oversight

World Trade Organization: Standard of Review and Impact of Trade Remedy Rulings

Published by the Government Accountability Office on 2003-07-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Ranking Minority Member,
             Committee on Finance, U.S. Senate



July 2003
             WORLD TRADE
             ORGANIZATION
             Standard of Review
             and Impact of Trade
             Remedy Rulings




GAO-03-824
             a
                                                July 2003


                                                WORLD TRADE ORGANIZATION

                                                Standard of Review and Impact of Trade
Highlights of GAO-03-824, a report to the       Remedy Rulings
Ranking Minority Member, Committee on
Finance, U.S. Senate




World Trade Organization (WTO)                  About a third of the cases filed in the WTO dispute settlement system from
members rely on trade remedies in               1995 through 2002 challenged members’ trade remedies, with the ratio of
the form of duties or other import              such cases increasing over time. Although a relatively small proportion of
restrictions to protect their                   WTO members’ trade remedy measures were challenged in the WTO, the
industries from injury due to unfair            United States faced substantially more challenges than other WTO members.
foreign trade practices or
unexpected import surges. There
is congressional concern that the               The WTO generally rejected members’ decisions to impose trade remedies in
WTO, created in 1995 to administer              the 25 trade remedy disputes resolved from 1995 through 2002. However,
trade rules, is interfering with this           GAO found that the WTO ruled for and against the U.S. and other members
ability. There is also congressional            in roughly the same ratios. Overall, WTO rulings resulted in few changes to
concern that the WTO is not                     members’ laws, regulations, and practices but had a relatively greater impact
treating the United States fairly in            on those of the United States. While U.S. agencies stated that WTO rulings
resolving trade remedy disputes.                have not yet significantly impaired their ability to impose trade remedies,
                                                they had concerns about the potential future adverse impact of WTO rulings.
A congressional requester asked
GAO to identify trends in WTO                   Of the legal experts GAO consulted, a majority concluded that the WTO has
trade remedy disputes since 1995,
including the outcomes of these
                                                properly applied standards of review and correctly ruled on major trade
disputes and how they affected                  remedy issues. However, a significant minority strongly disagreed with
members’ ability to impose trade                these conclusions. U.S. agencies also said that the WTO has not always
remedies. The requester also asked              properly applied the standards and has, in some cases, imposed obligations
GAO to discuss the standards of                 on members that are not found in WTO agreements. Nonetheless, the
review that the WTO applies when                experts almost unanimously agreed that the WTO was not treating the
ruling on trade remedy disputes                 United States any differently than other members.
and to present U.S. agencies’ and
legal experts’ views on the WTO’s               Total Number of WTO Trade Remedy Measures Imposed and Number Challenged, by Most
application of these standards and              Frequent Trade Remedy Users, 1995-2002
related trade remedy issues.

In their comments on a draft of this
report, the Department of
Commerce and the U.S.
International Trade Commission
stated that the report needed to put
more emphasis on U.S. agencies’
concerns about the potential
adverse impact of WTO rulings on
the U.S.’s use of trade remedies.
The U.S. Trade Representative
provided only technical comments
on the report. GAO modified the
report as appropriate.


www.gao.gov/cgi-bin/getrpt?GAO-03-824.

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Loren Yager at
(202) 512-4346 or yagerl@gao.gov.
Contents



Letter                                                                                               1
                            Results in Brief                                                         3
                            Background                                                               7
                            Trade Remedy Cases Increased Over Time, but Few Measures Were
                              Challenged                                                             8
                            Domestic Determinations Generally Were Rejected, but Statutes
                              Were Upheld                                                           12
                            Rulings Resulted in Few Changes to Members’ Laws, Regulations,
                              and Practices but Caused Numerous Changes to U.S. Measures
                                                                                                    16
                            Two Standards of Review Apply to WTO Trade Remedy Cases                 22
                            Expert Views and U.S. Agency Positions on Standard of Review and
                              Other Trade Remedy Issues                                             26
                            Agency Comments and Our Evaluation                                      34


Appendixes
             Appendix I:    Objectives, Scope, and Methodology                                      37
             Appendix II:   Summaries of Completed WTO Trade Remedy Cases                           41
                            GAO Case Number 1: Brazil – Measures Affecting Desiccated
                              Coconut (DS 22)                                                       43
                            GAO Case Number 2: Guatemala – Antidumping Investigation
                              Regarding Portland Cement from Mexico (DS 60)                         45
                            GAO Case Number 3: Korea – Definitive Safeguard Measure on
                              Imports of Certain Dairy Products (DS 98)                             47
                            GAO Case Number 4: United States – Antidumping Duty on Dynamic
                              Random Access Memory Semiconductors (DRAMS) of One
                              Megabyte or Above Originating from Korea (DS 99)                      49
                            GAO Case Number 5: Argentina – Safeguard Measures on Imports of
                              Footwear (DS 121)                                                     52
                            GAO Case Number 6: Thailand – Antidumping Duties on Angles,
                              Shapes, and Sections of Iron or Non-Alloy Steel and H-Beams
                              from Poland (DS 122)                                                  54
                            GAO Case Number 7: Mexico – Antidumping Investigation of
                              High-Fructose Corn Syrup (HFCS) from the United States (DS
                              132)                                                                  57
                            GAO Case Number 8: United States – Antidumping Act of 1916 (DS
                              136/162)                                                              60
                            GAO Case Number 9: United States – Imposition of Countervailing
                              Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel




                            Page i                                  GAO-03-824 WTO Trade Remedy Rulings
                Contents




                  Products Originating in the United Kingdom (DS 138)                     62
                GAO Case Number 10: European Union – Antidumping Duties on
                  Imports of Cotton-Type Bed Linen from India (DS 141)                    65
                GAO Case Number 11: Guatemala – Definitive Antidumping
                  Measures on Grey Portland Cement from Mexico (DS 156)                   68
                GAO Case Number 12: United States – Definitive Safeguard
                  Measures on Imports of Wheat Gluten from the European
                  Communities (DS 166)                                                    71
                GAO Case Number 13: United States – Safeguard Measures on
                  Imports of Fresh, Chilled, or Frozen Lamb Meat from New
                  Zealand and Australia (DS 177/178)                                      74
                GAO Case Number 14: United States – Antidumping Measures on
                  Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip
                  from Korea (DS 179)                                                     77
                GAO Case Number 15: United States – Antidumping Measures on
                  Certain Hot-Rolled Steel Products from Japan (DS 184)                   79
                GAO Case Number 16: Argentina – Definitive Antidumping Measures
                  on Imports of Ceramic Floor Tiles from Italy (DS 189)                   83
                GAO Case Number 17: United States – Measures Treating Export
                  Restraints as Subsidies (DS 194)                                        85
                GAO Case Number 18: United States – Definitive Safeguard
                  Measures on Imports of Circular Welded Carbon Quality Line Pipe
                  from Korea (DS 202)                                                     88
                GAO Case Number 19: United States – Antidumping and
                  Countervailing Measures on Steel Plate from India (DS 206)              91
                GAO Case Number 20: Chile – Price Band System and Safeguard
                  Measures Relating to Certain Agricultural Products (DS 207)             93
                GAO Case Number 21: Egypt – Definitive Antidumping Measures on
                  Steel Rebar from Turkey (DS 211)                                        96
                GAO Case Number 22: United States – Countervailing Measures
                  Concerning Certain Products from the European Communities
                  (“Privatization”) (DS 212)                                              98
                GAO Case Number 23: United States – Countervailing Duties on
                  Certain Corrosion-Resistant Carbon Steel Flat Products from
                  Germany (“Sunset”) (DS 213)                                            101
                GAO Case Number 24: United States – Section 129(c)(1) of the
                  Uruguay Round Agreements Act (DS 221)                                  104
                GAO Case Number 25: United States – Preliminary Determinations
                  With Respect to Certain Softwood Lumber from
                  Canada (DS 236)                                                        106
Appendix III:   Experts That GAO Interviewed for this Report                             109




                Page ii                                   GAO-03-824 WTO Trade Remedy Rulings
                        Contents




         Appendix IV:   Comments from the Department of Commerce                              110
                        GAO Comments                                                          114
         Appendix V:    Comments from the United States International Trade
                        Commission                                                            116
                        GAO Comments                                                          118
         Appendix VI:   GAO Contacts and Staff Acknowledgments                                119
                        GAO Contacts                                                          119
                        Staff Acknowledgments                                                 119


Tables                  Table 1: U.S. Trade Remedy Laws Challenged in WTO Dispute
                                  Settlement, 1995-2002                                        15
                        Table 2: Impact of WTO Rulings on Members’ Laws, Regulations,
                                  Practices, and Measures, 1995-2002                           17
                        Table 3: WTO Trade Remedy Dispute Settlement Cases Completed
                                  Between 1995 and December 31, 2002                           41
                        Table 4: Case 1 – Major Case Issue and Panel/Appellate Body
                                  Findings                                                     44
                        Table 5: Case 2 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     46
                        Table 6: Case 3 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     48
                        Table 7: Case 4 – Major Case Issues and Panel Findings                 51
                        Table 8: Case 5 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     53
                        Table 9: Case 6 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     56
                        Table 10: Case 7 – Major Case Issues and Panel Findings                59
                        Table 11: Case 8 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     61
                        Table 12: Case 9 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     64
                        Table 13: Case 10 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     67
                        Table 14: Case 11 – Major Case Issues and Panel Findings               70
                        Table 15: Case 12 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     73
                        Table 16: Case 13 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     76
                        Table 17: Case 14 – Major Case Issues and Panel Findings               78
                        Table 18: Case 15 – Major Case Issues and Panel/Appellate Body
                                  Findings                                                     81



                        Page iii                               GAO-03-824 WTO Trade Remedy Rulings
          Contents




          Table 19: Case 16 – Major Case Issues and Panel Findings                 84
          Table 20: Case 17 – Major Case Issues and Panel Findings                 87
          Table 21: Case 18 – Major Case Issues and Panel/Appellate Body
                    Findings                                                       90
          Table 22: Case 19 – Major Case Issues and Panel Findings                 92
          Table 23: Case 20 – Major Case Issues and Panel/Appellate Body
                    Findings                                                       95
          Table 24: Case 21 – Major Case Issues and Panel Findings                 97
          Table 25: Case 22 – Major Case Issues and Panel/Appellate Body
                    Findings                                                      100
          Table 26: Case 23 – Major Case Issues and Panel/Appellate Body
                    Findings                                                      103
          Table 27: Case 24 – Major Case Issue and Panel Findings                 105
          Table 28: Case 25 – Major Case Issues and Panel Findings                108


Figures   Figure 1: Total Number of WTO Cases Versus Trade Remedy Cases
                    Filed per Year, 1995-2002                                       9
          Figure 2: Most Frequent Complainants and Defendants in WTO
                    Trade Remedy Cases, 1995-2002                                  10
          Figure 3: Total Number of WTO Trade Remedy Measures Imposed
                    and Number Challenged, by Most Frequent Trade Remedy
                    Users, 1995-2002                                               11
          Figure 4: Number of Findings on Domestic Agency Determinations
                    and Percentage of Those Determinations Rejected by the
                    WTO in 21 Completed Trade Remedy Cases, 1995-2002              13
          Figure 5: Number (Percent) of Domestic Agency Determinations
                    Upheld and Rejected by the WTO, the United States
                    Versus Other Members, in Completed Trade Remedy
                    Cases, 1995-2002                                               14




          Page iv                                  GAO-03-824 WTO Trade Remedy Rulings
Contents




Abbreviations

ADA          Antidumping Agreement
CVD          countervailing duties
DRAMS        dynamic random access memory semiconductors
DSB          Dispute Settlement Body
DSU          Dispute Settlement Understanding
EU           European Union
GATT         General Agreement on Tariffs and Trade
HFCS         high-fructose corn syrup
ITC          International Trade Commission
NAFTA        North American Free Trade Agreement
SAA          Statement of Administrative Action
SCM          Subsidies and Countervailing Measures
URAA         Uruguay Round Agreements Act
USTR         United States Trade Representative
WTO          World Trade Organization

 This is a work of the U.S. government and is not subject to copyright protection in the
 United States. It may be reproduced and distributed in its entirety without further
 permission from GAO. However, because this work may contain copyrighted images or
 other material, permission from the copyright holder may be necessary if you wish to
 reproduce this material separately.




Page v                                             GAO-03-824 WTO Trade Remedy Rulings
A
United States General Accounting Office
Washington, D.C. 20548



                                    July 30, 2003                                                                                  Leter




                                    The Honorable Max Baucus
                                    Ranking Minority Member
                                    Committee on Finance
                                    United States Senate

                                    Dear Senator Baucus:

                                    The World Trade Organization (WTO) provides the institutional framework
                                    for the multilateral trading system. Established in January 1995, the WTO
                                    administers rules of international trade and provides a forum for
                                    conducting trade negotiations. In addition, the WTO has a dispute
                                    settlement system with panels and an Appellate Body that provides a
                                    multilateral forum for resolving trade disputes among WTO members. A
                                    dispute arises when one WTO member believes another member has
                                    violated a WTO agreement and initiates a dispute settlement proceeding
                                    through the WTO.

                                    Many disputes in recent years have pertained to WTO members’ use of
                                    trade remedy measures. Members impose trade remedies in the form of
                                    duties or import restrictions after determining that a domestic industry has
                                    been injured or threatened with injury by imports. Specifically, member
                                    governments impose antidumping or countervailing duties1 when they find
                                    that imports are priced at less than normal value,2 or benefit from a foreign
                                    subsidy, and that such imports injure their domestic industry. Similarly,
                                    members impose safeguard measures3 after finding that import surges have
                                    seriously injured or threatened serious injury to domestic industry. The
                                    WTO permits its 146 members to impose such trade remedy measures but
                                    requires them to follow certain rules before doing so, as set forth in various


                                    1
                                     Antidumping or countervailing measures take the form of increased duties on imports.
                                    Dumping is generally considered to be the sale of a commodity in a foreign market at a
                                    lower price than its normal value. WTO rules allow for the imposition of antidumping duties,
                                    or fees, to offset dumping. Countervailing duties are special customs duties imposed to
                                    offset subsidies provided on the manufacture, production, or export of a particular good.
                                    Subsidies essentially lower a producer’s costs or increase its revenues.
                                    2
                                     For the purposes of this report, we use the term “normal value” to mean home market
                                    value. Normal value is also sometimes referred to as “fair market value.”
                                    3
                                     A safeguard is a temporary import control or other trade restriction that a WTO member
                                    imposes to prevent serious injury to domestic industry caused by increased imports.




                                    Page 1                                              GAO-03-824 WTO Trade Remedy Rulings
WTO agreements.4 Domestic agencies usually make a number of “domestic
agency determinations.”5 When a trade measure is challenged in the WTO
dispute settlement system and a dispute settlement panel is established,
the panel reviews the domestic agency determinations supporting the
measure to determine whether they are consistent with the relevant WTO
agreements. In addition to cases challenging WTO members’ domestic
determinations to impose specific trade remedy measures, WTO members
sometimes directly challenge other members’ trade remedy laws.

Over the past several years, Congress has raised concerns that some WTO
panel and Appellate Body rulings have adversely affected the U.S.’s ability
to impose trade remedy measures. For example, in the Trade Act of 2002,6
Congress voiced concern about certain WTO rulings on trade remedies,
including how the WTO has applied standard of review—that is, how the
WTO evaluates and defers to the factual and legal determinations of WTO
members’ domestic agencies. In addition, some Members of Congress are
concerned that some WTO rulings have created new obligations for WTO
members beyond those found in the WTO agreements. For example, a
Senate report accompanying the Trade Act of 2002 stated that WTO panels
and the Appellate Body have substantially rewritten part of the WTO
Agreement on Subsidies and Countervailing Measures in ways that are
disadvantageous to the United States.7

Accordingly, you asked us to conduct a review of WTO dispute settlement
activity during the past 8 years, focusing on trade remedy disputes.
Specifically, in this report we (1) identified the major trends in WTO
dispute settlement activity concerning trade remedies; (2) analyzed the




4
 The relevant WTO agreements for trade remedy determinations are the Antidumping
Agreement, the Agreement on Subsidies and Countervailing Measures, the Safeguards
Agreement, and parts of the General Agreement on Tariffs and Trade 1994 (GATT 1994).
5
 Throughout this report, we use the term “domestic agency determination” to refer to a
finding by a domestic agency leading to a decision to impose one or more trade remedy
measures. An example of this would be a domestic agency finding in a safeguards case that
a product is being imported in such increased quantities as to cause or threaten to cause
serious injury to a domestic industry.
6
Public Law No. 107-210, § 2101, 116 Stat. 933, 993.
7
S. Rep. No. 107-139, at 6-7 (2002).




Page 2                                                GAO-03-824 WTO Trade Remedy Rulings
                   outcome of WTO rulings in completed trade remedy cases;8 (3) assessed
                   the major impacts of these rulings on WTO members’ laws, regulations,
                   practices, and measures9 and on members’ ability to impose trade
                   remedies; (4) identified the standards of review for trade remedy cases and
                   Appellate Body guidance on how the standards should be applied; and (5)
                   summarized legal experts’ views and U.S. agencies’ positions on standard
                   of review and other trade remedy issues.

                   To address these objectives, we created a database using WTO data on
                   dispute settlement complaints filed from 1995 through 2002; reviewed WTO
                   and U.S. government documents; and interviewed U.S., WTO, and
                   European Union (EU) officials. In addition, we reviewed WTO panel and
                   Appellate Body reports in the 25 completed trade remedy cases through
                   2002. Finally, we interviewed 18 U.S. and foreign legal experts, including
                   practitioners, academics, and advisors on WTO-related trade remedy
                   issues. Appendix I contains a full description of our scope and
                   methodology, and appendix II contains summaries of the 25 completed
                   trade remedy cases. Appendix III contains the names and affiliations of the
                   18 legal experts we interviewed. Appendixes IV and V contain agency
                   comments and our responses. Appendix VI identifies the major
                   contributors to this report.



Results in Brief   Of the 198 cases filed in the WTO from 1995 through 2002, one-third (64)
                   challenged members’ trade remedies, and the ratio of trade remedy cases
                   filed versus other types of cases generally has increased over time. The
                   United States was by far the most frequent defendant in trade remedy
                   cases, acting as defendant in 30 of the 64 challenges, with 17 of those 30
                   cases filed since January 2000. In contrast, the EU had only 5 trade remedy
                   cases filed against it. On the other hand, the United States was less active in
                   filing complaints against other WTO members. For example, the United
                   States filed only 5 of the 64 trade remedy cases, while the EU filed 16 such
                   cases. Overall, WTO members challenged a small proportion of trade
                   measures imposed. Of the 1,405 trade measures that members notified the


                   8
                    “Completed” refers to those cases in which the WTO Dispute Settlement Body has adopted
                   a panel or Appellate Body report as of December 31, 2002.
                   9
                    We define “measures” broadly to include orders calling for antidumping or countervailing
                   duties or some type of safeguard action. For the purposes of this report, the term “measure”
                   does not include members’ laws, regulations, or practices.




                   Page 3                                              GAO-03-824 WTO Trade Remedy Rulings
WTO that they imposed from 1995 through 2002, WTO members challenged
only 63 (4 percent) in the WTO dispute settlement system. The United
States imposed the most measures (239) and had the highest proportion of
its measures (12 percent) challenged, whereas the next biggest trade
remedy users had fewer of their measures challenged. For example, India
had none of its 226 measures challenged, while the EU had 4 of its 182
measures challenged. According to U.S. agency officials, one reason that
the United States has been a defendant more often than a complainant in
trade remedy cases is that the United States has the world’s biggest
economy and most desirable market.

In the 25 trade remedy cases completed from 1995 through 2002, the WTO
generally did not uphold WTO members’ domestic determinations to
impose trade remedy measures but upheld a higher proportion of members’
trade remedy laws that were challenged. In 17 of the 21 cases involving a
total of 175 WTO findings10 on domestic determinations,11 the WTO rejected
50 percent or more of the agencies’ determinations as not complying with
WTO agreements, rejecting all determinations in 5 of those cases. Overall,
the WTO rejected about the same percentage of the U.S. and non-U.S.
agency determinations in the 21 cases, 57 percent and 56 percent,




10
  To analyze WTO findings about domestic determinations, for the most part we reviewed
the concluding sections of panel and Appellate Body reports. When several findings were
included within a single paragraph in the concluding section, we generally counted each
finding separately. In the several instances in which concluding sections of panel reports did
not clearly indicate these findings, we obtained our numbers by evaluating the full reports.
11
 Four cases did not involve WTO findings on domestic agency determinations—3
challenged only statutes, and 1 was found to be not properly before the WTO. Although the
Appellate Body ruled that another case was not properly before the panel, the panel ruled
on a number of antidumping issues involving determinations of a domestic agency.




Page 4                                               GAO-03-824 WTO Trade Remedy Rulings
respectively.12 In 9 of the 25 cases, there were 13 challenges to trade
remedy laws, all of which were U.S. laws. The WTO upheld U.S. trade
remedy laws in 11 of the 13 challenges and rejected U.S. laws in 2
challenges.

WTO rulings in the 25 completed cases we examined have not required
numerous changes to members’ laws, regulations, and practices but have
resulted in the revision or removal of a number of trade remedy measures
that members imposed. As a result of the 14 cases in which the United
States was a defendant, two U.S. laws, one regulation, and three practices
were changed or are subject to change. In addition, the rulings in 9 of those
cases necessitated the onetime revision to, or removal of, 21 U.S. trade
measures. However, WTO trade remedy rulings resulted in fewer changes
to the laws, regulations, practices, and measures of other WTO members.
Specifically, no foreign laws or regulations were affected, and only one
foreign practice was changed, in the 11 cases in which other WTO members
were defendants. In addition, only 7 foreign trade measures were subject to
revision or removal.13 U.S. officials told us that the trade remedy rulings
have not significantly impaired their ability to impose trade remedies to
date. However, they were concerned about the potential for rulings to have
a greater adverse impact in the future. For example, these officials cited the
possible negative ramifications of WTO rulings in the privatization and EU
bed linen cases. U.S. officials also said that some WTO safeguard rulings
have been extremely difficult to implement. For instance, some safeguard
rulings have placed a greater burden on domestic agencies to establish a
clearer link between increased imports and serious injury to domestic
industry. In addition, U.S. officials said that the rulings have required U.S.
agencies to provide more detailed explanations of their analyses and
procedures for applying their methodologies in trade remedy
investigations.



12
  These data, however, do not distinguish domestic agency determinations on the basis of
their importance. Thus, these determinations ranged in importance from whether domestic
agencies established the proper link between dumped imports and injury to domestic
industry to whether the agency followed proper procedures in providing public notice of its
proceedings. Furthermore, panels and the Appellate Body addressed the same issues in a
number of cases. See appendix I for a further discussion of the methodological limitations
on these data.
13
 We relied primarily on the WTO and U.S. agencies for information about foreign laws,
regulations, practices, and measures. For the most part, we did not obtain information from
foreign governments on these matters.




Page 5                                             GAO-03-824 WTO Trade Remedy Rulings
The WTO uses two principal standards of review to evaluate the factual and
legal determinations of WTO member domestic agencies in trade remedy
cases—article 11 of the WTO Dispute Settlement Understanding and article
17.6 of the WTO Antidumping Agreement. Article 11 applies to all cases
brought under the WTO dispute settlement system and requires that panels
make an objective assessment of the factual and legal determinations of
WTO member domestic agencies. The Appellate Body has found that in
applying article 11, panels are not to conduct a new review of domestic
agency fact-findings nor totally defer to them. Article 17.6 applies only to
antidumping cases and is more specific and deferential than article 11. For
factual review, article 17.6 requires panels to determine whether domestic
agencies have properly established the facts and evaluated them in an
unbiased and objective manner, and, if the agencies have done so, it does
not allow panels to overturn the agencies’ determinations. For legal review,
article 17.6 requires panels to interpret the Antidumping Agreement by
applying established international rules for interpreting treaties and
international agreements.14 When a panel finds more than one permissible
interpretation of the Antidumping Agreement, and one of them is
consistent with a domestic agency’s determination, article 17.6 requires the
panel to uphold the agency’s determination. The Appellate Body has
concluded that panels should apply article 17.6 in a certain order: first,
apply international rules of interpretation; and then, consider whether to
uphold the domestic agency’s determination. The Appellate Body has found
that panels have generally interpreted and applied both standards of review
correctly in the relatively few instances where standard of review was
specifically an issue in a case. Finally, the panels and the Appellate Body
discussed the standards of review in most of the trade remedy cases, but
the extent of that discussion varied by trade remedy area, case, and issue.

The most common concern raised by legal experts with whom we spoke,
although a minority view, related to the way in which the WTO has applied
article 17.6 to evaluate legal determinations of domestic agencies. For
example, some experts believed that Appellate Body guidance to apply
international rules of treaty interpretation first has resulted in panels’
improperly rejecting domestic agency interpretations because, in the
experts’ view, these rules necessarily lead to only one interpretation. The
experts contended that this tendency to find one interpretation made
panels less likely to consider alternative domestic agency interpretations.


14
 Principally, these are articles 31 and 32 of the Vienna Convention on the Law of Treaties,
U.N. Doc. A/CONF. 39/27 (May 23, 1969).




Page 6                                              GAO-03-824 WTO Trade Remedy Rulings
             Some experts also stated that the panels and the Appellate Body have not
             applied article 17.6 in as deferential a manner as the United States
             intended. Overall, however, a majority of the experts with whom we spoke
             indicated that the WTO had not exceeded its authority in applying the
             standards of review, and that the WTO had treated its members the same in
             trade remedy cases. A majority of experts also said that the WTO has not
             added new obligations or diminished WTO members’ rights in these cases;
             however, a significant minority of experts strongly disagreed with these
             views. Finally, many experts considered some of the WTO rulings on
             safeguards to be unclear and difficult to implement, particularly regarding
             how agencies should link increased imports and serious injury to domestic
             industry.

             The U.S. agencies most involved in trade remedy activities said that the
             WTO has improperly applied article 17.6(ii) in some trade remedy cases,
             mainly because it has not applied the article in a way that allows for
             upholding permissible interpretations of WTO members’ domestic
             agencies. These agencies also said that in certain trade remedy cases, the
             WTO has found obligations and imposed restrictions on WTO members
             that are not supported by the texts of the WTO trade remedy agreements.



Background   The 1994 Uruguay Round agreements created the WTO dispute settlement
             system. The new system replaced the one under the General Agreement on
             Tariffs and Trade (GATT), the predecessor to the WTO. The Uruguay Round
             created a stronger dispute settlement system that, unlike the system under
             the GATT, discourages stalemates by not allowing parties to block
             decisions. In addition, the new system established a standing Appellate
             Body, with the aim of making decisions more stable and predictable.

