Dispute Settlement DS397

17/05/2013 12:00 - 913 Views

European Communities — Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China

Short title:	EC — Fasteners (China)
Complainant:	China
Respondent:	European Communities
Third Parties:	Brazil; Canada; Chile; Colombia; India; Japan; Norway; Chinese Taipei; Thailand; Turkey; United States
Agreements cited: (as cited in request for consultations)	Anti-dumping (Article VI of GATT 1994): Art.1, 2, 2.1, 2.2, 2.4, 2.6, 3, 3.1, 3.2, 3.4, 4,3.5, 4.1, 5, 5.4, 6, 6.1, 6.2, 6.4, 6.5, 6.10,9, 9.2, 9.3, 9.4, 12.2.2, 17.6, 2.2(a)(i) GATT 1994: Art. I, I:1, VI:1, X:3(a) Agreement Establishing the World Trade Organization: Art. XVI:4 Protocol of Accession: ,
Request for Consultationsreceived:	31 July 2009
Panel Reportcirculated:	3 December 2010
Appellate Body Reportcirculated:	15 July 2011

Consultations

Complaint by China.

On 31 July 2009, China requested consultations with the European Communities concerning Article 9(5) of Council Regulation (EC) No. 384/96 (the EC's Basic Anti-Dumping Regulation) which provides that in case of imports from non-market economy countries, the duty shall be specified for the supplying country concerned and not for each supplier and that an individual duty will only be specified for exporters that demonstrate that they fulfil the criteria listed in that provision.

According to China, Article 9(5) of the Basic Anti-Dumping Regulation is inconsistent, as such, with the European Communities' obligations under:

Article XVI:4 of the WTO Agreement;
Articles I:1, VI:1, and X:3(a) of the GATT 1994; and
Articles 6.10, 9.2, 9.3, 9.4, 12.2.2 and 18.4 of the Anti-Dumping Agreement.

China also requests consultations regarding Council Regulation (EC) No 91/2009 imposing definitive anti-dumping duties on imports of certain iron or steel fasteners originating in the People's Republic of China.

China considers that the imposition of definitive anti-dumping duties on imports of certain iron or steel fasteners originating in the People's Republic of China is inconsistent with the European Communities' obligations under:

Articles VI and X:3(a) of the GATT 1994;
Articles 1, 2.1, 2.2. 2.4, 2.6, 3.1, 3.2, 3.4, 3.5, 4.1, 5.4, 6.1, 6.2, 6.4, 6.5, 6.10, 9.2, 9.4 and 17.6(i) of the Anti-Dumping Agreement; as well as
Part I, paragraph 15 of China's Protocol of Accession.
In addition, China also refers to Articles 9.3 and 12.2.2 of the Anti-Dumping Agreement.

China claims that the European Communities acted inconsistently with various procedural obligations in the Anti-Dumping Agreement. China also claims that the European Communities has acted inconsistently with its obligations under the Anti-Dumping Agreement, the GATT 1994, and the Protocol of Accession through the application of Article 9(5) of the Basic Anti-Dumping Regulation in this investigation as well as decisions and determinations made in the investigation relating to, inter alia, the scope of the like product, the extent of the domestic industry, the conduct of the injury analysis and the lack of price comparability adjustments made in the calculation of the anti-dumping margin.

Panel and Appellate Body proceedings

On 12 October 2009, China requested the establishment of a panel which the DSB established on 23 October 2009. Brazil, Canada, Chile, Colombia, India, Japan, Norway, Chinese Taipei, Thailand, Turkey and the United States reserved their third-party rights. On 30 November 2009, the European Communities requested the Director-General to determine the composition of the panel which he did on 9 December 2009. On 1 April 2010, the Chairman of the panel informed the DSB that the panel expected to complete its work in September 2010.

On 3 December 2010, the panel report was circulated to Members.

