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STATEMENTS BY I. United States: Countervailing Measures Concerning
Certain Products from the European Communities. First, as with most legal proceedings, the underlying facts in the proceedings identified by the EC are complicated. However, the United States is particularly concerned about the EC's mischaracterization of how the United States took into account the privatizations in these cases. The EC's panel request incorrectly suggests that the United States, in dealing with the privatization of a government-owned company, has failed to take into account the Appellate Body's decision in the U.K. Lead Bar case and continues simply to allocate any subsidies previously received by the government-owned company to the successor privatized company. This is not accurate. Indeed, since the Appellate Body's decision in U.K. Lead Bar, the United States has adopted a new change-in-ownership methodology. Under its new methodology, DOC now undertakes an inquiry when a question is raised about the continued existence of a benefit in view of a change in ownership. Thus, in the context of a privatization, i.e., a government-to-private sale, DOC begins its inquiry by first examining several criteria in order to determine whether the post-privatization entity is for all intents and purposes the same as the pre-privatization entity that received the subsidy. If it is, then all of the elements for a subsidy, i.e., financial contribution, benefit, and specificity, continue to exist and the remaining portion of the unamortized subsidy continues to be countervailable. If, however, the first step of the inquiry were to reveal that the post-privatization entity is not the same as the pre-privatization entity, then DOC would undertake a second inquiry to determine whether the post-privatization entity receives a subsidy as a result of the change in ownership. The United States believes that this new methodology is consistent with the SCM Agreement, as interpreted by the Appellate Body in U.K. Lead Bar. Moreover, the United States applies this new methodology to any outstanding countervailing duty order in which a review has been initiated. In this regard, the United States would like to comment on how the EC handles privatizations. In its recently issued countervailing duty regulations, the EC does not include any regulation specifically addressing privatizations, nor has the EC addressed a privatization in any of its countervailing duty investigations. The EC does, however, address privatizations in the guidelines for its State Aids Code, pursuant to which the EC internally regulates Member State subsidization. These guidelines take a position directly contrary to the position being advocated by the EC in this dispute. The EC's State Aid guidelines automatically treat all of the prior subsidies as passing through to the privatized company. Finally, the United States would note that it is unable to discern from the EC's panel request the precise identity of the measures the EC purports to be challenging, and the United States reserves its rights in this regard. More specifically, it is unclear whether the measures in question are the identified countervailing duty proceedings and section 771(5)(F) of the Tariff Act of 1930, or the Department of Commerce's methodology in the abstract. In summary, Mr. Chairman, while the United States recognizes the EC's right to request a panel, we are confident that should a panel be established, it will conclude that the United States has not breached any WTO rules. II. United States - Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany. Mr. Chairman, the United States cannot agree to the establishment of a panel at this time. The EC is challenging two fundamental aspects of the United States' sunset regime B automatic self-initiation by the Department of Commerce of sunset reviews, and the de minimis standard applicable to sunset reviews. With respect to self-initiation, the EC considers that the United States inappropriately has shifted the burden of proof to exporters and eliminated the requisite threshold for initiation in sunset reviews required under Article 21.3 of the SCM. The United States disagrees. Article 21.3 distinguishes between self-initiated reviews by authorities B in this case, the Department of Commerce B and reviews initiated on the basis of a duly substantiated request made by or on behalf of the domestic industry. The EC is attempting to make the requirements for an industry-based review apply to self-initiated reviews. In so doing, the EC essentially is attempting to rewrite Article 21.3. With respect to the de minimis standard, the EC contends that the appropriate standard in a sunset review of a countervailing duty order is the 1 percent de minimis threshold set forth in Article 11.9 of the SCM. Again, the United States disagrees. There is no mention of a de minimis threshold in Article 21.3, the SCM provision that explicitly addresses sunset reviews. Moreover, the de minimis standard