             The WTO dispute settlement system operates in four major phases:
             consultation, panel review, Appellate Body review (when a party appeals
             the panel ruling), and implementation of the ruling. To initiate, or file, a
             dispute, a WTO member requests consultations with the defending
             member. If the parties do not settle the case during consultations, the
             complainant may then request that a panel be established. Nonpermanent,
             three-person panels issue formal decisions, or reports, for cases that are
             appealed; three members of a permanent, seven-member Appellate Body—
             comprised of individuals with recognized standing in the field of law and
             international trade—review panel findings. The Dispute Settlement Body,
             which is comprised of representatives of all WTO members, approves all




             Page 7                                     GAO-03-824 WTO Trade Remedy Rulings
                               final reports, and only a consensus of the members can block decisions.
                               Thus, no individual member can block a decision.

                               When a WTO member challenges a trade remedy measure, the panels and
                               the Appellate Body apply standards of review, outlined in certain WTO
                               agreements, to evaluate members’ factual and legal determinations
                               supporting these measures. In the United States, the Department of
                               Commerce and the International Trade Commission (ITC) investigate
                               whether the United States should impose antidumping or countervailing
                               duties to offset unfair foreign trade practices. The ITC also investigates
                               whether the conditions exist for the United States to invoke safeguards in
                               response to import surges.



Trade Remedy Cases             From 1995 through 2002, WTO members brought 198 formal dispute
                               settlement cases against other members.15 One-third (64 cases) involved
Increased Over Time,           members’ trade remedies, and the ratio of trade remedy cases filed, versus
but Few Measures               all other types, generally increased over the time period. Among WTO
                               members, the United States has been by far the most frequent defendant in
Were Challenged                trade remedy cases but relatively less active in filing complaints. Overall,
                               however, WTO members have challenged a relatively small share of the
                               trade measures that their fellow members imposed, although the
                               proportion of U.S. trade measures challenged was larger.



About One-third of All Cases   Overall, about one-third (64) of all WTO cases involved members’ trade
Involved Trade Remedies,       remedies. From 1995 to 2000, an increasing proportion of the cases filed
                               pertained to trade remedy measures and laws, as shown in figure 1. In 2001
and Ratio Increased Over
                               and 2002, there was somewhat of a shift in this trend.
Time




                               15
                                 These 198 cases originated from 276 separate requests for consultation or filings—the first
                               of the four phases in the dispute settlement process. For the purposes of our analysis, we
                               combined multiple requests for consultation regarding the same measure or law into a
                               single case. For instance, nine WTO members requested consultations regarding the steel
                               safeguard that the United States imposed in March 2002; we counted this as one case,
                               because all of the requests for consultation pertained to the same measure.




                               Page 8                                              GAO-03-824 WTO Trade Remedy Rulings
                             Figure 1: Total Number of WTO Cases Versus Trade Remedy Cases Filed per Year,
                             1995-2002




United States Has Been the   In comparing WTO members’ participation in the trade remedy cases, the
Most Frequent Defendant,     United States by far has been the most frequent defendant but less active as
                             a complainant. As shown in figure 2, the United States was a defendant in
but Less Active as a         30 (47 percent) of the 64 trade remedy cases, a majority of which were filed
Complainant                  since January 2000. The next most frequent defendants were Argentina,
                             which defended 6 cases, and the EU, a defendant in 5 cases. On the other
                             hand, the United States was less active than other WTO members in filing
                             trade remedy cases. As figure 2 also shows, the EU was the most frequent
                             complainant in the 64 trade remedy cases, filing 16 complaints. Six WTO
                             members each filed more complaints than the United States.




                             Page 9                                      GAO-03-824 WTO Trade Remedy Rulings
Figure 2: Most Frequent Complainants and Defendants in WTO Trade Remedy Cases, 1995-2002




                                       U.S. agency officials said that it was not surprising that the United States
                                       had been a defendant more often than a complainant in WTO disputes since
                                       (1) the United States has the world’s biggest economy and most desirable
                                       market and (2) U.S. laws and procedures are more detailed and transparent
                                       than those of other members that are large users of trade remedies. These
                                       officials also pointed to the easy availability in the United States of trade
                                       lawyers, who could assist in bringing trade remedy actions, as another
                                       factor.



Few Imposed Measures                   Although members notified the WTO that they imposed 1,405 trade remedy
Were Challenged, but U.S.              measures from 1995 through 2002, only a small percentage of these
                                       measures were challenged in the dispute settlement system. Specifically,
Measures Were Challenged
                                       WTO members challenged only 63 (4 percent) of the 1,405 measures, but
Most                                   nearly one-half of these challenges involved U.S. trade measures. Over the
                                       same period, as shown in figure 3, the United States imposed the most
                                       trade remedy measures (239) and had the biggest number and share (29, or



                                       Page 10                                     GAO-03-824 WTO Trade Remedy Rulings
12 percent) of its measures challenged by other WTO members. On the
other hand, India, the next biggest user of trade remedy measures, had
none of its 226 measures challenged. WTO members challenged 4 (2
percent) of the EU’s 182 trade remedy measures and 7 (6 percent) of
Argentina’s 127 trade remedy measures.



Figure 3: Total Number of WTO Trade Remedy Measures Imposed and Number
Challenged, by Most Frequent Trade Remedy Users, 1995-2002




Notes:
Data on trade remedy measures imposed are the most recent available from the WTO and are through
December 2002.
Challenges to WTO members’ sunset reviews are not included in these figures. Sunset reviews are
domestic agency reviews of whether to terminate antidumping or countervailing duties after a certain
period, usually 5 years. The duties are terminated unless the authorities determine, in a review, that
the duties’ elimination would likely lead to a continuation or recurrence of dumping or subsidies and
injury.




Page 11                                                   GAO-03-824 WTO Trade Remedy Rulings
Domestic                   While the 25 WTO trade remedy rulings completed from 1995 through 2002
                           generally rejected domestic agency determinations supporting trade
Determinations             measures, the rulings upheld a vast majority of the trade remedy laws that
Generally Were             were challenged. The WTO rejected at least half of the domestic agency
                           determinations in most of the 21 cases dealing with such determinations.
Rejected, but Statutes     The WTO also rejected roughly the same proportion of U.S. and non-U.S.
Were Upheld                domestic determinations. The 21 rulings addressed issues ranging from
                           whether domestic agencies adequately justified imposing a trade remedy
                           measure to whether WTO members followed proper procedures in
                           initiating the disputes. Regarding WTO rulings on members’ laws, only U.S.
                           laws were challenged during the period. The WTO upheld more than three-
                           quarters of the U.S. laws challenged in 9 cases involving 13 challenges.



WTO Rejected Majority of   The WTO made findings on a total of 175 domestic agency determinations
Domestic Determinations;   in 21 of the 25 trade remedy cases completed through 2002. As shown in
                           figure 4, in 17 of the 21 cases the panels rejected 50 percent or more of the
U.S./Non-U.S. Rejection    domestic agency’s determinations—rejecting all determinations in 5 cases.
Ratios Were Similar        In all 21 cases, the WTO found at least one aspect of a measure to be
                           inconsistent with WTO requirements.




                           Page 12                                    GAO-03-824 WTO Trade Remedy Rulings
Figure 4: Number of Findings on Domestic Agency Determinations and Percentage of Those Determinations Rejected by the
WTO in 21 Completed Trade Remedy Cases, 1995-2002




                                        Note: The WTO findings on domestic determinations range in importance from how well the domestic
                                        agency justified imposing the trade remedy by adequately establishing a causal link between the
                                        increased imports and injury to domestic industry to whether the domestic agency followed proper
                                        procedures by providing public notice of the initiation of its antidumping investigation.


                                        When comparing rulings among WTO members on domestic
                                        determinations, the United States and other WTO members fared similarly.
                                        Overall, as shown in figure 5, the WTO rejected almost the same proportion
                                        of the U.S.’s and other WTO members’ domestic determinations—57
                                        percent and 56 percent, respectively.




                                        Page 13                                               GAO-03-824 WTO Trade Remedy Rulings
                          Figure 5: Number (Percent) of Domestic Agency Determinations Upheld and
                          Rejected by the WTO, the United States Versus Other Members, in Completed Trade
                          Remedy Cases, 1995-2002




All WTO Challenges to     Although to date WTO members have challenged only U.S. laws, the WTO
Trade Remedy Laws         upheld a large majority of these laws. As shown in table 1, in the 13
                          instances (in 9 cases), in which WTO members directly challenged U.S.
Involved U.S. Laws, but
                          laws, the WTO upheld U.S. laws in 11 challenges and rejected U.S. laws in 2
Most Laws Were Upheld     challenges.16




                          16
                            In the 13 challenges to U.S. law, 3 were cases challenging only laws, while 10 involved both
                          laws and domestic agency determinations.




                          Page 14                                              GAO-03-824 WTO Trade Remedy Rulings
Table 1: U.S. Trade Remedy Laws Challenged in WTO Dispute Settlement, 1995-2002

                                                                          Ruling
Law challenged                   WTO dispute settlement case              outcome
Sections 733(e) and              United States – Antidumping Measures     Law upheld
735(a)(3) of the Tariff Act of   on Certain Hot-Rolled Steel Products
1930                             from Japan (DS 184)
Section 771(7)(c)(iv) of the     United States – Antidumping Measures     Law upheld
Tariff Act of 1930               on Certain Hot-Rolled Steel Products
                                 from Japan (DS 184)
Sections 776(a) and 782(d)       United States – Antidumping and          Law upheld
and (e) of the Tariff Act of     Countervailing Measures on Steel Plate
1930                             from India (DS 206)
Section 751(b) of the Tariff     United States – Antidumping Duty on      Law upheld
Act of 1930 and                  Dynamic Random Access Memory
accompanying regulations         Semiconductors (DRAMS) of One
                                 Megabyte or Above Originating from
                                 Korea (DS 99)
Section 751(c)(2) of the         United States – Countervailing Duties on Law upheld
Tariff Act of 1930               Certain Corrosion-Resistant Carbon
                                 Steel Flat Products from Germany (DS
                                 213)
Sections 751(c)(1)(A) and        United States – Countervailing Duties on Law upheld
752(b) of the Tariff Act of      Certain Corrosion-Resistant Carbon
1930                             Steel Flat Products from Germany (DS
                                 213)
Section 752(b)(4)(B) of the      United States – Countervailing Duties on Law upheld
Tariff Act of 1930               Certain Corrosion-Resistant Carbon
                                 Steel Flat Products from Germany (DS
                                 213)
Section 771(5)(F) of the         United States – Countervailing Measures Law upheld
Tariff Act of 1930               Concerning Certain Products from the
                                 European Communities (DS 212)
Sections 777A(e)(2)(A) and       United States – Preliminary            Law upheld
(B) of the Tariff Act of 1930    Determinations With Respect to Certain
and accompanying                 Softwood Lumber from Canada (DS 236)
regulations
Section 129(c)(1) of the United States – Section 129(c)(1) of the         Law upheld
Uruguay Round Agreements Uruguay Round Agreements Act (DS
Act                      221)
Section 771(5)(B)(iii) of the    United States – Measures Treating       Law upheld
Tariff Act of 1930               Export Restraints as Subsidies (DS 194)
Section 735(c)(5)(A) of the      United States – Antidumping Measures     Law rejected
Tariff Act of 1930               on Certain Hot-Rolled Steel Products
                                 from Japan (DS 184)
Section 801 of the Revenue       United States – Antidumping Act of 1916 Law rejected
Act of 1916a                     (DS 136/162)




Page 15                                             GAO-03-824 WTO Trade Remedy Rulings
                            Legend: DRAMS            dynamic random access memory semiconductors
                                    URAA             Uruguay Round Agreements Act
                            Source: GAO analysis of WTO panel and Appellate Body reports.
                            a
                             The official name of the law is section 801 of the Revenue Act of 1916; however, for purposes of this
                            report, we use the name of the law that the WTO used—the Antidumping Act of 1916.


                            Addressing why only U.S. trade remedy laws were challenged, a U.S.
                            agency official said that U.S. laws tend to be more vulnerable because they
                            are more detailed than those of other members, and their language is not
                            the same as the language in the WTO agreements. In contrast, according to
                            the official, some WTO members essentially take the language in the
                            relevant WTO agreement and make it their law.



Rulings Resulted in         The 25 WTO trade remedy rulings completed from 1995 through 2002 did
                            not result in many changes to WTO members’ laws, regulations, or
Few Changes to              practices.17 However, the rulings more often resulted in the onetime
Members’ Laws,              revision to, or removal of, trade remedy measures. The rulings affected a
                            number of U.S. laws, regulations, practices, and measures; but for other
Regulations, and            WTO members, no laws or regulations were affected, and only one practice
Practices but Caused        was subject to change. Furthermore, fewer foreign trade measures were
Numerous Changes to         subject to removal or revision. Nonetheless, U.S. officials told us that the
                            rulings to date had not significantly impaired their ability to impose trade
U.S. Measures               remedies. However, they told us they were concerned about the potential
                            for rulings to have a greater adverse impact in the future. In addition, U.S.
                            agencies said that, with few exceptions, the rulings did not question U.S.
                            methodologies for determining whether to impose remedies but have
                            required them to provide fuller explanations and justifications for their
                            decisions.



Rulings Caused Few          WTO rulings resulted in a small number of changes to members’ laws,
Changes to Members’ Laws,   regulations, and practices, with all but one of those changes involving U.S.
                            trade remedies. In the 14 completed trade remedy cases in which the
Regulations, or Practices
                            United States was the defendant, two U.S. laws, one regulation, and three
                            practices were changed or are subject to change, as shown in table 2. In the
                            11 cases involving other WTO members, only one practice was subject to
                            change.

                            17
                              “Practices” refer to WTO members’ uncodified methodologies and procedures in
                            investigating injury to domestic industry and in determining the appropriate trade remedy
                            measures, according to Commerce Department officials.




                            Page 16                                                         GAO-03-824 WTO Trade Remedy Rulings
Table 2: Impact of WTO Rulings on Members’ Laws, Regulations, Practices, and
Measures, 1995-2002

                                                                                                                  Measures
                                                Laws            Regulations                Practices              subject to
                                            subject to           subject to                subject to            revision or
 Defendants                                   change                change                   change                 removal
 United States                                           2                       1                       3                21
 Other WTO members                                       0                       0                       1                7
Source: GAO analysis of compliance action documents filed with the WTO by members, plus information from U.S. agencies.

Notes:
The 21 U.S. measures were subject to revision or removal in 9 cases. While 7 of those cases each
involved 1 measure, 2 cases involved more than 1 measure—1 case involved 12 measures and 1 case
involved 2 measures.
In 2 cases, WTO members technically removed the relevant measures in response to other judicial
bodies that made similar rulings to the WTO: one case was in direct response to a North American
Free Trade Agreement (NAFTA) panel ruling, and the other was in response to U.S. domestic litigation
(see app. II, case summaries 7 and 9).


Specifically, the two U.S. laws subject to change are a section of the
Antidumping Act of 1916 and a section of the Tariff Act of 193018 involving
calculation of the “all others” rate.19 In the 1916 Antidumping Act case, the
WTO found the U.S. law to be in violation of GATT 1994 and the WTO
Antidumping Agreement because it authorized imposing fines,
imprisonment, and recovery of damages in response to the dumping of
products in the U.S. market—remedies that are not provided for in those
agreements. Both the U.S. Senate and the House of Representatives have
introduced legislation to repeal the 1916 Act.20 The proposed change to the
Tariff Act of 1930 involves making calculation of the “all others” rate
consistent with the WTO Antidumping Agreement. The WTO granted the
United States until the end of December 2003 to comply, but so far
Congress has not addressed this change.




18
     Sections 735(c)(5) of the Tariff Act of 1930, codified at 19 U.S.C. § 1673d(c)(5).
19
   The “all others” rate is the rate used to calculate antidumping duties for exporters and
producers who are not individually investigated.
20
 While the House bill (H.R. 1073), introduced on March 4, 2003, and one of the Senate bills
(S. 1155), introduced on May 23, 2003, explicitly state that the repeal would not affect
pending cases, another Senate bill (S. 1080), introduced on May 19, 2003, would apply to any
pending cases on the date of enactment.




Page 17                                                                  GAO-03-824 WTO Trade Remedy Rulings
The one change to a U.S. regulation stemmed from a case involving U.S.
antidumping duties imposed on imports of Korean dynamic random access
memory semiconductors (DRAMS). To implement the ruling, the United
States replaced its regulatory standard for revoking an antidumping
order—that dumping was “not likely” to occur—with the standard in the
WTO Antidumping Agreement—that “continued imposition of the
antidumping duty is necessary to offset dumping.”

The three changes to U.S. practices involved a revision of the “arm’s-
length”21 methodology in antidumping cases and two privatization
methodologies that the Commerce Department used in countervailing duty
cases to calculate the extent to which the benefit of past subsidies are
passed on to private purchasers of state-owned enterprises.22 The United
States revised its “arms-length” methodology to conform to the WTO
Antidumping Agreement by expanding the scope of sales to an affiliated
business that could be considered to be made in the ordinary course of
trade. Commerce revised its countervailing duty methodology to conform
to the Appellate Body’s first privatization decision, but the Appellate Body
later ruled that the revised methodology was also inconsistent with the
Subsidies and Countervailing Measures Agreement. Commerce revised its
methodology a second time23 to reflect the Appellate Body’s finding that an
arm’s-length, fair market value sale of a subsidized, state-owned entity to a
private buyer creates a presumption that the privatized entity no longer
benefits from past subsidies.




21
  The “arm’s-length” methodology involves determining whether home market sales by an
exporter to an affiliated party are made at arm’s length, that is, in the ordinary course of
trade.
22
   The privatization cases concern the issue of whether past subsidies provided to a state-
owned enterprise continue to benefit the enterprise after it is sold to a private buyer. The
two relevant U.S. methodologies are commonly referred to as the “gamma” and “same
person” methodologies and are described by the Appellate Body in paragraphs 12-16 of
United States—Countervailing Measures Concerning Certain Products from the
European Communities, WT/DS212/AB/R (see case summary 22 in app. II). The U.S. Court
of Appeals for the Federal Circuit rejected the gamma methodology in Delverde, SRL v.
United States, 202 F.3d 1360, 1362-63 (Fed. Cir. 2000). This occurred before the WTO
Appellate Body ruled in the first WTO privatization case—United States—Imposition of
Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom, WT/DS138/AB/R (see case summary 9 in app. II).
23
   The final modification to the U.S. privatization methodology was published in the Federal
Register on June 23, 2003. 68 Fed. Reg. 37125.




Page 18                                              GAO-03-824 WTO Trade Remedy Rulings
                              Aside from the changes to U.S. laws, regulations, and practices, 1 case
                              resulted in a change to an EU practice. In that case,24 the WTO ruled that
                              the EU’s practice of “zeroing” was not permitted under the WTO
                              Antidumping Agreement. Zeroing25 in that case concerned the EU’s
                              changing negative dumping margins to zero when comparing dumping
                              margins of different models of like products—for example, comparing
                              dumping margins of high-end satin sheets with low-end polyester/cotton
                              blend sheets.



Rulings Brought about         In contrast to the relatively few changes in members’ laws, regulations, and
Increased Removals and        practices, most of the rulings in the 25 completed trade remedy cases26
                              involved a case-specific removal or revision of a WTO member’s trade
Revisions of Specific Trade
                              remedy measure. More U.S. measures were affected than those of all other
Measures                      members. In the 14 completed cases brought against the United States, 21
                              U.S. trade measures were subject to revision or removal,27 while the 11
                              completed cases against other countries resulted in 7 trade measures being
                              subject to revision or removal, as shown in table 2.




                              24
                                European Communities—Antidumping Duties on Imports of Cotton-Type Bed Linen
                              from India, WT/DS141/AB/R (see case summary 10 in app. II).
                              25
                               The dumping margin is the amount by which the imported merchandise is sold below
                              normal value. For example, if the export price is $200 and the normal value is $220, the
                              dumping margin is $20. This margin is expressed as a percentage of the export price; in this
                              example, the margin is 10 percent. The term “zeroing” is used to describe designating
                              dumping margins for non-dumped sales (i.e., sales made above the normal value) as zero.
                              Thus, if the export price is $220 and the normal value is $200, the level of dumping (i.e., the
                              amount by which normal value exceeds the export price) is zero, not negative $20. By
                              zeroing comparisons where the export price exceeds normal value, dumping margins tend
                              to be higher.
                              26
                                Four U.S. cases did not involve domestic agency determinations, and thus did not concern
                              trade measures; 3 directly challenged laws, and 1 was found not to be properly before the
                              WTO.
                              27
                               The 21 U.S. measures were subject to revision or removal in 9 cases. While 7 of those cases
                              each involved only 1 measure, 2 cases concerned more than 1 measure. United States—
                              Countervailing Measures Concerning Certain Products from the European Communities,
                              WT/DS212/AB/R, involved 12 measures, and United States—Antidumping Measures on
                              Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea, WT/DS179/R
                              (see case summary 14 in app. II), concerned 2 measures.




                              Page 19                                               GAO-03-824 WTO Trade Remedy Rulings
Specifically, the United States reduced antidumping margins on measures
in response to 3 WTO rulings,28 removed countervailing duty measures in 1
case as a result of domestic litigation,29 and is revising countervailing duty
measures in 2 other cases.30 And in 3 cases, the United States removed, or
allowed to expire, safeguard measures that the Appellate Body found
inconsistent with the WTO Safeguards Agreement.31

By contrast, other WTO members removed antidumping measures in 3
cases32 and are due to remove or revise antidumping measures in 2 cases.33




28
 These cases were United States—Antidumping Measures on Stainless Steel Plate in
Coils and Stainless Steel Sheet and Strip from Korea, WT/DS179/R; United States—
Antidumping Measures on Certain Hot-Rolled Steel Products from Japan,
WT/DS184/AB/R (see case summary 15 in app. II); and United States—Antidumping and
Countervailing Measures on Steel Plate from India, WT/DS206/R (see case summary 19 in
app. II).
29
     See Delverde, SRL v. United States, 202 F.3d 1360, 1362-63 (Fed. Cir. 2000).
30
  These cases were United States—Countervailing Duties on Certain Corrosion-Resistant
Carbon Steel Flat Products from Germany, WT/DS213/AB/R (see case summary 23 in app.
II), and United States—Countervailing Measures Concerning Certain Products from the
European Communities, WT/DS212/AB/R (see case summary 22 in app. II).
31
  These cases were United States—Definitive Safeguard Measures on Imports of Circular
Welded Carbon Quality Line Pipe from Korea, WT/DS202/AB/R (see case summary 18 in
app. II); United States—Definitive Safeguard Measures on Imports of Wheat Gluten from
the European Communities, WT/DS166/AB/R (see case summary 12 in app. II); and United
States—Safeguard Measures on Imports of Fresh, Chilled, or Frozen Lamb Meat from New
Zealand and Australia, WT/DS177/AB/R and WT/DS178/AB/R (see case summary 13 in app.
II).
32
 The cases were Guatemala—Definitive Antidumping Measures on Grey Portland
Cement from Mexico, WT/DS156/R (see case summary 11 in app. II); Argentina—Definitive
Antidumping Measures on Imports of Ceramic Floor Tiles from Italy, WT/DS189/R (see
case summary 16 in app. II); and Mexico—Antidumping Investigation of High-Fructose
Corn Syrup (HFCS) from the United States, WT/DS132/R (see case summary 7 in app. II).
In the latter case, Mexico actually removed its antidumping measure pursuant to a panel
ruling under the North American Free Trade Agreement. The WTO panel had made similar
rulings and recommendations regarding Mexico’s compliance with the Antidumping
Agreement.
33
  These cases are Egypt—Definitive Antidumping Measures on Steel Rebar from Turkey,
WT/DS211/R (see case summary 21 in app. II), and European Union—Antidumping Duties
on Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R (see case summary 10
in app. II).




Page 20                                                 GAO-03-824 WTO Trade Remedy Rulings
                             In addition, other members removed safeguard measures as a result of 2
                             WTO rulings.34



U.S. Officials Are           While U.S. officials told us that WTO trade remedy rulings had not yet
Concerned about the          significantly impaired the U.S.’s fundamental right and ability to use its
                             trade remedies, they are concerned about the rulings’ potential to do so in
Potential Impact of WTO      the future. For example, Commerce Department officials said that
Rulings on U.S. Ability to   implementing the second Appellate Body ruling on privatization may have a
Impose Trade Remedy          substantial impact on similar proceedings in the future as well as existing
Measures                     countervailing duty orders.

                             In addition, U.S. officials expressed concern about the potential negative
                             ramifications of the WTO ruling in the EU bed linen case. First, U.S.
                             officials said that although the United States did not change its “zeroing”
                             practice as a result of the ruling against the EU, they noted that the ruling
                             could affect a current Canadian dispute against the United States involving
                             U.S. zeroing practices.35 Furthermore, the EU has recently challenged 21
                             Commerce Department antidumping determinations with regard to the
                             U.S.’ zeroing practice. The EU alleged that U.S. application of its zeroing
                             practice is inconsistent with the WTO Antidumping Agreement and GATT
                             1994. The EU also asserted that U.S. laws and regulations providing for this
                             zeroing practice appear to be inconsistent with those agreements. As
                             shown by this challenge, U.S. officials believe that when the WTO strikes
                             down a practice, there is significant potential for WTO members to
                             challenge similar practices of other members. Accordingly, these officials
                             said they are monitoring WTO rulings and recommendations in cases not
                             involving the United States in order to prepare for similar, potential
                             challenges against the United States.




                             34
                              These cases were Argentina—Safeguard Measures on Imports of Footwear,
                             WT/DS121/AB/R (see case summary 5 in app. II), and Korea—Definitive Safeguard
                             Measure on Imports of Certain Dairy Products, WT/DS98/AB/R (see case summary 3 in
                             app. II).
                             35
                              According to a Commerce Department official, the WTO panel is due to issue an interim
                             ruling in a case involving a final dumping determination on softwood lumber from Canada in
                             September and a final ruling in December 2003. See United States—Final Dumping
                             Determination on Softwood Lumber from Canada, WT/DS264.




                             Page 21                                            GAO-03-824 WTO Trade Remedy Rulings
                      In the safeguards area, U.S. officials indicated that some WTO rulings36
                      were confusing and extremely difficult to implement, particularly regarding
                      certain aspects of causation—the extent to which increases in imports
                      cause serious injury, or threaten serious injury, to domestic industry. U.S.
                      officials also said that they have had to increase the level of detail they
                      provide in explaining their analyses and how they apply their
                      methodologies in safeguard investigations. For example, they cited
                      safeguard rulings dealing with “nonattribution,” an aspect of causation
                      requiring that injury to domestic industry caused by factors other than
                      increased imports not be attributed to increased imports.37 U.S. officials
                      said that these rulings could be viewed as calling for domestic agencies to
                      quantify the amount of injury due to increased imports versus the amount
                      due to other factors—a task they consider to be difficult, if not impossible.
                      Moreover, the officials said they would now have to expend more
                      resources in conducting safeguard investigations.