The Panel found that Article 9(5) of the Basic Regulation was inconsistent with Articles 6.10, 9.2 and 18.4 of the AD Agreement, Article I:1 of the GATT 1994 and Article XVI:4 of the WTO Agreement because, with respect to producers from non-market economy countries, the individual treatment test embodied in this provision conditioned the calculation of individual dumping margins and the imposition of individual duties on the fulfilment of certain criteria.
The Panel also found that the application of Article 9(5) of the Basic Regulation in the fasteners investigation was inconsistent with AD Agreement Articles 6.10 and 9.2. The Panel also found that the EU investigating authorities acted inconsistently with AD Agreement Articles 3.1 and 3.2 with respect to the consideration of the volume of dumped imports; AD Agreement Articles 3.1 and 3.5 with respect to the causation analysis; AD Agreement Articles 6.4 and 6.2 with respect to aspects of the normal value determination; AD Agreement Article 6.5.1 with respect to non-confidential versions of questionnaire responses of two European producers and AD Agreement Article 6.5 with respect to confidential treatment of information in the questionnaire response of an Indian producer; and AD Agreement Article 6.5 with respect to the confidential treatment of the Eurostat data on total EU production of fasteners.
The Panel rejected China's claims with respect to the standing determination; definition of domestic industry; product under consideration; dumping determination; price undercutting determination; treatment of imports from non-sampled producers; consideration of the consequent impact of dumped imports on the domestic industry; non-disclosure of the identity of the complainants and the supporters of the complaint; confidential treatment of the Eurostat data on total EU production of fasteners; procedural aspects of the domestic industry definition; and the amount of time provided for responses to requests for information.
The Panel found that China's claims concerning the definition of like product; alleged non-disclosure of aspects of the normal value determination; and the procedural aspects of the domestic industry definition were not within its terms of reference and declined to make findings on these claims. Further, it applied judicial economy with respect to some of China's claims regarding the Basic Regulation and the Definitive Regulation.
The Panel recommended that the DSB request the European Union to bring its measures into conformity with its obligations under the WTO Agreement. The Panel declined to make a suggestion on how the DSB recommendations and rulings may be implemented by the European Union.

On 10 January 2011, the European Union and China requested the DSB to adopt a draft decision extending the 60-day time period stipulated in Article 16.4 of the DSU, to 25 March 2011. At its meeting on 25 January 2011, the DSB agreed that, upon a request by the European Union and China, the DSB, shall no later than 25 March 2011, adopt the panel report, unless the DSB decides by consensus not to do so or the European Union or China notifies the DSB of its decision to appeal pursuant to Article 16.4 of the DSU.

On 25 March 2011, the European Union notified the DSB of its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the Panel. On 30 March 2011, China notified the DSB of its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the Panel. On 24 May 2011, the Chair of the Appellate Body notified the DSB that due to the time required for completion of the Appellate Body report, the Appellate Body would not be able to circulate its report within 60 days. The Appellate Body estimated that the report would be circulated to Members by mid-July 2011.

On 15 July 2011, the Appellate Body report was circulated to Members.

Summary of key findings

The European Union appealed certain of the Panel's findings under Articles 6.2, 6.4, 6.5, 6.5.1, 6.10, 9.2, and 18.4 of the Anti-Dumping Agreement, Article I:1 of the GATT 1994, and Article XVI:4 of the WTO Agreement. China cross-appealed certain other findings of the Panel under Articles 2.4, 3.1, 4.1, 6.1.1, 6.2, 6.4, 6.5, and 6.5.1 of the Anti-Dumping Agreement.

