WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

Congressional research reportApr 23, 2012

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WTO Dispute Settlement: Status of

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

Summary

Although the United States has complied with adverse rulings in many past World Trade

Organization (WTO) disputes, there are currently 14 cases in which rulings have not yet been

implemented or the United States has acted and the dispute has not been fully resolved. Under

WTO dispute settlement rules, a WTO Member will generally be given a reasonable period of

time to comply. While the Member is expected to remove the offending measure by the end of

this period, compensation and temporary retaliation are available if the Member has not acted or

not taken adequate remedial action by this time. Either disputing party may request a compliance

panel if there is disagreement over whether a Member has complied in a case.

Nine unresolved cases involve trade remedies, including a long-standing dispute with Japan over

a provision of U.S. antidumping (AD) law and another with various WTO Members over the

Continued Dumping and Subsidy Offset Act of 2000. The Offset Act was repealed as of October

2005, but remains the target of sanctions by the European Union (EU) and Japan due to continued

payments to U.S. firms authorized under the repealer (P.L. 109-171). Six of these cases involve

“zeroing,” a practice under which the Department of Commerce (DOC), in calculating dumping

margins in AD proceedings, disregards non-dumped sales. The practice was challenged by the EU

(DS294/DS350), Japan (DS322), and Mexico (DS344), resulting in broad prohibitions on its use.

The United States administratively resolved one aspect of DS294 by abandoning zeroing in

original AD investigations, but has yet to comply fully either in this case or in DS350, 322, or

344, leading the EU (in DS294) and Japan to request the WTO to authorize sanctions. Under

memoranda signed by the United States with each complainant on February 6, 2012, however,

U.S.-requested arbitration of the two sanctions proposals has been suspended while the United

States makes new dumping determinations in challenged AD proceedings using a methodology

finalized in March 2012 that eliminates zeroing in later stages of AD cases. The sanctions

arbitrations will be terminated once implementation of the new determinations is complete. A

compliance panel report in Mexico’s zeroing dispute has not yet been publicly circulated. The

United States was expected to comply by March 17, 2012, in Brazil’s zeroing challenge (DS382),

but it is unclear if recent U.S. action will resolve the dispute. A July 2, 2012, deadline is in place

in the dispute with Vietnam (DS404). The United States is expected to comply by April 25, 2012,

in China’s challenge to U.S. countervailing duties imposed on Chinese goods (DS379).

Panel and Appellate Body reports were adopted in the EU’s successful challenge of U.S. aircraft

subsidies on March 23, 2012 (DS353) (“Boeing” case), and the United States is expected to

comply by September 23, 2012. In Brazil’s dispute over U.S. cotton subsidies (DS267), Congress

repealed a WTO-inconsistent cotton program in 2006 (P.L. 109-171), but other programs were

also successfully challenged and the United States was found not to have fully complied. The

United States later made statutory and administrative changes to the export credit guarantee

program faulted in the case. While the WTO has authorized Brazil to retaliate, the United States

and Brazil signed an agreement in June 2010 aimed at permanently resolving the dispute. It

includes Brazil’s pledge not to impose sanctions during the life of the agreement and foresees

possible legislative resolution of the dispute in the 2012 farm bill. The United States and Antigua

have been consulting on outstanding issues in Antigua’s challenge of U.S. online gambling

restrictions (DS285); compensation agreements between the United States and various WTO

Members in exchange for U.S. withdrawal of its WTO gambling commitments, an action taken to

resolve the case, will not enter into effect until issues with Antigua are settled. Also unsettled are

long-pending disputes with the European Union (EU) over a music copyright law (DS160) and a

statutory trademark provision affecting property confiscated by Cuba (DS176).

Congressional Research Service

WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

Contents

WTO Dispute Settlement Procedures .............................................................................................. 1

Uruguay Round Agreements Act (URAA): Statutory Requirements for Implementing

WTO Decisions ............................................................................................................................ 4

Section 102: Domestic Legal Effect of WTO Decisions ........................................................... 4

Federal Law......................................................................................................................... 4

State Law............................................................................................................................. 5

Preclusion of Private Remedies........................................................................................... 6

Domestic Implementation of WTO Decisions Involving Administrative Action...................... 7

Section 123: Regulatory Action Generally.......................................................................... 7

Section 129: Agency Determinations in Trade Remedy Proceedings ................................. 8

Judicial Responses................................................................................................................... 12

Pending WTO Disputes: An Overview.......................................................................................... 14

A Thumbnail Sketch of Pending Cases ................................................................................... 14

A Major Focus: Use of “Zeroing” in Antidumping Proceedings............................................. 15

Pending Disputes: Trade Remedies ............................................................................................... 23

Antidumping Measures on Hot-Rolled Steel Products from Japan (DS184) .......................... 23

Recent Developments........................................................................................................ 26

Continued Dumping and Subsidy Offset Act (DS217/DS234) ............................................... 26

Recent Developments........................................................................................................ 30

Laws, Regulations, and Methodology for Calculating Dumping Margins (“Zeroing”)

(DS294) ................................................................................................................................ 30

Recent Developments........................................................................................................ 40

Measures Relating to Zeroing and Sunset Reviews (DS322).................................................. 42

Recent Developments........................................................................................................ 48

Final Anti-Dumping Measures on Stainless Steel from Mexico (DS344)............................... 49

Recent Developments........................................................................................................ 51

Continued Existence and Application of Zeroing Methodology (DS350) .............................. 51

Recent Developments........................................................................................................ 53

Definitive Anti-Dumping and Countervailing Duties on Certain Products from China

(DS379) ................................................................................................................................ 54

Related U.S. Litigation: GPX Int’l Tire Corp. v. United States......................................... 62

Recent Developments........................................................................................................ 64

Anti-Dumping Administrative Reviews and Other Measures Related to Imports of

Certain Orange Juice from Brazil (DS382) .......................................................................... 65

Anti-Dumping Measures on Certain Shrimp from Vietnam (DS404) ..................................... 66

Pending Disputes: Subsidies.......................................................................................................... 67

Subsidies on Upland Cotton (DS267) ..................................................................................... 67

Recent Developments........................................................................................................ 80

Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (“Boeing”

Case) (DS353) ...................................................................................................................... 83

Pending Disputes: Trade in Services ............................................................................................. 91

Measures Affecting Cross-Border Supply of Gambling and Betting Services (DS285) ......... 91

Recent Developments........................................................................................................ 98

Pending Disputes: Trade-Related Intellectual Property Rights.................................................... 100

Section 110(5)(B) of the Copyright Act (Music Copyrights) (DS160) ................................. 100

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

Recent Developments...................................................................................................... 101

Section 211 of the Omnibus Appropriations Act of 1998 (Trademark Exclusion

Involving Property Confiscated by Cuba) (DS176) ........................................................... 102

Recent Developments...................................................................................................... 102

Contacts

Author Contact Information......................................................................................................... 103

Congressional Research Service

WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

his report provides a summary of the status of U.S. compliance efforts in pending World

Trade Organization (WTO) disputes that have resulted in adverse rulings against the

United States. The report focuses on cases in which panel and Appellate Body reports have

been adopted by the WTO Dispute Settlement Body, an action sending the disputes into the

compliance phase of the WTO dispute process. Although the United States has complied with

adverse rulings in many past WTO disputes,1 there are 14 pending cases in which the United

States is facing compliance deadlines in 2012; deadlines have expired but the United States has

not yet fully implemented the WTO decisions involved; or the United States has taken action,

including the enactment of legislation, but the prevailing parties in the dispute continue to

question whether the United States has fully complied and, as in one case, continue to impose

WTO-authorized trade sanctions. Compliance in these cases may implicate either legislative or

administrative action by the United States, or both.

The report begins with an overview of WTO dispute settlement procedures, focusing on the

compliance phase of the process, followed by a discussion of U.S. laws relating to WTO dispute

resolution proceedings. The report then lists pending WTO disputes in the compliance phase

categorized by subject matter: trade remedies, subsidies, trade in services, and trade-related

intellectual property rights. Disputes are listed in chronological order based on the date on which

the panel and any Appellate Body in the case were adopted by the WTO Dispute Settlement

Body. Each entry contains a discussion of major issues and U.S. compliance history. Longstanding cases also include a section titled “Recent Developments” discussing the latest activity

in the dispute.

WTO Dispute Settlement Procedures

WTO disputes are conducted under the terms of the WTO Understanding on the Rules and

Procedures Governing the Settlement of Disputes (Dispute Settlement Understanding or DSU).2

The DSU, which entered into force with the establishment of the World Trade Organization on

January 1, 1995, carries forward and expands upon dispute settlement practices developed under

the General Agreement on Tariffs and Trade (GATT). The DSU is administered by the WTO

Dispute Settlement Body (DSB), which is composed of all WTO Members. Where individual

WTO agreements contain special or additional dispute settlement rules that differ from those in

the DSU (e.g., expedited timelines for subsidy disputes in the Agreement on Subsidies and

Countervailing Measures), the former will prevail. A list of these agreements and rules is

contained in Appendix 2 of the DSU. The Office of the United States Trade Representative

(USTR) represents the United States in the WTO and in WTO disputes.

The case histories in this report are primarily based on WTO documents, available at http://www.wto.org, or the WTO

dispute settlement website indicated below. This report does not address cases in which the United States has

implemented adverse reports to the satisfaction of the complaining party and the dispute has been fully settled, nor does

it discuss the compliance history of other WTO Members that have been found to be in violation of their WTO

obligations. For further information on WTO disputes, see Office of the U.S. Trade Representative, “WTO Dispute

Settlement,” at http://www.ustr.gov/trade-topics/enforcement/dispute-settlement-proceedings/wto-dispute-settlement;

the annual Trade Policy Agenda and Annual Report of the President of the United States on the Trade Agreements

Program, at http://www.ustr.gov/sites/default/files/uploads/reports/2009/asset_upload_file86_15410.pdf; and WTO,

Update of WTO Dispute Settlement Cases (updated regularly), at http://www.wto.org/english/tratop_e/dispu_e/

dispu_e.htm.

For further information on WTO dispute settlement procedures, see “Dispute settlement,” at http://www.wto.org/

english/tratop_e/dispu_e/dispu_e.htm, and CRS Report RS20088, Dispute Settlement in the World Trade Organization

(WTO): An Overview, by (name redacted).

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

WTO dispute settlement may be characterized as a three-stage process: (1) consultations; (2)

panel and, if requested, Appellate Body (AB) proceedings; and (3) implementation. Within this

framework, the DSB establishes panels; adopts panel and appellate reports; authorizes

countermeasures when requested; and monitors the implementation of dispute settlement results.

The establishment of panels, adoption of panel and AB reports, and authorization of

countermeasures are decisions that are subject to a “reverse consensus” rule under which the DSB

agrees to these actions unless all DSB Members object. In effect, these decisions are virtually

automatic. Article 23 of the DSU requires a complaining Member to act in accordance with the

DSU when it initiates a dispute, including making any internal determination that another

Member has violated a WTO obligation consistent with the WTO decision in the case and

following DSU procedures to set a deadline by which the defending Member must comply,

determining the level of sanctions for non-compliance, and obtaining authorization from the DSB

to impose any such sanctions.

After the DSB adopts an adverse panel and any Appellate Body report, the defending Member

must inform the DSB of its compliance plans. If it is impracticable for the Member to comply

immediately, the Member will be allowed a “reasonable period of time” to do so. If the Member

proposes a compliance period and it is not approved by the DSB, the disputing parties may

negotiate a deadline themselves. If this fails, the length of the period will be arbitrated. A WTO

Member found to have violated WTO obligations is expected to comply by withdrawing the

offending measure by the end of the established compliance period, with compensation and

temporary retaliation available to the prevailing party as alternative remedies. Full compliance is

the preferred outcome, however, so as to ensure that negotiated rights and obligations are

preserved and maintained.

Article 22 of the DSU provides that if the prevailing Member in a dispute believes that the

defending Member has not implemented the WTO rulings and recommendations by the end of the

established compliance period, it may request the other Member to negotiate a compensation

agreement or it may ask the DSB for authorization to suspend WTO concessions, usually to

impose higher tariffs on selected imports from the defending country. The Member may choose

the latter option without first requesting compensation. In some cases, the prevailing party may

agree to extend the original compliance deadline instead of immediately seeking a remedy.

If a prevailing Member does choose to suspend concessions, it is expected to do so in the same

sector in which the WTO violation was found, but if the Member finds that this is not “practicable

or effective,” it may seek to suspend concessions in other sectors in the same agreement. If,

however, the Member finds that this alternative would also be impracticable or ineffective and

that “the circumstances are serious enough,” it may seek to suspend obligations under another

WTO agreement, referred to as “cross-retaliation.” A prevailing Member may seek to crossretaliate if, for example, in a dispute involving trade in goods, the Member does not import a

sufficient amount of goods from the defending Member to remedy the trade injury involved or the

Member believes that placing tariff surcharges on goods imported from the defending Member

would be unreasonably costly for the prevailing Member’s economy.

Under the DSU, the DSB is to authorize the retaliation request under the reverse consensus rule

within 30 days after the compliance period expires. If the defending Member objects to the

request, however, the proposed retaliation will be arbitrated and the 30-day deadline for

approving the retaliation request effectively extended. The objection may relate to the level of

nullification or impairment of benefits involved or whether DSU cross-retaliation rules have been

followed. The arbitration, which may be carried out by the original panel if members are

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

available, or by an arbitrator appointed by the WTO Director General, is ordinarily to be

completed within 60 days after the compliance period expires. The DSB then meets to authorize

the retaliation request, subject to any modification by the arbitrator.

In addition, Article 21.5 of the DSU provides for further dispute settlement proceedings in the

event the disputing parties disagree as to whether the defending Member has implemented the

WTO rulings and recommendations in a particular case. Once a compliance panel is convened, it

is expected to issue its report within 90 days; the report may then be appealed. In practice,

compliance panels may require a considerably longer period of time to complete their work where

a complicated case is involved. For example, in the European Union’s challenge to the U.S. use of

“zeroing” in antidumping proceedings (DS294), the EU made its compliance panel request in

September 2007, panelists were appointed in November 2007, and the panel report was not

publicly circulated until December 2008.

Because the DSU fails to incorporate Article 21.5 proceedings into the 30-day period for

approving countermeasures and the time frame for any subsequent arbitration, a procedural

problem, referred to as “sequencing,” has resulted. Disputing Members have often filled the gap

by entering into ad hoc bilateral procedural agreements setting out timelines for any requested

compliance-related proceedings and reserving Members’ rights in the unfolding of these

proceedings.3 Such agreements have been entered into in many of the cases discussed below.

The DSU provides that any suspension of concessions or other obligations is temporary and may

only be applied by the prevailing Member until the WTO-inconsistent measure is removed, the

defending Member provides a solution to any trade injury at issue, or a mutually satisfactory

resolution of the dispute is reached.4 Moreover, if a prevailing Member is ultimately authorized to

impose countermeasures, the Member is not required to implement them. As evident from some

of the cases discussed in this report, WTO Members may manage disputes in a variety of ways at

the compliance phase, short of imposing sanctions.

See Sylvia A. Rhodes, The Article 21.5/22 Problem: Clarification Through Bilateral Agreements?, 3 J. INT’L ECON. L.

553 (2000).

The DSU does not expressly set out a procedure for obtaining the removal of countermeasures, though Members may

obtain a ruling on whether continued imposition is warranted either through a compliance panel or a new dispute

settlement proceeding. The issue of removing such measures arose in connection with the continued levying of

increased tariffs on imports from the European Union (EC) by the United States and Canada in response to the EC’s

failure to comply with WTO decisions faulting European Union import restrictions on beef produced with growth

hormones. The EC initiated WTO dispute settlement proceedings against the United States and Canada in 2004. The

Appellate Body, reversing the panel on various points, recommended that the disputing parties request an Article 21.5

compliance panel proceeding in order to resolve their differences as to whether the EC is in compliance in the

underlying beef hormone cases (DS26/DS48) and whether the U.S. and Canadian countermeasures thus have a legal

basis. Appellate Body Report, United States—Continued Suspension of Obligations in the EC-Hormones Dispute,

WT/DS320/AB/R (October 16, 2008); Appellate Body Report, Canada—Continued Suspension of Obligations in the

EC-Hormones Dispute, WT/DS321/AB/R (October 16, 2008). The EC requested consultations under Article 21.5 in

December 2008, but the proceeding involving the United States has since been suspended as part of a bilateral

agreement intended to resolve the beef hormone dispute. Press Release, Office of the USTR, USTR Announces

Agreement with European Union in Beef Hormones Dispute (updated June 22, 2009), at http://www.ustr.gov/about-us/

press-office/press-releases/2009/may/ustr-announces-agreement-european-union-beef-hormones-; European

Commission, Memorandum on Beef Hormones dispute signed with the United States (May 14, 2009), at

http://ec.europa.eu/trade/issues/respectrules/dispute/memo140509_en.htm.