Two Standards of      WTO panels use two standards of review in evaluating the factual and legal
                      determinations of WTO members’ domestic agencies in trade remedy
Review Apply to WTO   cases. Article 11 of the WTO Dispute Settlement Understanding applies to
Trade Remedy Cases    all cases brought under the WTO dispute settlement system and calls for an
                      objective assessment of domestic agency determinations. The Appellate
                      Body has stated that in applying article 11, panels should not conduct a
                      new review of domestic agency fact-finding nor totally defer to domestic
                      agency determinations. Article 17.6 of the Antidumping Agreement applies
                      only to antidumping cases and is more specific and deferential than article
                      11. Appellate body guidance on article 17.6 calls for panels first to apply
                      established international rules of treaty interpretation to interpreting
                      provisions of the Antidumping Agreement before deciding whether to
                      uphold a domestic agency’s interpretation. In the relatively few number of
                      instances in which the Appellate Body has considered standard of review


                      36
                       In addition to the safeguard rulings in this study, a WTO panel in July 2003 issued a
                      decision on challenges brought by a number of WTO members against U.S. safeguards
                      imposed on certain steel products. The panel found against the United States on unforeseen
                      developments and aspects of causation, among other issues. See United States—Definitive
                      Safeguard Measures on Imports of Certain Steel Products, WT/DS248-49, 251-54, 258-59/R.
                      37
                       The Appellate Body has found, with regard to the issue of nonattribution, that members
                      must separate and distinguish the injurious effects of other factors from the injurious effects
                      of increased or dumped imports to comply, respectively, with article 4.2(b) of the
                      Safeguards Agreement and article 3.5 of the Antidumping Agreement.




                      Page 22                                               GAO-03-824 WTO Trade Remedy Rulings
                        issues, it has found that panels have generally interpreted and applied both
                        standards of review correctly. Finally, panel and Appellate Body decisions
                        generally discuss the standards of review, but the extent of the discussion
                        varies by trade remedy area, case, and issue.



WTO Has Two Principal   The standard of review that WTO panels and the Appellate Body apply in
Standards of Review     WTO dispute settlement cases refers to how they evaluate and defer to the
                        factual and legal determinations of domestic agencies of WTO members.38
                        The two principal standards of review that WTO panels and the Appellate
                        Body use to evaluate these determinations are article 11 of the WTO
                        Dispute Settlement Understanding and article 17.6 of the WTO
                        Antidumping Agreement.39 Article 11 applies to cases brought under all the
                        WTO agreements that are covered by the dispute settlement system and
                        supplements article 17.6 in antidumping cases. Article 17.6 only applies to
                        cases brought under the Antidumping Agreement, which is the only WTO
                        agreement that has a specific standard of review.40




                        38
                         In the 25 trade remedy cases we reviewed, panels and the Appellate Body also resolved 13
                        direct challenges to U.S. laws. For many of these challenges to laws, panels and the
                        Appellate Body did not specifically mention articles 11 or 17.6 or articulate any other
                        standard of review for evaluating whether the laws were consistent with WTO obligations.
                        39
                          Some experts view article 3.2 of the Dispute Settlement Understanding as an additional
                        standard of review. Under article 3.2, WTO members recognize that the dispute settlement
                        system serves both to preserve the rights and obligations of WTO members under the WTO
                        agreements covered by dispute settlement and to clarify the provisions of those agreements
                        in accordance with customary rules of interpretation of public international law. It also
                        provides that Dispute Settlement Body recommendations and rulings cannot add to or
                        diminish the rights and obligations provided in the WTO agreements. Although panels and
                        the Appellate Body have not specifically identified article 3.2 as a standard of review, they
                        frequently do refer to it when interpreting provisions of WTO trade remedy agreements.
                        40
                          A WTO ministerial decision adopted by the Uruguay Round Trade Negotiations Committee
                        in December 1993 states that the standard of review in article 17.6 “shall be reviewed after
                        three years with a view to considering the question of whether it is capable of general
                        application.” This has not been done. In addition, in the WTO countervailing duty case,
                        United States—Imposition of Countervailing Duties on Certain Hot-Rolled Lead and
                        Bismuth Carbon Steel Products Originating in the United Kingdom, WT/DS138/AB/R, the
                        United States argued that article 17.6 should also apply to countervailing duty cases brought
                        under the WTO Subsidies and Countervailing Measures Agreement. Part of the U.S.
                        argument was based on a WTO ministerial declaration that called for “consistent resolution
                        of disputes arising from anti-dumping and countervailing duty measures.” The Appellate
                        Body, however, rejected this position and found that article 11 was the appropriate standard
                        of review to apply in these disputes.




                        Page 23                                             GAO-03-824 WTO Trade Remedy Rulings
Article 11 Calls for an        Article 11 obligates a panel to make an “objective assessment of the matter
Objective Assessment           before it, including an objective assessment of the facts of the case and the
                               applicability of and conformity with the relevant” WTO agreement.41 The
                               Appellate Body has interpreted this requirement to mean that panels
                               should neither conduct a new review of domestic agency fact-findings,
                               often referred to as a “de novo review,” nor totally defer to domestic agency
                               determinations. In rejecting both these extremes, the Appellate Body has
                               found that the panels are poorly suited to engage in new reviews and
                               cannot ensure an objective assessment by totally deferring to domestic
                               agency determinations. What the panels should do in safeguards cases,
                               according to the Appellate Body, is ascertain whether domestic agencies
                               have evaluated all relevant facts and provided an adequate, reasoned, and
                               reasonable explanation about how the facts supported their
                               determinations.42



Article17.6 Is More Specific   Article 17.6 is more specific than article 11 and calls for more deference to
and Deferential than Article   domestic agency determinations. Article 17.6 is divided into two subparts—
                               factual and legal—and establishes standards of review for panel
11
                               evaluations of domestic agency determinations. Under the factual standard
                               of review in article 17.6(i), panels must determine whether domestic
                               agencies have properly established the facts and evaluated them in an
                               unbiased and objective manner. When a panel finds that the domestic
                               agency has performed this task, the panel cannot overturn the domestic
                               agency’s determination even if it might have reached a different conclusion.
                               The Appellate Body has stated that the panel’s obligation under the factual
                               standard in article 17.6(i) closely reflects the obligation imposed on panels
                               under article 11.43

                               Under the legal standard of review in article 17.6(ii), panels must apply
                               established international rules in interpreting provisions of the WTO
                               Antidumping Agreement. These rules are set forth in articles 31 and 32 of

                               41
                                Article 11 also obligates panels to “make such other findings as will assist the Dispute
                               Settlement Body in making” recommendations and rulings.
                               42
                                    See Fresh Lamb Meat from New Zealand and Australia, above, paragraphs 97-108.
                               43
                                In paragraphs 55 and 62 of United States—Antidumping Measures on Certain Hot-Rolled
                               Steel Products from Japan, WT/DS184/AB/R, the Appellate Body described the
                               complementary interaction between articles 11 and 17.6, particularly regarding panel review
                               of factual determinations of domestic agencies.




                               Page 24                                              GAO-03-824 WTO Trade Remedy Rulings
                              the Vienna Convention on the Law of Treaties44 and provide a method for
                              interpreting provisions of the Antidumping Agreement. When a panel
                              applies these rules and finds that there is more than one permissible way to
                              interpret a provision of the Antidumping Agreement, the panel must uphold
                              the domestic agency’s determination if it is consistent with one of the
                              permissible interpretations. The Appellate Body’s guidance to panels about
                              how they are to apply this standard is consistent with the sequence implied
                              above. Thus, panels should first use the international rules to interpret the
                              WTO provision in question, and only after completing this task should
                              panels then decide whether to uphold the domestic agency’s legal
                              determination. The Appellate Body has stated that application of the
                              international rules could give rise to at least two permissible
                              interpretations of some provisions of the Antidumping Agreement.45



Appellate Body Generally      WTO members did not often challenge panel interpretations and
Upheld Panels’ Treatment of   applications of the standards of review, and most challenges involved
                              article 11. In most instances, the Appellate Body upheld the panels’
Standards, but Treatment
                              treatment of the standards. In the 14 instances in which the Appellate Body
Was Seldom Challenged         specifically ruled on panel interpretations and applications of standard of
                              review, it found that the panels had correctly addressed the standards in 11
                              instances—9 involving article 11 and 2 involving article 17.6.



Panels/Appellate Body         As indicated above, panels have the responsibility for applying the
Discuss Standard of Review    standards of review in articles 11 and 17.6 when evaluating determinations
                              of WTO member domestic agencies. The Appellate Body’s function is to
in Cases, but Extent Varied
                              review how panels have interpreted and applied these standards and to
                              uphold, modify, or reverse panel actions. For the most part, Appellate Body




                              44
                                These provisions call for applying general and supplementary methods to interpreting
                              provisions of treaties and international agreements. Under article 31, general rules for
                              interpreting treaty provisions are first applied, and supplementary methods under article 32
                              are used to (1) confirm the meaning resulting from application of article 31 or (2) determine
                              the meaning when the interpretation under article 31 is ambiguous or obscure or leads to an
                              unreasonable result.
                              45
                                 United States—Antidumping Measures on Certain Hot-Rolled Steel Products from
                              Japan, WT/DS184/AB/R, paragraphs 59-60. See also, Thailand—Antidumping Duties on
                              Angles, Shapes, and Sections of Iron or Non-Alloy Steel and H-Beams from Poland,
                              WT/DS/AB/R, paragraphs 125-27 (see case summary 6 in app. II).




                              Page 25                                             GAO-03-824 WTO Trade Remedy Rulings
                        decisions in trade remedy cases have included longer and more detailed
                        discussions of standard of review than the panels.46

                        Aside from differences between the panels and the Appellate Body, the
                        extent to which standards of review are discussed vary by trade remedy
                        area, case, and issue. Thus, standards of review are discussed, at least to
                        some extent, in all safeguard and antidumping cases involving
                        determinations of domestic agencies but are not mentioned in a number of
                        countervailing duty cases. In many of the safeguard and antidumping cases,
                        the panels discuss article 11 or article 17.6, respectively, at the beginning of
                        the case, indicating that they are the standards of review to be applied in
                        evaluating the domestic agency determinations involved, though the
                        amount of introductory discussion varies from case to case. The standards
                        of review are sometimes also discussed, or alluded to, later in panel and
                        Appellate Body reports in connection with evaluations of particular
                        domestic agency determinations. These allusions to the standards of
                        review involve use of language from the standards themselves or
                        interpretations of the standards rather than any specific mention of them.
                        For example, in the safeguard cases, panels often invoke Appellate Body
                        guidance about what kind of domestic agency explanation is necessary—
                        an “adequate, reasoned, and reasonable explanation”—without mentioning
                        article 11. Similarly, in antidumping cases, panels sometimes refer to the
                        requirement in article 17.6(i) to conduct an “unbiased and objective”
                        evaluation of domestic agency fact-finding without specifically mentioning
                        17.6(i). Finally, for some issues, panels neither specifically mention nor
                        allude to standard of review provisions.



Expert Views and U.S.   How the WTO has interpreted and applied the standard of review in trade
                        remedy cases and how it has resolved important trade remedy issues are
Agency Positions on     highly controversial issues in the United States. Further, a number of these
Standard of Review      important trade remedy issues are highly complex, technical, and not easily
                        explained, as evidenced by their lengthy treatment in WTO panel and
and Other Trade         Appellate Body reports. Accordingly, we decided to interview a wide range
Remedy Issues           of WTO legal experts to obtain their views on these issues.


                        46
                         The Appellate Body decisions in United States—Safeguard Measures on Imports of
                        Fresh, Chilled, or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R,
                        and United States—Antidumping Measures on Certain Hot-Rolled Steel Products from
                        Japan, WT/DS184/AB/R, contain the most detailed discussions, respectively, of articles 11
                        and 17.6.




                        Page 26                                            GAO-03-824 WTO Trade Remedy Rulings
                             The most common concern identified by the experts with whom we spoke,
                             although a minority view, was about how the WTO was applying article
                             17.6(ii) in antidumping cases. Notwithstanding this concern, overall a
                             majority of the experts believed that the WTO had not exceeded its
                             authority in applying the standard of review in the trade remedy cases we
                             reviewed. Commenting on more general issues surrounding the WTO trade
                             remedy rulings, almost all of the experts believed that the United States
                             and other WTO members have received the same treatment in trade
                             remedy cases. In addition, a majority of the experts who responded
                             concluded that WTO decisions generally have not added to obligations or
                             diminished rights of WTO members and that it was appropriate for the
                             WTO to interpret vague and ambiguous provisions in WTO agreements,
                             sometimes referred to as “gap filling.” However, a significant minority of
                             experts strongly disagreed with this view about WTO members’ obligations
                             and rights and considered gap filling to be inconsistent with several
                             provisions of the Dispute Settlement Understanding. Regarding specific
                             rulings, a number of experts cited some safeguard rulings as confusing and
                             unclear.

                             In contrast to the majority views expressed above, the U.S. agencies most
                             involved in trade remedy activities believed that article 17.6(ii) has been
                             improperly applied in some trade remedy cases, mainly because the WTO
                             has not applied article 17.6(ii) in a way that allows for upholding
                             permissible interpretations of WTO members’ domestic agencies. They also
                             believed that in certain trade remedy cases, the WTO has found obligations
                             and imposed restrictions on WTO members that are not supported by the
                             texts of the WTO trade remedy agreements.



Significant Minority         A common concern raised by a significant minority of experts with whom
Expressed Concerns about     we spoke was that the WTO was not properly applying the legal standard of
                             review in article 17.6(ii) of the Antidumping Agreement. Specifically, these
WTO Application of Article   experts maintained that Appellate Body guidance calling for panels to first
17.6(ii)                     apply international rules in the Vienna Convention on the Law of Treaties to
                             interpret provisions of the Antidumping Agreement before they evaluate
                             the domestic agencies’ legal determinations necessarily leads to only one
                             interpretation. Consequently, panels never reach the point of applying the
                             part of article 17.6(ii) that allows for multiple permissible interpretations
                             and upholding an agency determination that is based on one of these




                             Page 27                                    GAO-03-824 WTO Trade Remedy Rulings
interpretations.47 In fact, while several experts mentioned specific rulings
in which panels or the Appellate Body had upheld domestic agency
determinations as permissible, it was unclear whether this was due to these
bodies going through the article 17.6(ii) analysis or solely because they
agreed with the domestic agency. In this regard, in the trade remedy cases
we reviewed, no expert pointed to a clear instance in which a panel first
applied the Vienna Convention, found several permissible interpretations,
and then upheld the agency determination because it was consistent with
one of them.48 One expert, who was a former U.S. negotiator in the Uruguay
Round, stated that U.S. negotiators in the round had not fully appreciated
how application of the Vienna Convention would limit the possibility of
panels or the Appellate Body finding multiple permissible interpretations of
the Antidumping Agreement.

Some experts also believed that panels and the Appellate Body have not
applied the legal standard of review in article 17.6(ii) in the deferential way
intended by the United States, as expressed in the U.S. Statement of
Administrative Action (SAA) accompanying the U.S. Uruguay Round
Agreements Act.49 The SAA describes article 17.6 as a special standard of
review analogous to the deferential standard applied by U.S. courts in
reviewing actions by the Commerce Department and the ITC, commonly




47
 Some of these experts stated that by not applying part of article 17.6(ii), panels and the
Appellate Body are violating the principle that every provision of a treaty or international
agreement should be given effect.
48
  In United States—Antidumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/R, on an issue involving calculation of normal value, the Appellate Body
upheld a U.S. determination as resting on an interpretation of article 2.1 of the Antidumping
Agreement that was, in principle, permissible “following application of the rules of treaty
interpretation in the Vienna Convention.” Nevertheless, the Appellate Body did not first set
forth several permissible interpretations and then uphold the United States determination
because it was consistent with one of them. In the April 2003 WTO panel report,
Argentina—Definitive Anti-Dumping Duties on Poultry from Brazil, WT/DS241/R, the
panel appeared to go further in applying the article 17.6(ii) process in finding permissible an
Argentinean interpretation dealing with the definition of “domestic industry.”
49
 The SAA is an authoritative expression of the United States about the interpretation and
application of the Uruguay Round Agreements and the Uruguay Round Agreements Act.
Public Law No. 103-465, 108 Stat. 4815, codified at 19 U.S.C. §§ 3512(d). H.R. Doc. No.103-
316, at 818 (Vol. 1 1994).




Page 28                                               GAO-03-824 WTO Trade Remedy Rulings
                            referred to as the Chevron standard.50 Thus, from the U.S. perspective,
                            article 17.6 was intended to ensure that WTO panels neither second-guess
                            the factual conclusions of domestic agencies, even when panels might have
                            reached a different conclusion, nor rewrite, under the guise of legal
                            interpretation, the provisions of the Antidumping Agreement.



Majority Said WTO Did Not   Despite the concerns expressed above, the majority of the experts with
Exceed Its Authority in     whom we spoke indicated that the panels and the Appellate Body generally
                            had not exceeded their authority in applying the standards of review in
Applying Standard of        articles 11 and 17.6 in the trade remedy cases we reviewed.51 These experts
Review                      indicated that panels and the Appellate Body had properly applied article
                            11 in safeguards and countervailing duty cases as well as the factual
                            standard of review in article 17.6(i) in antidumping cases. Several of this
                            group even questioned whether article 11 was intended to be a standard of
                            review provision at all and, if it was, that it did not intend the same level of
                            deference as article 17.6.52 Majority support for how panels and the
                            Appellate Body applied the legal standard in article 17.6(ii) included
                            experts who thought the panels and the Appellate Body had generally
                            applied the article correctly and provided the right amount of deference,
                            those who believed the article was not particularly deferential, and those
                            who considered the article to primarily set forth a method for interpreting
                            provisions of the Antidumping Agreement rather than for conferring
                            deference. Finally, a number of experts, including a few with divergent
                            opinions about whether the legal standard in article 17.6(ii) had been
                            properly applied, stated that evaluation of panel and Appellate Body
                            decisions should focus on their substantive rulings and not the technical
                            issue of standard of review.


                            50
                             The Chevron standard or doctrine was established by the United States Supreme Court in
                            Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.C. 837, 842-45
                            (1984). Under the Chevron doctrine, when a reviewing court determines that the law is clear
                            on a particular issue, the court as well as the agency must give effect to the law. If, however,
                            the law is silent or ambiguous, the court is to uphold an agency’s interpretation when it is
                            reasonable, even if it is different from the interpretation of the law that the court would have
                            reached.
                            51
                              A majority of experts also agreed that, both in a WTO and domestic political context, the
                            United States has had the most concerns about how standard of review has been applied in
                            trade remedy cases.
                            52
                             This included one expert who was highly critical about how panels and the Appellate Body
                            had applied article 17.6(ii) in a number of instances in antidumping cases.




                            Page 29                                               GAO-03-824 WTO Trade Remedy Rulings
                              A majority of experts also maintained that the United States was not
                              successful in getting the standard of review it wanted in the Antidumping
                              Agreement and that the SAA only expresses the U.S.’s view about the intent
                              of article 17.6. They pointed out that while the United States was the main
                              proponent for having a strongly deferential standard included in the
                              Antidumping Agreement,53 numerous WTO members opposed the United
                              States on this issue. Although the experts agreed that the lack of written
                              negotiating history makes it difficult to determine how much deference
                              article 17.6 was intended to provide, a large number believed that the
                              language that was ultimately agreed to did not include the Chevron
                              standard. 54



Large Majority Said All WTO   Experts with markedly divergent views on other issues were in near
Members Were Treated the      unanimous agreement that the United States generally was being treated
                              about the same as other WTO members in trade remedy cases. Although
Same in Trade Remedy
                              several experts pointed out that the United States was the most frequent
Cases                         defendant and was losing more often than other WTO members, they
                              believed that the panels and the Appellate Body had ruled against other
                              WTO members with the same frequency and in the same or similar manner
                              as they had for the United States. Several experts also were emphatic in
                              describing the WTO as a plaintiff’s court in trade remedy cases and pointed
                              out that in nearly all trade remedy decisions and all the safeguards
                              decisions we reviewed, respondents were asked to take some action—for
                              example, to ensure that a safeguard measure was applied consistent with
                              the Safeguards Agreement. When asked why respondents usually lose trade
                              remedy cases, some experts cited a WTO free trade bias or bias against
                              trade remedies as the principal reason.55 Several others said that WTO
                              members only bring trade remedy actions in the WTO that they are
                              confident they can win. As to why the United States was the most frequent
                              defendant in trade remedy cases, several experts mentioned the fact that
                              the United States was the biggest market as well as the biggest user of trade
                              remedies. In addition, several experts believed that some of the Commerce
                              Department’s decisions to impose trade remedy measures were unfounded.


                              53
                                   The United States also wanted article 17.6 to apply to countervailing duty cases.
                              54
                               Among other things, the U.S.’s draft language for article 17.6(ii) that incorporated the
                              Chevron term “reasonable interpretation” was changed to “permissible interpretation.”
                              55
                               A few of these experts viewed a bias toward liberalizing trade positively and consistent
                              with WTO agreement provisions.




                              Page 30                                                 GAO-03-824 WTO Trade Remedy Rulings
Majority Said No New        A majority of experts who responded to this issue agreed that panels and
Obligations or Diminished   the Appellate Body generally have not added to the obligations or
                            diminished the rights of the United States and other WTO members in trade
Rights, but Minority        remedy cases. They believed panels and the Appellate Body generally had
Strongly Disagreed          ruled appropriately in these cases, including the rulings on issues that the
                            experts cited most frequently as being important and controversial—
                            zeroing, facts available,56 nonattribution, unforeseen developments, and
                            privatization.57 A number of these experts believed that the panels and the
                            Appellate Body had both the authority and the need to interpret vague or
                            ambiguous provisions, or to fill gaps,58 in the trade remedy agreements
                            when no provision clearly deals with an issue. A number also cited article
                            3.2 of the Dispute Settlement Understanding, which calls for dispute
                            settlement to “clarify the . . . provisions of the [WTO] Agreements,” as
                            support for panel and Appellate Body interpretations of vague or
                            ambiguous provisions. Furthermore, a number stated that it is a common
                            and accepted practice for courts to interpret vague or ambiguous
                            provisions of laws and agreements, or to fill gaps, when the meaning of a
                            legal provision is unclear.

                            A significant minority of experts, however, strongly believed that panel and
                            Appellate Body findings on a number of important issues, including those
                            listed above, had added to obligations or diminished the rights of the
                            United States and other WTO members. For example, some in this group
                            believed that panels or the Appellate Body should have upheld the
                            domestic agency determinations on the antidumping issues of zeroing,
                            facts available, and nonattribution as permissible under the legal standard
                            of review in article 17.6(ii). In addition, they contended that gap filling was
                            prohibited by articles 3.2 and 19.2 of the Dispute Settlement
                            Understanding, both of which preclude the Dispute Settlement Body from


                            56
                             Under the “facts available” provisions in article 6.8 and annex II of the WTO Antidumping
                            Agreement, domestic agencies are authorized to make antidumping determinations on the
                            basis of whatever facts are available to them when the defending party fails to provide
                            relevant facts within a reasonable period of time or significantly impedes the investigation.
                            57
                             The Appellate Body ruled against respondents on nearly all of these issues and, with the
                            exception of zeroing, all involved cases in which the United States was a respondent.
                            58
                               Not all of the experts agreed on the meaning of “gap filling.” Some viewed the term
                            negatively in that it led to inappropriately adding obligations to WTO agreements, while
                            others agreed that it was synonymous with interpreting vague or ambiguous provisions.
                            When asked about which of several factors had influenced WTO decisions, gap filling was
                            among the most frequently cited by the experts.




                            Page 31                                              GAO-03-824 WTO Trade Remedy Rulings
                         adding to obligations or diminishing the rights of WTO members as
                         provided in the WTO agreements covered by dispute settlement.
                         Furthermore, they believed that the WTO had engaged in improper gap
                         filling in its rulings regarding the aforementioned issues, including
                         privatization. They said that WTO provisions on these issues were unclear
                         and that privatization was not specifically referred to in the Subsidies and
                         Countervailing Measures Agreement. Finally, some experts concluded that
                         it was improper for the panels and the Appellate Body to rule on issues that
                         the negotiating members had intentionally left unclear. They believed that
                         the proper way to deal with vague and ambiguous language in the WTO
                         agreements was through additional negotiations rather than through panel
                         or Appellate Body rulings.



Experts Believed Some    A substantial number of experts stated that WTO rulings on the safeguard
Safeguard Rulings Were   issues of causation and unforeseen developments were confusing and
                         difficult to follow. This group included experts with sharply divergent
Confusing and Unclear    views on other trade remedy issues. Specifically, these experts believed
                         that the lack of clarity in the rulings on the causation issue of
                         nonattribution has made it difficult for domestic agencies to implement the
                         rulings. Some in this group were concerned that the rulings seemed to
                         require a quantitative analysis of each factor causing serious injury to
                         domestic industry to ensure the factors were not being improperly
                         attributed to increased imports,59 and several questioned whether domestic
                         agencies could perform this kind of analysis. The experts also had
                         concerns about how domestic agencies could implement the Appellate
                         Body rulings on the issue of unforeseen developments. Specifically, they
                         were unsure how WTO members would show that increased imports
                         causing serious injury resulted from developments they had not foreseen
                         when they made tariff concessions or assumed other obligations under
                         GATT. A few experts were surprised that the Appellate Body had
                         resurrected the GATT requirement on unforeseen developments, which
                         they thought had been abandoned and had not been specifically included in
                         the Safeguards Agreement.



                         59
                          In the antidumping context, the Appellate Body recognized that it might not be easy to
                         separate and distinguish the injurious effects of different causal factors but found that this
                         was what was intended by the nonattribution language in the Antidumping Agreement.
                         United States—Antidumping Measures on Certain Hot-Rolled Steel Products from Japan,
                         WT/DS184/AB/R, paragraph 228.




                         Page 32                                              GAO-03-824 WTO Trade Remedy Rulings
U.S. Agency Positions on    In its December 2002 report to Congress,60 the executive branch concluded
Standard of Review and      that, overall, the United States had fared well in WTO dispute settlement,
                            including in a number of trade remedy cases. Nevertheless, the report
Other Trade Remedy Issues   raised concerns about how the WTO had applied standard of review in
                            trade remedy cases and stated that some rulings were troubling in “their
                            failure to recognize that agreement terms may be susceptible of multiple,
                            reasonable interpretations among which WTO members may properly
                            choose.” The report specifically criticized the Appellate Body ruling in
                            United States—Antidumping Measures on Certain Hot-Rolled Steel
                            Products from Japan for how it had applied the legal standard of review in
                            article 17.6(ii).

                            The executive branch report also stated that in certain trade remedy cases,
                            the WTO had found obligations and imposed restrictions on WTO members
                            that were not supported by the texts of the WTO agreements.61 The report
                            mentioned the rulings on facts available, unforeseen developments,
                            nonattribution, and several others as examples. The report qualified these
                            criticisms by stating that not all of the WTO findings it cited were based on
                            a problematical analytical approach or that the WTO would have
                            necessarily found in favor of the United States had the proper approach
                            been used. Nevertheless, the report emphasized that the problematic
                            findings were troubling due to their lack of grounding in the texts of the
                            negotiated agreements.