found in Article 11.9, by its terms, applies solely to investigations and, thus, does not govern sunset reviews of countervailing duty orders. Here, too, the EC is attempting to rewrite the SCM Agreement. In sum, the United States believes that in general, and as applied to the countervailing duty order in question on German steel, its sunset review regime is fully in conformance with U.S. obligations under the SCM Agreement and the WTO Agreement. We are confident that should a panel be established, it will agree, and we urge the EC to reconsider its approach to this matter. III. United States - Definitive Safeguard Measures on Imports of Steel Wire Rod and Circular Welded Quality Line Pipe. The United States is disappointed that the EC has chosen to request a WTO panel on these measures. After careful and exhaustive investigations, the USITC concluded that imports of these products were causing or threatening to cause serious injury to the U.S. industries. In each case the President applied a remedy only to the extent necessary to remedy the injury or threat of injury posed by the imports and to facilitate the adjustment of the domestic industries. WTO rules specifically provide that governments may impose temporary import restrictions to prevent or remedy serious injury to a domestic industry due to increased imports and to facilitate industry adjustment. That is what we have done here. We will now turn briefly to the panel request itself. In the request, the EC alleges that the safeguard measures are inconsistent, quote, "in particular, but not necessarily exclusively," end quote, with certain, listed provisions of the Safeguards Agreement and the GATT 1994. This phrasing suggests that if a panel is ever established, the EC may attempt to allege violations of additional legal provisions not identified in the request. As the Appellate Body has noted, and as the EC has itself argued in the past, identifying the treaty provisions alleged to be violated is "always necessary" and constitutes a "minimum prerequisite" to present the legal basis of the complaint. Accordingly, to the extent that the EC intends to challenge the U.S. measures under legal provisions not identified in its panel request, its request is legally deficient as a matter of law. In any event, we are not prepared to consent to establishment of a panel at today's meeting. IV. United States - Continued Dumping and Subsidy Offset Act of 2000. As we have stated before, in our view, the Byrd Amendment is fully consistent with our international obligations under the WTO and we intend to vigorously defend it before the WTO panel. This law does not alter how the United States makes antidumping or countervailing duty determinations, or the amount of duties assessed on dumped or subsidized imports, which are issues covered by the WTO agreements. The WTO agreements do not address what a country may do with antidumping and countervailing duties after they have been collected. Therefore Mr. Chairman, while we understand that the DSB will today establish a panel in the dispute brought by the EC and others, we cannot agree to the establishment of a panel with respect to the complaints brought by Canada and Mexico. V. United States - Section 129(c)(1) of the Uruguay Round Agreements Act. We are disappointed that Canada has chosen to move ahead with its panel request. Perhaps of greatest concern is that, by bringing this case, it appears that Canada is seeking to alter well-established jurisprudence that decisions under the GATT/WTO dispute settlement system only apply prospectively. Section 129(c)(1) is fully consistent with U.S. obligations, and we will vigorously defend the provision before the panel. VI. United States - Measures Treating Export Restraints as Subsidies. Mr. Chairman, the United States has decidedly mixed feelings about the panel report in DS 194. On the positive side, the portion of the report that deals with the actual measures in question constitutes a workmanlike application of the well-established mandatory/discretionary doctrine, and a model for how to interpret U.S. domestic law in the context of a WTO dispute. Rejecting Canada's persistent efforts to mischaracterize U.S. law in general, and U.S. administrative law in particular, the panel properly found that none of the so-called measures identified by Canada required that U.S. authorities treat export restraints as subsidies. In particular, the panel correctly recognized that under applicable U.S. administrative law principles, agency practice is not binding on the agency and, thus, cannot be regarded as a mandatory measure for purposes of U.S. WTO obligations. Accordingly, the panel did not make any recommendations regarding the U.S. measures that were actually before it. While we are pleased with the result, this outcome should not have come as a surprise to anyone. On two prior occasions B the latest as recent as 1999 B the Government of Canada officially expressed the position in writing before the U.S. Department of Commerce that the