallace is an attorney and founding partner of the law firm. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/