                            During the course of our work, the Commerce Department and ITC
                            officials reiterated these concerns. ITC officials indicated that they do not
                            agree that the WTO has properly applied standard of review in trade
                            remedy cases. Specifically, they stated that the WTO has applied article
                            17.6(ii) of the Antidumping Agreement in a manner that raises a question
                            about whether the second sentence of the provision, requiring the WTO to
                            uphold domestic agency determinations that rest on permissible


                            60
                             The report was entitled Executive Branch Strategy Regarding WTO Dispute Settlement
                            Panels and the Appellate Body: Report to the Congress Transmitted by the Secretary of
                            Commerce, at 6-10 (Dec. 30, 2002), and was required by the Trade Act of 2002, Public Law
                            No. 107-210, § 2105(b)(3), 116 Stat. 1016. The report was prepared by the Commerce
                            Department in consultation with the Secretary of State, the Secretary of the Treasury, the
                            Attorney General, and the U.S. Trade Representative.
                            61
                             In contrast, an EU and a WTO official we interviewed stated that standard of review has
                            been properly applied by the WTO in trade remedy cases and that WTO rulings have not
                            added to obligations or diminished rights of WTO members.




                            Page 33                                            GAO-03-824 WTO Trade Remedy Rulings
                      interpretations of the Antidumping Agreement, has real meaning. In these
                      officials’ view, the WTO has not allowed for more than one permissible
                      interpretation of the relevant provisions. In this regard, the United States
                      recently proposed that article 17.6 be considered as a topic for discussion
                      in the Negotiating Group on Rules in the ongoing WTO negotiations. In its
                      submission, the United States stated that panels and the Appellate Body
                      have not accepted WTO members’ reasonable, permissible interpretations
                      of the Antidumping Agreement.

                      ITC officials also stated that in some instances, the Appellate Body had
                      ruled incorrectly on important issues and created new obligations, which
                      do not appear in and are unsupported by the plain language of the relevant
                      agreements. One example involved the Appellate Body findings on the
                      nonattribution provision of the Safeguards Agreement. The ITC also found
                      it particularly significant that the WTO had enunciated systemic
                      requirements for this issue, as well as unforeseen developments,62 even
                      though they are not specifically covered by U.S. law.



Agency Comments and   We requested comments on a draft of this report from the Secretary of
                      Commerce, the Chairman of the U.S. International Trade Commission, and
Our Evaluation        the U.S. Trade Representative (USTR). The Commerce Department and the
                      ITC provided written comments, which are reprinted in appendixes IV and
                      V. We obtained oral comments from USTR officials, including the Assistant
                      U.S. Trade Representative for Monitoring and Enforcement.

                      The Commerce Department had three areas of concern regarding our
                      report. First, it emphasized the potential future impact of WTO trade
                      remedy rulings on the U.S.’s ability to impose trade remedies, noting that
                      this potential is far more significant than these rulings’ limited impact to
                      date. Commerce cited, in particular, the possible negative ramifications of
                      two WTO rulings. Specifically, it said that the ruling on privatization could
                      impact a significant number of U.S. countervailing duty orders, and that as
                      a result of the EU bed linen ruling, the EU has recently challenged more
                      than 20 U.S. antidumping investigations and reviews. As a result of this
                      increased emphasis, we modified the sections of this report that present
                      U.S. agency views on the potential future ramifications of WTO decisions


                      62
                       In the recent panel report, United States—Definitive Safeguard Measures on Imports of
                      Certain Steel Products, WT/DS248-49, 251-54, 258-59/R, the panel found against the United
                      States on the issue of unforeseen developments, among others.




                      Page 34                                            GAO-03-824 WTO Trade Remedy Rulings
on the U.S.’s ability to impose trade remedies. Second, Commerce raised
concerns regarding the composition of the group of legal experts we
consulted and our characterization of their views as “majority” and
“minority.” However, we believe that our methodology for selecting these
experts was sound (see app. I). In addition, we believe that our report
sufficiently addresses the concerns of the minority of experts.
Nevertheless, we have made modifications to the relevant sections of our
report to ensure that majority positions and minority concerns are
presented in a balanced manner. Finally, Commerce expressed concern
that we did not adequately address the executive branch’s views on the
WTO’s application of standard of review and other trade remedy issues. As
a result, we modified our report to give more prominent treatment to U.S.
agency positions.

The ITC had two main areas of concern regarding the report. First, the ITC
said that the report understated the full effect of WTO rulings on the ability
of the United States to impose and maintain trade remedy measures in that
the full effect of WTO rulings likely has not yet been realized, citing for
example several systemic WTO requirements for safeguard determinations.
In response to this comment as well a similar comment from the
Commerce Department, we modified the relevant sections of the report as
discussed above and used examples that the ITC cited. Second, the ITC did
not agree that WTO panels and the Appellate Body have properly applied
the standard of review in article 17.6(ii) of the Antidumping Agreement. In
response to this concern, we have incorporated the ITC’s views in our
report.

In addition, we obtained technical comments from the Commerce
Department and the ITC, which we have incorporated into the report as
appropriate. For example, Commerce noted that we had included
challenges to WTO members’ sunset reviews in some of our statistics on
trade remedy measures. As a result, we eliminated the sunset review
challenges from our statistics.

USTR provided technical comments such as clarification of certain
terminology. For example, USTR noted that the term “domestic
determination” usually connotes a final decision by the appropriate agency
as to whether dumping has occurred or whether increased imports have
caused injury or are threatening injury to domestic industry. Accordingly,
we clarified our definition in this report and made other technical changes
as appropriate. USTR also noted that U.S. trade remedy measures had been
challenged more frequently than those of other WTO members in part



Page 35                                     GAO-03-824 WTO Trade Remedy Rulings
because U.S. trade remedy laws and investigations are more transparent.
We have added this point to our report.


We are sending copies of this report to interested congressional
committees, the U.S. Trade Representative, the Secretary of Commerce,
and the Chairman of the U.S. International Trade Commission. We will also
make copies available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me
at (202) 512-4128. Other GAO contacts and staff acknowledgments are
listed in appendix VI.

Sincerely yours,




Loren Yager, Director,
International Affairs and Trade




Page 36                                    GAO-03-824 WTO Trade Remedy Rulings
Appendix I

Objectives, Scope, and Methodology                                                            AA
                                                                                               ppp
                                                                                                 ep
                                                                                                  ned
                                                                                                    n
                                                                                                    x
                                                                                                    id
                                                                                                     e
                                                                                                     x
                                                                                                     Iis




              The Ranking Minority Member of the Senate Committee on Finance asked
              us to conduct a review of the World Trade Organization’s (WTO) dispute
              settlement activity during the past 8 years, focusing on trade remedy
              disputes. Specifically, in this report we (1) identified the major trends in
              WTO dispute settlement activity concerning trade remedies; (2) analyzed
              the outcome of WTO rulings in completed trade remedy cases; (3) assessed
              the major impacts of these rulings on WTO members’ laws, regulations, and
              practices and on their ability to impose trade remedies; (4) identified the
              standards of review for trade remedy cases and Appellate Body guidance
              on how they should be applied; and (5) summarized legal experts’ views
              and U.S. agencies’ positions on standard of review and other trade remedy
              issues.

              To identify the major trends in dispute settlement activity during the last 8
              years, we developed a database containing all members’ requests for
              consultation (complaints) filed from 1995 through 2002. We obtained the
              data for the database from the WTO Web site, including data on each
              request for consultation; data on the complainant(s), defendant, and
              complaint date; and a short title. To determine which disputes related to
              trade remedies, we examined the short titles of the cases; the initial
              complaint filed with the WTO; and WTO documents, including the Update
              of WTO Dispute Settlement Cases, January 2003. Our analysis of trade
              remedy cases focused exclusively on cases brought under the WTO trade
              remedy agreements—the Antidumping Agreement, the Agreement on
              Safeguards, the Subsidies and Countervailing Measures Agreement, and
              parts of the General Agreement on Tariffs and Trade 1994.

              To obtain the number 198 for formal dispute settlement cases filed with the
              WTO from 1995 through 2002, we combined multiple complaints against
              one WTO member on the same law, measure, or action into one distinct
              case for the purposes of our analysis. We did this because multiple WTO
              members can file complaints against one member. For example, 9 WTO
              members filed complaints regarding 1 U.S. steel safeguard measure
              imposed in March 2002. As a result, the 276 separate complaints filed from
              1995 through 2002 resulted in 198 distinct cases.

              To determine which WTO members imposed the most trade remedy
              measures from 1995 through 2002, we used WTO data that were based on
              the notifications filed with the WTO by each member. We excluded
              challenges to WTO members’ sunset reviews in our data on trade remedy
              measures in response to agency comments. For antidumping and
              countervailing duty measures, we used summary data that the WTO



              Page 37                                     GAO-03-824 WTO Trade Remedy Rulings
Appendix I
Objectives, Scope, and Methodology




Secretariat compiled. Department of Commerce officials noted that these
WTO data differ from Commerce’s data on U.S. antidumping and
countervailing measures and recommended that we use Commerce data.
However, because the WTO is the only source of comparable data on the
use of trade remedy measures by all WTO members, we ultimately used the
WTO data. For safeguards, we analyzed the information contained in the
annual reports of the WTO Committee on Safeguards. These reports
included information on both preliminary and definitive safeguard
measures imposed.

To analyze the outcome of WTO rulings in the completed trade remedy
cases, we compiled statistics on panel and Appellate Body findings about
whether domestic agency determinations and members’ laws were found
to be consistent or inconsistent with WTO trade remedy provisions. We
defined “completed” cases as those cases in which the Dispute Settlement
Body had adopted a panel or Appellate Body decision as of December 31,
2002. To analyze WTO findings about domestic determinations, for the
most part, we reviewed the concluding findings at the end of the panel and
Appellate Body reports. When several findings were included within a
single paragraph in the concluding findings, we generally counted each
finding separately. In the several instances in which concluding sections of
panel reports did not clearly indicate these findings, we obtained our
numbers by evaluating the full reports. For our statistics on findings about
domestic agency determinations, we did not distinguish between more
important issues—such as the causal relationship between increased
imports and injury to domestic industry—and those that seemed less
important—for example, notification requirements and certain evidentiary
issues. To analyze direct challenges to members’ laws in the completed
cases, we analyzed the full panel and Appellate Body reports.

To assess the major impacts of the WTO rulings in the completed trade
remedy cases on members’ laws, regulations, and practices, and on their
ability to impose trade remedies, we identified compliance actions taken,
or in the process of being taken, by WTO members as a result of the rulings.
First, we consulted the WTO Web site to find any and all official documents
filed in the completed trade remedy cases. WTO members and relevant
parties in the cases file such documents with the WTO to report actions
taken following the rulings and recommendations of adopted panel and
Appellate Body reports. Alternatively, some documents indicate only
agreements between the relevant parties for compliance actions to be
taken, or the status of any ongoing negotiations regarding compliance. For
cases where official documentation regarding compliance actions was not



Page 38                                    GAO-03-824 WTO Trade Remedy Rulings
Appendix I
Objectives, Scope, and Methodology




found on the WTO Web site, we searched the Dispute Settlement Body
archives. We also consulted U.S. agency officials on the one case in which
the United States was the complainant.

For the cases in which the United States was the defendant, we also
consulted officials from the Commerce Department, the U.S. International
Trade Commission (ITC), and the U.S. Trade Representative (USTR). These
officials provided us the most up-to-date information on the status of
bilateral negotiations and U.S. intentions for certain completed cases
where compliance information was not yet publicly available. In addition,
we monitored congressional Web sites to glean information on the status of
legislation in cases involving challenges to U.S. laws. Finally, we obtained
copies of the changes to one U.S. regulation and two established practices
from the Federal Register.

For cases not involving the United States, for the most part, we did not
consult with foreign government officials. We relied primarily on official
documents that WTO members and relevant parties had filed with the WTO
to report their compliance actions and on pertinent comments from U.S.
agency officials.

To identify the WTO standards of review for trade remedy cases, we
analyzed the standards and obtained the views of legal experts, including
practitioners and academics (see below). To identify how the panels and
the Appellate Body were interpreting and applying the standards, we read
the panel and Appellate Body reports for the trade remedy cases completed
from 1995 through 2002 as well as Appellate Body reports for other relevant
WTO dispute settlement cases. In reading these reports, we identified
Appellate Body guidance on how the standards should be applied. Finally,
we also read the provisions of the Vienna Convention on the Law of
Treaties that the Appellate Body had identified as pertinent to how one of
the standards should be applied.

To obtain and summarize legal experts’ views on WTO standard of review
and other trade remedy issues, we conducted structured interviews with 18
legal experts, including practitioners, academics, and advisers on WTO-
related trade remedy issues. In addition, we interviewed a current WTO
official and an European Union (EU) official; however, in response to
agency comments, we reviewed our decision rule on the composition of
our expert group and excluded the WTO official and EU representative
from our discussion of expert views, since we did not include U.S. agency
officials in this group.



Page 39                                    GAO-03-824 WTO Trade Remedy Rulings
Appendix I
Objectives, Scope, and Methodology




To identify the legal experts for our study, we conducted literature
searches, read formal publications on WTO standard of review and trade
remedies, sought recommendations from other experts and the
International Trade Committee of the American Bar Association, and
attended seminars on issues surrounding standard of review and trade
remedies. Our main criteria for selecting the experts for our study were
that they (1) had past experience with WTO trade remedy cases; (2) had
been active in writing and/or speaking about issues pertaining to WTO
dispute settlement, including standard of review and trade remedies; and
(3) constituted a mix of experts representing or affiliated with U.S.
domestic interests, foreign interests, or both. We did not choose experts on
the basis of their expressed views, because we did not believe that this was
methodologically sound. To obtain the views of the experts, we conducted
structured interviews to ensure that we asked all of the experts the same
questions. We coded the answers to key survey questions to help us analyze
the experts’ views and assess the frequency with which particular views
were held.

To write the case summaries, we consulted the WTO Web site and reviewed
the panel and Appellate Body reports for the 25 completed trade remedy
cases. We also reviewed the dispute settlement commentaries on the
www.WorldTradeLaw.net Web site.

We performed our work from September 2002 to July 2003 in accordance
with generally accepted government auditing standards.




Page 40                                    GAO-03-824 WTO Trade Remedy Rulings
Appendix II

Summaries of Completed WTO Trade Remedy
Cases                                                                                                                          Appendx
                                                                                                                                     Ii




                                            Between the inception of the World Trade Organization (WTO) in 1995 and
                                            December 31, 2002, the WTO ruled on 25 cases involving the trade remedies
                                            of antidumping, countervailing duties (CVD), and safeguards. Table 3 lists
                                            the cases in order of their WTO dispute case number. It is followed by a
                                            brief summary of each case that includes information on the case's
                                            outcome and major issues.



Table 3: WTO Trade Remedy Dispute Settlement Cases Completed Between 1995 and December 31, 2002

                                                                                                      Circulation
GAO case      Case name:                                                            WTO dispute       date of panel or
number        Defendant – subject                                                   case number       Appellate Body reporta
1             Brazil – Measures Affecting Desiccated Coconut                        DS 22             02/21/1997
2             Guatemala – Antidumping Investigation Regarding Portland Cement       DS 60             11/02/1998
              from Mexico
3             Korea – Definitive Safeguard Measure on Imports of Certain Dairy      DS 98             12/14/1999
              Products
4             United States – Antidumping Duty on Dynamic Random Access             DS 99             01/29/1999
              Memory Semiconductors (DRAMS) of One Megabyte or Above
              Originating from Korea
5             Argentina – Safeguard Measures on Imports of Footwear                 DS 121            12/14/1999
6             Thailand – Antidumping Duties on Angles, Shapes, and Sections of      DS 122            03/12/2001
              Iron or Non-Alloy Steel and H-Beams from Poland
7             Mexico – Antidumping Investigation of High-Fructose Corn Syrup        DS 132            01/28/2000
              (HFCS) from the United States
8             United States – Antidumping Act of 1916                               DS 136/162        08/28/2000
9             United States – Imposition of Countervailing Duties on Certain Hot-   DS 138            05/10/2000
              Rolled Lead and Bismuth Carbon Steel Products Originating in the
              United Kingdom
10            European Union – Antidumping Duties on Imports of Cotton-Type Bed DS 141                03/01/2001
              Linen from India
11            Guatemala – Definitive Antidumping Measures on Grey Portland          DS 156            10/24/2000
              Cement from Mexico
12            United States – Definitive Safeguard Measures on Imports of Wheat     DS 166            12/22/2000
              Gluten from the European Communities
13            United States – Safeguard Measures on Imports of Fresh, Chilled, or   DS 177/178        05/01/2001
              Frozen Lamb Meat from New Zealand and Australia
14            United States – Antidumping Measures on Stainless Steel Plate in      DS 179            12/22/2000
              Coils and Stainless Steel Sheet and Strip from Korea
15            United States – Antidumping Measures on Certain Hot-Rolled Steel      DS 184            07/24/2001
              Products from Japan
16            Argentina – Definitive Antidumping Measures on Imports of Ceramic     DS 189            09/28/2001
              Floor Tiles from Italy




                                            Page 41                                          GAO-03-824 WTO Trade Remedy Rulings
                                                   Appendix II
                                                   Summaries of Completed WTO Trade Remedy
                                                   Cases




(Continued From Previous Page)
                                                                                                                            Circulation
GAO case              Case name:                                                                   WTO dispute              date of panel or
number                Defendant – subject                                                          case number              Appellate Body reporta
17                    United States – Measures Treating Export Restraints as Subsidies             DS 194                   06/29/2001
18                    United States – Definitive Safeguard Measures on Imports of Circular DS 202                           02/15/2002
                      Welded Carbon Quality Line Pipe from Korea
19                    United States – Antidumping and Countervailing Measures on Steel             DS 206                   06/28/2002
                      Plate from India
20                    Chile – Price Band System and Safeguard Measures Relating to                 DS 207                   05/03/2002
                      Certain Agricultural Products
21                    Egypt – Definitive Antidumping Measures on Steel Rebar from Turkey DS 211                             08/08/2002
22                    United States – Countervailing Measures Concerning Certain                   DS 212                   12/09/2002
                      Products from the European Communities (“Privatization”)
23                    United States – Countervailing Duties on Certain Corrosion-Resistant DS 213                           11/28/2002
                      Carbon Steel Flat Products from Germany (“Sunset”)
24                    United States – Section 129(c)(1) of the Uruguay Round Agreements DS 221                              07/15/2002
                      Act
25                    United States – Preliminary Determinations With Respect to Certain           DS 236                   09/27/2002
                      Softwood Lumber from Canada
Source: GAO analysis of WTO data.
                                                   a
                                                    In cases that concluded with the adoption of the panel report, the circulation date of the panel report is
                                                   listed. In all other cases, the circulation date of the Appellate Body report is listed.




                                                   Page 42                                                     GAO-03-824 WTO Trade Remedy Rulings
                       Appendix II
                       Summaries of Completed WTO Trade Remedy
                       Cases




GAO Case Number 1:     Complainant:          Philippines1
                       Defendant:            Brazil
Brazil – Measures
Affecting Desiccated
Coconut (DS 22)

Nature of Complaint    In June 1994, Brazil initiated a countervailing duty (CVD) investigation to
                       determine whether imports of desiccated coconut and coconut milk from
                       Côte d’Ivoire, Indonesia, Malaysia, the Philippines, and Sri Lanka had been
                       subsidized. Brazil imposed provisional CVDs on imports of desiccated
                       coconut from all of these countries except Malaysia in March 1995 and final
                       CVDs in August 1995.

                       The Philippines challenged the Brazilian CVDs under various provisions of
                       the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the
                       World Trade Organization (WTO) Agreement on Agriculture. Brazil’s
                       principal argument was that none of the WTO provisions relied upon by the
                       Philippines applies in this case because the Brazilian subsidy investigation
                       was initiated on the basis of an application received prior to the date the
                       WTO Agreement entered into force.



Outcome                The Appellate Body upheld the panel finding that GATT 1994 provisions on
                       CVD investigations did not apply because this dispute involved application
                       of a Brazilian CVD measure based on an investigation initiated prior to
                       January 1, 1995—the date on which the WTO Agreement entered into
                       effect. Accordingly, the Appellate Body upheld the panel’s finding that the
                       dispute was not properly before it.



Compliance Action      No compliance action was necessary.




                       1
                       Canada, the EU, Indonesia, Sri Lanka, and the United States were third parties in this case.




                       Page 43                                             GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 4: Case 1 – Major Case Issue and Panel/Appellate Body Findings

Major case issue                                                 Panel findings                             Appellate Body findings
Whether GATT 1994 rules on CVD                                   GATT 1994 rules on CVDs did not            Upheld the panel.
investigations, particularly article VI, and the                 apply to this dispute because the
WTO Agreement on Subsidies and                                   Brazilian investigation that led to the    CVDs may only be imposed in accord with
Countervailing Measures (SCM Agreement)                          CVD measure was initiated prior to the     article VI of GATT 1994 and the SCM
applied to the Philippines’ challenge of Brazil’s                WTO Agreement’s entering into effect       Agreement. Article VI cannot be applied
CVD measures on desiccated coconut imports.                      for Brazil.                                independently of the SCM Agreement.

                                                                 The imposition of CVDs must comply  Article 32.3 of the SCM Agreement clearly
                                                                 both with article VI of GATT 1994 and
                                                                                                     states that for CVD investigations, the dividing
                                                                 the SCM Agreement. Article 32.3 of the
                                                                                                     line between the GATT 1947 system of
                                                                 SCM Agreement indicates that it onlyarrangements and the WTO Agreement is to
                                                                 applies to CVD investigations initiated
                                                                                                     be determined by the date on which the
                                                                 pursuant to applications made on or application was made for the CVD
                                                                 after the date of entry into force for a
                                                                                                     investigation. The Tokyo Round SCM
                                                                 WTO member of the WTO Agreement.    Committee was to handle disputes arising out
                                                                                                     of CVD investigations initiated pursuant to
                                                                 Pursuant to a GATT Tokyo Round SCM applications made prior to the date the WTO
                                                                 Committee decision, the Philippines Agreement became effective.
                                                                 could have invoked the Tokyo Round
                                                                 SCM Code dispute settlement
                                                                 provisions to resolve this dispute.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                Page 44                                            GAO-03-824 WTO Trade Remedy Rulings
                      Appendix II
                      Summaries of Completed WTO Trade Remedy
                      Cases




GAO Case Number 2:    Complainant:          Mexico2
                      Defendant:            Guatemala
Guatemala –
Antidumping
Investigation
Regarding Portland
Cement from Mexico
(DS 60)

Nature of Complaint   Mexico challenged both the initiation of Guatemala’s antidumping
                      investigation of imports of grey portland cement from Mexico and various
                      decisions and conduct of the Guatemalan domestic authority during the
                      investigation. Guatemala’s principal claim was that Mexico’s panel request
                      did not identify any of the three measures listed in article 17.4 of the
                      Antidumping Agreement (ADA), and therefore the panel should not hear
                      the claim.



Outcome               The panel found that Guatemala had failed to comply with article 5.3 of the
                      ADA by initiating the antidumping investigation on the basis of insufficient
                      evidence of dumping, injury, and casual link between dumping and injury.
                      The panel also found that the matters referred to in Mexico’s panel request
                      for establishment of a panel were properly before it. The Appellate Body
                      reversed the panel and determined that the dispute was not properly before
                      the panel because Mexico’s panel request did not identify the measure it
                      was complaining about. Consequently, it did not consider the panel’s
                      findings on article 5.3.



Compliance Action     After the Appellate Body effectively dismissed this case, Mexico brought
                      the case again with a new panel request (see our case summary 11 of
                      Guatemala – Definitive Antidumping Measures on Grey Portland
                      Cement from Mexico, DS 156). The new panel considered many of the
                      same issues that were involved in this case.


                      2
                      Canada, El Salvador, Honduras, and the United States were third parties in this case.




                      Page 45                                            GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 5: Case 2 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                                Panel findings                                Appellate Body findings
Whether article 17 of the ADA provides for a                     Article 17 of the ADA provides for a          Reversed the panel.
coherent set of rules for dispute settlement                     coherent set of rules for dispute
specific to antidumping cases that replaces the                  settlement specific to antidumping cases      Only when a provision of the DSU and a
more general approach of the Dispute                             that replaces the more general approach       special or additional provision of another
Settlement Understanding (DSU).                                  of the DSU.                                   WTO Agreement are mutually inconsistent
                                                                                                               can the special or additional provision be
                                                                                                               read to prevail over the DSU provision.
Whether Mexico was required by article 6.2 of                    Mexico’s panel request did not have to        Reversed the panel.
the DSU and article 17 of the ADA to identify at                 identify one of the three types of
least one of the three antidumping measures in                   measures in article 17.4.                     In disputes under the ADA relating to the
article 17.4 in its panel request—definitive                                                                   initiation and conduct of an antidumping
antidumping duties, acceptance of a price                        Article 17.4 is a “timing provision”          investigation, members must identify in
undertaking, or a provisional measure.                           establishing when a panel may be              their panel requests one of the three
                                                                 requested but not establishing the            measures listed in article 17.4 of the ADA.
                                                                 appropriate subject of a request.
                                                                 A formalistic requirement that Mexico
                                                                 identify one of the three types of
                                                                 measures identified in article 17.4 would
                                                                 undermine the status of the special
                                                                 dispute settlement rules in the ADA.
Whether it was appropriate for the panel to                      Consistent with the authority in article      Since the dispute was not properly before
make suggestions about how Guatemala might                       19.1 of the DSU, it was appropriate for the   the panel, the Appellate Body came to no
deal with its substantive violation of the                       panel to suggest that Guatemala revoke        conclusions about whether the panel was
standards for initiation of an antidumping                       its existing antidumping measure on           right or wrong on this issue.
investigation.                                                   imports of Mexican cement.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                Page 46                                             GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 3:       Complainant:          European Union (EU)3
                         Defendant:            Korea
Korea – Definitive
Safeguard Measure on
Imports of Certain
Dairy Products (DS 98)

Nature of Complaint      The EU challenged Korea’s imposition of a safeguard measure on imports
                         of skimmed milk powder preparations from the EU. The safeguard
                         measure was in the form of a quantitative restriction on imports of these
                         dairy products. The EU argued that Korea’s safeguard measure was
                         inconsistent with various provisions of the Safeguards Agreement as well
                         as article XIX:1 of GATT 1994. Generally, the EU contended that Korea had
                         not shown that increases in imports resulted from “unforeseen
                         developments,” had not examined all factors in its examination of serious
                         injury, and had not adequately considered the extent of application of the
                         safeguard measure.



Outcome                  The Appellate Body upheld several panel findings that Korea had acted
                         inconsistently with the Safeguards Agreement because of its
                         determinations regarding serious injury. The Appellate Body also reversed
                         a panel finding on the issue of “unforeseen developments.” Accordingly, it
                         recommended that Korea bring its safeguard measure into conformity with
                         the Safeguards Agreement.



Compliance Action        Korea reported to the WTO that it had effectively terminated the safeguard
                         measure on imports of the dairy products on May 20, 2000. By lifting the
                         safeguard measure, Korea considers that it has implemented the
                         recommendations and rulings of the Dispute Settlement Body (DSB).