U.S. countervailing duty law does not require Commerce to treat export restraints as subsidies. If the panel had limited its findings to the mandatory/discretionary issue and its examination of the actual U.S. legal provisions at issue, we could have said that this was a solid report, and would have had no qualms in supporting its adoption. Unfortunately, in a step that appears to have no precedent in GATT or WTO jurisprudence, the panel did not limit its analysis to the measures before it. In the view of the United States, Members should find this other portion of the panel report B and the remarkable judicial activism it represents B extremely disturbing. Although the panel's application of the mandatory/discretionary doctrine to the U.S. legal provisions before it was dispositive of Canada's claims, the panel nonetheless decided to pursue an extraneous discussion on the issue of whether an export restraint can constitute a financial contribution B and, thus, a subsidy B under the SCM Agreement. In so doing, the Panel made findings not with respect to the measure at issue, but with respect to a purely hypothetical and abstract category of measures not within the panel's terms of reference. It is important at the outset to recognize that, notwithstanding the title of this dispute, it involved neither an actual export restraint nor, as the panel correctly concluded, a measure which treats an export restraint as a subsidy. In the absence of such a measure, the Panel was precluded by its terms of reference from offering opinions on a hypothetical measure which either has treated an export restraint as a subsidy in a specific instance, or requires this outcome. Under DSU Articles 6 and 7, a panel is authorized to make legal findings only with respect to the actual measures before it. The panel in this dispute disregarded this stricture, and breached the fundamental constraint in the DSU which limits the subject of dispute settlement to actual disputes, and which precludes the issuance of advisory opinions regarding measures that do not exist. The panel's justification for this extraordinary exercise went as follows. First, the panel stated that it was unaware of any GATT/WTO precedent requiring a panel to consider whether legislation is mandatory or discretionary before examining the substance of the GATT or WTO provisions at issue. (Para. 8.11). Second, the panel cited three GATT panel precedents for the proposition that any controversy as to the requirements of GATT/WTO obligations should be determined first before applying the mandatory/discretionary doctrine. (Id.). Finally, based on the prior two considerations, the panel claimed that "identifying and addressing the relevant WTO obligations first will facilitate our assessment of the manner in which the legislation addresses those obligations, and whether any violation is involved." (Para. 8.12). Mr. Chairman, each element of the panel's justification is severely flawed. The panel simply opined on an issue that was irrelevant to the resolution of the matter before it, and that was not implicated by the measure before it. Consider the panel's first rationale: that there was no precedent requiring a panel to consider the mandatory/discretionary issue first. This is wrong for several reasons. It is true that there has not, heretofore, been an attempt to obtain an advisory opinion through the mischaracterization of a measure as mandating an allegedly GATT/WTO-inconsistent outcome. Therefore, it is natural that there has not been panel precedent on this point. However, there have been numerous disputes involving the limits of the dispute settlement system, an examination of which indicates that the panel exceeded these limits. For example, it is well established that panels may not examine measures not the subject of consultations, or in the extreme case, not even in existence at the time of consultations. This stricture would be easily circumvented were panels to follow the logic of the panel in this dispute, since it would only be necessary that the complaining party allege the existence of a measure mandating a WTO-inconsistent action. Under the panel's logic, the complaining party would then be entitled to a substantive finding on the measure alleged, even if the panel ultimately concludes that the actual measure does not mandate the action in question B in other words, the measure was mischaracterized. In this regard, numerous panels have concluded that in order to determine whether a measure is WTO-consistent, it is first necessary to determine what the actual measure provides for. For example, in Australia Salmon, the Appellate Body's first order of business was to correct the panel's mischaracterization of the measure; only then did it proceed with the substantive analysis. Likewise, the panel in U.S. B Certain Import Measures first determined the actual characteristics of the measure B which, as in this case, were very much in dispute B since this would inevitably determine the nature and results of its substantive