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

Uruguay Round Agreements Act (URAA): Statutory

Requirements for Implementing WTO Decisions

The legal effect of Uruguay Round agreements and WTO dispute settlement results in the United

States is comprehensively dealt with in the Uruguay Round Agreements Act (URAA), P.L. 103465, which addresses the relationship of WTO agreements to federal and state law and prohibits

private remedies based on alleged violations of WTO agreements.5 The statute also requires the

United States Trade Representative (USTR) to keep Congress informed of disputes challenging

U.S. laws once a dispute panel is established, any U.S. appeal is filed, and a panel or Appellate

Body report is circulated to WTO Members.6 In addition, the URAA places requirements on

regulatory action taken to implement WTO decisions and contains provisions specific to the

implementation of panel and appellate reports that fault U.S. actions in trade remedy proceedings.

Section 102: Domestic Legal Effect of WTO Decisions

Section 102 of the URAA and its legislative history establish that domestic law supersedes any

inconsistent provisions of the Uruguay Round agreements and that congressional or

administrative action, as the case may be, is required to implement adverse decisions in WTO

dispute settlement proceedings.

Federal Law

Section 102(a)(1), 19 U.S.C. Section 3512(a)(1), provides that “[n]o provision of any of the

Uruguay Round Agreements, nor the application of any such provision to any person or

circumstance, that is inconsistent with any law of the United States shall have effect.” The URAA

further provides, at Section 102(a)(2), 19 U.S.C. Section 3512(a)(2), that nothing in the statute

“shall be construed ... to amend or modify any law of the United States ... or ... to limit any

authority conferred under any law of the United States ... unless specifically provided for in this

act.”

As explained in Statement of Administrative Action (SAA) accompanying the Uruguay Round

agreements when they were submitted to Congress in 1994, “[i]f there is a conflict between U.S.

law and any of the Uruguay Round agreements, section 102(a) of the implementing bill makes

clear that U.S. law will take precedence.”7 Moreover, Section 102 is further intended to clarify

that all changes to U.S. law “known to be necessary or appropriate” to implement the WTO

For background discussions regarding the effect of treaties and international agreements in domestic law, see CRS

Report RL32528, International Law and Agreements: Their Effect Upon U.S. Law, by (name redacted); Ronald A.

Brand, Direct Effect of International Economic Law in the United States and the European Union, 17 NW. J. INT’L L. &

BUS. 556 (1996-97); and John H. Jackson, Status of Treaties in Domestic Legal Systems: A Policy Analysis, 86 AM. J.

INT’L L. 310 (1992).

Uruguay Round Agreements Act (URAA), P.L. 103-465, §123(d)-(f), 19 U.S.C. §3533(d)-(f).

Uruguay Round Agreements, Statement of Administrative Action, H.Doc. 103-316(I) at 659 (1994)[hereinafter cited

as Uruguay Round SAA]. The SAA, which was expressly approved in the URAA, is “regarded as an authoritative

expression by the United States concerning the interpretation and application of the Uruguay Round Agreements and ...

[the URAA] in any judicial proceeding in which a question arises concerning such interpretation or application.”

URAA, §102(d), 19 U.S.C. §3512(d).

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

agreements are incorporated in the URAA and that any unforeseen conflicts between U.S. law

and the WTO agreements “can be enacted in subsequent legislation”8 Congress has traditionally

treated potential conflicts with prior GATT agreements and free trade agreements in this way,

treatment that it also deems to be “consistent with the Congressional view that necessary changes

in Federal statutes should be specifically enacted, not preempted by international agreements.”9

This approach carries over into the implementation of WTO dispute settlement results, a situation

explained as follows in URAA legislative history:

Since the Uruguay Round agreements as approved by the Congress, or any subsequent

amendments to those agreements, are non-self-executing, any dispute settlement findings

that a U.S. statute is inconsistent with an agreement also cannot be implemented except by

legislation approved by the Congress unless consistent implementation is permissible under

the terms of the statute.10

State Law

Where a state law is at issue in a WTO dispute, the URAA provides for federal-state cooperation

in the proceeding and limits any domestic legal challenges to the law to the United States.11 The

act’s general preclusion of private remedies (discussed below) further centralizes the response to

adverse WTO decisions involving state law in the federal government.12

Section 102(b) provides as follows:

No State law, or the application of such a State law, may be declared invalid as to any person

or circumstance on the ground that the provision or its application is inconsistent with any of

the Uruguay Round Agreements, except in an action brought by the United States for the

purposes of declaring such law or application invalid.13

H.Rept. 103-826(I), at 25; see also S.Rept. 103-412, at 13.

H.Rept. 103-826(I), at 25; see also S.Rept. 103-412, at 13, and the Uruguay Round SAA, supra note 7, at 1032-33.

The latter states as follows: “Reports issued by panels or the Appellate Body under the DSU have no binding effect

under the law of the United States and do not represent an expression of U.S. foreign or trade policy. They are no

different in this respect than those issued by GATT panels since 1947. If a report recommends that the United States

change federal law to bring it into conformity with a Uruguay Round agreement, it is for the Congress to decide

whether any such change will be made.”

A challenge by Brazil to Florida’s equalizing excise tax on processed orange and grapefruit products (WT/DS250)

was resolved in 2004 without panelists having been appointed after Florida amended its statute. Notification of

Mutually Agreed Solution, United States—Equalizing Excise Tax Imposed by Florida on Processed Orange and

Grapefruit Products, WT/DS250/3 (June 2, 2004); U.S. Brazil Settle Long-standing Dispute Over Florida Tax to

Promote Citrus Products, 21 Int’l Trade Rep. (Bloomberg BNA) 945 (2004). In the challenge by Antigua and Barbuda

to both federal and state laws affecting the cross-border supply of gambling and betting services (DS285), the United

States prevailed on the issue of whether the state measures infringed market access obligations under the General

Agreement on Trade in Services (GATS). The WTO Appellate Body found that the panel had erred in considering

whether the eight laws at issue violated the Agreement because the complainant had not presented sufficient evidence

and legal arguments to establish a prima facie case. United States—Measures Affecting the Cross-Border Supply of

Gambling and Betting Services, WT/DS285. See infra text accompanying notes 387-436 for further discussion of this

case.

For further discussion, see Uruguay Round SAA, supra note 7, at 676.

URAA, §102(b)(2)(A), 19 U.S.C. §3512(b)(2)(A). The term “State law” is defined to include “any law of a political

subdivision of a State, as well as any State law that regulates or taxes the business of insurance.” URAA, §102(b)(3),

(continued...)

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

According to legislative history, the provision “makes clear that the Uruguay Round agreements

do not automatically preempt State laws that do not conform to their provisions, even if a WTO

dispute settlement panel or the Appellate Body were to determine that a particular State measure

was inconsistent with one or more of the Uruguay Round agreements.”14 The statute also contains

certain restrictions in any such legal action brought by the United States, including that the report

of the WTO dispute settlement panel or the Appellate Body may not be considered binding or

otherwise accorded deference.15 Any such suit by the United States is expected to be a rarity.16

Preclusion of Private Remedies

Private remedies are prohibited under Section 102(c)(1) of the URAA, 19 U.S.C. Section

3512(c)(1), which provides that “[n]o person other than the United States ... shall have a cause of

action or defense under any of the Uruguay Round Agreements or by virtue of congressional

approval of such an agreements” or “may challenge, in any action brought under any provision of

law, any action or inaction by any department, agency, or other instrumentality of the United

States, any State, or any political subdivision of a State, on the ground that such action or inaction

is inconsistent with such agreement.”

Congress has additionally stated in Section 102(c)(2) of the URAA, 19 U.S.C. Section

3512(c)(2), that it intends, through the prohibition on private remedies:

to occupy the field with respect to any cause of action or defense under or in connection with

any of the Uruguay Round Agreements, including by precluding any person other than the

United States from bringing any action against any State or political subdivision thereof or

raising any defense to the application of State law under or in connection with any of the

Uruguay Round Agreements—

(A) on the basis of a judgment obtained by the United States in an action brought under any

such agreement; or

(B) on any other basis.

(...continued)

19 U.S.C. §3512(b)(3). The term is intended to encompass “any provision of a state constitution, regulation, practice or

other state measure.” Uruguay Round SAA, supra note 7, at 674.

S.Rept. 103-412, at 15; see also H.Rept. 103-826(I), at 25, and Uruguay Round SAA, supra note 7, at 670.

URAA, §102(b)(2)(B), 19 U.S.C. §3512(b)(2)(B). In addition, the United States will have the burden of proving that

the State law or its application is inconsistent with the WTO agreement in question; any State whose interests may be

impaired or impeded by the suit will have the unconditional right to intervene as a party, and the United States will be

entitled to amend its complaint to include a claim or cross-claim concerning the law of a State that does intervene; and

any State law that is declared invalid will not be considered to have been invalid in its application during any period

before the court’s judgment becomes final and all timely appeals are exhausted. The statute also requires the United

States Trade Representative to notify Congress before bringing any such suit. URAA, §102(b)(2)(C), 19 U.S.C.

§3512(b)(2)(C).

Uruguay Round SAA, supra note 7, at 674; H.Rept. 103-826(I), at 26; S.Rept. 103-412, at 15. The SAA states, inter

alia, that the Attorney General “will be particularly careful in considering recourse to this authority where the state

measure involved is aimed at the protection of human, animal, or plant health or of the environment or the state

measure is a state tax of a type that has been held to be consistent with the requirements of the U.S. Constitution. In

such a case, the Attorney General would entertain use of this statutory authority only if consultations between the

President and the Governor of the State concerned failed to yield an appropriate alternative.” Uruguay Round SAA,

supra note 7, at 674.

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WTO Dispute Settlement: Status of U.S. Compliance in Pending Cases

The House Ways and Means Committee report on the URAA discusses the rationale and

implications of Section 102(c) as follows:

For example, a private party cannot bring an action to require, preclude, or modify

government exercise of discretionary or general “public interest” authorities under other

provisions of law. These prohibitions are based on the premise that it is the responsibility of

the Federal Government, and not private citizens, to ensure that Federal or State laws are

consistent with U.S. obligations under international agreements such as the Uruguay Round

agreements.17

The SAA notes, however, that Section 102(c) “does not preclude any agency of government from

considering, or entertaining argument on, whether its action or proposed action is consistent with

the Uruguay Round agreements, although any change in agency action would have to be

authorized by domestic law.”18

Domestic Implementation of WTO Decisions Involving

Administrative Action

In addition to the URAA provisions that limit the direct effect of WTO rules and decisions in U.S.

law, the URAA also places requirements on agencies in their implementation of WTO panel and

Appellate Body reports. These provisions apply to regulatory action in general and to new agency

determinations in response to WTO decisions involving trade remedy proceedings.

Section 123: Regulatory Action Generally

Section 123(g) of the URAA, 19 U.S.C. Section 3533(g), provides that in any WTO case in which

a departmental or agency regulation or practice has been found to be inconsistent with a WTO

agreement, the regulation or practice may not be rescinded or modified in implementation of the

decision “unless and until” the United States Trade Representative and relevant agencies meet

congressional consultation and private sector advice requirements, the proposal has been

published in the Federal Register with a request for public comment, and the final rule or other

modification has been published in the Federal Register.19 Section 123(g) does not apply to any

regulation or practice of the U.S. International Trade Commission.

The statute requires the USTR to consult with “the appropriate congressional committees”

regarding the proposed contents of the final rule or other modification. These committees include

the House Ways and Means Committee, the Senate Finance Committee, and any other

H.Rept. 103-826(I), at 26.

Uruguay Round SAA, supra note 7, at 676.

The provision first came into play in 1996 when the United States took regulatory action to comply with the adverse

WTO decision in United States—Standards for Reformulated and Conventional Gasoline, WT/DS2, WT/DS4. See

World Trade Organization (WTO) Decision on Gasoline Rule (Reformulated and Conventional Gasoline), 61 Federal

EPA to resolve the dispute, finding, inter alia, that the agency was not statutorily precluded from considering factors

other than air quality in issuing rules under the antidumping provision of the Clean Air Act and could thus consider the

effect of the proposed rule on U.S. treaty obligations. George E. Warren Corp. v. U.S. Environmental Protection

Agency, 159 F.3d 616 (D.C.Cir. 1998).

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congressional committees that have jurisdiction over matter at hand.20 In addition, the final rule or

other modification may not take effect until 60 days after the USTR has begun committee

consultations, unless the President determines that an earlier effective date is in the national

interest. The House Ways and Means Committee and the Senate Finance Committee may vote to

indicate the disagreement of the committee with the proposed action during the 60-day period.

Any such vote is not binding on the agency or department involved.21

Section 129: Agency Determinations in Trade Remedy Proceedings

Section 129 of the URAA, 19 U.S.C. Section 3538, sets forth authorities and procedures under

which the Department of Commerce (DOC) and the U.S. International Trade Commission (ITC)

may issue new subsidy, dumping and injury determinations, referred to as Section 129

Determinations, in implementation of adverse WTO decisions involving U.S. safeguards,

antidumping, and countervailing duty proceedings. Section 129 does not authorize the Commerce

Department or the ITC to issue new determinations on their own motion, but instead grants the

USTR the discretion to direct the agency to do so in a given case.

In antidumping and countervailing duty investigations, which are carried out under authorities in

Title VII of the Tariff Act of 1930, 19 U.S.C. Sections 1671-1677n, the Commerce Department

determines the existence and level of dumping or subsidization, as the case may be, and the ITC

determines whether the dumped or subsidized imports cause material injury, or a threat of

material injury, to a domestic industry. Under U.S. safeguards law, set forth in Title II of the Trade

Act of 1974, 19 U.S.C. Sections 2251-2254, the ITC conducts investigations to determine if

increased imports, whether or not they are fairly traded, are a substantial cause of serious injury to

a domestic industry. If the ITC makes an affirmative injury determination, it recommends

remedial measures (e.g., a tariff surcharge or import quota) to the President, who ultimately

determines whether or not to take action.

Implemented Section 129 Determinations in antidumping and countervailing duty cases are

reviewable in the U.S. Court of International Trade and by binational panels established under

Chapter 19 of the North American Free Trade Agreement (NAFTA).22 Chapter 19 panels are

URAA, §121(3), 19 U.S.C. §3531(3).

Two 110th Congress bills would have placed restrictions on the use of Section 123 authorities. S. 364 (Rockefeller)

would have amended Section 123 to provide that any regulatory modification or final rule proposed under the Section

could only enter into force if approved by joint resolution enacted into public law. The bill would also have rescinded

certain Section 123 regulatory modifications that had already taken effect. S. 1919 (Baucus) would have established a

WTO Dispute Settlement Review Commission to evaluate WTO decisions under statutory criteria and prohibited a

domestic regulatory modification under Section 123 from taking effect unless and until Congress received the

Commission’s report on the WTO decision involved. No action was taken on either of these bills. See also infra note

133.

URAA, §129(e), adding Tariff Act of 1930, §516A(a)(2)(B)(vii), 19 U.S.C. §1516a(a)(2)(B)(vii)), and amending

Tariff Act of 1930, §516A(g)(8)(A)(i), 19 U.S.C. §1516a(g)(8)(A)(i).

The Uruguay Round SAA states the following regarding the legal implications of possible parallel judicial proceedings

regarding the same agency determinations:

Since implemented determinations under section 129 may be appealed, it is possible that

Commerce or the ITC maybe in the position of simultaneously defending determinations in which

the agency reached different conclusions. In such situations, the Administration expects that courts

and binational panels will be sensitive to the fact that under the applicable standard of review, as set

forth in statute and case law, multiple permissible interpretations of the law and the facts may be

legally permissible in any particular case, and the issuance of a different determination under

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available to review final agency determinations in antidumping and countervailing duty

investigations involving NAFTA countries in lieu of judicial review in the country in which the

determination is made.