                         3
                         The United States was a third party in this case.




                         Page 47                                             GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 6: Case 3 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                                  Panel findings                                Appellate Body findings
Whether Korea was required to examine if                           Korea was not required to examine             Reversed the panel.
increases in imports were the result of                            whether import trends under investigation
“unforeseen developments” as described in                          were the result of “unforeseen                Although article XIX:1(a) does not
article XIX:1(a) of GATT 1994.                                     developments.”                                establish independent conditions for
                                                                                                                 application of a safeguard, “unforeseen
                                                                   The “unforeseen developments” clause in       developments” must be demonstrated as
                                                                   article XIX:1(a) does not provide an          a matter of fact for a safeguard measure
                                                                   independent basis for finding that a          to be applied.
                                                                   safeguard measure violates WTO rules.
                                                                                                                 The Appellate Body could not decide
                                                                                                                 whether Korea had violated article
                                                                                                                 XIX:1(a) due to insufficient facts on the
                                                                                                                 record.
Whether Korea was required by article 5.1 of the                   When members apply a safeguard                Upheld the panel finding that the first
Safeguards Agreement to ensure that the                            measure, they must (1) apply a measure        sentence of article 5.1 imposes an
safeguard applied was not more restrictive than                    no more restrictive than necessary to         obligation on a WTO member applying a
necessary to prevent or remedy serious injury                      prevent or remedy serious injury and          safeguard measure to ensure the
and facilitate adjustment.                                         facilitate adjustment and (2) provide a       measure is “commensurate with the
                                                                   reasoned explanation about how                goals of preventing or remedying serious
                                                                   authorities reached a conclusion that the     injury and of facilitating adjustment.”
                                                                   measure satisfied all requirements of
                                                                   article 5.1.                                  Reversed the panel finding that article
                                                                                                                 5.1 requires members to explain how it
                                                                   Korea violated article 5.1 by not including   ensures these goals are met when
                                                                   in its recommendations and                    making recommendations about
                                                                   determinations an explanation of how it       application of a measure that is not a
                                                                   concluded that the measure was                quantitative restriction.
                                                                   necessary to remedy serious injury and
                                                                   facilitate adjustment of the industry.        Absent a factual record, the Appellate
                                                                                                                 Body could not determine whether Korea
                                                                                                                 had violated the second sentence of
                                                                                                                 article 5.1.
How the standard of review under article 11 of the A panel should consider whether a                             Under article 11, a panel has a duty to
WTO DSU should be applied to evaluations           domestic authority (1) examined all facts                     examine and consider all evidence
under article 4.2 of the Safeguards Agreement.     in its possession (or facts it should have in                 before it, not just evidence submitted by
                                                   its possession) and (2) provided an                           one or the other party, and to evaluate
                                                   adequate explanation about how facts                          the relevance and probative force of each
                                                   supported the determinations.                                 piece of evidence.
Whether Korea’s finding that serious injury                        Korea violated article 4.2(a) by not          Not appealed.
occurred was consistent with article 4.2(a) of the                 adequately examining all serious injury
Safeguards Agreement.                                              factors.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                Page 48                                             GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 4:       Complainant:          Korea
                         Defendant:            United States
United States –
Antidumping Duty on
Dynamic Random
Access Memory
Semiconductors
(DRAMS) of One
Megabyte or Above
Originating from Korea
(DS 99)

Nature of Complaint      Korea challenged the U.S.’s failure to revoke an antidumping order on
                         Korean dynamic random access memory semiconductors (DRAMS) of one
                         megabyte or above. Korea contended that the U.S. regulatory standard4
                         under which it refused to revoke the antidumping order with respect to two
                         Korean producers violated the ADA. Korea also challenged the Department
                         of Commerce’s rejection of certain cost information and its application of
                         the de minimis5 standard during the administrative review of the
                         antidumping order.



Outcome                  The panel found that the U.S. regulatory standard for revoking an
                         antidumping order was inconsistent with the ADA. However, the panel also
                         upheld several aspects of the U.S.’s application of its antidumping laws.
                         The panel recommended that the DSB request that the United States bring
                         its regulatory standard for revoking an antidumping order, and the results
                         of its third administrative review, into conformity with its obligations under
                         the ADA. The parties did not appeal the panel findings.


                         4
                          The regulatory provision in question deals with revocation of an antidumping order based
                         on the absence of dumping and should not be confused with the regulatory provision
                         dealing with “sunset reviews.”
                         5
                          De minimis refers to the level below which a dumping margin or subsidy is considered to
                         be negligible. Antidumping or CVD actions are terminated in cases where the margin of
                         dumping or level of subsidy is below the de minimis level.




                         Page 49                                           GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




Compliance Action   The United States took several compliance actions as a result of the panel’s
                    findings. The United States deleted the “not likely” criterion from its
                    regulation and replaced it with a requirement that the Secretary of
                    Commerce consider “whether the continued application of the
                    antidumping duty order is otherwise necessary to offset dumping.” Using
                    this modified standard, the United States found that the continued
                    application of the dumping order was necessary to offset dumping and,
                    accordingly, did not revoke the antidumping order. Korea asserted that
                    these actions failed to comply with the DSB’s recommendations and
                    rulings. During the compliance panel proceeding, however, the United
                    States revoked the antidumping order as a result of the U.S. sunset review
                    process, primarily because the petitioner withdrew from the proceeding.
                    The United States and Korea then notified the DSB of a mutually agreed-
                    upon solution to the dispute, and the compliance panel proceeding was
                    terminated.




                    Page 50                                    GAO-03-824 WTO Trade Remedy Rulings
                                                 Appendix II
                                                 Summaries of Completed WTO Trade Remedy
                                                 Cases




Table 7: Case 4 – Major Case Issues and Panel Findings

Major case issues                                                        Panel findings
Whether the U.S. regulatory standard for revoking an antidumping The U.S. regulatory standard requiring a finding that it is “not likely”
order, requiring the United States to find that the foreign producer is that the producer will sell the merchandise in the future at less than
“not likely” to sell products at less than foreign market value,a       foreign market value was inconsistent with article 11.2.
violates article 11.2 of the ADA.
                                                                        The “not likely” standard is not equivalent to the standard in article
                                                                        11.2 that requires the domestic authority to examine whether “injury
                                                                        would be likely to continue or recur” if the dumping duty were
                                                                        removed.
Whether the U.S. rejection of certain cost data submitted by a           The U.S. rejection of the data did not violate the ADA.
Korean firm violated article 2.2.1.1 of the ADA relating to the
calculation of costs.                                                    Korea failed to establish that an objective and impartial
                                                                         investigating authority could not properly have found that the data
                                                                         did not reasonably reflect the costs associated with the production
                                                                         and sale of DRAMS.
Whether the de minimis standard for antidumping investigations in        The de minimis standard in article 5.8 does not apply to duty
article 5.8 of the ADA also applies to duty assessment procedures        assessments under article 9.3.
under article 9.3.
Source: GAO analysis of the WTO panel report.
                                                 a
                                                 The term “foreign market value” was later replaced with “normal value.”




                                                 Page 51                                                  GAO-03-824 WTO Trade Remedy Rulings
                        Appendix II
                        Summaries of Completed WTO Trade Remedy
                        Cases




GAO Case Number 5:      Complainant:          European Union (EU)6
                        Defendant:            Argentina
Argentina – Safeguard
Measures on Imports
of Footwear (DS 121)

Nature of Complaint     The EU challenged Argentina’s imposition of safeguards on imports of EU
                        footwear. The safeguard measure took the form of minimum specific duties
                        on these imports. For several years prior to this EU challenge, Argentina
                        had maintained various measures regarding imports of footwear and other
                        clothing and textiles. The EU contended that the safeguard measure
                        violated article XIX:1(a) of GATT 1994 and various provisions of the
                        Safeguards Agreement.



Outcome                 The Appellate Body upheld panel findings that Argentina’s safeguard
                        investigation and determinations of increased imports, serious injury, and
                        causation were inconsistent with articles 2 and 4 of the Safeguards
                        Agreement, and thus there was no legal basis for applying safeguards. As a
                        result, it recommended that the DSB request that Argentina bring its
                        safeguard measures into conformity with its obligations under the
                        Safeguards Agreement.



Compliance Action       Argentina indicated to the WTO in February 2000 that it intended to
                        implement the DSB’s rulings and recommendations.




                        6
                        Brazil, Indonesia, Paraguay, the United States, and Uruguay were third parties in this case.




                        Page 52                                             GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 8: Case 5 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                                 Appellate Body findings
Whether safeguard measures that meet the                        Safeguard measures that meet the               Reversed the panel’s conclusion, but in
requirements of the Safeguards Agreement                        requirements of the Safeguards Agreement       view of other findings did not decide
must also satisfy the requirements of article                   also satisfy the requirements of article       whether Argentina demonstrated that
XIX:1(a) of GATT 1994 with respect to                           XIX:1(a) of GATT 1994 on “unforeseen           increased imports occurred as a result of
“unforeseen developments.”                                      developments.”                                 “unforeseen developments.”

                                                                                                               The “unforeseen developments” clause
                                                                                                               establishes certain “factual circumstances”
                                                                                                               that must be demonstrated in a safeguard
                                                                                                               investigation.
Whether Argentina violated article 2 of the                     Argentina violated article 2 because           Reversed the panel finding that it was
Safeguards Agreement by including imports                       members of a customs union, like               dealing with a safeguard measure applied
from MERCOSURa countries in its                                 MERCOSUR, must apply a safeguard               by MERCOSUR on behalf of a member
investigation of imports, injury, and causation,                measure to imports from all sources            state. The safeguard was applied by
but excluding them from application of the                      considered in its analysis of imports during   Argentina, not MERCOSUR.
safeguards measure.                                             the investigation.
                                                                                                               Upheld the panel’s parallelism analysis and
                                                                                                               concluded that Argentina could not impose
                                                                                                               safeguards only on non-MERCOSUR
                                                                                                               sources on the basis of investigation of
                                                                                                               imports from all sources, including imports
                                                                                                               from MERCOSUR member states.
Whether the panel correctly applied the                         The task of a panel is not to conduct a de     The panel correctly stated and applied the
proper standard of review in article 11 of the                  novo review of Argentina’s investigation.      appropriate standard of review set forth in
DSU to the EU claims under articles 2 and 4                                                                    article 11.
of the Safeguards Agreement.                                    The panel reviewed the full file and noted
                                                                portions of the record relied on by            The panel did not conduct a de novo review
                                                                Argentina.                                     of the evidence or substitute its analysis
                                                                                                               and judgment for that of the Argentine
                                                                                                               authorities.
Whether Argentina’s examination of increased Argentina’s examination of increased                              Upheld the panel’s conclusions, but
imports, serious injury, and causation was   imports, serious injury, and causation were                       disagreed with the panel’s interpretation of
consistent with articles 2 and 4 of the      inconsistent with articles 2 and 4.                               the requirement in article 2.1 on increased
Safeguards Agreement.                                                                                          imports.
                                             In its causation analysis under article
                                             4.2(b), Argentina did not adequately                              It was not reasonable for the panel to
                                             consider factors operating within the market                      examine the trend in imports over a 5-year
                                             other than increased imports, so that injury                      period. Article 2.1 requires that the increase
                                             caused by these other factors could be                            in imports must have been recent, sudden,
                                             identified and properly attributed.                               sharp, and significant enough, both
                                                                                                               quantitatively and qualitatively, to cause or
                                                                                                               threaten to cause serious injury.
Source: GAO analysis of WTO panel and Appellate Body reports.
                                                                a
                                                                MERCOSUR is a South American customs union composed of Argentina, Brazil, Paraguay, and
                                                                Uruguay. Bolivia, Chile, and Peru are associate members.




                                                                Page 53                                              GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 6:       Complainant:          Poland7
                         Defendant:            Thailand
Thailand –
Antidumping Duties on
Angles, Shapes, and
Sections of Iron or
Non-Alloy Steel and H-
Beams from Poland
(DS 122)

Nature of Complaint      Poland challenged Thailand’s imposition of antidumping duties on imports
                         of certain Polish steel products. The final antidumping duty was a
                         percentage of a determined value of these products. Poland contended that
                         Thailand’s injury and dumping determinations were inconsistent with
                         various provisions of the ADA.



Outcome                  The Appellate Body affirmed the panel’s findings that Thailand had violated
                         the ADA with regard to Thailand’s findings about injury to domestic
                         industry and the causal relationship between dumped imports and injury to
                         domestic industry. Although the Appellate Body also upheld the panel’s
                         application of the standard of review in article 17.6(ii) of the ADA, it
                         reversed a panel interpretation of article 17.6(i). As a result of these rulings,
                         the Appellate Body recommended that the DSB request that Thailand bring
                         its antidumping measure into conformity with its obligations under the
                         ADA.



Compliance Action        Thailand reexamined aspects of the injury determination that the panel and
                         Appellate Body had found to be inconsistent with the ADA and found that
                         the antidumping measure should be maintained. Subsequently, in
                         December 2001, Thailand informed the WTO that it had fully implemented
                         the DSB’s recommendations. In January 2002, Poland and Thailand



                         7
                         The EU, Japan, and the United States were third parties in this case.




                         Page 54                                             GAO-03-824 WTO Trade Remedy Rulings
Appendix II
Summaries of Completed WTO Trade Remedy
Cases




announced they had reached agreement that this case should no longer be
on the DSB’s agenda.




Page 55                                   GAO-03-824 WTO Trade Remedy Rulings
                                                                  Appendix II
                                                                  Summaries of Completed WTO Trade Remedy
                                                                  Cases




Table 9: Case 6 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                                     Appellate Body findings
Whether Thai authorities had sufficient                         Poland did not establish that the contents of the Not appealed.
evidence of dumping, injury, and the                            application were insufficient to meet the
causal link between them to initiate an                         requirements of article 5.2.
investigation under article 5.2 of the ADA.
Whether Thailand’s injury determination                         Confidential government documents, which had Reversed the panel.
was based on an “objective examination”                         not been made available to the parties, could
of the facts, as required by articles 3.1 and                   not be reviewed by the panel.                    Investigating authorities may rely on
17.6(i) of the ADA, since it included                                                                            confidential information not shared with the
evaluation of confidential information that                     Articles 3.1 and 17.6(i) dictate that the        parties.
was not made available to the parties.                          reasoning supporting an injury determination
                                                                must be formally or explicitly stated in the     The “facts” referred to in article 17.6(i)
                                                                documentary record of the investigation to       embrace all facts, confidential and
                                                                which interested parties have access and that nonconfidential, that are made available to
                                                                the factual basis relied upon by the authorities the authorities of the importing member.
                                                                must be discernible from those documents.
Whether Thailand was required to                                The text of article 3.4 is mandatory, and each of Upheld the panel’s interpretation of article
consider all of the15 injury factors listed in                  the 15 individual factors listed must be          3.4 and its application of the standard of
article 3.4 of the ADA in making an injury                      evaluated. Therefore, Thailand acted              review in article 17.6(ii).
determination.                                                  inconsistently with article 3.4 of the ADA.
                                                                                                                  Since article 3.4 requires consideration of
                                                                                                                  all its listed factors, the panel could not
                                                                                                                  have found Thailand’s argument, that not
                                                                                                                  all factors need to be considered, a
                                                                                                                  permissible interpretation under article
                                                                                                                  17.6(ii).
Whether Thailand was required to                                Thailand was not required to consider all the      Not appealed.
consider all the factors listed in article 3.5                  factors listed in article 3.5 since that list is
of the ADA with respect to demonstrating a                      merely illustrative.
casual relationship between dumped
imports and injury to the domestic industry.                    Thailand had considered the factors raised by
                                                                Poland.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                  Page 56                                              GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 7:       Complainant:          United States8
                         Defendant:            Mexico
Mexico – Antidumping
Investigation of High-
Fructose Corn Syrup
(HFCS) from the
United States (DS 132)

Nature of Complaint      The United States challenged Mexico’s imposition of antidumping duties on
                         imports of two grades of high-fructose corn syrup (HFCS) from the United
                         States. The final antidumping measure imposed duties of up to $175.50 per
                         metric ton of imported HFCS and ordered the collection of duties
                         retroactive to the imposition of provisional duties. The United States
                         contended that both the initiation of the antidumping investigation and the
                         determination of threat of injury were inconsistent with the ADA.



Outcome                  Although the panel upheld the way in which Mexico initiated its
                         antidumping investigation, it concluded that Mexico’s imposition of the
                         antidumping measure was inconsistent with various provisions of the ADA.
                         As a result, the panel recommended that the DSB request that Mexico bring
                         its antidumping measure into conformity with its obligations under the
                         ADA. The panel findings were not appealed.



Compliance Action        Mexico revised its antidumping determination following the panel report.9
                         However, in a subsequent proceeding, Mexico again concluded that the
                         imports of HFCS constituted a threat of material injury to the domestic
                         sugar industry. As a result, the United States requested a compliance
                         review under article 21.5 of the DSU. In the article 21.5 proceeding, the
                         Appellate Body upheld panel findings that Mexico’s revised determination



                         8
                         Jamaica and Mauritius were third parties in this case.
                         9
                          A North American Free Trade Agreement (NAFTA) panel also found that Mexico failed to
                         establish a threat of material injury to the domestic injury.




                         Page 57                                            GAO-03-824 WTO Trade Remedy Rulings
Appendix II
Summaries of Completed WTO Trade Remedy
Cases




was inconsistent with various provisions of the ADA. According to U.S.
officials, Mexico revoked the antidumping measure in May 2002.




Page 58                                   GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 10: Case 7 – Major Case Issues and Panel Findings

Major case issues                                                     Panel findings
Whether Mexico had enough evidence of a threat of injury or of a      A panel’s role under the standard of review in article 17.6(i) is to
causal link between dumped imports and injury to initiate an          examine whether an unbiased and objective investigating authority
antidumping investigation as provided by article 5.3 of the ADA.      evaluating the evidence and information before it could properly
                                                                      have determined that sufficient evidence of dumping, injury, and
                                                                      causal link existed to justify initiating the antidumping investigation.
                                                                      A panel’s role is not to newly evaluate the evidence and information.

                                                                      An unbiased and objective investigating authority could have found
                                                                      sufficient evidence to justify initiation of an antidumping investigation
                                                                      under article 5.3.

                                                                      Under the standard of review in article 17.6(i), as well as article
                                                                      17.5(ii), in evaluating the consistency of the initiation with article 5.3,
                                                                      a panel may only consider what was actually available to the
                                                                      investigating authority at the time of initiation of the antidumping
                                                                      investigation.
Whether in reaching a determination that a threat of material injury A threat of injury determination requires that the factors in both
exists, Mexico had to consider factors set forth in both articles 3.7 articles 3.7 and 3.4 be considered.
and 3.4 of the ADA, which deal respectively with threat of material
injury and the impact of dumped imports on the domestic industry. The Mexican investigating authority’s determination of threat of
                                                                      material injury failed to adequately address the factors set forth in
                                                                      article 3.4 of the ADA concerning the impact of dumped imports on
                                                                      the domestic industry. Accordingly, its determination of threat of
                                                                      material injury was inconsistent with the ADA.
Whether Mexico properly concluded in its final determination that     Mexico ignored possible effects of imports on the portion of the
the relevant domestic industry for purposes of its threat of injury   domestic industry’s production sold in the household sector and
determination was Mexican sugar producers, instead of the             ignored the effect of the household sector on the condition of the
industry as a whole.                                                  domestic producers of sugar. Accordingly, Mexico failed to make a
                                                                      determination of threat of material injury to the domestic industry as
                                                                      a whole, consistent with the requirements of article 3 of the ADA.
Source: GAO analysis of the WTO panel report.




                                                Page 59                                                GAO-03-824 WTO Trade Remedy Rulings
                      Appendix II
                      Summaries of Completed WTO Trade Remedy
                      Cases




GAO Case Number 8:    Complainants:              European Union (EU), Japan10
                      Defendant:                 United States
United States –
Antidumping Act of
1916 (DS 136/162)

Nature of Complaint   Japan and the EU separately challenged section 801 of the Revenue Act of
                      1916 (1916 Act)11 as being inconsistent with article VI of GATT 1994 and
                      various provisions of the ADA. Section 801 of the 1916 Act allows for
                      private claims against, and criminal prosecutions of, parties that import or
                      assist in importing goods into the United States at a price substantially less
                      than actual market value or wholesale price. The Japan and EU challenges
                      were to the law itself rather than to its implementation.



Outcome               The Appellate Body affirmed the panel conclusions that antidumping
                      legislation, including the 1916 Act, can be directly challenged, absent any
                      particular application. It also upheld the panel findings that the 1916 Act
                      itself was inconsistent with article VI of GATT 1994 and various provisions
                      of the ADA. Accordingly, the Appellate Body recommended that the United
                      States bring the 1916 Act into conformity with its obligations under these
                      agreements.



Compliance Action     The United States continues to work to enact legislation to implement the
                      WTO ruling. Although a number of bills have been introduced in the
                      Congress calling for repeal of section 801 of the 1916 Act, to date no
                      legislation has been passed. As of July 15, 2003, the latest bills were H.R.
                      1073, introduced in the House of Representatives on March 4, 2003; S. 1080,
                      introduced in the Senate on May 19, 2003; and S. 1155, introduced in the
                      Senate on May 23, 2003. The bills are somewhat different in that the repeals
                      under H.R. 1073 and S. 1155 would not affect pending cases, whereas the S.
                      1080 repeal would apply to them.



                      10
                           India and Mexico were third parties in this case.
                      11
                           15 U.S.C. § 72.




                      Page 60                                                  GAO-03-824 WTO Trade Remedy Rulings
                                                                 Appendix II
                                                                 Summaries of Completed WTO Trade Remedy
                                                                 Cases




Table 11: Case 8 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                                     Appellate Body findings
Whether panels have jurisdiction to hear                        The panel had jurisdiction to hear direct          Upheld the panel.
challenges of antidumping law, absent any                       challenges to the 1916 Act.
specific application of the law.                                                                                   GATT and WTO case law firmly establish
                                                                                                                   that members may directly challenge
                                                                                                                   legislation. Nothing is inherent in
                                                                                                                   antidumping legislation that would
                                                                                                                   distinguish it from other types of legislation
                                                                                                                   for these purposes.
Whether the 1916 Act constitutes a                              The 1916 Act is mandatory.                         Upheld the panel.
mandatory or discretionary law within WTO
and GATT practice.                                              The discretion enjoyed by the United States        The relevant discretion for purposes of
                                                                Department of Justice about whether to             distinguishing between mandatory and
                                                                initiate a case is not the kind of discretion to   discretionary legislation is discretion vested
                                                                transform the 1916 Act into discretionary          in the executive, and not the judicial, branch
                                                                legislation.                                       of government.
Whether article VI of GATT 1994 and the                         These WTO provisions apply to the 1916             Upheld the panel.
ADA apply to the 1916 Act.                                      Act.
                                                                                                                   Article VI and the ADA apply to any specific
                                                                                                                   action against dumping. The civil and
                                                                                                                   criminal proceedings and penalties provided
                                                                                                                   for in the 1916 Act are specific actions
                                                                                                                   against dumping.
Whether the 1916 Act is inconsistent with                       The 1916 Act violates various requirements         Upheld the panel.
article VI of GATT 1994 and various                             of article VI and the ADA.
provisions of the ADA.                                                                                             Article VI and the ADA limit permissible
                                                                The 1916 Act violates article VI:2 of GATT         responses to dumping to definitive
                                                                1994 by providing for imposition of fines or       antidumping duties, provisional measures,
                                                                imprisonment or for recovery of treble             and price undertakings. To the extent that
                                                                damages.                                           the 1916 Act provides for civil and criminal
                                                                                                                   proceedings and penalties, it is inconsistent
                                                                                                                   with these obligations.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                 Page 61                                                  GAO-03-824 WTO Trade Remedy Rulings
                        Appendix II
                        Summaries of Completed WTO Trade Remedy
                        Cases




GAO Case Number 9:      Complainant:               European Union (EU) 12
                        Defendant:                 United States
United States –
Imposition of
Countervailing Duties
on Certain Hot-Rolled
Lead and Bismuth
Carbon Steel Products
Originating in the
United Kingdom
(DS 138)

Nature of Complaint     The United States imposed CVDs on imports of certain hot-rolled lead and
                        bismuth carbon steel products originating in the United Kingdom, as a
                        result of alleged subsidies13 the British Government granted to British Steel
                        Corporation, a state-owned company, between 1977 and 1986. The British
                        Government began the privatization of British Steel in 1986 and completed
                        it in 1988. The Commerce Department found the sale to be at arm’s length
                        for fair market value and consistent with commercial considerations.
                        Notwithstanding these factors, the Commerce Department imposed CVDs
                        on these United Kingdom imports, initially in 1993 and in subsequent
                        annual reviews, on the grounds that a certain proportion of the subsidies
                        granted to British Steel had passed through to the new entities. The EU
                        claimed that the U.S. methodology14 in calculating the amount of these
                        subsidies was inconsistent with several provisions of the WTO SCM
                        Agreement.



Outcome                 The Appellate Body upheld the panel finding that the financial
                        contributions provided to British Steel did not confer a benefit on the new


                        12
                             Brazil and Mexico were third parties in this case.
                        13
                             The subsidies principally were in the form of equity infusions.
                        14
                             This methodology is commonly referred to as the “gamma” methodology.




                        Page 62                                                   GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    owners. In doing so, the Appellate Body also upheld a panel finding that
                    faulted the Commerce Department’s methodology in presuming that a
                    benefit had been provided to the new owners. Accordingly, it found that the
                    U.S. CVDs were inconsistent with the SCM Agreement and recommended
                    that the DSB request that the United States bring its measures into
                    conformity with its obligations under that agreement. The panel suggested
                    that the United States take all appropriate steps, including revision of its
                    administrative practices, to prevent a violation of the SCM Agreement, but
                    the Appellate Body did not make this specific recommendation.



