Statements by the United States at the March 25, 2011 DSB Meeting

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

A. UNITED STATES SECTION 211 OMNIBUS APPROPRIATIONS ACT OF 1998: STATUS REPORT BY THE UNITED STATES (WT/DS176/11/ADD.100)

• Madame Chair, the United States provided a status report in this dispute on March 14, 2011, in accordance with Article 21.6 of the DSU.

• As has been noted, a number of legislative proposals that would implement the DSB’s recommendations and rulings in this dispute were introduced in the 111th Congress.

• The U.S. Administration will continue to work with Congress to implement the DSB’s recommendations and rulings.

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

B. UNITED STATES ANTI DUMPING MEASURES ON CERTAIN HOT ROLLED STEEL PRODUCTS FROM JAPAN: STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.100)

• The United States provided a status report in this dispute on March 14, 2011, in accordance with Article 21.6 of the DSU.

• As of November 2002, the U.S. authorities had addressed the DSB’s recommendations and rulings with respect to the calculation of antidumping margins in the hot-rolled steel antidumping duty investigation at issue in this dispute. Details are provided in the document numbered WT/DS184/15/ADD.3.

• With respect to the recommendations and rulings of the DSB that were not already addressed by the U.S. authorities, the U.S. Administration will work with the U.S. Congress with respect to appropriate statutory measures that would resolve this matter.

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

C. UNITED STATES SECTION 110(5) OF THE US COPYRIGHT ACT: STATUS REPORT BY THE UNITED STATES (WT/DS160/24/ADD.75)

• The United States provided a status report in this dispute on March 14, 2011, in accordance with Article 21.6 of the DSU.

• The U.S. Administration will continue to confer with the European Union, and to work closely with the U.S. Congress, in order to reach a mutually satisfactory resolution of this matter.

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

D. EUROPEAN COMMUNITIES MEASURES AFFECTING THE APPROVAL AND MARKETING OF BIOTECH PRODUCTS: STATUS REPORT BY THE EUROPEAN UNION (WT/DS291/37/ADD.38)

• The United States thanks the EU for its status report and for its statement today.

• The United States remains concerned with delays in the EU’s approval system for biotech products, and the resulting effects on trade. The United States is likewise concerned with bans adopted by EU member States on biotech products approved at the EU level.

• In just a few days, as mentioned by my EU colleague, a U.S. delegation will be meeting with EU officials in Brussels to discuss these matters and related issues. The United States looks forward to a constructive discussion.

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

E. UNITED STATES MEASURES RELATING TO ZEROING AND SUNSET REVIEWS: STATUS REPORT BY THE UNITED STATES (WT/DS322/36/ADD.18)

• Madame Chair, the United States provided a status report in this dispute on March 14, in accordance with Article 21.6 of the DSU.

• As the United States explained in its status report and at the January and February DSB meetings, in December 2010 the U.S. Department of Commerce announced a proposal to change the calculation of weighted average dumping margins and assessment rates in certain antidumping proceedings.

• Details of the proposal were published in the Federal Register. As explained in the notice, the proposal required a period for public comment, and will involve consultations with appropriate committees in the U.S. Congress.

• At this time, the U.S. Department of Commerce is continuing with its ongoing work on the December proposal.

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• Because of our concerns about the findings regarding zeroing in this and other disputes, responding to those findings has presented substantial challenges for the United States and required significant resources. The proposal reflects that effort, and addresses adverse findings on zeroing in reviews, sunset reviews, and transaction-to-transaction comparisons in investigations.

[Second intervention:]

• There were a number of substantive comments in the last intervention. We look forward to receiving that statement and reviewing those comments.

• At this point, Commerce has issued a proposal. The proposal is not final, and does not prejudge what might happen in any specific past review. The proposal is subject to comment and we are reviewing the comments that we received.

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

F. UNITED STATES CONTINUED EXISTENCE AND APPLICATION OF ZEROING METHODOLOGY: STATUS REPORT BY THE UNITED STATES (WT/DS350/18/ADD.15)

• Madame Chair, the United States has addressed the issue of compliance with the findings in this dispute in the status report provided on March 14, 2011, and earlier in today’s discussion of agenda item 1.E. We would refer Members to that statement for further details.