U.S. International Trade Commission

If an interim WTO panel report or a WTO Appellate Body report concludes that an action by the

ITC in connection with a trade remedy proceeding is inconsistent with U.S. obligations under the

WTO Antidumping Agreement, the Agreement on Subsidies and Countervailing Measures, or the

Agreement on Safeguards, the USTR may request the ITC to issue an advisory report on whether

U.S. antidumping, countervailing duty, or safeguards law, as appropriate, allows the ITC to take

steps with respect to the proceeding at issue that would render its action “not inconsistent with”

the panel or AB findings.23

The ITC is to report to the USTR within 30 calendar days of the USTR’s request where an interim

report is involved, and within 21 calendar days in case of an AB report.24 These deadlines are

aimed at ensuring that the USTR will receive the requested advice in time to decide whether to

appeal a panel’s interim report or to implement an adverse report, and to estimate the period of

time that may be needed to implementing the WTO decision.25

If a majority of the ITC Commissioners have found that action may be taken under existing law,

the USTR must consult with the House Ways and Means Committee and the Senate Finance

Committee and may request the ITC in writing to issue a new determination in the underlying

proceeding that would render the ITC action “not inconsistent with” the WTO findings.26 The

new determination must be issued within 120 days of the USTR’s request.27 The 120-day limit is

intended to allow the USTR to propose a reasonable period of time for implementation to the

WTO Dispute Settlement Body once the DSB adopts a WTO panel and any Appellate Body

report in a case.28

In the event the ITC issues a new negative injury or threat of injury determination, the imports

subject to antidumping or countervailing duty order at issue, or a least a portion of them, would

no longer be considered to have caused a harmful effect, even though they may in fact be dumped

or subsidized. The Tariff Act requires that the imposition of antidumping or countervailing duties

on dumped or subsidized imports be supported by an affirmative injury determination and thus,

absent such a determination, the antidumping or countervailing duty order would need to be

revoked in whole or in part. Section 129(a)(6) authorizes the USTR to direct the Commerce

(...continued)

section 129 does not signify that the initial determination was unlawful.

Uruguay Round SAA, supra note 7, at 1027.

URAA, §129(a)(1), 19 U.S.C. §3538(a)(1).

URAA, §129(a)(2), 19 U.S.C. §3538(a)(2).

Uruguay Round SAA, supra note 7, at 1023.

URAA, §129(a)(3),(4), 19 U.S.C. §3538(a)(3),(4).

ITC authority to issue a new determination is granted “notwithstanding any provision of Tariff Act of 1930 ... or title

II of the Trade Act of 1974.” The Uruguay Round SAA explains that “[m]any of the ITC’s proceedings are timelimited by statute, and the ITC cannot revisit its actions in those proceedings in the absence of the authority provided

by subsection (a)(4) or a remand.” Uruguay Round SAA, supra note 7, at 1024.

Id.

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Department to take this action.29 The USTR must consult with the House Ways and Means and

Senate Finance Committees before the ITC’s new determination is implemented.30

Where a safeguard proceeding is involved, Section 129 authorizes the President, after receiving a

new ITC determination, to reduce, modify, or terminate the safeguard notwithstanding other

statutory requirements governing changes in existing safeguard measures.31 The President must

consult with the House Ways and Means Committee and Senate Finance Committee before acting

under this authority. The USTR is required to publish a notice of the implementation of any ITC

determination in the Federal Register.32

Department of Commerce

Section 129 also sets out a procedure for new Department of Commerce determinations in

antidumping and countervailing duty proceedings, though without the requirement for an initial

agency advisory report regarding the scope of the agency’s statutory discretion. Instead, promptly

after the issuance of a WTO panel or Appellate Body report finding that a DOC determination in

an antidumping or countervailing duty proceeds is inconsistent with U.S. obligations under the

WTO Antidumping Agreement or the Agreement on Subsidies and Countervailing Measures, the

USTR is to consult with the Commerce Department and the House Ways and Means and Senate

Finance Committees, and may request the department, in writing, to issue a determination in

connection with the underlying antidumping or countervailing duty proceeding that would render

its action “not inconsistent with” the panel or appellate findings.33 The Commerce Department

must issue its Section 129 Determination within 180 days of the request.34 A new determination

may, for example, reduce the dumping margin or net subsidy and thus result in a reduction of

existing duties. After consulting with DOC and the above-named congressional committees,

USTR may direct DOC to implement its determination in whole or in part.35

Prospective Implementation of Section 129 Determinations

Section 129(c)(1) of the URAA provides that Section 129 Determinations, whether issued by the

ITC or the Commerce Department, apply prospectively, that is, the full or partial revocation of the

antidumping or countervailing duty order or the implementation of the DOC determination, as the

case may be, applies to unliquidated entries of the subject merchandise that are entered, or

URAA, §129(a)(6), 19 U.S.C. §3538(a)(6).

URAA, §129(a)(5),(6), 19 U.S.C. §3538(a)(5),(6).

URAA, §129(a)(7), 19 U.S.C. §2254(b)(3).

URAA, §129(c)(2)(B), 19 U.S.C. §3538(c)(2)(B).

URAA, §129(b)(1),(2), 19 U.S.C. §3538(b)(1),(2). Senate legislative history indicates that USTR is expected to

“consult closely with Commerce in order to ensure that it benefits from Commerce’s expertise with respect to both the

panel or Appellate Body reports and the appropriate implementing action (if any), including the implications of any

such action on the administration of the antidumping or countervailing duty law.” S.Rept. 103-412, at 27. The Senate

Finance Committee has further stated that it “expects to be consulted closely by the Administration throughout this

process, and to be informed and provided an explanation should USTR decide to implement an adverse panel or

Appellate Body decision notwithstanding a contrary recommendation by Commerce.” Id. If USTR directs Commerce

to implement the new determination, “Commerce may do so even if litigation is pending with respect to the initial

agency determination.” H.Rept. 103-826(I), at 39.

URAA, §129(b)(2), 19 U.S.C. §3538(b)(2).

URAA, §129(b)(3),(4), 19 U.S.C. §3538(b)(3),(4).

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withdrawn from warehouse for consumption, on or after the date on which the USTR directs the

Commerce Department to revoke the order or implement the determination.36 Unliquidated

entries are those for which the U.S. Customs and Border Protection (CBP) has not ascertained a

final rate and amount of duty.37 Notices of the implementation of Section 129 Determinations

must be published in the Federal Register.

The Uruguay Round SAA explains the operation of Section 129(c)(1) as follows:

Consistent with the principle that GATT panel recommendations apply only prospectively,

subsection 129(c)(1) provides that where determinations by the ITC or Commerce are

implemented under subsections (a) or (b), such determinations have prospective effect only.

That is, they apply to unliquidated entries of merchandise entered, or withdrawn from

warehouse, for consumption on or after the date on which the Trade Representative directs

implementation. Thus, relief available under subsection 129(c)(1) is distinguishable from

relief available in an action brought before a court or a NAFTA binational panel, where,

depending on the circumstances of the case, retroactive relief may be available. Under

129(c)(1), if implementation of a WTO report should result in the revocation of an

antidumping or countervailing duty order, entries made prior to the date of Trade

Representative’s direction would remain subject to potential duty liability.38

Canada unsuccessfully challenged Section 129(c)(1) in a WTO dispute settlement proceeding in

2001 on the ground that the provision violated the WTO Dispute Settlement Understanding and

various WTO antidumping and countervailing duty obligations. Under the retrospective U.S.

antidumping and countervailing duty system, DOC ordinarily makes a final assessment of the

duties owed on dumped or subsidized goods in an administrative review conducted after the

goods are imported. The review covers goods that enter the United States during a specified prior

12-month period. Until this final duty assessment is made for particular goods, importers must

deposit estimated duties with CBP on entry.39 Canada argued that, where a DOC or ITC

determination in an antidumping or countervailing duty proceeding is found to violate a WTO

obligation, Section 129(c)(1) effectively prohibits the United States from fully complying with

the WTO decision by preventing it from refunding estimated duties deposited with CBP before

the date that the Section 129 Determination is implemented. In other words, because the duty

deposits supported by the challenged determination would no longer have a WTO-consistent

basis, Canada argued that they must be returned.40

In response to Canada’s claim, the United States maintained that Section 129(c)(1) addresses only

the treatment of imports entered after the implementation date and does not govern the treatment

of prior entries for which final duties have not yet been calculated. The United States further

argued that the statute does not mandate any particular treatment of these prior unliquidated

entries and that the United States has other legal options for dealing with them, including

URAA, §129(c)(1), 19 U.S.C. §3538(c)(1). This provision has been held to be unambiguous in its prospective effect.

E.g., Corus Staal BV, v. United States, 593 F.Supp.2d 1373, 1382-83 (Ct. Int’l Trade 2008).

U.S. Customs and Border Protection, Importing into the United States; A Guide for Commercial Importers 105-106

(2002 ed.), at http://www.cbp.gov/nafta/cgov/pdf/iius.pdf.

Uruguay Round SAA, supra note 7, at 1026. See also H.Rept. 103-826(I), at 39; S.Rept. 103-412, at 27.

Trade Act of 1974, §751(a), 19 U.S.C. §1675(a), 19 C.F.R, §351.212(a), 351.213. The rate determined in the

administrative review is also the rate at which estimated duties on imports entered during the succeeding year are

assessed and will apply until any subsequent administrative review produces a new rate.

Request for the Establishment of a Panel by Canada, United States—Section 129(c)(1) of the Uruguay Round

Agreements Act, WT/DS221/4 (July 13, 2001).

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establishing a new dumping or subsidy margin by using a WTO-consistent methodology in an

administrative review of the entries or, in the event the duty order or orders were revoked as a

result of the WTO proceeding, revising the duty rate in response to a domestic court decision

involving the earlier entries.41

In a report issued in July 2002, the WTO panel concluded that Canada failed to establish that the

statute either required WTO-inconsistent action on the part of the United States or precluded the

United States from taking action in accordance with its WTO obligations.42 Canada did not

appeal, and the panel report was adopted by the DSB in August 2002.

Judicial Responses

Although private rights of action based on Uruguay Round agreements are precluded under

Section 102(c) of the Uruguay Round Agreements Act, WTO panel findings have at times been

brought to the attention of federal courts, most often in challenges to agency determinations in

antidumping and countervailing duty proceedings initiated under judicial review provisions

contained in Section 516A of the Tariff Act of 1930, 19 U.S.C. Section 1516a. Section 129

determinations issued by the ITC and the Commerce Department to comply with WTO decisions

are also reviewable under this statute. These cases are heard in the U.S. Court of International

Trade (USCIT), which has exclusive jurisdiction over civil actions brought under Section 516A.43

The USCIT’s decisions may be appealed to the U.S. Court of Appeals for the Federal Circuit,

whose decisions are reviewable by the U.S. Supreme Court.

Federal courts must hold a final agency determination in an antidumping or countervailing duty

proceeding or a Section 129 Determination unlawful if it is found to be “unsupported by

substantial evidence on the record, or otherwise not in accordance with law.”44 To determine

whether an agency legal interpretation applied in an agency determination is in accordance with

law, the court employs the two-step analysis set out by the U.S. Supreme Court in Chevron,

U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984).45 First, the court, using

tools of statutory construction, determines whether Congress has clearly spoken to the issue at

hand. Second, if the underlying statute is silent or ambiguous, the court decides whether the

agency’s construction of the statute is permissible and will defer to an agency’s interpretation of a

statute provided it is reasonable. It has also been argued that, in considering whether an agency

construction is reasonable for purposes of the second prong of the Chevron test, the court should

apply the canon of construction articulated by the Supreme Court in 1804 in Murray v. Schooner

Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804). This canon holds that where a statute does not

Second Written Submission of the United States, United States—Section 129(c)(1) of the Uruguay Round

Agreements Act (WT/DS221), paras. 17-20 (March 8, 2002), at http://www.ustr.gov/webfm_send/688.

Panel Report, United States—Section 129(c)(1) of the Uruguay Round Agreements Act, WT/DS221/R (July 15,

2002).

28 U.S.C. §1581(c)(enacted in Customs Courts Act of 1980, P.L. 96-417, §201).

Tariff Act of 1930, §516A(b)(1)(B)(i), 19 U.S.C. §1516a(b)(1)(B)(i).

See United States v. Eurodif S.A., 129 S.Ct. 878, 886-87 (2009); United States v. Mead Corp., 533 U.S. 218, 226-27

(2001). See also Wheatland Tube Co. v. United States, 495 F.3d 1355 (Fed. Cir. 2007); Pesquera Mares Australes Ltda.

v. United States, 266 F.3d 1372, 1379-82 (Fed. Cir. 2001); Koyo Seiko Co. v. United States, 36 F.3d 1565, 1570 (Fed.

Cir. 1994), Corus Staal BV v. United States, 593 F.Supp.2d 1373, 1381-82 (Ct. Int’l Trade 2008); Windmill Int’l PTE

v. United States, 193 F.Supp.2d 1303, 1305-306 (Ct. Int’l Trade 2002); Cultivos Miramonte S.A. v. United States, 980

F.Supp. 1268, 1271-72 (Ct. Int’l Trade 1997).

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require a specific interpretation, that is, it permits more than one interpretation, it should be

interpreted consistently with U.S. international obligations.46 In the current context, the

international obligation would be that contained in a WTO agreement, either by itself or as

interpreted in one or more WTO decisions.47 Plaintiffs thus argue, on the basis of the Charming

Betsy canon, that an agency interpretation that violates a WTO obligation is unreasonable under

Chevron step two.

Because the underlying cause of action in domestic legal challenges to the agency actions

described above is based in the Tariff Act and not on a provision of a WTO agreement, courts

have not viewed Section 102(c) of the URAA as preventing them from hearing a WTO-based

argument in these challenges.48 When faced with such arguments, courts may deem WTO

decisions to be “persuasive”49 or a source of useful reasoning, “if sound” to inform a court’s

decision,50 but state that WTO decisions are not binding on the United States, U.S. agencies, or

the judiciary.51 Most recently, courts have made clear that, given the statutory scheme established

in the URAA for regulatory implementation of adverse WTO decisions, questions as to whether

the United States should comply with an adverse WTO decision, and what the extent of U.S.

compliance should be, are matters falling within the province of the executive branch.52 As a

result, in ruling on whether an agency’s interpretation of a statute is reasonable, courts have

See, e.g, Corus Staal BV v. U.S. Dep’t of Commerce, 259 F.Supp.2d 1253, 1262 (Ct. Int’l Trade 2003) and generally

Jane A. Restani & Ira Bloom, Interpreting International Trade Statutes: Is The Charming Betsy Sinking? 24 FORDHAM

INT’L L. J. 1533 (2001). The Charming Betsy canon stems from the following Supreme Court language: “It has also

been observed, that an act of congress ought never to be construed to violate the law of nations, if any other possible

construction remains, and consequently, can never be construed to violate neutral rights, or to affect neutral commerce,

further than is warranted by the law of nations as understood in this country.” Murray v. Schooner Charming Betsy, 6

U.S. (2 Cranch) 64, 118 (1804).

See, e.g, Corus Staal BV v. Dept. of Commerce, 395 F.3d 1343, 1347 (Fed. Cir. 2005), cert denied, 126 S.Ct. 1023

(2006); Timken Co. v. United States, 354 F.3d 1334, 1343-44 (Fed. Cir. 2004); Corus Staal BV v. United States, 593

F.Supp.2d 1373, 1383-84 (Ct. Int’l Trade 2008).

E.g., SNR Roulements v. United States, 341 F.Supp.2d 1334, 1341 (Ct. Int’l Trade 2004); Timken v. United States,

240 F.Supp. 2d 1228, 1238 (Ct. Int’l Trade 2002); Gov’t of Uzbekistan v. United States, 2001 WL 1012780, at *3 (Ct.

Int’l Trade August 30, 2001).

Koyo Seiko Co. v. United States, 442 F.Supp.2d 1360, 1363 (Ct. Intl Trade 2006), citing, inter alia, NSK Ltd. v.

United States, 358 F.Supp.2d 1276, 1288 (Ct. Int’l Trade 2005). Note also that in Cummings Inc. v. United States, the

Court of Appeals for the Federal Circuit held that a classification opinion of the World Customs Organization “is not

binding and is entitled, at most, to ‘respectful consideration’” by a U.S. court. 454 F.3d 1361, 1366 (Fed. Cir. 2006).

Hyundai Electronics Co. v. United States, 53 F.Supp.2d 1334, 1343 (Ct. Int’l Trade 1999); see also, e.g., Allegheny

Ludlum Corp. v. United States, 367 F.3d 1339, 1348 (Fed. Cir. 2004).

Corus Staal BV v. Dept. of Commerce, 395 F.3d 1343, 1348-49 (Fed. Cir. 2005), cert denied, 126 S.Ct. 1023 (2006).

See also Corus Staal BV v. United States, 502 F.3d 1370, 1375 (Fed. Cir. 2007), and Koyo Seiko Co. v. United States,

442 F.Supp.2d 1360, 1363 (Ct. Int’l Trade 2006). For discussions of federal cases addressing the domestic effect of

WTO decisions, see, e.g., Robin Miller, Effect of World Trade Organization (WTO) Decisions Upon United States, 17

A.L.R.FED.2D 1 (2007) and Patrick C. Reed, Relationship of WTO Obligations to U.S. International Trade Law:

Internationalist Vision Meets Domestic Reality, 38 GEO. J. INT’L L. 209 (2006).