Compliance Action   Prior to the issuance of the Appellate Body report, the Commerce
                    Department revoked the CVD measure in response to a request from the
                    U.S. industry. However, the Commerce Department changed its
                    methodology as a result of related domestic litigation.15




                    15
                         See Delverde, SRL v. United States, 202 F.3d 1360, 1362-1363 (Fed. Cir. 2000).




                    Page 63                                                 GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 12: Case 9 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                                   Panel findings                              Appellate Body findings
Whether the panel should have applied the        Article 11 is the standard of review that                      Upheld the panel.
standard of review in article 17.6 of the ADA to should be applied in cases involving
a dispute under Part V of the SCM Agreement. Part V of the SCM Agreement. Article                           The Decision on Review of Article 17.6,b
                                                 17.6 only applies in cases brought                         which provides that article 17.6 shall be
                                                 under the ADA.                                             reviewed after a period of 3 years with a view
                                                                                                            to considering its general application,
                                                                    Ministerial Declaration on Dispute      supports the conclusion that the article 17.6
                                                                    Settlement under article VI of the ADAa standard applies only to disputes arising
                                                                    is not mandatory and simply recognizes under the ADA.
                                                                    the need for consistent resolution of
                                                                    antidumping and CVD disputes but
                                                                    does not mandate any action.
Whether Commerce Department administrative The Commerce Department should                                       Upheld the panel.
reviews should have examined whether a       have examined whether there was a
benefit accrued to the new owners of British benefit.                                                           Given changes in ownership leading to
Steel.                                                                                                          creation of the new entity, the Commerce
                                             Irrebuttable presumption in U.S. CVD                               Department was required to examine whether
                                             law that nonrecurring subsidies pass                               a benefit accrued to the new owners.
                                             through to a new owner violates the
                                             SCM Agreement.                                                     Disagreed with the panel’s view that the
                                                                                                                method for establishing the existence of a
                                                                                                                benefit is always the same for the original
                                                                                                                investigation and an administrative review.
Whether a benefit was provided to the new       Because the privatization was done         Upheld the panel.
owners as a result of the contributions made to through an arm’s length, fair market
British Steel.                                  value transaction, subsidies provided to
                                                British Steel did not constitute a benefit
                                                to the new owners.
Whether the panel exceeded its mandate by                           No benefit was conferred.                   Upheld the panel.
finding that no benefit was conferred on the
new owners of British Steel.                                                                                    Panel acted within the scope of its DSU
                                                                                                                mandate to resolve this issue.
Source: GAO analysis of WTO panel and Appellate Body reports.
                                                                a
                                                                 The full name is the Ministerial Declaration on Dispute Settlement Pursuant to the Agreement on
                                                                Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 or Part V of the
                                                                Agreement on Subsidies and Countervailing Measures.
                                                                b
                                                                 The full name is the Decision on Review of Article 17.6 of the Agreement on Implementation of Article
                                                                VI of the General Agreement on Tariffs and Trade 1994.




                                                                Page 64                                                   GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 10:      Complainant:               India16
                         Defendant:                 European Union (EU)
European Union –
Antidumping Duties on
Imports of Cotton-Type
Bed Linen from India
(DS 141)

Nature of Complaint      India challenged the EU’s imposition of antidumping duties on imports of
                         various types of cotton bed linens from India. Due to the high number of
                         domestic producers involved in its investigation, the EU established a
                         sample of domestic producers consisting of 17 of the 35 companies
                         identified as the EU industry. The dumping duties that were imposed
                         differed in amount depending on the exporter in question. India argued that
                         the imposition of antidumping duties was inconsistent with various
                         provisions of the ADA. One of the principal issues involved the EU’s
                         practice of zeroing in calculating antidumping margins.



Outcome                  The Appellate Body affirmed the panel’s finding that the EU’s practice of
                         zeroing was inconsistent with the ADA. The Appellate Body also reversed
                         several panel findings and concluded that the EU had acted inconsistently
                         with the ADA in calculating amounts for administrative, selling, and general
                         costs and profits in its investigation. As a result, the Appellate Body
                         recommended that the DSB request that the EU bring its antidumping
                         measure into conformity with its obligations under the ADA.



Compliance Action        After the DSB adopted the Appellate Body report, the EU established lower
                         dumping margins for Indian imports of bed linens. Although it also
                         concluded that dumped imports from India were still causing material
                         injury to the EU industry, the EU suspended application of the duties for
                         these imports. In a subsequent proceeding, the EU determined that there
                         was a causal link between dumped imports from India and material injury
                         to the EU industry, but the EU continued to suspend imposition of the

                         16
                              Egypt, Japan, and the United States were third parties in this case.




                         Page 65                                                 GAO-03-824 WTO Trade Remedy Rulings
Appendix II
Summaries of Completed WTO Trade Remedy
Cases




antidumping duties. Because India believed that the EU had not complied
with the recommendations of the DSB, it brought a proceeding under
article 21.5 of the DSU contesting compliance. Although the panel in the
article 21.5 proceeding determined that the EU had implemented the
recommendation of the DSB, the Appellate Body reversed and found that
the EU was still acting inconsistently with the ADA. Accordingly, it
recommended that the DSB request that the EU bring its antidumping
measure into conformity with that agreement.




Page 66                                   GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 13: Case 10 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                                 Panel findings                                       Appellate Body findings
Whether the EU violated the ADA by converting The EU acted inconsistently with article 2.4.2 Upheld the panel.
negative dumping margins to zero in           of the ADA by calculating margins of dumping
establishing overall margins of dumping.      through a methodology that included zeroing The EU clearly identified cotton-type
                                              of negative price differences.                 bed linen as the product under
                                                                                             investigation.
                                              The dumping calculation can only be for the
                                              product as a whole and not for individual      In determining a dumping margin for a
                                              transactions concerning that product or        product, article 2.4.2 refers to a
                                              discrete models of that product.               comparison of all comparable
                                                                                             transactions. By not offsetting dumping
                                              By using zeroing for some models, the EU       margins, the EU did not take into
                                              failed to carry out a comparison with all      account export transactions involving
                                              transactions, as required by article 2.4.2.    models of cotton-type bed linen that
                                                                                             were not dumped. This inflated the
                                                                                             margin of dumping.

                                                                                                                       Export transactions involving types or
                                                                                                                       models falling within the scope of a like
                                                                                                                       product are “comparable export
                                                                                                                       transactions” within the meaning of
                                                                                                                       article 2.4.2.
Whether the panel failed to apply the legal                       In accord with the provisions of the Vienna          The panel applied the standard of
standard of review in article 17.6(ii) of the ADA                 Convention governing treaty interpretation,          review in article 17.6(ii).
by not finding that the EU’s zeroing practice was                 the panel looked first to the ordinary meaning
a permissible interpretation.                                     of the phrase “a comparison of a weighted            The panel viewed the EU interpretation
                                                                  average normal value with a weighted                 of article 2.4.2 of the ADA, allowing it to
                                                                  average of all comparable export                     use zeroing, as impermissible. Thus,
                                                                  transactions” in article 2.4.2, in its context and   the panel was not faced with a choice
                                                                  in light of its object and purpose, in               among multiple permissible
                                                                  determining whether zeroing was permitted.           interpretations that, under article
                                                                                                                       17.6(ii), would have required it to give
                                                                                                                       deference to the EU interpretation.
Whether the EU’s methodology for determining                      The EU’s methodology was consistent with             Reversed the panel.
amounts for administrative, selling, and general                  article 2.2.2(ii).
costs and for profit, in constructing normal                                                                           Method for calculating amounts for
value, was proper under article 2.2.2(ii) of the                  The method for calculating amounts for               administrative, selling, and general
ADA.                                                              administrative, selling, and general costs and       costs and profits can only be used if
                                                                  profits under article 2.2.2(ii) may be applied       data relating to more than one other
                                                                  where there is data for only one other exporter      exporter or producer are available.
                                                                  or producer.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                Page 67                                                 GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 11:      Complainant:          Mexico17
                         Defendant:            Guatemala
Guatemala – Definitive
Antidumping Measures
on Grey Portland
Cement from Mexico
(DS 156)

Nature of Complaint      In 1999, Mexico challenged Guatemala’s imposition of an antidumping
                         measure on imports of portland cement from Mexico. The measure was in
                         the form of an antidumping duty of 89.54 percent that was imposed on
                         these imports. In its challenge, Mexico contended that the initiation and
                         conduct of the antidumping investigation and the imposition of the
                         measure violated article VI of GATT 1994 and various provisions of the
                         ADA.

                         Mexico’s challenge was a follow-up to an earlier Mexican challenge to
                         Guatemala’s imposition of antidumping duties on imports of the same
                         product (see case summary 2). Although the panel in that case ruled that
                         Guatemala had acted inconsistently with several provisions of the ADA and
                         recommended that Guatemala revoke the dumping order, the Appellate
                         Body reversed the panel and found that the dispute was not properly before
                         the panel.



Outcome                  The panel determined that Guatemala did not properly determine that there
                         was sufficient evidence to justify initiation of the antidumping
                         investigation. It also found that Guatemala did not properly determine that
                         the imports under investigation were being dumped, that the domestic
                         producer of cement in Guatemala was being injured, or that the imports
                         were the cause of the injury. Accordingly, it concluded that Guatemala had
                         acted inconsistently with various provisions of the ADA. Under the
                         authority provided in article 19.1 of the DSU, the panel recommended that
                         Guatemala revoke its antidumping measure on these imports. However, the


                         17
                          Ecuador, El Salvador, the EU, Honduras, and the United States were third parties in this
                         case.




                         Page 68                                            GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    panel rejected a Mexican request that the panel recommend that
                    Guatemala refund previously collected antidumping duties. The panel
                    findings were not appealed.



Compliance Action   In December 2000, Guatemala informed the WTO that it had removed the
                    antidumping measures in question and complied with its
                    recommendations.




                    Page 69                                   GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 14: Case 11 – Major Case Issues and Panel Findings

Major case issues                                                    Panel findings
Whether the panel should perform a de novo review of the evidence It is not the panel’s role under article 17 to perform a de novo review
under the standard of review in article 17.6(i) of the ADA.       of the evidence that was before the investigating authority.

                                                                     The panel must determine whether an unbiased and objective
                                                                     investigating authority evaluating the evidence before it at the time
                                                                     of the investigation could properly have made the determinations
                                                                     Guatemala made.

                                                                     A panel is not to examine any new evidence that was not part of the
                                                                     record of the investigation.
Whether Guatemala had sufficient evidence to justify initiation of   An objective and unbiased investigating authority could not have
the antidumping investigation, consistent with article 5.3 of the    properly determined that there was sufficient evidence of dumping
ADA.                                                                 and threat of injury to justify Guatemala’s initiating an antidumping
                                                                     investigation under article 5.3.
Whether Guatemala informed the Mexican exporter of the essential     Guatemala’s disclosing to Mexico the essential facts forming the
facts that would be taken into account in imposing the definitive    basis of its preliminary antidumping determination and offering to
antidumping measure, as required by various provisions in article    provide interested parties with copies of all information in its file
6.9 of the ADA.                                                      were not sufficient to satisfy the requirements of article 6.9.

                                                                     Article 6.9 is intended to allow exporters a fair opportunity to
                                                                     comment on the important issues in an investigation after the record
                                                                     is closed to new facts. An interested party will not know whether a
                                                                     particular fact is important unless the investigating authority has
                                                                     explicitly identified it as one of the essential facts.
Whether Guatemala was entitled to rely on the best information       Guatemala was not entitled to rely on the best information available.
available, as permitted by article 6.8 of the ADA, for calculating   Guatemala did not act as an objective and impartial investigating
normal value because the Mexican exporter refused to cooperate       authority in finding that the Mexican exporter significantly impeded
in the investigation.                                                Guatemala’s investigation because it objected to Guatemala’s
                                                                     including nongovernmental experts with a conflict of interest in its
                                                                     verification team.

                                                                     Although there are consequences under article 6.8 when interested
                                                                     parties fail to cooperate with an investigating authority, they do not
                                                                     apply here since the Guatemalan authority did not act in a
                                                                     reasonable, objective, and impartial manner.
Source: GAO analysis of the WTO panel report.




                                                Page 70                                             GAO-03-824 WTO Trade Remedy Rulings
                       Appendix II
                       Summaries of Completed WTO Trade Remedy
                       Cases




GAO Case Number 12:    Complainant:              European Union (EU)18
                       Defendant:                United States
United States –
Definitive Safeguard
Measures on Imports
of Wheat Gluten from
the European
Communities (DS 166)

Nature of Complaint    The EU challenged a United States safeguard measure imposed on imports
                       of wheat gluten19 from the EU. The safeguard measure consisted of a
                       quantitative restriction on these imports for 3 years. The United States
                       excluded products from Canada, a U.S. NAFTA20 partner, and from certain
                       other WTO members from the application of the safeguard. The EU
                       contended that the safeguard measure violated provisions of the
                       Safeguards Agreement and GATT 1994. The EU complaints were directed at
                       the U.S.’s serious injury determination, its causation21 analysis, and its
                       findings about the relationship between the members included in its
                       investigation and those covered by the safeguard measure.



Outcome                The Appellate Body found that the U.S.’s safeguard measure was applied
                       inconsistently with the Safeguards Agreement and GATT 1994 and
                       recommended that the DSB request that the United States bring the
                       measure into conformity with those agreements. Although the Appellate
                       Body upheld part of the panel findings on serious injury, it reversed the
                       panel findings on another serious injury issue and on an important aspect
                       of the panel’s causation analysis. In addition, the Appellate Body agreed


                       18
                            Australia, Canada, and New Zealand were third parties in this case.
                       19
                        Wheat Gluten is a by-product of the industrial production of starch and, among other
                       things, is used to enrich protein in flours for bread, pasta, etc.
                       20
                            The parties to NAFTA are Canada, Mexico, and the United States.
                       21
                        Causation in safeguards cases refers to whether increased imports cause or threaten to
                       cause serious injury to domestic industry.




                       Page 71                                                GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    with the panel that the United States inappropriately excluded imports
                    from Canada from its safeguard measure after including such imports in its
                    injury investigation.



Compliance Action   The safeguard measure expired in June 2001.




                    Page 72                                   GAO-03-824 WTO Trade Remedy Rulings
                                                                 Appendix II
                                                                 Summaries of Completed WTO Trade Remedy
                                                                 Cases




Table 15: Case 12 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                                Appellate Body findings
Whether the United States was required to                       The United States need only consider            Reversed the panel.
examine only the relevant factors listed in                     factors other than those in article 4.2(a) that
article 4.2(a) of the Safeguards Agreement                      are clearly raised by the interested parties in The United States must evaluate all relevant
in evaluating serious injury to a domestic                      the investigation.                              factors, not just those raised by interested
industry.                                                                                                       parties.
Whether the causation standard in article   Increased imports alone must cause serious Reversed the panel.
4.2(b) of the Safeguards Agreement          injury.
requires that increased imports alone cause                                            Domestic authorities must only find a causal
serious injury to the domestic industry.                                               link between increased imports and serious
                                                                                       injury that shows a genuine and substantial
                                                                                       relationship of cause and effect between the
                                                                                       imports and injury.
Whether the United States, consistent with                      Did not fully analyze this issue.             The United States did not adequately show
article 4.2(b) of the Safeguards Agreement,                                                                   that injury caused to the domestic industry
adequately explained that injury to the                                                                       by increases in average capacity to produce
domestic industry from factors other than                                                                     wheat gluten was not attributed to increased
increased imports was not attributed to                                                                       imports.
increased imports.
Whether the United States properly                              The United States was not justified in        Upheld the panel.
excluded Canadian imports from the                              excluding imports from Canada from its
safeguard measure after including such                          safeguard measure.                           Although the United States examined
imports in its investigation to determine                                                                    imports from Canada separately, it did not
whether serious injury to the domestic                          The United States failed to consider whether establish that imports from the other sources
industry had occurred.                                          non-Canadian imports themselves caused       satisfied the conditions for application of a
                                                                serious injury.                              safeguard measure.
Whether the panel properly applied the         The panel applied the standard of review to                    The panel properly applied article 11 to
standard of review in article 11 of the DSU in evaluating four factors.                                       three factors, but violated article 11
evaluating factors dealing with serious                                                                       regarding the fourth factor—“profits and
injury, as required by article 4.2(a) of the                                                                  losses”—by improperly relying on
Safeguards Agreement.                                                                                         supplementary information the United States
                                                                                                              provided to the panel that was not part of the
                                                                                                              domestic proceeding.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                 Page 73                                             GAO-03-824 WTO Trade Remedy Rulings
                        Appendix II
                        Summaries of Completed WTO Trade Remedy
                        Cases




GAO Case Number 13:     Complainants:             Australia, New Zealand22
                        Defendant:                United States
United States –
Safeguard Measures on
Imports of Fresh,
Chilled, or Frozen
Lamb Meat from New
Zealand and Australia
(DS 177/178)

Nature of Complaint     Australia and New Zealand challenged a U.S. safeguard measure imposed
                        on imports of fresh, chilled, and frozen lamb meat from New Zealand and
                        Australia. The measure was in the form of a tariff rate quota23 that was to
                        span 3 years. The safeguard measure did not apply to imports from Canada,
                        Mexico, certain other U.S. trading partners, and developing countries.
                        Australia and New Zealand contended that the safeguard measure violated
                        various provisions of the Safeguards Agreement and GATT 1994. Their
                        complaints were directed at U.S. findings about the definition of the
                        domestic lamb meat industry, the existence of serious injury, and the causal
                        relationship between increased imports and injury to the domestic lamb
                        meat industry.



Outcome                 The Appellate Body found that the United States safeguard measure was
                        applied inconsistently with the Safeguards Agreement and GATT 1994 and
                        recommended that the DSB request that the United States bring its
                        measure into conformity with those agreements. Although the Appellate
                        Body upheld a number of important panel findings—including those
                        involving the definition of the domestic lamb meat industry, serious injury,
                        and a part of the panel’s causation analysis—it reversed the panel’s
                        interpretation of the causation requirements in the Safeguards Agreement.


                        22
                             Canada, the EU, Iceland, and Japan were third parties in this case.
                        23
                         Tariff rate quotas consist of two different tariff rates. A lower rate is applied to a certain
                        quota amount of a product, and a higher tariff rate applies to amounts that exceed that
                        quota.




                        Page 74                                                 GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    The Appellate Body also concluded that the panel incorrectly applied the
                    standard of review in article 11 in evaluating the U.S.’s determination about
                    the existence of a threat of serious injury.



Compliance Action   In August 2001, the United States decided to end the application of the
                    safeguard measure on imports of lamb meat, effective in November 2001.




                    Page 75                                    GAO-03-824 WTO Trade Remedy Rulings
                                                                 Appendix II
                                                                 Summaries of Completed WTO Trade Remedy
                                                                 Cases




Table 16: Case 13 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                                    Appellate Body findings
Whether the United States violated article                      Found a violation.                                Upheld the panel finding though it didn’t
XIX:1(a) of GATT 1994 by failing to                                                                               agree with all of the panel’s reasoning.
demonstrate, as a matter of fact, the                           Investigating authorities must clearly
existence of “unforeseen developments”                          examine the existence of “unforeseen              Failure to address “unforeseen
prior to applying a safeguard measure.                          developments” and come to a reasoned              developments” is not surprising. U.S. legal
                                                                conclusion about it.                              measures do not obligate it to examine them
                                                                                                                  in its investigation into the situation of a
                                                                                                                  domestic industry.
Whether the United States appropriately      Found the U.S. definition improper.                                  Upheld the panel.
defined the domestic industry in its
safeguard investigation by including growers An enterprise can only be considered a                               Input products can only be included in
and feeders of live lambs.                   producer of goods it actually makes.                                 defining the domestic industry if they are
                                             Growers and feeders of live lambs are                                “like or directly competitive” with the end
                                             producers of live lambs, not lamb meat.                              products.
Whether the panel appropriately interpreted                     The panel’s task was limited to reviewing the     Upheld the panel’s interpretation of the
and applied the standard of review in article                   U.S. threat of injury determination and           standard of review, but found that the panel
11 in its evaluation of the U.S. determination                  examining whether the determination               did not apply it properly in examining
that a threat of serious injury to the domestic                 provided an adequate explanation of how           whether the United States provided a
industry existed.                                               the facts supported it. The panel should not      reasoned and adequate explanation of how
                                                                conduct a new review of the evidence.             the facts supported its determination that a
                                                                                                                  threat of serious injury existed.
Whether the U.S. examination of causation                       United States violated article 4.2(b) by          Upheld the panel finding but reversed its
was consistent with article 4.2(b) of the                       applying a “substantial cause” a standard         interpretation that increased imports alone
Safeguards Agreement.                                           and by failing to ensure that the threat of       must cause, or threaten to cause, serious
                                                                serious injury caused by other factors was        injury.
                                                                not attributed to increased imports.
                                                                                                                  Since the United States did not provide a
                                                                Increased imports alone must be sufficient        meaningful explanation of the injurious
                                                                to cause serious injury.                          effects of six factors it considered, it was
                                                                                                                  impossible to determine whether injury
                                                                                                                  caused by those factors was attributed to
                                                                                                                  increased imports.
Source: GAO analysis of WTO panel and Appellate Body reports.
                                                                 a
                                                                 The panel explained that under the U.S. standard, the U.S. International Trade Commission examines
                                                                 whether imports are an important cause of injury and no less important than any other single cause.




                                                                 Page 76                                                 GAO-03-824 WTO Trade Remedy Rulings
                           Appendix II
                           Summaries of Completed WTO Trade Remedy
                           Cases




GAO Case Number 14:        Complainant:              Korea24
                           Defendant:                United States
United States –
Antidumping Measures
on Stainless Steel Plate
in Coils and Stainless
Steel Sheet and Strip
from Korea (DS 179)

Nature of Complaint        Korea challenged several aspects of the U.S. antidumping investigation and
                           measures on imports of stainless steel plate in coils (plate) and stainless
                           steel sheet and strip (sheet) from Korea. Specifically, Korea challenged the
                           U.S. treatment of currency conversions and of sales to U.S. companies that
                           failed to pay for the imports due to bankruptcy. Finally, Korea challenged
                           the U.S. calculation of the dumping margin.



Outcome                    The panel found several aspects of the U.S. investigation to be inconsistent
                           with the ADA. It found that the currency conversions in the sheet
                           investigation were inconsistent with the ADA, though it also found that the
                           conversions in the plate investigation were consistent with the ADA. The
                           panel also found the U.S. treatment of sales for which payment was never
                           received and its use of multiple averaging periods in its calculation of
                           dumping margins were inconsistent with the ADA. Accordingly, the panel
                           recommended that the United States bring its antidumping duties on
                           Korean steel plate and sheet into compliance with the ADA. The panel
                           findings were not appealed.



Compliance Action          As of April 2003, the antidumping orders were still in effect. According to
                           officials from the Commerce Department, the United States made some
                           revisions in its calculation of dumping margins in this case.




                           24
                                The EU and Japan were third parties in this case.




                           Page 77                                                  GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 17: Case 14 – Major Case Issues and Panel Findings

Major case issues                                                   Panel findings
Whether the U.S. actions regarding currency conversions violated    The U.S. treatment of currency conversions in the stainless steel
the ADA.                                                            plate investigation complied with the ADA. However, in the sheet
                                                                    investigation, the United States acted inconsistently with the ADA
                                                                    by performing unnecessary currency conversions.
Whether the United States treatment of sales for which payment      The United States acted inconsistently with article 2.4 of the ADA
was never received due to a company’s bankruptcy violated article   by improperly adjusting for unpaid sales.
2.4 of the ADA.
Whether the U.S. use of multiple averaging periods for comparing    The U.S.’s use of multiple averaging periods in this investigation
prices—by dividing the period of investigation into two averaging   was inconsistent with the requirement of article 2.4.2 to compare a
periods to take into account a major devaluation of the Korean      “weighted average normal value with a weighted average of all
won—violated articles 2.4.2, 2.4.1, and 2.4 of the ADA.             comparable export transactions.” However, the U.S.’s use of multiple
                                                                    averaging periods was not inconsistent with article 2.4.1 or the first
                                                                    sentence in the chapeau of article 2.4 of the ADA.
Source: GAO analysis of the WTO panel report.




                                                Page 78                                           GAO-03-824 WTO Trade Remedy Rulings
                        Appendix II
                        Summaries of Completed WTO Trade Remedy
                        Cases




GAO Case Number 15:     Complainant:               Japan25
                        Defendant:                 United States
United States –
Antidumping Measures
on Certain Hot-Rolled
Steel Products from
Japan (DS 184)

Nature of Complaint     Japan challenged the U.S.’s imposition of antidumping duties on imports of
                        hot-rolled steel products from Japan. Japan claimed that certain provisions
                        of U.S. antidumping laws, regulations, and administrative procedures were
                        inconsistent with the ADA. For example, Japan challenged the U.S.’s
                        application of “facts available” and adverse facts as inconsistent with its
                        ADA obligations. Japan also challenged the U.S.’s statutory method26 for
                        calculating an “all others” rate as inconsistent with the ADA.



Outcome                 The Appellate Body upheld panel findings of U.S. violations relating to the
                        use of facts available, adverse facts, calculation of all other rates, and
                        application of the arm’s-length test.27 The Appellate Body also reversed the
                        panel finding on the issue of nonattribution without specifically finding
                        against the United States on that issue. Although the Appellate Body upheld
                        a panel finding that United States law on captive production was consistent
                        with the ADA, it reversed the panel’s finding that the United States had
                        applied the law properly. As a result of the findings against the United
                        States, the Appellate Body recommended that the DSB request that the
                        United States bring its measures into conformity with the ADA. The




                        25
                             Brazil, Canada, Chile, the EU, and Korea were third parties in this case.
                        26
                             Section 735(c)(5)(A) of the Tariff Act of 1930.
                        27
                          This test relates to whether certain sales are “in the ordinary course of trade.” The United
                        States treated home market sales by an exporter to an affiliated customer as within the
                        ordinary course of trade so long as prices to the affiliated customers were on average at
                        least 99.5 percent of the average prices charged to unaffiliated customers.




                        Page 79                                                 GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    Appellate Body also made important statements about the standard of
                    review in article 17.6 of the ADA.28



Compliance Action   In November 2002, the United States completed a new antidumping
                    determination that implemented the recommendations and rulings of the
                    DSB. As a result of the changes made to the dumping margin calculations,
                    the dumping margins for all three companies and all others were reduced.

                    The United States also revised its rules regarding its arm’s-length test to
                    determine if sales are “in the ordinary course of trade.” The United States
                    continues work to implement the recommendations and rulings regarding
                    the U.S. antidumping statutory provision on the “all others rate.” The
                    United States and Japan agreed to extend the deadline for implementation
                    to December 2003, or until the end of the first session of the next Congress,
                    whichever is earlier.




                    28
                     The Appellate Body concluded that there was no conflict between the factual standard of
                    review in article 17.6(i) and article 11, and that the legal standard of review in article 17.6(ii)
                    supplements rather than replaces article 11. The Appellate Body also concluded that the
                    second sentence of article 17.6(ii) presupposes that application of the rules in articles 31
                    and 32 of the Vienna Convention on the Law of Treaties could give rise to, at least, two
                    permissible interpretations of some ADA provisions.




                    Page 80                                                 GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 18: Case 15 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                               Panel findings                               Appellate Body findings
Whether the United States violated article      The United States acted inconsistently with Upheld the panel, but on the basis of
6.8 and annex II of the ADA by using facts      the ADA because an objective and            modified reasoning.
available instead of certain information from   unbiased investigating authority could not
two companies submitted after the               have concluded the two companies failed to
expiration of the deadline for such             provide necessary information within a
information.                                    reasonable period of time.
Whether the United States violated article      The United States acted inconsistently with Upheld the panel.
6.8 and annex II of the ADA by using certain    the ADA by using certain adverse
adverse information because a company did       information because the use of adverse
not provide information the United States       facts is only appropriate when a party does
had requested.                                  not cooperate in an investigation.