[Second intervention:]

• As explained in prior DSB meetings, we are not aware of any other instances in which a Member has refunded duties in response to an adverse finding in a WTO dispute. As we explained at the January and February DSB meetings, we understand that the EU took a very different approach in the Bananas dispute than the one suggested today.

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

G. UNITED STATES LAWS, REGULATIONS AND METHODOLOGY FOR CALCULATING DUMPING MARGINS (“ZEROING”): STATUS REPORT BY THE UNITED STATES (WT/DS294/38/ADD.9)

• Madame Chair, the United States has addressed the issue of compliance with the findings in this dispute in the status report provided on March 14, 2011, and earlier in today’s discussion of agenda item 1.E., and would refer Members to that statement for further details.

1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

H. CHINA MEASURES AFFECTING TRADING RIGHTS AND DISTRIBUTION SERVICES FOR CERTAIN PUBLICATIONS AND AUDIOVISUAL ENTERTAINMENT PRODUCTS: STATUS REPORT BY CHINA (WT/DS363/17/ADD.1)

• The United States thanks China for its status report and its statement today.

• The United States is troubled by the lack of any apparent progress by China in bringing its measures relating to films for theatrical release into compliance with the DSB recommendations and rulings. The United States also has significant concerns about the incomplete progress relative to China’s measures relating to audio visual home entertainment products, reading materials, and sound recordings.

• The United States and China are in discussions regarding how to handle any eventual request for a compliance proceeding under Article 21.5 of the DSU and any eventual request for authorization to suspend concessions under Article 22.6 of the DSU. The United States hopes to report progress in those discussions in the coming days.

• The United States would also take this occasion to recall, as China and other Members are aware, that the United States does not consider that the DSU requires a complaining party to request an Article 21.5 compliance proceeding before pursuing a request pursuant to Article 22.2 of the DSU.

2. UNITED STATES USE OF ZEROING IN ANTI DUMPING MEASURES INVOLVING PRODUCTS FROM KOREA

A. IMPLEMENTATION OF THE RECOMMENDATIONS OF THE DSB

• Madame Chair, on February 24th, the DSB adopted the Panel report in the dispute United States – Use of Zeroing in Anti-Dumping Measures Involving Products from Korea, DS402.

• This morning, as provided in the first sentence of Article 21.3 of the DSU, the United States wishes to state that it intends to implement the recommendations and rulings of the DSB in a manner that respects U.S. WTO obligations.

• The United States will need a reasonable period of time in which to implement.

3. UNITED STATES CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000: IMPLEMENTATION OF THE RECOMMENDATIONS ADOPTED BY THE DSB

A. STATEMENTS BY THE EUROPEAN UNION AND JAPAN

• As the United States has explained at previous DSB meetings, the President signed the Deficit Reduction Act into law on February 8, 2006. That Act includes a provision repealing the Continued Dumping and Subsidy Offset Act of 2000. Thus, the United States has taken all actions necessary to implement the DSB’s recommendations and rulings in these disputes.

• We recall, furthermore, that Members, have acknowledged during previous DSB meetings that the 2006 Deficit Reduction Act does not permit the distribution of duties collected on goods entered after October 1, 2007.

• With respect to comments regarding further status reports in this matter, as we have already explained at previous DSB meetings, the United States fails to see what purpose would be served by further submission of status reports repeating the progress the United States made in the implementation of the DSB’s recommendations and rulings.

6. CHINA – CERTAIN MEASURES AFFECTING ELECTRONIC PAYMENT SERVICES

A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE UNITED STATES (WT/DS/413/2)

• As the United States explained at the February 24th DSB meeting, for several years the United States has been concerned about certain measures maintained by China affecting suppliers of electronic payment services.

• In the financial services sector, as set out in China’s services Schedule, China undertook both market access and national treatment commitments with respect to these services.

• Despite its GATS commitments, however, China imposes market access restrictions and requirements on service suppliers of other Members seeking to supply electronic payment services in China.