Koyo Seiko Co. v. United States, 551 F.3d 1286, 1291 (Fed. Cir. 2008)(“The determination whether, when, and how

to comply with the WTO’s decision on ‘zeroing’, involves delicate and subtle political judgments that are within the

authority of the Executive and not the Judicial Branch.”); Corus Staal BV v. Dept. of Commerce, 395 F.3d 1343, 1347

(Fed. Cir. 2005), cert denied, 126 S.Ct. 1023 (2006); SKF USA v. United States, 611 F.Supp.2d 1351, 1359-60 (Ct. Intl

Trade 2009); Corus Staal BV v. United States, 593 F.Supp.2d 1373, 1383-85 (Ct. Int’l Trade 2008). See also Koyo

Seiko Co. v. United States, 442 F.Supp. 1360, 1363 (Ct. Int’l Trade 2006). In this case, the court refused to permit the

plaintiff to amend its complaint to challenge the Commerce Department’s “zeroing” methodology on the ground that

the WTO had since adopted an Appellate Body decision faulting the U.S. practice, stating that such an amendment

would be futile “given that it is not controlling precedent and is immaterial to the court’s examination of the

administrative decisions issued by the Department.”

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rejected Charming Betsy arguments and declined to base their decision making on a WTO

decision adverse to the United States where the executive branch has not taken the necessary

domestic action to comply.53

Pending WTO Disputes: An Overview

A Thumbnail Sketch of Pending Cases

There are currently 14 pending WTO cases in which the United States is the defending (or in the

language of the WTO Dispute Settlement Understanding, “responding”) party. As noted earlier,

this report treats a WTO case as pending if the United States has not fully implemented adopted

WTO panel and Appellate Body reports or the United States has taken action, including the

enactment of legislation, but the prevailing parties in the dispute continue to question whether the

United States has fully complied. In one such case, complaining Members are continuing to

impose WTO-authorized trade sanctions. Of the 14 cases, nine involve U.S. trade remedies, with

the remainder involving subsidies, trade in services, or trade-related intellectual property rights.

Six of the nine pending trade remedy cases focus on the U.S. practice of “zeroing” in

antidumping proceedings, discussed in greater detail below. The remaining three are a longstanding dispute with Japan over a portion of U.S. antidumping law governing the calculation of

dumping rates for producers and exporters who are not individually investigated by the

Commerce Department in an antidumping proceeding; a dispute involving the Continued

Dumping and Subsidy Offset Act, a statute that required the distribution of collected antidumping

and countervailing duties to petitioners and interested parties in the underlying trade remedy

proceedings; and the application of U.S. antidumping and countervailing duty law to products of

China.

The United States took administrative action to resolve its antidumping dispute with Japan, but

has yet to amend a statutory provision at issue in the case. While Congress repealed the CDSOA

as of October 1, 2005, and Congress placed additional restrictions on available funds in 2010, the

2005 repeal legislation mandates the distribution to U.S. firms of duties collected on goods

entered through September 30, 2007. The European Union and Japan, two complainants who

have objected to the post-repeal disbursements, are continuing to retaliate with tariff surcharges

on U.S. goods, albeit in decreasing amounts. The United States and China have agreed to a

deadline of April 25, 2012, in their countervailing duty dispute.54

E.g., Corus Staal BV v. Dept. of Commerce, 395 F.3d 1343, 1349 (Fed. Cir. 2005), cert denied, 126 S.Ct. 1023

(2006) and SNR Roulements v. United States, 341 F.Supp.2d 1334, 1343-44 (Ct. Int’l Trade 2004). See also Mary Jane

Alves, Reflections on the Current State of Play: Have U.S. Courts Finally Decided to Stop Using International

Agreements and Reports of International Trade Panels in Adjudicating International Trade Cases? 17 TUL. J. INT’L &

COMP. L. 299 (2009). Jeffry L. Dunoff, Less Than Zero: The Effects of Giving Domestic Effect to WTO Law, 6 LOY. U.

CHI. INT’L L. REV. 279 (2008); and John D. Greenwald, After Corus Staal—Is There Any Role, and Should There Be—

for WTO Jurisprudence in the Review of U.S. Trade Measures by U.S. Courts? 39 GEO. J. INT’L L. 199 (2007).

In another recent case brought by China against the United States, a panel report adverse to the United States was

issued in September 2010, but because the challenged measure had expired before the panel concluded its work, the

United States was not required to take any action. The panel in the case, United States—Certain Measures Affecting

Imports of Poultry from China, found that a U.S. appropriations restriction set to expire on September 30, 2009, which

prohibited the use of appropriated funds “to establish or implement a rule allowing poultry products to be imported into

the United States from the People’s Republic of China,” violated U.S. obligations under the WTO Agreement on

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As the result of a compliance panel proceeding, the United States was found not to have fully

complied in Brazil’s challenge to U.S. cotton subsidies and continues to face the possibility of

retaliation by Brazil against U.S. goods and possibly U.S. services or intellectual property

interests. While Congress repealed or made statutory changes to U.S. export credit guarantee

programs that were found by the WTO to be prohibited subsidies and the executive branch made

administrative changes to one of these programs under revised statutory authority, Congress also

reauthorized payments under two domestic support programs that Brazil successfully challenged

as actionable subsidies. Payments under these programs were found to cause serious prejudice to

Brazil in the form of significant price suppression in the world upland cotton market. Brazil is

currently authorized to impose sanctions to remedy both prohibited and actionable subsidy

measures at issue in the case. The United States and Brazil have temporarily resolved their

dispute, however, forestalling any application of sanctions by Brazil.

Antigua’s challenge to federal laws governing the remote supply of gambling services, while only

partially successful, left certain issues unresolved and resulted in the United States withdrawing

its market access commitments for gambling services under the General Agreement on Trade in

Services (GATS). Antigua sought authorized retaliation in the WTO dispute as well as

compensation under the GATS for the negative effects of the U.S. withdrawal of GATS

commitments. Outstanding issues still remain subject to discussion by the two parties.

Two long-standing disputes involve intellectual property rights, each of these brought by the

European Union (EU).55 The first involves Section 110(5)(B) of the Copyright Act, a statute

affecting music licensing; the second, Section 211 of the Omnibus Appropriations Act of 1998, a

statute addressing trademarks that involve property confiscated by Cuba. The United States made

a payment of $3 million to the EU in partial resolution of the music licensing case, but has not yet

fully complied. While bills have been introduced in past and current Congresses aimed at

resolving the trademark dispute, none has been enacted.

A Major Focus: Use of “Zeroing” in Antidumping Proceedings

Twenty-one WTO complaints against the United States have challenged the use of “zeroing,” a

practice used by the Department of Commerce (DOC) in antidumping proceedings to calculate

dumping margins, that is, the amount by which the home market or “normal” value of a good

exceeds its export price. Under this practice, DOC, in calculating dumping margins for an

imported product, disregards non-dumped sales and thus, complainants argue, inflates the

dumping margin or establishes a dumping margin where one might not otherwise exist. Of the 21

cases, six are currently in the compliance phase. Two of these cases were brought by the

(...continued)

Sanitary and Phytosanitary Measures, the GATT most-favored nation article, and the GATT prohibition on quantitative

restrictions. Panel Report, United States—Certain Measures Affecting Imports of Poultry from China, WT/DS392/R

(September 29, 2010). The challenged provision was Section 727 of the Omnibus Appropriations Act, 2009, P.L. 1118, Div. A, 123 Stat. 557. There was no appeal in the case and the panel report was adopted on October 25, 2010.

As of December 1, 2009, “European Union” replaced “European Communities” as the official name of this WTO

Member. The terms European Communities and EC still appear in older WTO materials, including panel and Appellate

Body reports, bilateral procedural agreements in particular disputes, and communications to the WTO Dispute

Settlement Body. Except for references to any such older WTO documents, this report uses the name “European

Union” or the acronym “EU” in the text of the report regardless of the time period being discussed. For further

information, see European Union or Communities?, at http://www.wto.org/english/thewto_e/countries_e/

european_union_or_communities_popup.htm.

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European Union (DS294 and DS350), with one each brought by Japan (DS322), Mexico

(DS344), Brazil (DS382), and Vietnam (DS404). The decisions in these cases have resulted in a

broad WTO prohibition on the use of zeroing in U.S. antidumping proceedings, a multi-phased

process consisting of original investigations, annual administrative reviews, five-year “sunset”

reviews, and, in some cases, “changed circumstances” and “new shipper” reviews.

In response to the first EU challenge (DS294), the Commerce Department in early 2007

discontinued the use of zeroing in the price comparison employed most frequently in original

antidumping investigations and recalculated dumping margins in the investigations cited by the

EU, issuing new determinations under Section 129 of the Uruguay Round Agreements Act

(URAA). The United States has yet to fully comply with the WTO decisions in this case, the

cases initiated by Japan (DS322) and Mexico (DS344), and the second EU challenge (DS350), to

the extent that the WTO decisions involve the use of zeroing in other phases of U.S. antidumping

proceedings.

Both the EU (in DS294) and Japan requested authorization from the WTO to impose trade

sanctions against the United States for non-compliance with the WTO decisions involved; the

United States objected to the proposals and, thus, under WTO dispute settlement rules, the

requests were automatically sent to arbitration. In 2010, the EU and Japan agreed to suspend the

arbitrations on the understanding that the United States would address outstanding issues by early

September 2011. In response, the Department of Commerce issued a Federal Register notice in

December 2010 in which it proposed as a general rule to calculate dumping margins and duty

assessment rates with an offset for non-dumped sales, that is, without zeroing, in administrative,

expedited administrative, and new shipper reviews and, by implication, to eliminate zeroing in

sunset reviews as well.

The dates for resuming the sanctions arbitrations were extended several times, ultimately to

February 6, 2012, for both the EC and Japan. Under separate memoranda signed by the United

States with the EU and Japan on that date, the suspensions will continue while the United States

finalizes the December 2010 zeroing proposal and issues Section 129 determinations using the

new methodology in eight AD proceedings challenged by the EU, one proceeding challenged by

Japan, and possibly a second proceeding challenged by Japan if U.S. courts do not uphold the

revocation of the antidumping order at issue. The sanctions arbitrations are to be terminated once

the Section 129 proceedings are completed, that is, on the date the USTR directs DOC to

implement the new determinations. DOC is expected to issue the Section 129 determinations

within four months of February 6, 2012, and the USTR is expected to direct DOC to implement

these determinations within seven days after they are issued. Implementation will be on a

prospective basis; that is, the new cash deposit rates resulting from the recalculated dumping

margins will apply to unliquidated entries (i.e., entries for which final duties have not been

assessed) that enter on or after the date that the determinations are implemented.

In September 2010, Mexico requested a compliance panel in DS344, alleging the failure of the

United States to comply with the WTO decision as it involves antidumping administrative

reviews in general and reviews of the original antidumping order challenged in the case. The

panel has not yet publicly circulated its report. The United States was expected to comply by

March 17, 2012, in Brazil’s zeroing challenge (DS382), but it is unclear if recent actions taken by

the United States will resolve the dispute. A deadline of July 2, 2012, is set in the dispute with

Vietnam (DS404).

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New complaints involving zeroing were filed in 2011 by Korea (DS420), China (DS422), and the

EU (DS424), and by Vietnam in February 2012 (DS429).56 A panel was established in Korea’s

challenge on February 22, 2012, following the entry into a bilateral procedural agreement by

Korea and the United States; among other things, the agreement aims at expediting the panel

proceeding and excludes from the panel’s consideration U.S. compliance efforts in other WTO

zeroing cases that may address issues also raised in Korea’s panel request.57 A panel was

established in China’s challenge in October 2011 after the United States and China entered into a

bilateral procedural agreement under which the parties agreed to expedite the panel process,

China pledged to provide the necessary evidence and arguments to support its allegations, and the

United States agreed not to contest China’s claim that the measures identified in the agreed-upon

panel request are inconsistent with the relevant section of the WTO Antidumping Agreement, an

approach the United States has taken in recent cases in which the use of zeroing in initial

investigations was challenged.58 The panel was appointed on December 21, 2011.59 The complaint

by the EU remains in consultations,60 as does the complaint by Vietnam, which involves a variety

of antidumping issues.61

Finally, 11 other WTO complaints have cited the U.S. use of zeroing; some of these disputes were

resolved through the panel process, while others remain in consultations or have been otherwise

settled.62 To date, more than 25 WTO panel and Appellate Body reports have been rendered on

this issue.

Request for Consultations by the Republic of Korea, United States—Anti-Dumping Measures on Corrosion-Resistant

Carbon Steel Flat Products from Korea, WT/DS420/1 (February 3, 2011); Request for Consultations by China, United

States—Anti-Dumping Measures on Certain Frozen Warmwater Shrimp from China, WT/DS422/1 (March 2,

2011)(caption since revised); Request for Consultations by the European Union, United States—Anti-Dumping

Measures on Imports of Stainless Steel Sheet and Strip in Coils from Italy, WT/DS424/1 (April 6, 2011); Request for

Consultations by Viet Nam, United States—Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS429/1

(February 27, 2012).

WTO News Item, Panel set up in steel case, reports adopted on raw materials, footwear and plastic (February 22,

2012), at http://www.wto.org/english/news_e/news12_e/dsb_14feb12_e.htm; Agreement on Procedures between Korea

and the United States, United States—Anti-Dumping Measures on Corrosion-Resistant Carbon Steel Flat Products

from Korea, WT/DS420/6 (February 15, 2012).

Request for the Establishment of a Panel by China, United States—Anti-Dumping Measures on Certain Shrimp and

Diamond Sawblades from China, WT/DS422/3 (October 14, 2011); Agreement on Procedures between China and the

United States, United States—Anti-Dumping Measures on Certain Shrimp and Diamond Sawblades from China,

WT/DS422/4 (October 14, 2011). Regarding past U.S. practice not to contest certain zeroing complaints, see infra

notes 62-63 and accompanying text.

Note by the Secretariat, Constitution of the Panel Established at the Request of China, United States—Anti-Dumping

Measures on Certain Shrimp and Diamond Sawblades from China, WT/DS422/5 (January 6, 2012).

The antidumping order in the EU’s challenge has since been revoked, 76 Federal Register 49450 (August 10, 2011),

an action that the EU has stated “could ... resolve” the dispute. Press release, European Commission, DirectorateGeneral for Trade, EU welcomes US decision to lift duties on stainless steel sheet and strip (August 10, 2011), at

http://trade.ec.europa.eu/doclib/press/index.cfm?id=731.

See the USTR’s notice and request for comments regarding this case, at WTO Dispute Settlement Proceeding

Regarding United Stares; Anti-Dumping Measures on Certain Shrimp from Viet Nam, 77 Federal Register 19745

(April 2, 2012).

The 11 cases, in reverse chronological order by DS number, are as follows:

United States—Use of Zeroing in Anti-Dumping Measures Involving Products from Korea, WT/DS 402 (adverse panel

report adopted February 24, 2011; dispute resolved with implementation in October and November 2011 of three

Section 129 Determinations in which dumping margins were recalculated without use of zeroing; as a result two

challenged AD orders were revoked in full and one in part);

United States—Antidumping Measures on Polyethylene Retail Carrier Bags from Thailand, WT/DS383 (adverse panel

(continued...)