                                                An unbiased and objective investigating
                                                authority could not have found that the
                                                Japanese company failed to cooperate.
Whether the U.S.’s statutory methodology for    U.S. law governing calculation of a dumping Upheld the panel.
calculating a dumping margin for exporters      margin for all other exporters, and its
and producers was not individually              application, was inconsistent with article
investigated—the “all others rate”—and its      9.4 of the ADA because it required
application violated article 9.4 of the ADA.    consideration of margins that were based,
                                                in part, on facts available.
Whether the United States “captive              The captive production law is not on its face Upheld the panel with regard to the challenge
production” lawa is, on its face, and, as       or as applied inconsistent with the ADA.      to the captive production law, but reversed
applied, inconsistent with the ADA.                                                           the panel with respect to its application.
                                                The U.S. International Trade Commission
                                                (ITC) made an affirmative injury or threat of The captive production provision does not
                                                injury determination whether they applied     require an exclusive focus on the merchant
                                                the captive production provision or not.      market, nor does it exclude an equivalent
                                                                                              examination of the captive market.

                                                                                             The ITC provided no adequate explanation
                                                                                             about why it failed to examine the merchant
                                                                                             market without also examining the captive
                                                                                             market in a comparable manner, and
                                                                                             therefore acted inconsistently with articles
                                                                                             3.1 and 3.4 of the ADA.
Whether the U.S.’s application of the arm’s-    U.S. application of the arm’s-length test   Upheld the panel finding on the basis of
length test was inconsistent with article 2.1   violated the ADA because it did not rest on modified reasoning.
of the ADA.                                     a permissible interpretation of the phrase
                                                “sales in the ordinary course of trade.”




                                                Page 81                                              GAO-03-824 WTO Trade Remedy Rulings
                                                                 Appendix II
                                                                 Summaries of Completed WTO Trade Remedy
                                                                 Cases




(Continued From Previous Page)
Major case issues                                               Panel findings                                     Appellate Body findings
Whether the U.S.’s reliance on downstream                       The United States acted inconsistently with        Reversed the panel.
sales between parties affiliated with an                        article 2.1 of the ADA by using in its
investigated exporter and independent                           calculation of normal value, certain               Reliance by the United States on
purchasers to calculate normal value was                        downstream sales made by an investigated           downstream sales to calculate normal value
inconsistent with article 2.1 of the ADA.                       exporter’s affiliates to independent               rested upon an interpretation of article 2.1 of
                                                                producers.                                         the ADA that, in principle, is permissible
                                                                                                                   following application of the rules of treaty
                                                                Normal value is to be determined on the            interpretation in the Vienna Convention.
                                                                basis of the prices of sales made by the
                                                                investigated companies themselves, in the
                                                                ordinary course of trade.
Whether the United States violated article                      The United States did not violate article 3.5 Reversed the panel reasoning without
3.5 of the ADA by failing to ensure that injury                 of the ADA because it did not attribute       specifically finding against the United States.
caused by factors other than dumped                             injury actually caused by other factors to
imports was not attributed to the dumped                        dumped imports.                               Investigating authorities must separate and
imports.                                                                                                      distinguish the injurious effects of other
                                                                                                              factors from the injurious effects of dumped
                                                                                                              imports.
Source: GAO analysis of WTO panel and Appellate Body reports.
                                                                 a
                                                                  Section 771(7)(C)(iv) of the Tariff Act of 1930, as amended. This provision distinguishes between the
                                                                 segment of the market consisting of commercial shipments on the open market and the captive
                                                                 segment of the market, which refers to internal transfers of the product that generally do not enter the
                                                                 open market because the product is used by an integrated producer to manufacture a downstream
                                                                 product. Domestic producers whose production is captive, therefore, do not compete directly with
                                                                 importers because their imports generally are not used in the captive production of the downstream
                                                                 product. Japan argued that the captive production provision ignores the fact that a significant part of
                                                                 the domestic industry—captive production—is shielded or protected from the effects of allegedly
                                                                 dumped imports.




                                                                 Page 82                                                    GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 16:      Complainant:               European Union (EU)29
                         Defendant:                 Argentina
Argentina – Definitive
Antidumping Measures
on Imports of Ceramic
Floor Tiles from Italy
(DS 189)

Nature of Complaint      The EU challenged Argentina’s imposition of antidumping measures on
                         imports of ceramic floor tiles from Italy. The antidumping measures took
                         the form of specific antidumping duties that were based on the difference
                         between the actual import price and a designated minimum export price,
                         whenever the former was lower than the latter. The EU claimed that the
                         antidumping measures were inconsistent with various provisions of the
                         ADA. Among other things, the EU maintained that Argentina disregarded
                         important information provided by exporters, failed to allow for
                         differences in physical characteristics between models of tiles exported to
                         Argentina and those sold in Italy, and did not inform Italian exporters of
                         important facts that formed the basis for the decision to apply antidumping
                         measures.



Outcome                  The panel found that Argentina acted inconsistently with various
                         provisions of the ADA and upheld most of the EU claims. As a result, the
                         panel recommended that Argentina bring its antidumping measures into
                         conformity with its obligations under the ADA. The panel findings were not
                         appealed.



Compliance Action        In May 2002, Argentina informed the DSB that on April 24, 2002, it had
                         revoked the antidumping measure at issue in this case.




                         29
                              Japan, Turkey, and the United States were third parties in this case.




                         Page 83                                                 GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 19: Case 16 – Major Case Issues and Panel Findings

Major case issues                                                      Panel findings
Whether Argentina acted inconsistently with article 6.8 and annex II   Argentina acted inconsistently with article 6.8 and annex II of the
of the ADA by calculating dumping margins on the basis of facts        ADA by (1) in large part disregarding exporter information used for
available and disregarding, in whole or in part, information           determining normal value and export prices; (2) not informing the
submitted to the Argentine investigating authority by Italian tile     exporters why it rejected the information; (3) not providing exporters
exporters.                                                             with an opportunity to provide further explanations of questions
                                                                       asked, within a reasonable period; and (4) not giving, in any
                                                                       published determinations, the reasons for rejection of evidence or
                                                                       information.

                                                                       In applying the standard of review in article 17.6(i), the panel found
                                                                       that the Argentine authority failed to perform an objective and
                                                                       unbiased evaluation of the facts by apparently deciding to
                                                                       disregard, in large part, the information provided by the exporters.
Whether Argentina acted inconsistently with article 2.4 of the ADA     An objective and unbiased evaluation of the facts of this case would
by failing to make due allowance for physical differences affecting    have required Argentina to make additional adjustments for physical
price comparability between the various models of tiles exported to    differences affecting price comparability. Therefore, Argentina acted
Argentina and those sold domestically.                                 inconsistently with article 2.4.
Whether Argentina acted inconsistently with article 6.9 of the ADA     Argentina violated article 6.9 by failing to inform the exporters of the
by failing to disclose to the exporters the “essential facts” under    “essential facts” under consideration.
consideration that formed the basis for the Argentina decision
about whether to apply definitive antidumping measures.                The exporters could not have been aware, simply by reviewing the
                                                                       complete record of the investigation, that evidence submitted by
                                                                       petitioners and derived from secondary sources, rather than from
                                                                       facts the exporters submitted, would form the primary basis for the
                                                                       determination of the existence and extent of dumping.
Source: GAO analysis of the WTO panel report.




                                                Page 84                                               GAO-03-824 WTO Trade Remedy Rulings
                       Appendix II
                       Summaries of Completed WTO Trade Remedy
                       Cases




GAO Case Number 17:    Complainant:               Canada30
                       Defendant:                 United States
United States –
Measures Treating
Export Restraints as
Subsidies (DS 194)

Nature of Complaint    Canada directly challenged a number of U.S. legal measures31 that it argued
                       required the United States to treat export restraints32 as financial
                       contributions, and thus potential subsidies,33 in violation of the SCM
                       Agreement. Canada argued that export restraints could result in providing
                       subsidies to other products that used or incorporated the restricted
                       product when the domestic price of the restricted product was affected by
                       the restraint. Canada’s challenge was only to U.S. legal measures and not to
                       a particular instance in which an export restraint had been the subject of a
                       CVD investigation.



Outcome                The panel found against Canada and concluded that U.S. CVD law is not
                       inconsistent with the SCM Agreement; U.S. law does not require that
                       export restraints be treated as financial contributions and thus subsidies.
                       In addition, the panel suggested that three of the legal measures Canada
                       contested could not be challenged independently of the relevant U.S.


                       30
                            Australia, the EU, and India were third parties in this case.
                       31
                        Canada challenged the following U.S. legal measures: Section 771(5) of the Tariff Act of
                       1930, codified at 19 U.S.C. § 1677(5), as amended by the Uruguay Round Agreements Act;
                       the U.S.’s Statement of Administrative Action accompanying the Uruguay Round
                       Agreements Act; the Commerce Department’s preamble to CVD regulations; and U.S.
                       “practice” related to the treatment of export restraints.
                       32
                        For purposes of this dispute, the panel considered an export restraint to be “a border
                       measure that takes the form of a government law or regulation which expressly limits the
                       quantity of exports or places explicit conditions on the circumstances under which exports
                       are permitted, or that takes the form of a government-imposed fee or tax on exports of the
                       product calculated to limit the quantity of exports.”
                       33
                          Under article 1.1 of the SCM Agreement, the definition of a subsidy has two elements: (1) a
                       financial contribution, (2) which confers a benefit. The parties agreed that an export
                       restraint could confer a benefit.




                       Page 85                                                  GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    statute.34 To facilitate its analysis of the challenge to the U.S. legal
                    measures, the panel first concluded that export restraints, as defined in the
                    dispute, do not constitute financial contributions within the meaning of the
                    SCM Agreement. The panel findings were not appealed.



Compliance Action   No compliance action was necessary.




                    34
                     These measures were the Statement of Administrative Action, the preamble to the relevant
                    Commerce Department regulations, and the Commerce Department’s administrative
                    practice.




                    Page 86                                           GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 20: Case 17 – Major Case Issues and Panel Findings

Major case issues                                                       Panel findings
Whether export restraints can be considered “financial                  Export restraints, as defined in this dispute, do not constitute
contributions,” and thus subsidies, within the meaning of article 1.1   financial contributions, and thus subsidies, within the meaning of
of the SCM Agreement (Definition of a Subsidy).                         article 1.1.

                                                                        Export restraints in this case cannot be considered government-
                                                                        entrusted or government-directed provision of goods.

                                                                        Rejects U.S. approach that to the extent that an export restraint
                                                                        causes an increased domestic supply of the restrained good—in
                                                                        effect, it is a subsidy.
Whether U.S. law requires the treatment of export restraints as         Section 771(5) of the Tariff Act, as read in light of the Statement of
financial contributions, in conflict with article 1.1 of the SCM        Administrative Action (SAA) accompanying the Uruguay Round
Agreement.                                                              Agreements Act and the preamble to the U.S. CVD regulations,
                                                                        does not mandate the treatment of export restraints as financial
                                                                        contributions.

                                                                        Section 771(5) does not specifically address export restraints. The
                                                                        SAA and preamble do not require the Commerce Department to
                                                                        interpret section 771(5) as requiring that export restraints be
                                                                        treated as financial contributions. Moreover, Canada did not show
                                                                        that the Commerce Department practice required export restraints
                                                                        to be treated as financial contributions.
Source: GAO analysis of the WTO panel report.




                                                Page 87                                               GAO-03-824 WTO Trade Remedy Rulings
                       Appendix II
                       Summaries of Completed WTO Trade Remedy
                       Cases




GAO Case Number 18:    Complainant:              Korea35
                       Defendant:                United States
United States –
Definitive Safeguard
Measures on Imports
of Circular Welded
Carbon Quality Line
Pipe from Korea
(DS 202)

Nature of Complaint    Korea challenged the U.S. imposition of a safeguard measure on imports of
                       certain line pipe from Korea. The safeguard measure that was imposed was
                       in the form of a duty increase for 3 years. The measure applied to imports
                       from all WTO members except Canada and Mexico. Korea maintained that
                       parts of the U.S. investigation as well as the safeguard measure itself
                       violated provisions of the Safeguards Agreement and GATT 1994.



Outcome                The panel and the Appellate Body found several aspects of the U.S.
                       safeguard measure to be inconsistent with provisions of the Safeguards
                       Agreement and GATT 1994. This included U.S. determinations about
                       causation. The Appellate Body also reversed several panel findings about
                       exclusion of certain WTO members from the safeguard measure and the
                       extent of application of the measure, which resulted in findings against the
                       United States. The Appellate Body also reversed the panel on one of its
                       injury findings, which resulted in upholding a United States determination.
                       As a result of the findings against the United States, the Appellate Body
                       recommended that the DSB request that the United States bring its
                       measure into conformity with the Safeguards Agreement and GATT 1994.



Compliance Action      In July 2002, the United States and Korea agreed on several steps to
                       implement the recommendations of the DSB. They agreed that the United
                       States would increase the amount of imports exempt from additional


                       35
                            Australia, Canada, the EU, Japan, and Mexico were third parties in this case.




                       Page 88                                                 GAO-03-824 WTO Trade Remedy Rulings
Appendix II
Summaries of Completed WTO Trade Remedy
Cases




tariffs, beginning in September 2002 and ending in March 2003. The
measure then expired in March 2003.




Page 89                                   GAO-03-824 WTO Trade Remedy Rulings
                                                                 Appendix II
                                                                 Summaries of Completed WTO Trade Remedy
                                                                 Cases




Table 21: Case 18 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                                 Appellate Body findings
Whether the United States improperly                            Korea failed to show that the United States    Reversed the panel.
excluded Canada and Mexico from                                 had violated the Safeguards Agreement by
application of the safeguard measure after                      excluding Mexico and Canada from the           The United States violated articles 2 and 4
including them in its analysis of whether                       measure.                                       of the Safeguards Agreement by excluding
serious injury occurred.                                                                                       Canada and Mexico from the safeguard
                                                                                                               without providing a reasoned and adequate
                                                                                                               explanation that imports from other sources
                                                                                                               by themselves satisfied the conditions for
                                                                                                               applying the safeguard.
Whether the United States adequately                            The United States violated article 4.2(b) of   Upheld the panel.
explained that the injury to the domestic                       the Safeguards Agreement by not
industry caused by factors other than                           adequately explaining how it ensured that
increased imports was not attributed to                         injury caused by other factors was not
increased imports.                                              attributed to increased imports.

                                                                The ITC’s “more important cause of injury”
                                                                standard does not satisfy the requirements
                                                                of article 4.2(b).
Whether Korea made a prima facie case that Korea failed to make a prima facie case.                            Reversed the panel.
the United States imposed a safeguard
measure beyond the extent necessary to                                                                         The United States violated article 5.1 of the
prevent or remedy serious injury and to                                                                        Safeguards Agreement by applying the line
facilitate adjustment.                                                                                         pipe measure beyond the extent necessary.
Whether U.S. determination of “serious                          The United States violated articles 3.1 and    Reversed the panel.
injury or threat of serious injury” was                         4.2 (c) of the Safeguards Agreement by not
consistent with articles 3.1 and 4.2(c) of the                  explicitly finding that increased imports      The ITC’s determination of serious injury or
Safeguards Agreement.                                           either (1) have caused serious injury or (2)   threat of serious injury was consistent with
                                                                threaten to cause serious injury.              the Safeguards Agreement.

                                                                                                               Articles 3.1 and 4.2(c) do not require a
                                                                                                               discrete determination either of serious
                                                                                                               injury or threat of serious injury.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                 Page 90                                             GAO-03-824 WTO Trade Remedy Rulings
                      Appendix II
                      Summaries of Completed WTO Trade Remedy
                      Cases




GAO Case Number 19:   Complainant:               India36
                      Defendant:                 United States
United States –
Antidumping and
Countervailing
Measures on Steel
Plate from India
(DS 206)

Nature of Complaint   India challenged several aspects of the U.S. antidumping investigation for
                      imports of steel plate from India. Specifically, India challenged the U.S.
                      rejection of certain sales information and its reliance on facts available in
                      its investigation. India further challenged U.S. statutory provisions37
                      governing the use of “facts available” and the U.S. treatment of India as a
                      developing country.



Outcome               The panel upheld the U.S. statutory provisions governing the use of “facts
                      available,” but found that the United States had not provided a legally
                      sufficient justification for rejecting some sales information during its
                      investigation. Accordingly, the panel recommended that the DSB request
                      that the United States bring its antidumping measure into conformity with
                      its obligation under the ADA. The panel also found that the U.S. “practice”
                      governing total facts available is not a “measure” that can violate the ADA.
                      The panel findings were not appealed.



Compliance Action     In February 2003, the United States informed the DSB that it had
                      implemented the WTO’s ruling by issuing a second determination regarding
                      antidumping duties imposed on imports of steel plate from India. Also in
                      February 2003, the United States and India came to an agreement regarding
                      the procedure to be followed if India believes that the United States has not
                      fully complied with the findings and recommendations of the DSB.


                      36
                           Chile, the EU, and Japan were third parties in this case.
                      37
                           Sections 776(a) and 782(d) and (e) of the Tariff Act of 1930.




                      Page 91                                                  GAO-03-824 WTO Trade Remedy Rulings
                                                  Appendix II
                                                  Summaries of Completed WTO Trade Remedy
                                                  Cases




Table 22: Case 19 – Major Case Issues and Panel Findings

Major case issues                                                       Panel findings
Whether the U.S. rejection of certain sales information and its         The United States acted inconsistently with article 6.8 and annex II
reliance completely on “facts available” violated article 6.8 and       of the ADA because it did not provide a legally sufficient justification
annex II of the ADA.                                                    for rejecting certain sales data from the Indian producer and instead
                                                                        relied entirely on “facts available” when calculating dumping
                                                                        margins.
Whether the U.S. statutory provisions governing the use of “facts       U.S. statutory provisions do not on their face require the
available” are inconsistent with article 6.8 and annex II of the ADA.   investigating authority to act inconsistently with article 6.8 and
                                                                        annex II of the ADA.
Whether the United States failed to give “special regard” to India as The United States did not act inconsistently with article 15 of the
a developing country under article 15 of the ADA.                     ADA because the article imposes “no specific or general obligation”
                                                                      on members to take any particular action when considering the
                                                                      application of antidumping measures to developing country
                                                                      members.
Whether the U.S. “practice” related to “total facts available” is a     The U.S. “practice” is not a separate measure that can
“measure” that can violate the ADA.                                     independently give rise to a WTO violation.
Source: GAO analysis of the WTO panel report.




                                                  Page 92                                              GAO-03-824 WTO Trade Remedy Rulings
                       Appendix II
                       Summaries of Completed WTO Trade Remedy
                       Cases




GAO Case Number 20:    Complainant:           Argentina38
                       Defendant:             Chile
Chile – Price Band
System and Safeguard
Measures Relating to
Certain Agricultural
Products (DS 207)

Nature of Complaint    Argentina made two distinct challenges to Chilean restrictions on imports
                       of Argentine wheat, wheat flour, sugar, and edible vegetable oils. Thus,
                       Argentina challenged both Chile’s price band system,39 which Chile applied
                       to calculate tariff rates on these imports, and its imposition of safeguard
                       measures on these imports. In certain situations, the use of Chile’s price
                       band system resulted in tariff rates higher than the bound tariff rate in
                       Chile’s WTO schedule. Chile also used its price band system to calculate
                       the safeguard measures it imposed on the Argentine imports. Argentina
                       claimed (1) that Chile’s price band system violated GATT 1994 and the WTO
                       Agreement on Agriculture and (2) that Chilean safeguards violated various
                       provisions of the Safeguards Agreement as well as GATT 1994. Argentina’s
                       safeguards challenges were directed at how Chile evaluated increases in
                       imports, the causal connection between imports and injury to Chile’s
                       domestic industry, and the scope of the safeguard measures.



Outcome                With respect to the safeguards issues, the panel determined that Chile had
                       violated various provisions of the Safeguards Agreement and GATT 1994.
                       Nevertheless, the panel did not make a recommendation regarding removal
                       of the safeguard measures because they had been removed before the


                       38
                         Australia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, the EU, Guatemala,
                       Honduras, Japan, Nicaragua, Paraguay, the United States, and Venezuela were third parties
                       in this case.
                       39
                        Under this system, the total amount of a tariff duty that was applied to these Argentine
                       imports was (1) an applied tariff rate of 8 percent and (2) a specific price band duty that was
                       determined for each import by comparing a reference price with the upper or lower
                       threshold of a price band. These upper and lower price bands were calculated for each
                       imported product on the basis of certain international prices. The reference prices were set
                       for each product based on prices in certain foreign markets.




                       Page 93                                               GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    panel published its report. Although the panel findings on safeguards were
                    not appealed, the Appellate Body upheld panel findings that Chile’s price
                    band system was inconsistent with GATT 1994 and the Agreement on
                    Agriculture. As a result, the Appellate Body recommended that the DSB
                    request that Chile bring its price band system into conformity with its
                    obligations under the Agreement on Agriculture.



Compliance Action   No action was required with regard to the safeguard measures. Chile’s
                    compliance with regard to its price band system involves the WTO
                    Agreement on Agriculture and is due by December 23, 2003.




                    Page 94                                   GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 23: Case 20 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                               Appellate Body Decisions
Whether the panel violated article 11 of the                    The duties called for under Chile’s price    Reversed the panel finding with respect to the
DSU by finding that the duties resulting from                   band system are inconsistent with both       second sentence of article II:1(b) because
Chile’s price band system were inconsistent                     the first and second sentences of article    Argentina had not made any claim under that
with the second sentence of article II:1(b) of                  II:1(b).                                     sentence.
GATT 1994.
                                                                                                             Although the panel acted in good faith, by
                                                                                                             making a finding on a claim that was not before
                                                                                                             it, it did not make an objective assessment of
                                                                                                             the matter and, thus, acted inconsistently with
                                                                                                             article 11 of the DSU.

                                                                                                             In making an objective assessment under
                                                                                                             article 11, a panel is also obligated to ensure
                                                                                                             that due process is respected.
Whether Chile demonstrated that its                             Chile violated article XIX:I(a) by failing   Not appealed.
safeguard measures were applied as a result                     to demonstrate that the safeguard
of “unforeseen developments,” as required by                    measures were applied as the result of
article XIX:1(a) of GATT 1994.                                  “unforeseen developments.”

                                                                “Unforeseen developments” is a
                                                                circumstance that must be
                                                                demonstrated as a matter of fact.
Whether Chile showed sudden and recent                          Chile acted inconsistently with articles     Not appealed.
increases in imports of products that justified                 2.1 and 4.2(a) of the Safeguards
imposing safeguard measures.                                    Agreement by failing to find a sudden
                                                                and recent increase in imports of
                                                                products.
Whether Chile limited its safeguard measures                    Chile violated article 5.1 by not ensuring Not appealed.
to remedying serious injury to and facilitating                 that its safeguards were only applied to
adjustment for its domestic industry, as                        the extent necessary to prevent or
required by article 5.1 of the Safeguards                       remedy serious injury and facilitate
Agreement.                                                      adjustment.

                                                                Chile’s use of the price band system to
                                                                calculate safeguards was improper.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                Page 95                                               GAO-03-824 WTO Trade Remedy Rulings
                       Appendix II
                       Summaries of Completed WTO Trade Remedy
                       Cases




GAO Case Number 21:    Complainant:               Turkey40
                       Defendant:                 Egypt
Egypt – Definitive
Antidumping Measures
on Steel Rebar from
Turkey (DS 211)

Nature of Complaint    Turkey challenged Egypt’s imposition of antidumping duties on imports of
                       steel rebar from Turkey. The antidumping duties imposed ranged from
                       about 23 percent to 61 percent, depending on the exporter. Turkey
                       contended that Egypt’s determinations of injury and dumping and the
                       causal relationship between the dumped imports and injury to domestic
                       injury were inconsistent with the ADA. A number of Turkey’s claims
                       involved questionnaires that the Egyptian investigating authority sent to
                       respondent companies requesting information about sales prices and the
                       cost of producing rebar.



Outcome                Although the panel upheld 19 determinations of the Egyptian investigating
                       authority, it found that Egypt had violated articles 3.4 and 6.8 of the ADA.
                       Accordingly, the panel recommended that Egypt bring its definitive
                       antidumping measure on imports of steel rebar from Turkey into
                       compliance with the ADA. The panel findings were not appealed.



Compliance Action      In November 2002, Egypt and Turkey informed the WTO that they had
                       agreed Egypt would implement the DSB’s recommendations and rulings by
                       July 31, 2003. In May 2003, Egypt reported to the WTO that it was
                       reexamining the dumping calculations of two Turkish companies, and the
                       general injury assessment, in light of this case.




                       40
                            Chile, the EU, Japan, and the United States were third parties in this case.




                       Page 96                                                  GAO-03-824 WTO Trade Remedy Rulings
                                                  Appendix II
                                                  Summaries of Completed WTO Trade Remedy
                                                  Cases




Table 24: Case 21 – Major Case Issues and Panel Findings

Major case issues                                                       Panel findings
Whether the panel should engage in a new—de novo—review of              The standard of review in article 17.6(i) of the ADA precludes a de
the facts submitted to Egypt.                                           novo review by the panel.

                                                                        It was necessary for the panel to undertake a detailed review of the
                                                                        evidence submitted by Egypt to determine whether an objective and
                                                                        unbiased investigating authority could have reached the
                                                                        determinations that Turkey challenged.

                                                                        The panel would not consider evidence that was not before the
                                                                        Egyptian investigating authority because this could be construed as
                                                                        a de novo review.
Whether Egypt appropriately resorted to “facts available” with          Egypt appropriately resorted to facts available with regard to three
regard to five Turkish exporters, as permitted by article 6.8 and       Turkish exporters in calculating costs of production. An unbiased
Annex II of the ADA.                                                    and objective investigating authority could have found that the three
                                                                        exporters failed to provide the necessary information Egypt
                                                                        requested.

                                                                        Egypt did not appropriately resort to facts available with regard to
                                                                        two exporters. Although Egypt received information from the two
                                                                        exporters that it had identified as being necessary to be provided, it
                                                                        still found that the exporters had failed to provide the necessary
                                                                        information. Egypt also did not inform the exporters of this finding
                                                                        and, before resorting to the use of “facts available,” did not give the
                                                                        exporters the required opportunity to provide further explanations.
Whether Egypt failed to evaluate all of the factors listed in article   Although Egypt gathered data on all of the factors listed in article
3.4 of the ADA, which deals with the examination of dumped              3.4, it failed to evaluate a number of these factors and thus acted
imports on the domestic industry.                                       inconsistently with that provision.

                                                                        Under the standard of review in article 17.6(i) panels must
                                                                        determine whether an investigating authority’s examination of the
                                                                        facts is objective and unbiased.
Source: GAO analysis of the WTO panel report.




                                                  Page 97                                              GAO-03-824 WTO Trade Remedy Rulings
                        Appendix II
                        Summaries of Completed WTO Trade Remedy
                        Cases




GAO Case Number 22:     Complainant:               European Union (EU)41
                        Defendant:                 United States
United States –
Countervailing
Measures Concerning
Certain Products from
the European
Communities
(“Privatization”)
(DS 212)

Nature of Complaint     The EU challenged U.S. CVDs resulting from 12 investigations on imports
                        of certain EU steel products.42 The steel products subject to these
                        proceedings were formerly produced by state-owned enterprises that had
                        been privatized in arm’s-length transactions for fair market value. The EU
                        complained that the two methodologies43 the United States used to
                        determine whether past subsidies continued to benefit the privatized
                        company violated the SCM Agreement. In addition, the EU claimed that a
                        provision of U.S. countervailing law—section 771(5)(F) of the Tariff Act of
                        193044—was, on its face, inconsistent with that agreement.