• The United States considers that the measures identified in the U.S. panel request are inconsistent with China’s obligations under the GATS.

• In particular, China’s measures appear to breach its obligation under GATS Article XVI to accord services and services suppliers of any other Member treatment no less favorable than that provided for in China’s Schedule, and its obligations under GATS Article XVII to accord to services and service suppliers of any other Member treatment no less favorable than that it accords to its own like services and service suppliers.

• The United States would also like to note that it disagrees with the assertion that China made at the February 24th DSB meeting that the U.S. panel request incorporates measures which were not identified in the U.S. request for consultations.

• Accordingly, the United States again requests that the DSB establish a panel to examine the matter set out in our panel request, with standard terms of reference.

7. CHINA – COUNTERVAILING AND ANTI-DUMPING DUTIES ON GRAIN ORIENTED FLAT-ROLLED ELECTRICAL STEEL FROM THE UNITED STATES

A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE UNITED STATES (WT/DS/414/2)

• China has imposed antidumping and countervailing duties on grain-oriented electrical steel, known as GOES, from the United States.

• As the United States explained at the DSB meeting on February 24th, China’s dumping and subsidy determinations in the GOES investigation appear to breach a number of its obligations under the General Agreement on Tariffs and Trade 1994, the Antidumping Agreement, and the Subsidies Agreement.

• The apparent inconsistencies are set out in detail in the U.S. request for the establishment of a panel.

• Our concerns relate to every phase of China’s investigation.

• In short, we believe that there were profound procedural and substantive deficiencies in the investigation, and these make the determinations unsustainable under WTO rules.

• Accordingly, the United States requests that the DSB establish a panel to examine the matter set out in the U.S. panel request, with standard terms of reference.

10. UNITED STATES DEFINITIVE ANTI DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA

A. REPORT OF THE APPELLATE BODY (WT/DS379/AB/R) AND REPORT OF THE PANEL (WT/DS379/R)

• Madame Chair, the United States first would like to thank the Panel, the Appellate Body, and the Secretariat staff assisting them for their work in this proceeding.

• Although we disagreed with several of the Panel’s findings, we recognize the Panel’s efforts in grappling with the numerous complex issues in this dispute, including, in particular, the use of out-of-country benchmarks to measure benefit under Article 14 of the SCM Agreement, the determination of whether a subsidy is specific within the meaning of Article 2 of the SCM Agreement, the proper interpretation of the term “public body” under Article 1 of the SCM Agreement, and China’s novel claims relating to the concurrent application of countervailing duties (CVDs) and antidumping duties (ADs) calculated using a nonmarket economy (NME) methodology.

• The United States considers that the Panel’s findings with respect to these four issues reflect a proper legal analysis of the SCM Agreement. On appeal, the Appellate Body upheld in part and reversed in part the findings relating to the use of out-of-country benchmarks to measure benefit, upheld the determination of specificity, and reversed the Panel’s findings relating to the interpretation of the term “public body” and relating to China’s claims regarding the concurrent application of CVDs and NME ADs.

• The United States is deeply disappointed with the findings in the Appellate Body report related to the interpretation of the term “public body” and China’s claims related to the concurrent application of CVDs and NME ADs, and considers that the report’s reasoning is based on a number of problematic assertions and assumptions.

• Today we would like to discuss a few key issues that we believe should be of serious concern to all Members.

Public Body

• The U.S. concerns with the interpretation of the term “public body” in Article 1 of the SCM Agreement extend both to the legal reasoning employed in the Appellate Body report and to its real-world ramifications.

• Under the SCM Agreement, a Member may countervail a subsidy by “a government or any public body within the territory of a Member”.

• In the underlying investigations, the United States determined that certain state-owned enterprises were public bodies, because the Chinese Government was the majority owner of these enterprises and therefore controlled them.

• Prior panels in Korea – Commercial Vessels and EC – Large Civil Aircraft, like the Panel in this dispute, have interpreted the term “public body” as meaning an entity controlled by the government.

• Despite acknowledging that the ordinary meaning of “public body” can encompass entities controlled by the government, the Appellate Body report concluded that government ownership and control does not make an entity a “public body,” but that the entity must possess, exercise, or be vested with “governmental authority” and be performing a “governmental function.”