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The conduct of antidumping investigations and the imposition of antidumping duties are subject

to obligations in the WTO Agreement on Antidumping and Article VI of the General Agreement

on Tariffs and Trade 1994 (GATT 1994), which permits the imposition of an antidumping duty on

an imported product “not greater in amount than the margin of dumping in respect of such

product.” While neither of these agreements expressly address the use of zeroing in antidumping

investigations or in the various reviews and duty assessments carried out in antidumping

proceedings, WTO panels and the Appellate Body have found that the use of zeroing in original

investigations, as applied in two types of price comparisons, is inconsistent with obligations in

Article 2.4.2 of the WTO Antidumping Agreement, a provision requiring WTO Members to

determine dumping margins by comparing normal and export values of “all comparable export

transactions.”63 In addition, WTO panels and the Appellate Body have concluded that the use of

zeroing in administrative and new shipper reviews violates GATT and Antidumping Agreement

prohibitions on imposing antidumping duties that exceed the dumping margin for the goods under

investigation. Further, reliance on zeroing-based dumping margins in mandatory five-year sunset

(...continued)

report adopted February 18, 2010; dispute resolved with July 2010 implementation of Section 129 Determination in

which dumping margins were recalculated without use of zeroing; AD order partially revoked as a result);

United States—Measures Related to Shrimp from Thailand, WT/DS343 (adverse panel and AB reports adopted August

1, 2008; dispute resolved with January 2009 implementation of Section 129 Determination in which dumping margins

were recalculated without use of zeroing);

United States—Anti-dumping Measure on Shrimp from Ecuador, WT/DS335 (adverse panel report adopted February

20, 2007; dispute resolved with August 2007 revocation of the AD order at issue);

United States—Anti-dumping Determinations Regarding Stainless Steel from Mexico, WT/DS325 (consultations only;

see WT/DS344, discussed in text, for further action);

United States—Provisional Anti-Dumping Measures on Shrimp from Thailand, WT/DS324 (consultations only; see

WT/DS343, supra, for further action);

United States—Anti-dumping Measures on Cement from Mexico, WT/DS281 (panel established but work suspended;

dispute settled with 2006 bilateral Trade in Cement Agreement);

United States—Final Dumping Determination on Softwood Lumber from Canada, WT/DS264 (adverse panel and AB

reports in original dispute adopted August 31, 2004; adverse AB report and reversed panel report in compliance panel

proceeding adopted September 1, 2006; dispute settled with 2006 bilateral Softwood Lumber Agreement);

United States—Provisional Anti-Dumping Measures on Import of Certain Softwood Lumber from Canada, WT/DS247

(consultations only; dispute settled with 2006 bilateral Softwood Lumber Agreement);

United States—Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan,

WT/DS244 (Appellate Body reversed panel finding that United States did not violate WTO Antidumping Agreement in

relying on zeroing-based dumping margin in challenged sunset review, but found that it had insufficient factual basis to

complete analysis of Japan’s claim; reports adopted January 9, 2004);

United States—Anti-dumping Duties on Silicon Metal from Brazil, WT/DS239 (consultations only).

Article 2.4.2 states, in pertinent part, as follows: “Subject to the provisions governing fair comparison in paragraph 4,

the existence of margins of dumping during the investigation phase shall normally be established on the basis of a

comparison of a weighted average normal value with a weighted average of prices of all comparable export

transactions or by a comparison of normal value and export prices on a transaction-to-transaction basis.”

The first WTO decision in which the U.S. practice of zeroing was ruled to be inconsistent with this provision of the

WTO Antidumping Agreement was United States—Final Dumping Determination on Softwood Lumber from Canada

(Softwood Lumber), WT/DS264, a case involving the application of zeroing in an average-to-average price comparison

in an original antidumping investigation. As summarized in a January 2010 panel report, the WTO Appellate Body

found in Softwood Lumber “that the terms ‘margins of dumping’ and ‘all comparable export transactions’ in Article

2.4.2 must be interpreted in an ‘integrated manner’, such that where ‘an investigating authority has chosen to undertake

multiple comparisons [of product sales], the investigating authority necessarily has to take into account the results of all

those comparisons in order to establish margins of dumping for the product as a whole under Article 2.4.2’.” Panel

Report, United States—Anti-Dumping Measures on Polyethylene Retail Carrier Bags from Thailand, para. 7.20,

WT/DS383/R (January 22, 2010).

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reviews of antidumping duty orders has been found to violate Article 11.3 of the WTO

Antidumping Agreement on the ground that such reliance taints the fundamental determination

made in sunset reviews, namely, whether revocation of the antidumping order is likely to lead to

the recurrence or continuation of dumping and injury.

As a result of these cases, the use of zeroing has been found to be broadly prohibited in the

calculation of dumping margins in U.S. antidumping proceedings, both as a general practice and

as applied in particular proceedings. Moreover, findings in related compliance panel proceedings

that a WTO decision faulting the use of zeroing in an original antidumping investigation

continues to apply with respect to subsequent annual administrative reviews are particularly

important for the U.S. “retrospective” antidumping duty system of which administrative reviews

are a key component. It has also been found in these cases that, where goods have entered the

United States before the end of the compliance period established in a WTO dispute but final

duties have not been collected, zeroing-based duties may not be applied to such goods once the

compliance period has ended. In addition, the Appellate Body has found that an additional claim

may be made in an initial WTO complaint against zeroing, namely, the “continued use” of the

practice in subsequent domestic proceedings relating to a particular antidumping duty order.

As mentioned earlier, the United States has responded to these decisions by prospectively

eliminating the use of zeroing in original investigations under a regulatory modification issued by

the Commerce Department under Section 123(g) of the Uruguay Round Agreements Act and

finalizing its December 2010 regulatory modification on the use of zeroing in subsequent phases

of antidumping proceedings. Where the use of zeroing in an individual original antidumping

investigation has been challenged, the United States has resolved the case by the issuance of a

Section 129 Determination in which the dumping margin in question has been recalculated

without the use of zeroing.64 The United States has not contested recent complaints of this type

before the panel.

It is not clear that prospective modification of U.S. zeroing practice—that is, its application to

new proceedings only—and the issuance of case-by-case recalculations under Section 129 will be

sufficient to satisfy the concerns of all WTO complainants.65 The EU, however, appears to have

dropped any demands that it had for the refund of zeroing-based duties paid after the expiration of

the compliance periods in its zeroing cases, given that the memorandum that the EU signed with

the United States in February 2012 aimed at resolving its zeroing disputes with the United States

An example is United States—Antidumping Measures on Polyethylene Retail Carrier Bags from Thailand

(WT/DS383). On January 22, 2010, the WTO dispute panel issued a report finding that the United States was in

violation of its obligations under the WTO Antidumping Agreement. Panel Report, United States—Antidumping

Measures on Polyethylene Retail Carrier Bags from Thailand, WT/DS383/R (January 22, 2010). The United States did

not contest Thailand’s claim in the case. See id. para. 3.3. The panel report was adopted on February 18, 2010, and the

two parties agreed to a compliance deadline of August 18, 2010. Agreement on Procedures between Thailand and the

United States, United States—Antidumping Measures on Polyethylene Retail Carrier Bags from Thailand,

WT/DS383/4 (January 12, 2010); Agreement under Article 21.3(b) of the DSU, United States—Antidumping Measures

on Polyethylene Retail Carrier Bags from Thailand, WT/DS383/6 (April 6, 2010). The Section 129 Determination was

issued on June 29, 2010, and implemented effective July 28, 2010. Notice of Implementation of Determination Under

Section 129 of the Uruguay Round Agreements Act and Partial Revocation of the Antidumping Duty Order on

Polyethylene Retail Carrier Bags from Thailand, 75 Federal Register 48940 (August 12, 2010). Thailand expressed

appreciation for the “timely” U.S. determination at the August 31, 2010, meeting of the WTO Dispute Settlement

Body. Dispute Settlement Body, Minutes of Meeting, August 31, 2010, at 11-12, WT/DSB/M/286 (October 22, 2010).

See, e.g., Brazil Mulling Whether to Move Forward with Zeroing Case Against U.S., INSIDE U.S. TRADE, March 30,

2012, at 19; U.S. Still Examining Whether It Will Adjust Past Reviews in Zeroing Cases, INSIDE U.S. TRADE, January 7,

2011, at 3.

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provides that the new WTO-compliant dumping margins to be calculated by the United States

will be applied only to future entries of merchandise.66

The United States has been critical of the Appellate Body’s broad prohibition on the use of

zeroing at meetings of the WTO Dispute Settlement Body and in related documents circulated to

Members. In addition, the United States submitted proposals in June 2007 to the WTO

Negotiating Group of Rules, which has been negotiating revisions to antidumping and subsidy

rules in the Doha Round, asking that negotiators evaluate the reasoning of the WTO panels that

have examined the issue of zeroing and stating that “the proper resolution of this issue requires

clear text providing that margins of dumping may be determined without offsets for non-dumped

transactions, consistent with the long-held concept of dumping.”67 The United States also

proposed revised language for the Antidumping Agreement to this effect.68 While the draft

negotiating text issued by the Chairman of the Doha Negotiating Group in November 2007

contained proposed language reflecting U.S. concerns,69 the draft text issued in December 2008

does not contain such language and instead notes that, with regard to zeroing, “[d]elegations

remain profoundly divided on this issue,” with positions ranging from “insistence on a total

prohibition of zeroing irrespective of the comparison methodology used and in respect of all

proceedings to a demand that zeroing be specifically authorized in all contexts.”70

Notwithstanding these uncertainties, including the continued inability of WTO Members to

complete the Doha Round, the United States stated at a February 2012 meeting of the WTO

Dispute Settlement Body that “it will continue to press in ongoing WTO negotiations for

affirmation that ‘zeroing’ is consistent with WTO rules.”71

Domestic Legal Basis for Zeroing

Although the Tariff Act of 1930, at Section 735(A), 19 U.S.C. Section 1677(35), defines the terms

“dumping margin” and “weighted average dumping margin,” it does not expressly address the

practice of zeroing. Using the Chevron standard of judicial review, U.S. courts have held that the

statute does not unambiguously require zeroing, but that the Commerce Department’s

interpretation of the statute as allowing the practice is a permissible one.72 Courts have also

See, e.g., Dispute Settlement Body, Minutes of Meeting, January 25, 2011, at 9, WT/DSB/M/291 (March 8, 2011);

Dispute Settlement Body, Minutes of Meeting, February 24, 2011, at 8-9, WT/DSB/M/293 (May 2, 2011).

Communication from the United States, Offsets for Non-Dumped Comparisons, TN/RL/W/208 (June 5, 2007).

Proposal from the United States, Proposal on Offsets for Non-Dumped Comparisons, TN/RL/GEN/147 (June 27,

2007).

WTO, Negotiating Group on Rules, Draft Consolidated Chair Texts of the AD and SCM Agreements, at 6, 20,

TN/RL/W/213 (November 30, 2007).

WTO, Negotiating Group on Rules, New Draft Consolidated Chair Texts of the AD and SCM Agreements, at 6,

TN/RL/W/236 (December 19, 2008). See also 16 Members Propose Complete Ban of All ‘Zeroing’ in WTO Rules

Talks, 25 Int’l Trade Rep. (Bloomberg BNA) 149 (January 31, 2008); China, Other WTO Members Add Support to

Proposal on Elimination of Zeroing, 25 Int’l Trade Rep. (Bloomberg BNA) 185 (February 7, 2008). See also U.S.

Continues Fight to Preserve Zeroing in Doha Despite New Proposal, INSIDE U.S. TRADE, January 7, 2011, at 8; Office

of the U.S. Trade Representative, 2011 TRADE POLICY AGENDA AND 2010 ANNUAL REPORT, at 10 (March 2011), at

http://www.ustr.gov/webfm_send/2597; Commerce Signals Link Between Doha Talks and Zeroing Compliance, INSIDE

U.S. TRADE, March 11, 2011, at 17.

Statement by the United States at the February 22, 2012, DSB Meeting, para. E., at http://geneva.usmission.gov/

2012/02/23/statement-by-the-united-states-at-the-february-22-2012-dsb-meeting/.

SKF USA Inc. v. United States, 491 F. Supp. 1354, 1364-66 (Ct. Int’l Trade 2007), aff’d, 537 F.3d 1373 (Fed. Cir.

2008); Corus Staal BV v. Department of Commerce, 395 F.3d 1343, 1347 (Fed. Cir. 2005), cert denied, 126 S.Ct. 1023

(2006); Timken Co. v. United States, 354 F.3d 1334, 1341-42 (Fed. Cir.), cert denied sub nom. Koyo Seiko Co. v.

(continued...)

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refused to implement adverse WTO decisions on zeroing, leaving determinations as to “whether,

when, and how” to comply with such rulings to the executive branch.73

Further, the U.S. Court of International Trade (USCIT) ruled in July 2009 that the Commerce

Department’s determination under Section 123 of the Uruguay Round Agreements Act to

eliminate the use of zeroing in average-to-average comparisons in original antidumping

investigations and to offset sales made at less than fair value with fair value sales, an action taken

in response to the WTO decision in DS294, was based on a reasonable interpretation of U.S.

antidumping law for purposes of Chevron and was thus in accordance with law.74 As discussed

earlier, Section 123 sets out statutory requirements for U.S. regulatory modifications taken to

implement WTO decisions. Thus, in its Chevron analysis, the court also considered that the

department was undertaking this interpretation in the context of statutory authorities and

requirements with an international dimension, stating that the “deference accorded to

Commerce’s interpretation [under Chevron] is at its highest when that agency acts under the

authority of a Congressional mandate to harmonize U.S. practices with international obligations,

particularly when it allows the Executive Branch to speak on behalf of the U.S. to the

international community on matters of trade and commerce.”75 The court further held that,

because the Section 123 action was in accordance with law, the department’s use of this new

approach in a Section 129 Determination taken to comply with the WTO decision was “not

unlawful.”76 In October 2010, the U.S. Court of Appeals for the Federal Circuit (CAFC), in a

decision focused on the Section 129 claim, found that the department’s Section 129

Determination “reflects Commerce’s reasonable interpretation of an ambiguous statute” and

affirmed the USCIT decision.77

In March 2011, however, the CAFC ruled in Dongbu Steel Co. v. United States that DOC’s use of

zeroing in administrative reviews while abandoning it in initial investigations was an arbitrary

interpretation of the statute for purposes of Chevron step two, vacating and remanding the

contrary USCIT judgment and remanding to DOC for further proceedings to enable DOC to

explain its reasoning.78 The court found, in part, that the government’s decision to implement an

adverse WTO decision “standing alone does not provide sufficient justification for the

inconsistent statutory interpretations.”79 The court stated in summary:

our prior case law does not address the situation at hand where Commerce has decided to

interpret 19 U.S.C. §1677(35) differently based on the nature of the antidumping proceeding

at issue. Applying Chevron step two to this ambiguous statute, we conclude that the agency

has not provided a reasonable explanation for why the statute supports such inconsistent

interpretations.... We accordingly vacate the decision of the Court of International Trade and

remand for further proceedings to give Commerce the opportunity to explain its reasoning. It

may be that Commerce cannot justify using opposite interpretations of 19 U.S.C. §1677(35)

(...continued)

United States, 543 U.S. 976 (2004).

Koyo Seiko Co. v. United States, 551 F.3d 1286, 1290-91 (Fed. Cir. 2008).

U.S. Steel Corp. v. United States, 637 F.Supp.2d 1199, 1209-16 (Ct. Int’l Trade 2009).

Id. at 1212.

Id. at 1216.

United States Steel Corp. v. United States, 621 F.3d 1351, 1360-63 (Fed. Cir. 2010).

Dongbu Steel Co. v. United States, 635 F.3d 1363, 1369-73 (Fed. Cir. 2011).

Id. at 1372.

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in investigations and in administrative reviews. Under such circumstances, Commerce is of

course free to choose a single consistent interpretation of the statutory language.80

In a subsequent case, JTEKT Corp. v. United States, DOC explained to the CAFC that the reason

for continuing to use zeroing in administrative reviews was that investigations and administrative

reviews are “different proceedings with different purposes,” with the dumping margin calculation

in the former used to determine if an antidumping order will be imposed and the dumping margin

calculation in the latter used to determine the amount of the duty assessment on entries subject to

the order.81 In response, the court ruled in June 2011 that DOC had “failed to address the relevant

question—why is it a reasonable interpretation of the statute to zero in administrative reviews, but

not in investigations?”—and again vacated and remanded.82

The U.S. Court of International Trade remanded the case to the Commerce Department on

December 15, 2011, ordering the department to issue a redetermination in which it reconsiders its

decision in the administrative review at issue; to modify its decision or explain how the language

of 19 U.S.C. §1677(35) may be construed differently as to the use of zeroing whether an original

investigation or an administrative review is involved; and, if the department modifies its decision

and decides not to apply zeroing or to make some other change, to redetermine the dumping

margin for the exporter involved.83 The court stated that to be adequate under the CAFC standard

articulated in Dongbu and JTEKT, discussed above, “any such explanation must identify a ‘basis

in the statute for reading 19 U.S.C. §1677(35) differently in administrative reviews than in

investigations’ … and must explain why the differences between antidumping investigations and

antidumping administrative reviews, ‘make it reasonable to continue zeroing in one phase, but

not the other.’”84

In Union Steel v. United States, a February 2012 decision of the USCIT, the court accepted the

department’s more expansive explanation and upheld the continued use of zeroing in

administrative reviews.85 The department provided three reasons for its different approaches: (1)

zeroing has been was the department’s “preferred method” and has been consistently upheld by

the courts; (2) the difference in procedures was the result of the department’s decision to comply

with WTO decisions; and (3) there exist inherent differences in the nature and purpose of

investigations and reviews.86 Regarding the third rationale, the department contrasted the fact that

investigations focus on “overall pricing behavior of an exporter in order to establish an

antidumping duty order” while reviews are used to set final rates to be used to assess antidumping

duties.87 The court stated that, in reviews, “it is reasonable for the agency to look for more

accuracy, which it achieves in some measure through monthly averaging, and also for the agency

to look for the full measure of duties resulting therefrom, which it better achieves through

Id. at 1373.