Outcome                 The panel found that where a privatization is at arm’s length and for fair
                        market value, the benefit from a prior subsidy to a state-owned enterprise
                        is not passed on to the privatized entity. The Appellate Body affirmed the

                        41
                             Brazil, India, and Mexico were third parties in this case.
                        42
                         The 12 proceedings included 6 original investigations, 2 administrative reviews, and 4
                        sunset reviews.
                        43
                           These are called the “gamma” and “same person” methodologies. The Appellate Body had
                        faulted the gamma methodology in United States—Imposition of Countervailing Duties on
                        Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United
                        Kingdom, WT/DS138/AB/R. A United States Court of Appeals found this methodology to be
                        inconsistent with United States law. Delverde, SRL v. United States, 202 F.3d 1360, 1368-69
                        (Fed. Cir. 2000).
                        44
                             19 U.S.C. § 1677(5)(F).




                        Page 98                                                  GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    panel’s finding that the Commerce Department’s privatization
                    methodologies were inconsistent with the SCM Agreement but disagreed
                    with the panel reasoning that a fair market value sale of a government
                    entity necessarily extinguishes prior subsidy benefits. The Appellate Body
                    reversed the panel and found that section 771(5)(F) of the Tariff Act of 1930
                    was consistent with the SCM Agreement.



Compliance Action   On June 23, 2003, the Commerce Department published in the Federal
                    Register its final modification to its privatization practice45 in order to
                    comply with the WTO’s rulings and recommendations. The parties have
                    agreed that the United States will use the new methodology in the 12
                    disputed investigations and reviews by November 8, 2003, and in future
                    cases. In addition, Commerce is evaluating how many other CVD orders
                    might be affected by this new methodology.




                    45
                         68 Fed. Reg. 37125 (June 23, 2003).




                    Page 99                                     GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 25: Case 22 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                               Panel findings                               Appellate Body findings
Whether the United States acted                                 The United States violated the SCM          Upheld the panel.
inconsistently with the SCM Agreement in 12                     Agreement by failing to determine
CVD investigations and reviews by imposing                      whether the new privatized producer
and maintaining CVDs without determining                        received any benefit from financial
whether a subsidy benefit continued to exist                    contributions previously provided to state-
after privatization at arm’s length and for fair                owned producers. Accordingly, the United
market value.                                                   States violated articles 14 and 19 of the
                                                                SCM Agreement, which prohibit
                                                                imposition of CVDs where there has been
                                                                no subsidization.
Whether a subsidy benefit that is derived                       Once an importing member determines          Reversed the panel finding on when a subsidy
from a nonrecurring financial contribution                      that a privatization has taken place at      benefit is extinguished by privatization, but
continues to exist following a transfer of                      arm’s length and for fair market value, it   upheld the panel finding that “gamma” and
ownership of a state-owned enterprise to a                      must conclude that no benefit resulting      “same person” methodologies are inconsistent
new private owner at arm’s length and for fair                  from the prior subsidization continues to    with the SCM Agreement.
market value.                                                   accrue to the privatized producer.
                                                                                                             There is only a rebuttable presumption, rather
                                                                Both “gamma” and “same person”               than an inflexible rule, that benefits derived
                                                                methodologies, which the Commerce            from pre-privatization financial contributions
                                                                Department used to determine if a            expire following privatization at arm’s length
                                                                subsidy benefit is extinguished by           and for fair market value.
                                                                privatization, violate the SCM Agreement.
                                                                                                             “Same person” methodology impedes the
                                                                                                             Commerce Department from complying with
                                                                                                             its obligation to examine whether a
                                                                                                             countervailable subsidy continues to exist
                                                                                                             where the pre- and post-privatization entities
                                                                                                             are the same legal person.
Whether section 771(5)(F) of the Tariff Act of Section 771(5)(F) violates the SCM                            Reversed the panel.
1930 allows the United States to exercise its Agreement because it prohibits the
discretion in a WTO-compatible manner.         Commerce Department from                                      Section 771(5)(F) does not mandate a method
                                               systematically concluding that                                contrary to the SCM Agreement for
                                               privatizations at arm’s length and for fair                   determining the continued existence of a
                                               market value extinguish prior subsidy                         subsidy benefit after a privatization. Therefore
                                               benefits.                                                     it does not prevent the Commerce Department
                                                                                                             from exercising a WTO-compatible discretion.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                Page 100                                             GAO-03-824 WTO Trade Remedy Rulings
                         Appendix II
                         Summaries of Completed WTO Trade Remedy
                         Cases




GAO Case Number 23:      Complainant:              European Union (EU)46
                         Defendant:                United States
United States –
Countervailing Duties
on Certain Corrosion-
Resistant Carbon Steel
Flat Products from
Germany (“Sunset”)
(DS 213)

Nature of Complaint      The EU challenged provisions of U.S. countervailing law and regulations as
                         well as application of the law and regulations to a sunset review of a CVD
                         order on certain imports of carbon steel from Germany. The EU argued
                         that, among other things, the United States had acted inconsistently with
                         the SCM Agreement by automatically self-initiating the sunset review, by
                         failing to apply a 1 percent de minimis47 standard of subsidization set forth
                         in the SCM Agreement, and by applying an improper standard to determine
                         whether a continuation or recurrence of subsidization was likely.



Outcome                  The Appellate Body upheld the panel findings that U.S. laws—regarding (1)
                         the automatic self-initiation of sunset reviews and (2) the obligation in the
                         SCM Agreement to determine the likelihood of continuation or recurrence
                         of subsidization in sunset reviews—were consistent with the SCM
                         Agreement. Nevertheless, with regard to the de minimis standard, the
                         Appellate Body reversed the panel48 and found that the 1 percent de
                         minimis standard applied only to initial CVD investigations and not to
                         sunset reviews of CVD orders. Accordingly, it found that U.S. law setting


                         46
                              Japan and Norway were third parties in this case.
                         47
                           De minimis subsidization is the level below which a subsidy is considered to be negligible.
                         CVD actions are terminated in cases where the level of subsidy is below the de minimis
                         level.
                         48
                          Although the panel’s majority found that U.S. law was inconsistent with the SCM
                         Agreement, in a rare dissent in WTO dispute settlement cases, one panelist concluded to the
                         contrary.




                         Page 101                                                 GAO-03-824 WTO Trade Remedy Rulings
                    Appendix II
                    Summaries of Completed WTO Trade Remedy
                    Cases




                    forth a de minimis subsidization threshold for sunset reviews below that
                    set forth for original investigations, as well as its application, was
                    consistent with the SCM Agreement.

                    In an issue that was not appealed, the panel found that the United States
                    had acted inconsistently with the SCM Agreement in the sunset review by
                    failing to properly determine the likelihood of the continuation or
                    recurrence of subsidization. On the basis of this finding, the Appellate Body
                    recommended that the United States bring its CVD measure into
                    conformity with the SCM Agreement.49



Compliance Action   The United States has agreed to implement the panel’s finding on the
                    likelihood of continuation or recurrence of subsidization. Commerce
                    Department officials said that implementation would require the agency to
                    conduct a new sunset analysis with respect to this particular German steel
                    order, but would not require a regulatory change.




                    49
                     The United States Court of International Trade also found that the Commerce
                    Department’s determination of likelihood of subsidization was inconsistent with U.S. law.
                    AG Der Gillinger Huttenwerke v. United States, 193 F. Supp.2d 1339 (CIT 2002).




                    Page 102                                           GAO-03-824 WTO Trade Remedy Rulings
                                                                Appendix II
                                                                Summaries of Completed WTO Trade Remedy
                                                                Cases




Table 26: Case 23 – Major Case Issues and Panel/Appellate Body Findings

Major case issues                                                Panel findings                             Appellate Body findings
Whether absence of an evidentiary standard for U.S. law does not violate article 21.3.                      Upheld the panel.
self-initiation of sunset reviews in U.S. CVD law
is consistent with article 21.3 of the SCM        Article 21.3 does not require that
Agreement.                                        investigating authorities apply any
                                                  evidentiary standard before they self-
                                                  initiate sunset reviews.
Whether the SCM Agreement requires that a 1 The1 percent de minimis standard in                             Reversed the panel.
percent de minimis standard of subsidization article 11.9 of the SCM Agreement
be applied during sunset reviews.            applies to sunset reviews described in                         U.S. law is consistent with the SCM
                                             article 21.3.                                                  Agreement because the 1 percent de minimis
                                                                                                            standard in article 11.9 is not implied in article
                                                                 The ½ percent standard in U.S. CVD         21.3.
                                                                 law violates article 21.3.
                                                                                                            A finding that the de minimis standard of
                                                                                                            article 11.9 is implied in sunset reviews would
                                                                                                            upset the delicate balance of rights and
                                                                                                            obligations attained in negotiations.
Whether U.S. CVD law and regulations                             U.S. CVD law is consistent.                Upheld the panel.
mandate WTO-inconsistent behavior regarding
the obligation under article 21.3 for an                         The language of U.S. law is nearly         The panel acted properly under article 11 of
investigating authority to determine the                         identical to article 21.3. Though a U.S.   the DSU in evaluating this issue.
likelihood of continuation or recurrence of                      regulation imposes severe limitations
subsidization in a sunset review.                                on the Commerce Department’s ability       The panel properly applied the distinction
                                                                 to reach a new rate of subsidization, it   between mandatory and discretionary
                                                                 does not mandate WTO-inconsistent          legislation.
                                                                 behavior.
Whether U.S. CVD law was properly applied                        The United States violated article 21.3    Not appealed.
regarding the Commerce Department’s                              of the SCM Agreement by making an
obligation to determine the likelihood of                        improper likelihood determination.
continuation or recurrence of subsidization in a
sunset review.                                                   The Commerce Department’s decision
                                                                 regarding the rate at which
                                                                 subsidization was likely to continue or
                                                                 recur lacked an adequate factual basis.
Source: GAO analysis of WTO panel and Appellate Body reports.




                                                                Page 103                                             GAO-03-824 WTO Trade Remedy Rulings
                          Appendix II
                          Summaries of Completed WTO Trade Remedy
                          Cases




GAO Case Number 24:       Complainant:               Canada50
                          Defendant:                 United States
United States – Section
129(c)(1) of the
Uruguay Round
Agreements Act
(DS 221)

Nature of Complaint       Canada directly challenged section 129(c)(1) of the U.S. Uruguay Round
                          Agreements Act (URAA), claiming that it was inconsistent with provisions
                          of a number of WTO agreements.51 Canada specifically argued that section
                          129(c)(1) of the URAA has the effect of requiring the United States to act
                          inconsistently with or precludes the United States from complying with
                          various agreements.



Outcome                   Canada failed to establish that section 129(c)(1) is inconsistent with WTO
                          rules. The panel findings were not appealed.



Compliance Action         No compliance action was necessary.




                          50
                               Chile, the EU, India, and Japan were third parties in this case.
                          51
                           Section 129 of the URAA generally authorizes the U.S. Trade Representative (USTR) to
                          request the Commerce Department or the ITC to take actions not inconsistent with WTO
                          rulings in antidumping or CVD cases. Subsection 129(c)(1) provides that Commerce
                          Department determinations under section 129 shall apply to unliquidated entries of
                          merchandise that enter or are withdrawn from a warehouse for consumption on or after the
                          date on which USTR directs Commerce to implement a WTO ruling.




                          Page 104                                                 GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 27: Case 24 – Major Case Issue and Panel Findings

Major case issue                                                      Panel findings
Whether section 129(c)(1) of the URAA requires the United States      Section 129(c)(1) does not mandate action that is inconsistent with
to act inconsistently with provisions of several WTO agreements       WTO rules, nor preclude action that is consistent with the rules.
with respect to unliquidated entries of merchandise occurring prior
to the date that the United States Trade Representative (USTR)        Section 129(c)(1) does not apply to unliquidated entries occurring
directs implementation of a WTO ruling.                               prior to the date that USTR directs implementation of a DSB ruling.
                                                                      Section 129(c)(1) only addresses entries that take place on or after
                                                                      the implementation date.
Source: GAO analysis of the WTO panel report.




                                                Page 105                                            GAO-03-824 WTO Trade Remedy Rulings
                       Appendix II
                       Summaries of Completed WTO Trade Remedy
                       Cases




GAO Case Number 25:    Complainant:               Canada52
                       Defendant:                 United States
United States –
Preliminary
Determinations With
Respect to Certain
Softwood Lumber from
Canada (DS 236)

Nature of Complaint    Canada challenged the U.S. imposition of provisional CVD measures on
                       certain softwood lumber imports from Canada. Canada also claimed that
                       the U.S. law and regulations concerning expedited and administrative
                       reviews of CVD orders were, in several respects, inconsistent with the SCM
                       Agreement and Article VI of GATT 1994.



Outcome                Although the panel upheld the United States on several issues, including
                       the direct challenges to U.S. law, it found that the methodology the
                       Commerce Department used to determine the subsidy benefit was
                       inconsistent with the SCM Agreement. The panel also found that the
                       Commerce Department’s retroactive application of the provisional measure
                       was inconsistent with the SCM Agreement. Accordingly, it recommended
                       that the DSB request that the United States bring its provisional measure
                       into conformity with its obligations under that agreement. The panel
                       findings were not appealed.



Compliance Action      In November 2002, the United States notified the DSB that the CVD
                       measures challenged by Canada were no longer in effect and that the
                       provisional cash deposits had been refunded. Canada, however, argued that
                       Commerce’s final determination was substantially unchanged and
                       subsequently brought another WTO complaint challenging that




                       52
                            The EU, India, and Japan were third parties in this case.




                       Page 106                                                GAO-03-824 WTO Trade Remedy Rulings
Appendix II
Summaries of Completed WTO Trade Remedy
Cases




determination. The WTO panel’s decision in that case is due to be made
public around the time this report is issued.53




53
 United States—Final Countervailing Duty Determination With Respect to Certain
Softwood Lumber from Canada, WT/DS257.




Page 107                                       GAO-03-824 WTO Trade Remedy Rulings
                                                Appendix II
                                                Summaries of Completed WTO Trade Remedy
                                                Cases




Table 28: Case 25 – Major Case Issues and Panel Findings

Major case issues                                                 Panel findings
Whether Canadian provincial sales of timber from public lands Canadian provincial stumpage programs by which standing timber was
can amount to a subsidy within the meaning of article 1 of the being supplied to tenure holders is a provision of a good within the
SCM Agreement, which defines a subsidy for purposes of the meaning of article 1.1(a)(l)(iii) of the SCM Agreement.
agreement.
                                                               The Commerce Department’s determination that the provision of
                                                               stumpage constituted a financial contribution was not in violation of
                                                               article 1.1.
Whether the U.S.’s use of U.S. rather than Canadian         By using U.S. stumpage prices to determine the benefit to the recipient,
stumpage prices to determine whether a benefit was provided the United States acted inconsistently with article 14 of the SCM
was consistent with the SCM Agreement.                      Agreement, which deals with calculation of subsidy benefits. U.S.
                                                            stumpage prices do not constitute the prevailing market conditions in
                                                            Canada.

                                                                  The United States provided no rationale consistent with article 14(d) for
                                                                  rejecting Canadian private stumpage prices as the basis for calculating
                                                                  the benefit.
Whether the United States was required to determine whether The United States acted inconsistently with article 1.1(b) of the SCM
a benefit was passed to downstream producers of lumber by Agreement by assuming that the subsidy passed through to the
unrelated upstream producers of log inputs.                 producers of the lumber.

                                                                  The United States should have examined whether certain lumber
                                                                  producers benefited from the financial contribution given to tenure
                                                                  holders that do not own processing facilities or who sell logs and lumber
                                                                  to the lumber producers.
Whether the U.S.’s retroactive application of the provisional     The U.S.’s retroactive application of the provisional measure in the form
measure was inconsistent with article 20.6 of the SCM             of cash deposits or bonds is inconsistent with article 20.6 of the SCM
Agreement.                                                        Agreement since that provision allows only for retroactive application of
                                                                  definitive duties, not preliminary duties.

                                                                  Imposition of provisional measures, such as the requirement of a cash
                                                                  deposit or the posting of a bond, is not necessary to preserve the right to
                                                                  apply definitive duties retroactively.
Whether provisions of the U.S. Tariff Act of 1930 and             The U.S. Tariff Act and accompanying regulations do not preclude the
accompanying regulationsa mandate action inconsistent with        U.S. executive branch from acting consistently with its obligations under
articles 19 and 21 of the SCM Agreement concerning                articles 19 and 21 of the SCM Agreement with respect to expedited and
expedited and administrative reviews of CVDs.                     administrative reviews.

                                                                  Legislation that merely gives the executive authority discretion to act
                                                                  inconsistently with the SCM Agreement cannot be challenged before a
                                                                  panel, independent of its actual application.
Source: GAO analysis of the WTO panel report.
                                                a
                                                 The challenge was to sections 777A(e)(2)(A) and (B) of the Tariff Act of 1930 and 19 C.F.R. §§
                                                351.214(k) and 351.213(b) and (k).




                                                Page 108                                                 GAO-03-824 WTO Trade Remedy Rulings
Appendix III

Experts That GAO Interviewed for this Report                                               Appendx
                                                                                                 iI




               Raj Bhala, Rice Distinguished Professor, School of Law, University of
               Kansas

               Richard Cunningham, Senior International Trade Partner, Steptoe &
               Johnson LLP

               William Davey, Professor of Law, University of Illinois College of Law

               James Durling, Partner, Willkie, Farr & Gallagher

               David Gantz, Professor of Law and Director, International Trade Law
               Program, James E. Rogers College of Law, University of Arizona

               John Greenwald, Partner, Wilmer, Cutler & Pickering

               Gary Horlick, Partner, Wilmer, Cutler & Pickering

               Robert Howse, Professor of Law, University of Michigan School of Law

               John Jackson, Professor of Law, Georgetown University Law Center

               Peter Lichtenbaum, Partner, Steptoe & Johnson LLP

               Robert Lighthizer, Partner, Skadden, Arps, Slate, Meagher & Flom LLP

               Mitsuo Matsushita, Professor Emeritus, Tokyo University, and Counsel,
               Nagashima, Ohno & Tsunematsu law firm in Tokyo

               Christopher Parlin, Counsel, Kaye Scholer LLP

               Joost Pauwelyn, Associate Professor of Law, Duke University Law School

               John Ragosta, Partner, Dewey Ballantine LLP

               Frieder Roessler, Executive Director, Advisory Center on WTO Law

               Terence Stewart, Managing Partner, Stewart and Stewart Law Offices

               Daniel Tarullo, Professor of Law, Georgetown University Law Center




               Page 109                                  GAO-03-824 WTO Trade Remedy Rulings
Appendix IV

Comments from the Department of
Commerce                                                              Appendx
                                                                            iIV




Note: GAO comments
supplementing those in
the report text appear
at the end of this
appendix.




                         Page 110   GAO-03-824 WTO Trade Remedy Rulings
                 Appendix IV
                 Comments from the Department of
                 Commerce




See comment 1.




See comment 2.




See comment 3.




See comment 4.




                 Page 111                          GAO-03-824 WTO Trade Remedy Rulings
                 Appendix IV
                 Comments from the Department of
                 Commerce




See comment 5.




See comment 6.




                 Page 112                          GAO-03-824 WTO Trade Remedy Rulings
                 Appendix IV
                 Comments from the Department of
                 Commerce




See comment 7.




See comment 8.




See comment 9.




                 Page 113                          GAO-03-824 WTO Trade Remedy Rulings
               Appendix IV
               Comments from the Department of
               Commerce




               The following are GAO’s comments on the Department of Commerce’s
               letter dated July 14, 2003.



GAO Comments   1. Our report presents data on changes to WTO members’ laws,
                  regulations, and practices that have resulted from WTO rulings through
                  December 2002. The data clearly indicate there have been few changes
                  in WTO members’ laws, regulations, and practices to date.

               2. In response to the Commerce Department’s (and the ITC’s)
                  comment(s), we modified our characterization of U.S. agency views on
                  the impact of WTO rulings on the U.S.’s ability to impose trade
                  remedies. The sections of this report that provide U.S. agencies’
                  viewpoints now reflect the agencies’ increased emphasis on the
                  potential future ramifications of WTO decisions indicated by the
                  Commerce Department (and ITC).

               3. The Commerce Department states that our report’s presentation
                  implies that the impact of the WTO dispute settlement system on
                  members’ ability to impose trade remedies must be small based on
                  statistical information we present. However, our report simply
                  provides data on the number of WTO members’ measures that were
                  notified to the WTO from 1995 through 2002 and the number that were
                  challenged. Moreover, we have modified the report to reflect agency
                  concerns about the impact of the dispute settlement system on
                  members’ ability to impose trade remedies.

               4. While our report provides aggregate data on the number of trade
                  remedy measures imposed by all WTO members from 1995 to 2002, it
                  was beyond the scope of our review to analyze trends in the growth of
                  these measures for individual WTO members and reasons for the
                  challenges to these measures.

               5. While the Commerce Department raised concerns regarding the
                  composition of the group of legal experts we consulted, we believe that
                  our methodology for selecting these experts as outlined in appendix I is
                  sound. As noted, we selected individuals who were identified as
                  leading experts on WTO dispute settlement. These individuals—
                  academics, practitioners, and advisors on WTO-related trade remedy
                  issues—have been active in writing and/or speaking about issues
                  pertaining to WTO dispute settlement. Moreover, the Commerce
                  Department’s assertion that we only included three experts



               Page 114                                  GAO-03-824 WTO Trade Remedy Rulings
Appendix IV
Comments from the Department of
Commerce




    representing domestic petitioners’ interests is incorrect. Although we
    did not choose experts on the basis of their expressed views because
    we believe that approach would have been methodologically flawed,
    our information indicates that of the nine practitioners we interviewed,
    three represent domestic petitioners, three represent foreign
    respondents, and three represent both. Nevertheless, in responding to
    agency comments, we reviewed our decision rule on the composition of
    the group of experts we consulted. Subsequently, we excluded the
    views of the current WTO official and the EU representative from our
    discussion of expert views since we did not include current U.S.
    officials in this group. However, we briefly noted the views of the
    current WTO and EU officials.

6. While we believe that our report sufficiently emphasizes the concerns
   of the minority of experts regarding standards of review and the other
   trade remedy issues discussed in this report, we have made
   modifications to the relevant sections of our report to ensure that
   majority positions and minority concerns are presented in a balanced
   manner.

7. See comment 2.

8. In response to the Commerce Department’s (and the ITC’s)
   comment(s), we added a section to our report presenting U.S. agencies’
   positions on WTO dispute settlement issues, including the executive
   branch’s position as outlined in its December 2002 report to Congress.

9. In response to the Commerce Department’s comments, we have added
   material to our report that discusses relevant aspects of the recent U.S.
   submission to the WTO Negotiating Group on Rules.




Page 115                                   GAO-03-824 WTO Trade Remedy Rulings
Appendix V

Comments from the United States
International Trade Commission                                        Append
                                                                           x
                                                                           i
                                                                           V




Note: GAO comments
supplementing those in
the report text appear
at the end of this
appendix.




See comment 1.




                         Page 116   GAO-03-824 WTO Trade Remedy Rulings
                 Appendix V
                 Comments from the United States
                 International Trade Commission




See comment 2.




See comment 3.




See comment 4.




                 Page 117                          GAO-03-824 WTO Trade Remedy Rulings
               Appendix V
               Comments from the United States
               International Trade Commission




               The following are GAO’s comments on the U.S. International Trade
               Commission’s letter dated July 14, 2003.



GAO Comments   1. In response to the ITC’s (and Commerce’s) comment(s), we modified
                  our characterization of U.S. agency views on the impact of WTO rulings
                  on the U.S.’s ability to impose trade remedies. The sections of this
                  report that provide U.S. agencies’ viewpoints now reflect the agencies’
                  increased emphasis on the potential future ramifications of WTO
                  decisions.

               2. In response to the ITC’s comments, we have added some discussion of
                  the safeguards issues that the ITC raises in the report’s section on
                  expert views and U.S. agencies’ positions.

               3. In response to the ITC’s comments, we have added some discussion of
                  their views on article 17.6(ii) in the report’s section on expert views and
                  U.S. agencies’ positions.

               4. See comment 1.




               Page 118                                    GAO-03-824 WTO Trade Remedy Rulings
Appendix VI

GAO Contacts and Staff Acknowledgments                                                       Appendx
                                                                                                   iVI




GAO Contacts      Elizabeth Sirois (202) 512-8989
                  Nina Pfeiffer (202) 512-9639
                  Richard Seldin (202) 512-4094



Staff             In addition to those named above, Jason Bair, Josey Ballenger, Sharron
                  Candon, Martin De Alteriis, Rona Mendelsohn, Mary Moutsos, Mark
Acknowledgments   Speight, and Laura Turman made key contributions to this report.




(320154)          Page 119                                 GAO-03-824 WTO Trade Remedy Rulings
GAO’s Mission            The General Accounting Office, the audit, evaluation and investigative arm of
                         Congress, exists to support Congress in meeting its constitutional responsibilities
                         and to help improve the performance and accountability of the federal government
                         for the American people. GAO examines the use of public funds; evaluates federal
                         programs and policies; and provides analyses, recommendations, and other
                         assistance to help Congress make informed oversight, policy, and funding
                         decisions. GAO’s commitment to good government is reflected in its core values of
                         accountability, integrity, and reliability.


Obtaining Copies of      The fastest and easiest way to obtain copies of GAO documents at no cost is
                         through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-
GAO Reports and          text files of current reports and testimony and an expanding archive of older
                         products. The Web site features a search engine to help you locate documents
Testimony                using key words and phrases. You can print these documents in their entirety,
                         including charts and other graphics.
                         Each day, GAO issues a list of newly released reports, testimony, and
                         correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site
                         daily. The list contains links to the full-text document files. To have GAO e-mail this
                         list to you every afternoon, go to www.gao.gov and select “Subscribe to
                         e-mail alerts” under the “Order GAO Products” heading.


Order by Mail or Phone   The first copy of each printed report is free. Additional copies are $2 each. A check
                         or money order should be made out to the Superintendent of Documents. GAO
                         also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a single
                         address are discounted 25 percent. Orders should be sent to:
                         U.S. General Accounting Office
                         441 G Street NW, Room LM
                         Washington, D.C. 20548
                         To order by Phone:     Voice: (202) 512-6000
                                                TDD: (202) 512-2537
                                                Fax: (202) 512-6061


To Report Fraud,         Contact:
                         Web site: www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in      E-mail: fraudnet@gao.gov
Federal Programs         Automated answering system: (800) 424-5454 or (202) 512-7470



Public Affairs           Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800
                         U.S. General Accounting Office, 441 G Street NW, Room 7149
                         Washington, D.C. 20548
United States                  Presorted Standard
General Accounting Office      Postage & Fees Paid
Washington, D.C. 20548-0001           GAO
                                 Permit No. GI00
Official Business
Penalty for Private Use $300
Address Service Requested