• To reach this result, the report relies in part on context, in particular a subparagraph in the definition of a subsidy that establishes that financial contributions can also be provided through private bodies when they are entrusted or directed to do so by a government or a public body. The report then asserts that every public body must therefore be able to entrust or direct private bodies to provide financial contributions, and concludes that public bodies must necessarily possess governmental authority in order to do so.

• In the view of the United States, this conclusion is a non sequitor. While it may be the case that some public bodies have authority to entrust or direct a private body, nothing in the text of the SCM Agreement requires that all public bodies have the authority to do so. Indeed, it should be plain to all Members that not even all organs of a government will have authority to entrust or direct a private body to make a financial contribution.

• In addition, the report reasons that, because a particular action listed in the definition of a subsidy – “a decision to forego or not collect government revenue that is otherwise due” – “appears to constitute conduct inherently involving the exercise of governmental authority,” then a public body must be an entity vested with certain governmental responsibilities, or exercising certain governmental authority.

• This, once again, is a non sequitor, and the report offers no explanation for why the functions other than foregoing government revenue that are identified in Article 1 of the SCM Agreement should be considered “governmental functions.”

• We also note that the Appellate Body report rejects the Panel report’s conclusion that the term “or” in the definition of a subsidy indicates that the terms “government” and “public body” are separate concepts with distinct meanings.

• Ultimately, it appears that the interpretation in the Appellate Body report collapses the terms “government” and “public body,” such that there is no purpose for the term “public body” to have been included by Members in the SCM Agreement at all. Reading terms out of an agreement is contrary to the customary rules of treaty interpretation.

• In moving away from an objective “control” standard, as adopted by this Panel and previous panels, the Appellate Body report adopts an undefined “governmental authority” standard. The test created by the Appellate Body report appears to require an additional analysis into what constitutes “governmental authority” within the domestic legal system of the exporting Member. There is, in addition, no elaboration in the report as to how to determine whether the entity in question possesses or exercises such authority.

• In a CVD case, such an analysis could place a considerable additional burden on the responding companies and governments to provide appropriate data, as well as on administering authorities to collect and analyze all of the appropriate data.

• It may be difficult in many instances to identify concrete evidence establishing that SOEs are vested with or exercising “governmental authority,” despite the fact that they are owned by the government.

• Yet at the same time, governments can and do use SOEs as key instruments through which to manage national economic activity. In such cases, the pricing policies of SOEs in NMEs can be very trade distorting – primarily the provision of inputs and financing at below market rates.

• Consequently, the Appellate Body report could make it much more difficult to address trade-distorting subsidies provided through SOEs.

Concurrent Application of CVDs and NME ADs

• The United States is similarly concerned with both the legal reasoning and the real-world implications of the findings in the Appellate Body report related to the concurrent application of CVDs and NME ADs. The United States is concerned that these findings do not appear to derive from the text of the SCM Agreement, and that the reasoning employed would not seem to support the findings in the report.

• The Appellate Body report finds that a Member may not concurrently impose CVDs and NME ADs without taking affirmative steps to ensure that concurrent application does not result in a so-called “double remedy.”

• It is important to bear a few things in mind when considering this result. First, no provision of either the AD or SCM Agreement restricts a Member’s ability to apply NME ADs and CVDs concurrently. Each of the two agreements disciplines a different remedy, and neither agreement conditions or limits the ability of a Member to apply a CVD on whether or not the AD is calculated using an NME approach.

• Second, the Panel report noted that a predecessor agreement, the Tokyo Round Subsidies Code, did expressly limit the ability of parties to that agreement to apply a CVD concurrently with an NME AD, but WTO Members did not agree to include such a limitation in the WTO agreements. The Appellate Body report found this irrelevant, even though in other contexts it has stated that omission of language or silence on an issue must be given some meaning. The United States is puzzled by the different approach in this dispute.

• Third, the Panel correctly noted that Article VI:5 of the GATT 1994 prohibits the application of antidumping and countervailing duties to compensate for the same situation of dumping or export subsidization and found it significant that no similar prohibition exists in the covered agreements with respect to domestic subsidization.