JTEKT Corp. v. United States, 642 F.3d 1378, 1384-85 (Fed. Cir. 2011).

Id. at 1384-85.

JTEKT Corp. v. United States, No. 08-00324, slip. op at 7-8 (Ct. Int’l Trade December 15, 2011), at

http://www.cit.uscourts.gov/slip_op/Slip_op11/11-158.pdf.

Id., slip op. at 6 (emphasis added by the court).

Union Steel and Dongbu Steel Co., Ltd v. United States, No. 11-00083 (Ct. Int’l Trade February 27, 2012), at

http://www.cit.uscourts.gov/SlipOpinions/Slip_op12/12-24.pdf.

Id., slip op. at 18-22.

Id. at 20-21.

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zeroing.”88 The court thus concluded that’s “when it comes to reviews, which are intended to

more accurately reflect commercial reality, Commerce is permitted to unmask dumping behavior

in a way that is not necessary at the investigation stage.”89 Considering these reasons in the

context of a statute that is silent on the matter of zeroing, the court held that Commerce did not

abuse its discretion in changing only its investigation methodology and acted reasonably in

applying the antidumping statute to conform to the different purposes of the two.90

Pending Disputes: Trade Remedies

Antidumping Measures on Hot-Rolled Steel Products

from Japan (DS184)

In November 1999, Japan challenged determinations made by the Department of Commerce

(DOC) and the U.S. International Trade Commission (ITC) in an antidumping investigation of

hot-rolled steel products from Japan initiated in 1998. Under Section 703 of the Tariff Act of

1930, 19 U.S.C. Section 1673, antidumping duties will be imposed if DOC determines that

dumping exists, that is, that a product is sold, or likely to be sold, in the United States at less than

its fair value, and ITC determines that the dumped imports cause, or threaten to cause, material

injury to a domestic industry. At issue in the WTO case were the manner in which DOC

calculated the dumping margins in these cases, that is, the amount by which the fair market or

“normal” value of the product under investigation exceeded the export price, and elements of the

affirmative material injury determination made by the ITC.

DOC calculates dumping margins for individual exporters, as well as an “all others” rate for firms

that are not investigated individually. Under Section 735(c)(5)(A) of the Tariff Act of 1930, 19

U.S.C. Section 1673d(c)(5)(A), the “all others” rate is to be based on rates determined for

individually investigated producers, excluding any zero and de minimis margins (i.e., margins of

less than 2%) and any margins determined “entirely” under “facts available.” The department

uses “facts available” whenever necessary information is not on the public record or any person

involved in the investigation withholds requested information, fails to provide information in a

timely manner, significantly impedes an investigation, or provides information that cannot be

properly verified.91 When the department decides to use “facts available,” it needs to determine

what is the most appropriate information on which to base the dumping margin and whether a

party has failed to cooperate in such a manner that an adverse inference against it is warranted.92

Also at issue was the test used by the United States to determine if sales were “in the ordinary

course of trade” and therefore included in the calculation of normal value. The Antidumping

Agreement requires that sales not made “in the ordinary course of trade” are to be excluded from

this calculation, but the agreement neither defines this concept nor establishes a general test for

determining whether sales fall within this category. In the case at hand, the “arm’s length” pricing

Id. at 21.

Id. at 22.

Tariff Act of 1930, §776(a), 19 U.S.C. §1677e(a).

Tariff Act of 1930, §776(b), 19 U.S.C. §1677e(b).

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test used by the United States to determine whether sales made by exporters and producers to

affiliated customers were “in the ordinary course of trade” was argued to unfairly exclude certain

low-priced sales and therefore to increase normal value and consequently inflate the dumping

margin for the goods under investigation.

In 2001, the WTO panel, as upheld by the Appellate Body, found that the United States was in

violation of the WTO Antidumping Agreement because (1) U.S. law requires, in effect, that any

dumping margins based in part on “facts available” be used in calculating the “all others” rate;

(2) the Commerce Department improperly applied “facts available” in calculating dumping

margins for producers who were individually investigated; and (3) the department improperly

determined the normal value of the goods under investigation due to the manner in which it

determined whether sales were “in the ordinary course of trade.” 93 While the panel had focused

on the “arm’s length” test, the Appellate Body looked at the combined operation of two tests used

by the department in determining whether goods were “in the ordinary course of trade”—the

“arm’s length” test and the related and even more limited “aberrationally high” test—finding a

“lack of even-handedness” that disadvantaged exporters. 94 As stated by the Appellate Body, the

“combined application of these two tests operated systematically to raise normal value, through

the automatic exclusion of marginally low-priced sales, coupled with the automatic inclusion of

all high-priced sales, except those proved, upon request, to be aberrationally high priced.”95 The

Appellate Body reversed the panel on a related point, finding that the United States was not in

violation of its WTO obligations regarding the calculation of normal value when it replaced home

market sales to affiliates that were excluded under the “arm’s length” test with downstream home

market sales by the affiliates to independent purchasers.96

The Appellate Body also ruled against the United States with respect to the ITC’s injury

determination, reversing two panel findings favorable to the United States. First, in contrast to the

panel, the AB found that ITC had not applied a provision of the antidumping statute addressing

“captive production” consistently with the Antidumping Agreement. “Captive production” refers

to the situation in which a domestic producer does not sell the domestic counterpart of the product

under investigation to unrelated parties (the “merchant market”) but instead processes it into a

higher-value good downstream. Second, the AB determined that the ITC had not found a causal

link between the dumped imports and material injury to the domestic industry involved. The AB

also found, however, that there was an insufficient factual record to allow completion of the

required causation analysis.97

The original compliance period in the case, which had been determined by arbitration, expired

November 23, 2002. It was later extended until December 31, 2003, or the end of the 108th

Congress, first session, whichever was earlier, in order to facilitate full compliance.98

Panel Report, United States—Anti-dumping Measures on Certain Hot-Rolled Steel Products from Japan,

WT/DS184/R (February 28, 2001)[hereinafter Hot-Rolled Steel Panel Report]; Appellate Body Report, United States—

Anti-dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R (July 24,

2001)[hereinafter Hot-Rolled Steel AB Report].

Hot-Rolled Steel AB Report, supra note 93, paras. 150-153.

Id. para. 154.

Id. paras.159-180.

Id. paras. 235-236.

See Status Report by the United States, Addendum, United States—Anti-dumping Measures on Certain Hot-Rolled

Steel Products from Japan, WT/DS184/15/Add.3 (December 9, 2002).

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Administrative Compliance

Addressing the normal value finding, the Commerce Department modified its “arm’s length” test

by establishing a price band covering a range of prices both below and above those charged by

producers or exporters to non-affiliated companies and treating sales to affiliates within the band

as being “in the ordinary course of trade” for purposes of determining normal value.99 It stated

that the new methodology would be used to implement the WTO findings regarding the Japan

hot-rolled steel AD proceeding, and applied in all investigations and reviews initiated on or after

November 23, 2002.100 The department announced a new dumping determination in the AD

proceeding at issue in December 2002, stating that in implementation of the WTO rulings and

recommendations, it had recalculated dumping margins for three affected Japanese producers

using the new methodology; addressed issues related to the use of adverse facts available; and

recalculated the all-others rate based on the new rates for the respondent companies.101 The

recalculations resulted in reduced dumping margins for the three companies as well for all other

exporters. Although ITC findings were also faulted in the case, no action was taken by the ITC in

response to the WTO decision.102

Legislative Compliance

The WTO panel, as affirmed on appeal, also concluded that Section 735(c)(5)(A) of the Tariff Act

of 1930 is inconsistent with Article 9.4 of the WTO Antidumping Agreement because it requires

DOC to consider dumping margins based in part on facts available in determining the all-others

rate, whereas Article 9.4 was found to require the exclusion of dumping margins based either in

whole or in part on such facts.103 Absent legislative compliance by the United States, the

December 2003 deadline referred to earlier was extended twice, most recently to July 31, 2005.104

The deadline lapsed without U.S. action. In an understanding between the disputing parties

reached earlier in July 2005, Japan stated that it would not request authorization to retaliate at the

time but might choose to do so in the future.105

Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 Federal Register 69186

(November 15, 2002). See also Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67

Federal Register 53339 (August 15, 2002)(request for public comment).

100

Id.

101

Notice of Determination Under Section 129 of the Uruguay Round Agreements Act: Antidumping Measures on

Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan, 67 Federal Register 71936 (December 3,

2002).

102

The United States and Japan had reportedly been in disagreement regarding implementation of the ruling as it relates

to the ITC’s application of the statutory captive production provision. See Japan Threatens Retaliation Against U.S.

For Hot-Rolled Steel Antidumping Duties, 19 Int’l Trade Rep. (Bloomberg BNA) 1965 (2002); U.S. Response Leaves

WTO Ruling on Hot-Rolled Injury Claims Untouched, INSIDE U.S. TRADE, November 15, 2002, at 3; U.S. Gets Extra

Year to Comply with WTO Hot-rolled Steel Decision, INSIDE U.S. TRADE, December 6, 2002, at 13.

103

Emphasis added. See Hot-Rolled Steel Panel Report, supra note 93, paras. 7.83-7.90, 8.1(b); Hot-Rolled Steel AB

Report, supra note 93, paras. 111-130.

104

See Dispute Settlement Body, Minutes of Meeting, August 31, 2004, at 6-7, WT/DSB/M/175 (September 24, 2004).

105

Understanding between Japan and the United States, United States—Anti-dumping Measures on Certain Hot-Rolled

Steel Products from Japan, WT/DS184/19 (July 28, 2005). The United States agreed not to block any retaliation

request on the ground that the 30-day period for requesting authorization to suspend concessions in Article 22.6 of

WTO Dispute Settlement Understanding has expired, but reserved the right to have any retaliation request referred to

arbitration.

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Recent Developments

No legislation has been introduced to amend Section 735(c)(5) of the Tariff Act since the 109th

Congress. H.R. 2473 (Shaw), 109th Congress, 1st Sess., would have amended Section 735(c)(5) to

remove the word “entirely” each time it appears in the provision, thus enabling the Department of

Commerce to exclude dumping margins based in whole or in part on facts available in

determining the “all others” rate, as called for by the WTO decision. Although the text of H.R.

2473 was listed for possible inclusion in 109th Congress miscellaneous tariff legislation,106 the bill

was not made part of the tariff legislation nor was it acted upon as stand-alone legislation.

Japan continues to seek legislative action,107 as the United States continues to state its support for

legislative amendments that would achieve full compliance in the case.108 The United States has

also submitted a proposal to the Doha Round Negotiating Group on Rules that Article 9.4 of the

Antidumping Agreement be clarified to allow the invalidated practice.109 No revisions or

clarifications of Article 9.4, however, were included in the draft texts of proposed revisions to the

Antidumping Agreement circulated by the Chair of the Negotiating Group in November 2007 and

December 2008.110

Continued Dumping and Subsidy Offset Act (DS217/DS234)

The Continued Dumping and Subsidy Offset Act (CDSOA) of 2000, also known as the Byrd

Amendment, required that duties collected under an existing antidumping or countervailing duty

order be distributed annually to petitioners and interested parties in the underlying antidumping or

countervailing duty proceeding.111 Payments were available for “qualifying expenditures” in

specified categories (e.g., manufacturing facilities or equipment) incurred by the petitioners and

interested parties after the applicable antidumping or countervailing duty order was issued. To be

eligible, petitioners and interested parties, referred to in the statute as “affected domestic

producers,” must also have remained in operation. Although the statute was held WTOinconsistent in January 2003 and repealed, effective October 2005, by P.L. 109-171, it remains

106

Comments submitted to the Trade Subcommittee of the House Ways and Means Committee on the possible

inclusion of this legislation in a future bill are available at http://waysandmeans.house.gov/hearings.asp?formmode=

comment&hearing=440.

107

E.g., Dispute Settlement Body, Minutes of Meeting, October 25, 2011, at 5-6, WT/DSB/M/305 (December 22,

2011).

108

Status Report by the United States, Addendum, United States—Anti-dumping Measures on Certain Hot-Rolled Steel

Products from Japan, WT/DS184/15/Add.112 (March 13, 2012).

109

U.S. Seeks to Reverse WTO Ruling on ‘Facts Available’ Dumping Rates, 21 Int’l Trade Rep. (Bloomberg BNA)

1540 (2004); Negotiating Group on Rules, All-Others Rate (Article 9.4 ADA); Communication from the United States,

TN/RL/GEN/16 (September 15, 2004), as corrected. See also Negotiating Group on Rules, Identification of Certain

Major Issues Under the Anti-Dumping and Subsidies Agreements; Submission by the United States, TN/RL/W/72, at

2-3 (March 19, 2003).

110

See WTO, Negotiating Group on Rules, New Draft Consolidated Chair Texts of the AD and SCM Agreements, at

20, TN/RL/W/236 (December 19, 2008) and WTO, Negotiating Group on Rules, Draft Consolidated Chair Texts of the

AD and SCM Agreements, at 21, TN/RL/W/213 (November 30, 2007).

111

P.L. 106-387, 114 Stat. 1549A-72, codified at 19 U.S.C. §1675c (2000). Regulations are set out at 19 C.F.R.

§§159.61-64. For a more detailed examination of the statute and additional discussion of the WTO proceeding, see

CRS Report RL33045, The Continued Dumping and Subsidy Offset Act (“Byrd Amendment”), by (name redacted)

and (name redacted). See also U.S. Government Accountability Office, International Trade: Issues and Effects of

Implementing the Continued Dumping and Subsidy Offset Act (September 2005)(GAO-05-979).

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the target of authorized sanctions by complainants European Union and Japan due to continued

payments to U.S. firms under the CDSOA program.

Original WTO Complaints

Eleven WTO members challenged CDSOA shortly after its enactment in October 2000 as

violative of the WTO Antidumping Agreement, the WTO Agreement on Subsidies and

Countervailing Measures (SCM Agreement), and other WTO obligations. The complainants

based their argument in part on the prohibitions in Article 18.1 of the Antidumping Agreement

and Article 32.1 of the SCM Agreement against Members’ taking any “specific action against”

dumping and subsidization, respectively, except for action taken in accordance with the GATT

1994 as interpreted by the Antidumping Agreement or the SCM Agreement.112 Two complaints

were filed: DS217, filed jointly by Australia, Brazil, Chile, the European Union (EU), India,

Indonesia, Japan, Korea and Thailand; and DS234, filed jointly by Canada and Mexico.

Considering both complaints at the same time, the WTO panel found that the CDSOA did create

an impermissible “specific action against” dumping and subsidization and that it provided a

financial incentive for domestic producers to file or support antidumping and countervailing duty

petitions, thereby undermining the industry support requirements in the Antidumping and SCM

Agreements. At the same time, the panel rejected other arguments made by the complainants,

including Mexico’s claim that the act constituted a subsidy in and of itself.113 The Appellate Body

upheld the panel’s finding that the statute created a “specific action against” dumping and

subsidization not allowed under WTO agreements, but reversed the panel on its conclusion

regarding industry support requirements.114 The reports were adopted January 27, 2003, and the

compliance period was subsequently determined by arbitration to expire December 27, 2003.115

Complainants’ Retaliation Requests and Subsequent Arbitration

Because the United States did not comply by the December 2003 deadline, eight complaining

Members—Brazil, Chile, EU, India, Japan, Korea, Canada, and Mexico—asked the WTO in

January 2004 for authorization to impose retaliatory measures.116 The United States objected to

the requests, sending them to arbitration.117 The remaining three complainants—Australia,

Indonesia, and Thailand—agreed to give the United States until December 27, 2004, to comply.118

112

Article 18.1 of the Antidumping Agreement had been successfully used by EC and Japan in their WTO challenges

of the U.S. Antidumping Act of 1916, 15 U.S.C. §72, which provided a private right of action and criminal penalties

against dumping. See Appellate Body Report, United States—Anti-Dumping Act of 1916, paras. 103-138,

WT/DS136/AB/R, WT/DS162/AB/R (August 28, 2000)(adopted September 26, 2000).

113

Panel Report, United States—Continued Dumping and Subsidy Offset Act, WT/DS217/R, WT/DS234/R (September

16, 2002).