The Appellate Body upheld the Panel's findings that Article 9(5) of the European Union's Basic Anti-Dumping Regulation (the “Basic AD Regulation”) was inconsistent “as such”, and “as applied” in the fasteners investigation, with Articles 6.10 and 9.2 of the Anti-Dumping Agreement because it conditions the determination of individual dumping margins, and the imposition of individual anti-dumping duties, on the fulfilment of an “Individual Treatment Test”. Under Article 9(5) of the Basic AD Regulation, an exporter or producer from a WTO Member designated as a non-market economy country (“NME”) under EU law, like China, will receive a country-wide dumping margin and a country-wide anti-dumping duty unless it can demonstrate that its export activities are sufficiently independent from the State to warrant individual treatment. The European Union argued that country-wide margins and duties were justified because, in NME countries, the State itself can be considered the country's single exporter. The Appellate Body agreed with the Panel that Article 6.10 of the Anti-Dumping Agreement requires an investigating authority to calculate individual dumping margins for each foreign exporter or producer, and that Article 9(5) of the Basic AD Regulation does not fall under any applicable exception to this rule. Similarly, the Appellate Body agreed with the Panel that Article 9.2 requires the imposition of an anti-dumping duty on each foreign exporter or producer named in an investigation, and that no exception to this rule applied to Article 9(5) of the Basic AD Regulation. Moreover, the Appellate Body did not consider that the purpose of Article 9(5) of the Basic AD Regulation was to identify a single State exporter on whom to impose a single anti-dumping duty.

Under Article 4.1 of the Anti-Dumping Agreement, the Appellate Bodyfound that the European Union acted inconsistently with its obligations because the domestic industry defined by the European Commission did not constitute producers whose production represented a “major proportion” of the total domestic production within the meaning of Article 4.1. The Appellate Body found that the Commission failed to ensure that the domestic industry definition would not introduce a material risk of distortion to the injury analysis by defining the domestic industry as comprising producers accounting for 27 per cent of total estimated EU production of fasteners, and by including only those producers who were willing to be part of the sample for purposes of the Commission's injury determination.

The Appellate Body upheld the Panel's findings under Articles 6.2 and 6.4 of the Anti-Dumping Agreement that the European Union failed to disclose in a timely manner information regarding product categorizations that was necessary for the presentation of the Chinese producers' case in the dumping determination and for the defence of their interests. The Appellate Body also found that the European Union's failure to disclose such information was inconsistent with its obligation under Article 2.4 of the Anti-Dumping Agreement to indicate to the parties to the investigation what information was necessary to ensure a fair comparison for purposes of the dumping determination.

Finally, the Appellate Body made several findings regarding procedural aspects of the fasteners investigation. The Appellate Body upheld the Panel's finding that the European Union did not act inconsistently with its obligations under Article 6.1.1 of the Anti-Dumping Agreement when it allowed Chinese exporters and producers less than 30 days to reply to the Market Economy Treatment and/or Individual Treatment Claim Form. The Appellate Body also upheld the Panel's finding that the European Union acted inconsistently with Article 6.5.1 of the Anti-Dumping Agreement by failing to ensure that domestic producers provide appropriate statements of the reasons why confidential information was not susceptible of non-confidential summary, and that the European Union did not act inconsistently with Article 6.5 of the Anti-Dumping Agreement when it treated the identity of the complainants and the supporters of the complaint as confidential information. The Appellate Body reversed the Panel's finding that the European Union acted inconsistently with its obligations under Article 6.5 when it treated information submitted by the analogue country producer participating in the investigation as confidential without requiring a “good cause” showing, and found instead that China had failed to substantiate this claim before the Panel.

On 28 July 2011, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.

Reasonable period of time

On 18 August 2011, the European Union informed the DSB that it intends to implement the recommendations and rulings of the DSB in a manner that respects its WTO obligation and that it will need a reasonable period of time to do so. On 19 January 2012, China and the European Union agreed that the reasonable period of time for the European Union to implement the DSB's recommendations and rulings shall be 14 months and 2 weeks. Accordingly, the reasonable period of time expired on 12 October 2012.

Implementation of adopted reports

At the DSB meeting on 23 October 2012, the European Union reported that it had completed the implementation of the DSB recommendations and rulings before the expiry of the agreed reasonable period of time. China noted the efforts of the European Union but did not agree with the European Union's assertion that it had fully complied.

On 25 October 2012, China and the European Union informed the DSB of Agreed Procedures under Articles 21 and 22 of the DSU.