• However – despite recognizing that, “in the case of domestic subsidies, an express prohibition is absent” from the text of the covered agreements – the Appellate Body report nevertheless creates a prohibition on the imposition of a so-called “double remedy” through the concurrent application of CVDs and NME ADs.

• The conclusion in the Appellate Body report is based entirely on Article 19.3 of the SCM Agreement. This article provides that, where CVDs are imposed, they shall be levied in the “appropriate amounts in each case.”

• The Appellate Body report’s expansive interpretation of the term “appropriate amounts” ignores the fact that Article 19 of the SCM Agreement is not concerned with the definition or calculation of CVDs, still less with the existence of concurrent antidumping proceedings, but rather is concerned with the “[i]mposition and [c]ollection” of CVDs.

• Article 19.3 directs importing Members to impose CVDs on imports from “all sources found to be subsidized and causing injury” except producers who have renounced subsidies or entered into undertakings. The reference to assessing CVDs in “appropriate amounts” refers simply to the fact that the CVD on particular imports may vary, even though a CVD should be imposed in a non discriminatory manner.

• The report turns this clause in Article 19.3 into an obligation concerning the amount of the CVD. In the process, the report creates a subjective standard for what is an “appropriate” amount, derived from a wide variety of unrelated provisions – e.g., the “desirab[ility]” of a lesser duty rule. None of these provisions, though, addresses the concurrent application of ADs and CVDs.

• As a result, the report introduces unpredictability into the SCM Agreement. Members have no certainty in determining what will constitute an “appropriate” amount of a CVD in any given situation.

• To compound the problem, the report appears to impose the entire burden of proving that there is no “double remedy” on the importing Member. Contrary to other situations, the exporting Member seemingly does not need to demonstrate that the CVD is in excess of the “appropriate” amount. It would appear to be enough that the exporting NME Member simply demonstrate that both CVDs and NME ADs are applied concurrently.

• Because the report imposes new obligations that do not appear to derive from the text of the covered agreements, its findings in this regard appear inconsistent with Article 19.2 of the DSU.

• The United States would also like to express its concerns with the decision to complete the analysis with respect to this claim. Despite the fact that the Panel report expressly made no findings with respect to the existence of any actual “double remedy” in any of the investigations at issue, and despite the fact that China presented no evidence regarding the existence of any specific instance of a “double remedy” in any of the investigations, the Appellate Body report nonetheless completed the analysis and found the U.S. measures inconsistent with Article 19.3.

• In doing so, the report states that USDOC dismissed the arguments of Chinese respondents and the Government of China on the ground that it had no statutory authority to make any adjustment and that USDOC “refused outright to afford any consideration to the issue.” The report does not cite to any findings in the Panel report to support these factual statements. What the Panel report actually says is that, in the context of the antidumping investigations, the United States rejected China’s suggestion that the USDOC made any broad pronouncement as to whether it lacked legal authority.

• In addition, the United States rejects the suggestion that USDOC refused to afford any consideration to the issue in its determination. The United States explained that USDOC considered what facts and argumentation were offered. The assertions in the Appellate Body report do not accurately characterize USDOC’s actions and are not the type of uncontested facts upon which the analysis has been completed in other Appellate Body reports.

• We again would note certain practical concerns that arise from these findings, which may seriously hinder Members’ ability to address trade-distorting subsidies by an NME Member.

• The Appellate Body report appears to impose significant administrative burdens on Members’ trade remedy administrators in the situation of concurrent application of CVDs and NME ADs.

• If required, measuring the effect of a subsidy on the export price of a good and other components of the dumping margin may involve highly complex economic and econometric analysis. The difficulties associated with such measurement may be significant.

• This raises serious questions about whether Members will be able to address trade-distorting subsidies by NME Members.

Conclusion

• We believe these findings in the Appellate Body report should be of concern to all Members, both because of the legal analysis from which they resulted, and also the potentially serious limitations they may impose on Members’ ability to address trade-distorting subsidies.

• Thank you, Madame Chair, and thanks to my fellow delegates for your attention to our statement.

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