114

Appellate Body Report, United States—Continued Dumping and Subsidy Offset Act, paras. 224-299,

WT/DS217/AB/R, WT/DS234/AB/R (January 16, 2003).

115

Award of the Arbitrator, United States—Continued Dumping and Subsidy Offset Act of 2000; WT/DS217/14,

WTDS234/22 (June 13, 2003). The Arbitrator emphasized in his award that it was for the United States to decide on the

manner of implementation, which might be through repeal or modification of the law. Id. para. 50.

116

See WTO documents WT/DS217/20 (Brazil); WT/DS217/21 (Chile); WT/DS217/22 (EC); WT/DS217/23 (India);

WT/DS217/24 (Japan); WT/DS217/25 (Korea); WT/DS234/25 (Canada); WT/DS234/26 (Mexico).

117

See Dispute Settlement Body, Minutes of Meeting, January 26, 2004, WT/DSB/M/164 (March 12, 2004).

118

See WTO documents WT/DS217/17 (Thailand); WT/DS217/18 (Australia); and WT/DS217/19 (Indonesia).

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In awards issued August 31, 2004, the Arbitrator determined that each of the eight Members

could impose countermeasures on an annual basis in an amount equal to 72% of the CDSOA

disbursements for the most recent year for which official U.S. data are available relating to

antidumping and countervailing duties paid on imports from the Member at that time.119 The

Arbitrator stated that the disbursements “operate, in economic terms, as subsidies that may

generate import substitution production”120 and used an economic model to determine the level of

nullification or impairment of benefits, or what the Arbitrator characterized as “a value of trade”

affected by application of the CDSOA.121

The eight complainants received formal authorization from the DSB to impose retaliatory

measures in late 2004.122 The EU and Canada began to impose countermeasures in the form of

higher tariffs and surcharges on selected U.S. products, respectively, as of May 2005.123 Mexico

began to impose $20.9 million in retaliatory tariffs effective August 18, 2005.124 In addition,

Japan imposed additional tariffs of 15% on 15 categories of U.S. goods as of September 2005.125

U.S. Judicial and Legislative Action

In April 2006, the U.S. Court of International Trade ruled that the CDSOA did not apply to

imports from Canada or Mexico,126 and on September 28, 2006, U.S. Customs and Border

119

E.g., Decision by the Arbitrator, Recourse to Arbitration by the United States under Article 22.6 of the DSU, United

States—Continued Dumping and Subsidy Offset Act of 2000 (Original Complaint by the European Communities),

paras. 5.1-5.2, WT/DS217/ARB/EEC (August 31, 2004).

120

Id. para. 3.41.

121

Id. paras. 3.72, 3.80-3.151, 4.7.

122

Absent action to repeal or modify the statute by December 27, 2004, the compliance deadline agreed to by Australia,

Indonesia, and Thailand, the three Members entered into entered into new agreements with the United States in which

they reserved the right to take further action against U.S. goods in the future. See WTO documents WT/DS217/44

(Australia), WT/DS217/45 (Thailand), and WT/DS217/46 (Indonesia).

123

Communication from the European Communities, United States—Continued Dumping and Subsidy Offset Act,

WT/DS217/47 (May 4, 2005); Canada Implements Retaliatory Surtax on U.S. Goods Due to Byrd Amendment, 22 Int’l

Trade Rep. (Bloomberg BNA) 796 (2005).

124

Mexico Announces $20.9 Million in Byrd Retaliation Against U.S. Exports, INSIDE U.S. TRADE, August 19, 2005, at

125

Communication from Japan, United States—Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/48

(August 19, 2005); Japan, Ministry of Economy, Trade and Industry, “US Byrd Amendment: Japan Decides to Start

Retaliation,” Press Release, August 1, 2005, at http://www.meti.go.jp/english/information/data/WTOByrd050801e.html

[hereinafter METI Press Release]; Japan OKs Countervailing Duties on 15 U.S. Products Because of Byrd Amendment,

22 Int’l Trade Rep. (Bloomberg BNA) 1344 (2005). According to Japan, the level of retaliation would not exceed $52

million, which, it stated, was the amount authorized by the WTO based on the amount of CDSOA disbursements

involving Japanese goods in fiscal 2004. METI Press Release, supra.

126

Canadian Lumber Trade Alliance v. United States, 425 F.Supp.2d 1321 (Ct. Int’l Trade 2006), 441 F.Supp.2d 1259

(Ct. Int’l Trade 2006), aff’d in part, vacated in part, and remanded, 517 F.3d 1319 (Fed. Cir. 2008), cert. denied 129

S.Ct. 344 (2008). Canada and Canadian industry groups had challenged CDSOA distributions based on goods from

Canada, arguing that, because of a provision in the NAFTA Implementation Act stating after the NAFTA enters into

force for the United States, an amendment that is made to Title VII of the Tariff Act of 1930 may apply to goods from a

NAFTA country only to the extent specified in the amendment, the CDSOA, in not expressly referring to Canada, did

not apply to imports of Canadian products. The provision is set out at P.L. 103-182, Section 408, 19 U.S.C. Section

3438. While ruling that Canada did not have standing to sue in the case, the USCIT agreed with industry plaintiffs that

the statutory provision applied to the CDSOA, which is contained in Title VII of the 1930 act along with authorities for

U.S. antidumping and countervailing duty investigations. Since the CDSOA did not refer either to Canada or Mexico,

the court ruled that imports from both countries were exempt.

Canadians had been concerned that antidumping and countervailing duties collected on softwood lumber imports,

(continued...)

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Protection (CBP) announced that it was withholding FY2006 and subsequent years’ distributions

on imports from the two countries pending the outcome of any appeal.127 Canada allowed its

retaliatory tariffs to terminate as of April 30, 2006.128 Mexico, after a month’s lapse, imposed

increased tariffs on U.S. dairy products from September 18 through October 31, 2006.129 These

tariffs surcharges have not been reimposed.

A provision repealing the CDSOA as of October 1, 2005, but providing for the distribution of

“duties on entries of goods made and filed before October 1, 2007,” was enacted in the Deficit

Reduction Act of 2005, signed by the President on February 8, 2006.130 While collection of

antidumping and countervailing duties for purposes of CDSOA disbursal has thus ceased, duties

will continue to be available for disbursement until all relevant customs entries before September

1, 2007, are liquidated, that is, the final assessment of duties on these entries is made.131

Following the 2006 enactment, the United States informed the WTO Dispute Settlement Body

(DSB) that it had taken the actions necessary to implement the WTO rulings.132 Although

complaining Members expressed support for the repeal, Members also stated their concerns that

the requirement that duties be distributed through 2007 and possibly after this date would prevent

the United States from complying fully with its WTO obligations in the case.133 While WTO

Members have regularly called on the United States to cease payments under the CDSOA

program,134 no Member has formally challenged the compatibility of the 2006 statute with U.S.

WTO obligations.

(...continued)

which had at the time of the suit totaled over $4 billion and whose underlying duty orders had been heavily litigated by

Canada, might eventually be distributed to U.S. lumber producers. For further information on the U.S.-Canada

softwood lumber dispute, which was settled in 2006, see CRS Report RL33752, Softwood Lumber Imports from

Canada: Issues and Events, by (name redacted) and (name redacted).

127

Notice of Withholding of Certain Distributions on Continued Dumping and Subsidy Offset to Affected Producers,

71 Federal Register 57000 (September 28, 2006).

128

See Canada, Dept. of Foreign Affairs and International Trade, Dispute Settlement: Questions and Answers—

Expiration of Retaliatory Measures, at http://www.dfait-maeci.gc.ca/tna-nac/disp/byrdqa-en.asp.

129

U.S. Dairy Industry Expects Hit from Short-term Mexican Byrd Retaliation, INSIDE U.S. TRADE, October 6, 2006;

Dispute Settlement Body, Minutes of Meeting, September 28, 2006, at 9, WT/DSB/M/220 (November 2, 2006).

130

Deficit Reduction Act of 2005, P.L. 109-171, §7601. Section 7701 of the act provides that Title VII, which contains

the CDSOA-related provisions, “shall take effect as if enacted on October 1, 2005.”

131

In addition, Congress had been routinely including provisions in annual appropriations legislation directing the

Commerce Department and the Office of the USTR to conduct negotiations in the WTO “to recognize the right of

members to distribute monies collected from antidumping and countervailing duties.” E.g., Consolidated

Appropriations Act, 2010, P.L. 111-117, Div. B, Tit. I, Tit. 4, 123 Stat. 3113-14, 3148. This provision is not included

Commerce Department and USTR appropriation for FY2012. See Consolidated and Further Continuing Appropriations

Act, 2012, P.L. 112-55, Div. B, Tit. I, Tit. IV, Tit. V.

Although the USTR submitted a proposal of this type to the pertinent Doha Round negotiating group in 2004, a

provision addressing this issue has not been included in the draft negotiating texts. See Communication from the United

States, Three Issues Identified for Discussion by the Negotiating Group on Rules, at 2, TN/RL/W/153 (April 26, 2004);

see WTO, Negotiating Group on Rules, New Draft Consolidated Chair Texts of the AD and SCM Agreements, at 20,

TN/RL/W/236 (December 19, 2008); WTO, Negotiating Group on Rules, Draft Consolidated Chair Texts of the AD

and SCM Agreements, at 21, TN/RL/W/213 (November 30, 2007).

132

Dispute Settlement Body, Minutes of Meeting, February 17, 2006, at 5-10, WT/DSB/M/205 (March 31, 2006).

133

Id.

134

See, e.g., Dispute Settlement Body, Minutes of Meeting, April 21, 2011, at 10-11, WT/DSB/M/295 (June 30, 2011).

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Recent Developments

A December 2010 enactment, as amended, restricted the funds available for continued payments

under the CDSOA program. Section 822 of the Claims Resolution Act of 2010, P.L. 111-291, a

provision included in the public law as a funding offset, provides that no payments may be

distributed under the CDSOA with respect to entries of any goods that, on the date of enactment,

that is, December 8, 2010, are (1) not liquidated and (2) not in litigation and not under an order of

liquidation from the Commerce Department.135

The EU and Japan are continuing to impose retaliatory tariffs on U.S. products due to the

continued CDSOA disbursements, albeit at diminishing levels due to the generally decreasing

amount of duties available for distribution to U.S. firms. As of May 1, 2011, the EU removed 30

U.S. products from its retaliation list and suspended tariff concessions on only three products—

sweet corn, glass frames, and crane lorries—for a total value of trade that does not exceed $9.96

million.136 Japan has reduced its retaliation as well, lowering tariffs on U.S. ball bearings and

tapered roller bearings to 1.7% beginning September 1, 2011.137

In June 2011 CBP announced that approximately $25.1 million was preliminarily available for

FY2011 disbursements, with approximately $18.2 million under review pursuant to amended

Section 822, discussed above.138

Laws, Regulations, and Methodology for Calculating Dumping

Margins (“Zeroing”) (DS294)

In June 2003, the European Union (EU) requested consultations with the United States over the

use of zeroing by the Commerce Department in determining dumping margins, arguing that the

practice as it relates to original antidumping investigations and subsequent administrative, new

shipper, changed circumstances, and sunset reviews was inconsistent “as such” with provisions of

the WTO Agreement on Antidumping and Article VI of the GATT 1994. That is, complainants

argued that the existence of the practice violated these agreements regardless of any specific

application.139 The EU also alleged that the United States had acted inconsistently with its WTO

135

The statute had originally stated that the covered entries must be (1) not liquidated and (2) not in litigation or not

under an order of liquidation from the Department of Commerce. Section 504 of P.L. 111-312, the Tax Relief,

Unemployment Insurance Authorization, and Job Creation Act of 2010, changed the word “or” to “and” and made the

amendment effective as if included in the earlier enactment.

136

Communication from the European Communities, United States—Continued Dumping and Subsidy Offset Act of

2000, WT/DS217/59 (April 12, 2011). This amount is a considerable reduction from the previous year, when the EU

raised its annual amount of retaliation from $16.31 million to $96.38 million in trade, based in large part on the

disbursement in 2009 of antidumping duties collected on low-enriched uranium from the EU. Communication from the

European Communities, United States—Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/57 (April 27,

2010); European Commission, General Overview of Active WTO Disputes Involving the EU as Complainant or

Defendant, at 25 ([July 15, 2011]), at http://trade.ec.europa.eu/doclib/docs/2007/may/tradoc_134652.pdf.

137

Communication from Japan, United States—Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/60

(August 30, 2011); Japan to Extend, Reduce Retaliatory Tariffs on U.S. Exports in Byrd Fight, INSIDE U.S. TRADE,

August 12, 2011, at 12.

138

U.S. Customs and Border Protection, FY2011 Preliminary CDSOA Amounts Available as of 4/30/11, at

http://www.cbp.gov/linkhandler/cgov/trade/priority_trade/add_cvd/cont_dump/fy_2011_amount.ctt/

fy_2011_amount.pdf.

139

Request for the Establishment of a Panel by the European Communities, United States—Laws, Regulations and

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obligations in applying zeroing in 31 specific cases, including 15 original investigations and 16

administrative reviews.140 The EU further claimed that insofar as dumping margins in original

investigations should be calculated without the use of zeroing and some exporters may thus have

de miminis dumping margins, these imports should be excluded from the volume of dumped

imports that the ITC takes into account in determining whether such imports are causing material

injury to domestic industry. The EU argued that WTO obligations require the United States to

make this determination based only on the volume of imports remaining after this exclusion. A

panel was established in March 2004.

Panel and Appellate Body Reports

In a report issued October 31, 2005, the WTO panel found that zeroing, as applied in the

weighted-average-to-weighted average price comparisons made in the 15 original investigations

cited in the EU’s complaint, was inconsistent with Article 2.4.2 of the Antidumping Agreement.

This article provides, in pertinent part, that “[s]ubject to the provisions governing fair comparison

in [Article 2] paragraph 4, the existence of margins of dumping during the investigation phase

shall normally be established on the basis of a comparison of weighted-average normal value of

prices of all comparable export transactions or by a comparison of normal value and export prices

on a transaction-to-transaction basis.”141 The panel based its conclusion on Appellate Body

rulings in earlier cases that “when a margin of dumping is calculated on the basis of multiple

averaging by model type, the margin of dumping for the products in question must reflect the

results of all such comparisons, including weighted average export prices that are above the

normal value for individual models.”142 The Appellate Body had earlier concluded that the term

“dumping” in WTO agreements is defined “in relation to a product as a whole” and that, as a

result, dumping can thus be found to exist “only for the product under investigation as a whole”

and not solely “for a type, model, or category of that product.”143 Thus, in considering the U.S.

multiple averaging technique in light of WTO obligations, the Appellate Body concluded that the

(...continued)

Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/7 (February 6, 2004) and

WT/DS294/7/Rev.1 (February 19, 2004). The EC’s use of zeroing in establishing the existence of dumping margins in

antidumping investigations, as applied in a case involving goods from India, had been successfully challenged by India

in 2001. See panel and Appellate Body reports in European Communities—Anti-Dumping Duties on Imports of Cottontype Bed Linen from India, WT/DS141.

140

Request for Consultations by the European Communities, United States—Laws, Regulations and Methodology for

Calculating Dumping Margins (“Zeroing”), WT/DS294/1 (June 19, 2003) and WT/DS294/1/Add.1 (September 15,

2003). : The WTO Appellate Body has described “as such” claims as follows: “By definition, an ‘as such’ claim

challenges laws, regulations, or other instruments of a Member that have general and prospective application, asserting

that a Member’s conduct—not only in a particular instance that has occurred, but in future situation as well—will

necessarily be inconsistent with that Member’s WTO obligations. In essence, complaining parties brining ‘as such’

challenges seek to prevent Members ex ante from engaging in certain conduct. The implications of such challenges are

obviously more far-reaching than ‘as applied’ claims.” Appellate Body Report, United States—Sunset Review of AntiDumping Measures on Oil Country Tubular Goods from Argentina, para. 172, WT/DS268/AB/R (November 29, 2004).

141

Panel Report, United States—Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”),

WT/DS294/R (October 31, 2005)[hereinafter U.S. Zeroing Panel Report (EC I)].

142

Id. paras. 7.27-7.32 (emphasis added).

143

Appellate Body Report, United States—Final Dumping Determination on Softwood Lumber from Canada,

WT/DS264/AB/R, para. 93 (August 11, 2004).

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only was that a dumping margin could be properly established for the product as a whole would

be to aggregate “all of the ‘results’ of the multiple comparisons for all product types.”144

The panel also found that zeroing, as it relates to original investigations, was a “well established

and well-defined norm” that could be challenged “as such” in a WTO dispute even though it was

not in written form, and that, with respect to its use in weighted-average-to-weighted-average

price comparisons in original investigations, the norm “as such” was inconsistent with Article

2.4.2.145

The panel rejected the EU’s claims regarding the application of zeroing in the 16 administrative

reviews cited by the EU, as well as on the use of zeroing “as such” in administrative reviews, new

shipper reviews, changed circumstances reviews, and sunset reviews. One dissenting panelist

would have struck down the use of the practice in proceedings other than original investigations,

however. The panel did not address EU claims involving the need for a new injury determination

based on excluded imports, viewing this as a dependent claim and finding that any conclusion

would not provide the United States with additional guidance as to how to remedy the primary

violation.

The panel report was appealed by the United States and the EU. While the United States appealed

the panel’s finding that zeroing was a challengeable norm, it did not appeal the panel’s conclusion

that the use of zeroing in weighted-average-to-weighted-average price comparisons in the cited

original investigations violated the Antidumping Agreement.146

On April 18, 2006, the Appellate Body found, although on different grounds from the panel, that

the zeroing methodology could be challenged “as such” as it relates to original investigations and

upheld the panel’s finding that the practice is inconsistent with Article 2.4.2 of the Antidumping

Agreement.147

The AB also expanded the range of proceedings in which zeroing was prohibited, finding,

contrary to the panel, that the United States could not use zeroing in making weighted-average-totransaction comparisons to assess duties and set cash deposit rates in the 16 administrative

reviews challenged by the EU. The AB found that the application of zeroing in these reviews

violated Article 9.3 of the Antidumping Agreement and Article VI:2 of the GATT 1994 since the

practice resulted in the imposition of antidumping duties that exceeded the exporters’ or

producers’ dumping margins.148 Article 9.3, which sets out obligations regarding the assessment

of antidumping duties, provides that the “amount of the anti-dumping duty” imposed by a WTO

Member “shall not exceed the margin of dumping as established under Article 2” of the

144

Id. para. 98 (emphasis added).

U.S. Zeroing Panel Report (EC I), supra note 141, paras. 7.91-7.106. The panel rejected the EC’s claims that

various provisions of the Tariff Act of 1930, which define terms “dumping margin” and “weighted average dumping

margin,” establish the basic authority for imposing antidumping duties, and authorize the price comparison

methodologies discussed above, were inconsistent with WTO obligations, finding that these provisions did not address

the issue of zeroing. Id. paras. 7.50-7.69. The cited provisions were Tariff Act of 1930, §§771(35)(A),(B), 731,

777A(d), 19 U.S.C. §§1677(35)(A),(B), 1673, 1677f-1(d).

146

Notification of an Other Appeal by the United States, United States—Laws, Regulations and Methodology for

Calculating Dumping Margins (“Zeroing”), WT/DS294/13 (February 1, 2006).

147

Appellate Body Report, United States—Laws, Regulations and Methodology for Calculating Dumping Margins

(“Zeroing”), WT/DS294/AB/R (April 18, 2006).

148

Id. para. 133.

145

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Agreement. Article VI:2 of the GATT 1994 provides that a WTO Member may impose an

antidumping duty on a dumped product “no greater in amount than the margin of dumping in

respect of such product.” The Appellate Body did not determine whether the use of zeroing in

these reviews was “as such” inconsistent with WTO obligations, however, due to insufficient

facts in the panel record to complete this analysis.

The AB report, which also addressed other issues, and the modified panel report were adopted on

May 9, 2006.149 While the United States vigorously disputed the Appellate Body decision,150 it

stated at a subsequent DSB meeting that it intended to comply.151 The disputing parties later

agreed on an implementation deadline of April 9, 2007.152

U.S. Actions in Response

Shortly before the AB report was issued, DOC had announced in the Federal Register that, in

response to the WTO panel report, it would abandon the use of zeroing in weighted-average-toweighted-average comparisons in antidumping investigations and was seeking comments on

alternative approaches that might be appropriate in future investigations.153 The department noted

that the United States had not appealed the panel’s finding that the zeroing could not be used in

making such comparisons in the specific antidumping investigations challenged by the EU.

On December 26, 2006, the department, following the requirements in Section 123 of the

Uruguay Round Agreements Act (URAA), published a Federal Register notice stating that it was

modifying its antidumping practice as announced earlier, noting that the modification would be

used in implementing the findings of the WTO panel pursuant to Section 129 of the URAA with

regard to the specific antidumping investigations challenged by the EU in the dispute and,

moreover, that it would apply the modification in all current and future antidumping

investigations as of the effective date, which at the time was planned for January 16, 2007.154 The

department later extended the date to January 23, 2007, and then to February 22, 2007, noting

each time that it was acting “[a]fter further consultations with Congress and in order to afford

adequate time for review.”155

149

Dispute Settlement Body, Minutes of Meeting, May 9, 2006, at 7-13, WT/DSB/M/211 (June 12, 2006).

Along with criticizing the Appellate Body report at DSB meetings, the United States took the uncommon step of

circulating detailed critiques of the decision to WTO Members. See Communication from the United States, United

States—Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/16 (May 17,

2006); Communication from the United States, United States—Laws, Regulations and Methodology for Calculating

Dumping Margins (“Zeroing”), WT/DS294/18 (June 19, 2006).

151

Dispute Settlement Body, Minutes of Meeting, May 30, 2006, at [1], WT/DSB/M/213 (June 21, 2006).

152

Agreement under Article 21.3(b) of the DSU, United States—Laws, Regulations and Methodology for Calculating

Dumping Margins (“Zeroing”), WT/DS294/19 (August 1, 2006).

153

Antidumping Proceedings: Calculation of the Weighted Average Dumping Margin During an Antidumping Duty

Investigation, 71 Federal Register 11189 (March 6, 2006).

154

Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an Antidumping

Investigation; Final Modification, 71 Federal Register 77722 (December 27, 2006).

155

Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an Antidumping Duty

Investigation; Change in Effective Date of Final Modification, 72 Federal Register 1704 (January 16, 2007);

Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an Antidumping Duty

Investigation; Change in Effective Date of Final Modification, 72 Federal Register 3783 (January 26, 2007).

Representative Rangel, Chairman of the House Ways and Means Committee, and Senator Baucus, Chairman of the

Senate Finance Committee, had written to the Secretary of Commerce and the USTR on January 19, 2007, requesting

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150

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The department also announced on February 22, 2007, that it was initiating Section 129

proceedings in which it would implement the WTO ruling with respect to 12 of the 15 original

antidumping investigations cited by the EU, three of the cited AD orders having been revoked.156

On April 9, 2007, the Department of Commerce issued new Section 129 Determinations in 11 of

the proceedings using average-to-average comparisons in which offsets were provided, two of

which resulted in findings of no dumping.157 DOC also postponed its determination in the 12th

investigation, a proceeding involving stainless steel products from Italy, as it was investigating a

possible clerical error in the original investigation alleged by the respondent. Recalculations were

done without the use of zeroing as provided in the modification originally announced in

December 2006.158 Regarding the administrative reviews at issue in the dispute, the United States

stated that since they had been superseded by new administrative reviews, it did not need to take

any further action to bring these reviews into compliance with the WTO decision.159 The USTR

instructed DOC to implement the new determinations on April 23, 2007.160

While the United States considered itself in compliance,161 the EU questioned the prospective

nature of the new determinations, that is, that they did not cover duties on goods entered before

the date the Section 129 Determinations were implemented; claimed that DOC had “massively

increased the ‘all others’ rate (applicable to exporters who do not have an individual duty rate,

notably new exporters)”; and stated that the United States was obligated to review the dumping

(...continued)

that DOC postpone its decision whether to modify the practice to March 31, 2007, to give committee members

additional time to consider the issue. The letter stated that the 60-day consultation period, which in this case ended in

mid-January, was insufficient given the limited actual time for consultation, the complexity of the matter, and the

controversial nature of the ruling. Text of letter available at http://finance.senate.gov/press/Bpress/2007press/

prb012207.pdf. The House Ways and Means Committee went on to solicit comments on the DOC action. See Advisory

from the Committee on Ways and Means, FC-7 (January 31, 2007), at http://waysandmeans.house.gov.

In mid-December 2006, 11 Senators signed a letter to the same Administration recipients in which they took issue with

the Appellate Body decision in DS294, favorably referred to several earlier GATT and WTO panels that had ruled

differently, and expressed their disagreement with any modification of the U.S. practice. Text of December 2006 letter

and of USTR memo to Congress under Section 123 regarding the modification available at Inside U.S. Trade,

December 15, 2006, at 19-21.

In addition, H.R. 496 (Rangel), introduced January 14, 2009, would have provided that the 2007 regulatory

modification would expire March 1, 2009, and the prior departmental practice would thenceforth apply, unless and

until the department issued a revised methodology pursuant to procedures laid out in the bill. Note also S. 364

(Rockefeller), 110th Congress, 1st Sess. (2007), discussed at supra note 21.

156

See Department of Commerce Federal Register notice and fact sheet at http://ia.ita.doc.gov/ia-highlights-andnews.html. The department stated in its Federal Register notice that since a Section 129 Determination is implemented

prospectively, the date on which the USTR directs the Commerce Department to implement the determination “will

necessarily be after the effective date of the revocation” of the AD orders in the three referenced cases and that “[a]s a

result, the Department is not conducting section 129 proceedings with respect to the three investigations.”

157

Department of Commerce, Issues and Decision Memorandum for the Final Results of the Section 129

Determination (April 9, 2007), at http://ia.ita.doc.gov/download/zeroing/zeroing-sec-129-final-decision-memo20070410.pdf.

158

Id.

159

Status Report by the United States, Addendum, United States—Laws, Regulations and Methodology for Calculating

Dumping Margins (“Zeroing”), at 2, WT/DS294/20/Add.2 (April 13, 2007)[hereinafter April 2007 Zeroing Status

Report].

160

See Implementation of the Findings of the WTO Panel in US—Zeroing (EC): Notice of Determinations Under

Section 129 of the Uruguay Round Agreements Act and Revocations and Partial Revocations of Certain Antidumping

Duty Orders, 72 Federal Register 25261 (May 4, 2007).

161

April 2007 Zeroing Status Report, supra note 159.

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margins in the 16 challenged administrative reviews, claiming that to its knowledge the United

States had not taken any action to bring these reviews into compliance with the WTO decision.162

On May 4, 2007, the United States and the EU entered into a procedural agreement regarding

possible Article 21.5 compliance panel proceedings and the sequencing of a possible retaliation

request in the event the United States was found not to have complied in the case.163 The EU

requested consultations with the United States under Article 21.5 in July 2007.164

In September 2007, DOC issued a new determination in the outstanding antidumping case

involving steel products from Italy, finding that the alleged clerical errors were not raised in the

WTO dispute and thus were outside the scope of the Section 129 proceeding.165

Compliance Proceedings

The EU requested a compliance panel in September 2007, claiming that the United States had

failed to take compliance actions in some cases and that measures that it had taken in others were

inconsistent with WTO obligations.166 In its panel request, the EU cited specific administrative

reviews and sunset reviews undertaken by the United States in the 15 original investigations and

16 administrative reviews that were successfully challenged in the original proceeding. The EU

also claimed that United States violated its WTO obligations in those cases where it had

recalculated dumping margins in original investigations without the use of zeroing, found that

some exporters were not dumping or had de miminis margins, and maintained the antidumping

order without determining whether the remaining amount of dumped goods were causing material

injury to domestic industry.

The compliance proceeding was complex not only because of the number of U.S. antidumping

determinations that the EU claimed were WTO-inconsistent, but also because of the interaction of

the retrospective U.S. duty system with what has generally been considered to be the prospective

nature of remedies in a WTO dispute. As described by the WTO Appellate Body, the WTO

dispute settlement system is one under which “compliance has to be accomplished at the latest

from the end of the reasonable period of time [i.e. the compliance period] with prospective

effect.”167 At the same time, due to the U.S. retrospective system, there were goods that had

162

European Commission, EU response to US action on WTO zeroing judgment (April 12, 2007), at

http://ec.europa.eu/trade/issues/respectrules/anti_dumping/pr120407_en.htm.

163

Understanding between the United States and the European Communities Regarding Procedures under Articles 21

and 22 of the DSU, United States—Laws, Regulations and Methodology for Calculating Dumping Margins

(“Zeroing”), WT/DS294/21 (May 9, 2007).

164

Request for Consultations, Recourse to Article 21.5 of the DSU by the European Communities, United States—

Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/22 (July 12, 2007).

165

The final antidumping margins were 2.11% for the individually investigated producer and 2.11 for all other

exporters and producers, the same as the preliminary margins, each a reduction from an original margin of 11.23%.

Implementation of the Findings of the WTO Panel in US-Zeroing (EC); Notice of Determination Under Section 129 of

the Uruguay Round Agreements Act: Antidumping Duty Order on Stainless Steel Sheet and Strip from in Coils from

Italy, 72 Federal Register 54640 (September 29, 2007); Department of Commerce, Issues and Decision Memorandum

for the Final Results of the Section 129 Determination (August 20, 2007), at http://ia.ita.doc.gov/download/section129/

Italy-SSSS-in-Coils-129-Final-Decision-Memo-08-20-07.pdf.

166

Request for the Establishment of a Panel, Recourse to Article 21.5 of the DSU by the European Communities,

United States—Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/25

(September 14, 2007).

167

Report of the Appellate Body, United States—Laws, Regulations and Methodology for Calculating Dumping

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entered the United States before the date on which the compliance period ended but for which

final duty assessments would not be made until after this date, or for which final assessments

were made before this date, but the duties were not collected until after the period expired. While

the United States and the EU agreed that the WTO Dispute Settlement Understanding provides

only for prospective remedies, the parties disagreed on what this entailed for the United States

with regard to these earlier-entered goods.168

Questions also arose as to whether dumping determinations made in a phase of the proceeding

that occurred after the one at issue in the original WTO dispute were considered measures taken

to comply or whether they were properly before the panel for other reasons. Some of the

challenged determinations, which had been rendered in original investigations, were the subject

of later administrative or sunset reviews. In addition, the challenged administrative reviews had

been superseded by determinations made in subsequent administrative reviews. Further, the

United States had taken new action in some of the challenged proceedings before the panel and

Appellate Body reports were issued.

The United States argued that administrative reviews of challenged dumping determinations made

in original investigations were not measures taken to comply with the WTO decision and thus

outside the panel’s terms of reference.169 In its view, the compliance panel could only review

whether the original determination now complied with the WTO decision and could not examine

whether the United States had employed zeroing in the subsequent review. The United States

made the same argument with regard to administrative reviews that occurred after those that were

challenged in the dispute and protested the inclusion of sunset reviews of challenged

determinations as well.170 As noted above, the United States maintained that since the challenged

administrative reviews had been superseded by later reviews, the United States was not required

to take any action to ensure that the challenged determinations were in compliance. The EU

argued that under this approach, the EU would need to initiate a new dispute settlement

proceeding for each subsequent administrative review with which it disagreed, thus allowing the

United States to avoid permanent compliance with a WTO decision as it related to a specific

investigation or review that was successfully challenged.171 In addition, the United States had

undertaken sunset reviews of some of the challenged original determinations and administrative

reviews prior to the adoption of the panel and Appellate Body reports by the Dispute Settlement

Body, actions that the EU claimed could not be considered measures taken to comply with the

WTO rulings and recommendations in these reports.

(...continued)

Margins (“Zeroing”); Recourse to Article 21.5 of the DSU by the European Communities, para. 305,

WT/DS294/AB/RW (May 14, 2009)[hereinafter U.S. Zeroing Article 21.5 AB Report (EC I)].

168

Report of the Panel, United States—Laws, Regulations and Methodology for Calculating Dumping Margins

(“Zeroing”); Recourse to Article 21.5 of the DSU by the European Communities, paras. 8.165-8.169, WT/DS294/RW

(December 17, 2008)[hereinafter U.S. Zeroing Article 21.5 Panel Report (EC I].

169

Id. para. 8.33.

170

Id. paras. 8.33-8.34, 8.36.

171

Id. paras. 8.40, 8.42.

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Compliance Proceedings: Panel and Appellate Body Reports

In December 2008, the panel issued a mixed report regarding U.S. compliance,172 which the EU

appealed. In a report issued May 20, 2009, the Appellate Body found that the United States

remained out of compliance with its WTO obligations in a variety of respects.173

Regarding whether actions taken by the United States before the panel and Appellate Body

reports were adopted were within the panel’s terms of reference, the Appellate Body, reversing

the panel, found that measures taken before this date were potentially reviewable as compliance

measures. The Appellate Body found that the relevant inquiry was not whether the measures were

intentionally taken to com

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