analysis. The panel in this dispute chose to put the analysis of what the measure actually provides last, after the legal analysis was complete B based on an inaccurate description of the measure and a hypothetical fact pattern. In addition, the Appellate Body has reinforced the fact that a measure may be found inconsistent based only on its own characteristics. In U.S. B Certain Import Measures, the Appellate Body reversed a finding that the measure in question was inconsistent because it related to a second measure, one not yet in existence at the time the first was taken. Para. 104. The Appellate Body had earlier supported the panel's finding that the measure under examination did not mandate the second measure, and thus the latter was not within the terms of reference. Para. 76. The Appellate Body also overturned another finding relating
to the second measure, stating that because the terms of reference
covered the first measure only, "the Panel should have limited
its reasoning to issues that were relevant to [that measure]. By making
statements on an issue that is only relevant to [the second measure],
the Panel failed to follow the logic of, and thus acted inconsistently
with, its own finding on the measure at issue." Para. 89. The
Appellate Body therefore declared those statements to be of no legal
effect. The DS194 panel's statements regarding export restraints likewise
do not relate to its own finding as to the actual measure at issue,
and therefore have no legal effect. Thus, it was incumbent upon the panel to resolve in a responsible way what appears to have been an issue of first impression. In this regard, it bears repetition that Canada was asking the panel to declare as "mandatory" measures which it had previously conceded were "discretionary." Now let us consider the panel's second rationale: the three GATT panel reports it cited. The three cases simply do not support the proposition for which the panel cited them. In the portions of the reports cited by the panel, there was no controversy as to the requirements of the GATT obligations at issue, and no analysis by the panels of the relevant GATT provisions. With respect to Thailand - Cigarettes and United States - Tobacco, the panels did not make "determinations" regarding GATT obligations, but merely summarized what the relevant provisions said, and then proceeded to apply the mandatory/discretionary doctrine. Likewise, in the third case B the US Superfund case B there was no genuine controversy as to the precise nature of the obligation or the measure at issue. In two sentences, the panel drew the unextraordinary conclusion that a penalty tax of 5%, if added to a tax designed to be equivalent to a domestic tax, would exceed that domestic tax. Neither party contested this conclusion, nor the existence of the 5% tax. The only issue was whether the tax was mandatory. DS194 is not comparable. Notwithstanding the fact that the term "export restraint" is not found in the SCM Agreement or in the US countervailing duty statute and regulations, in over 20 pages of text, the panel engaged in an entirely novel analysis of whether an export restraint could constitute a financial contribution, based on a hypothetical definition of export restraint not found in the US statute or regulations, nor in their preparatory materials. Given that the U.S. statute and regulations, even when read in conjunction with those preparatory materials, did not mandate any particular treatment of such a hypothetical export restraint, and given the extensive U.S. opposition to Canada's position on the substantive issue and to the panel even reaching the substantive issue, DS194 bears absolutely no resemblance to the cases the panel cited. And this takes us to the panel's final rationale: that a discussion of the subsidy issue would "facilitate" the panel's assessment of the mandatory/discretionary issue. Taking the panel at its word, if the purpose of dealing with the subsidy issue truly was designed to facilitate the panel's assessment of the mandatory/discretionary issue, one would expect that the portion of the report dealing with the mandatory/discretionary issue would be replete with references to the portion of the report dealing with the subsidy issue. However, that is not the case. In the mandatory/discretionary portion of the report B that is, the portion of the report that analyzes the actual measure before the panel B there is only a single reference to the other portion of the report B in paragraph 8.101 B and even that single reference was not necessary to the panel's analysis. In short, the panel could have disposed of this case without having addressed the subsidy issue at all, and the panel's assertions to the contrary are simply incorrect. Therefore, at best, the panel's extraneous discussion can only be characterized as obiter dicta. The critical aspect of the report is that the panel did not limit itself to the measure before it B the identified provision of U.S. law B but instead examined a hypothetical measure. The panel acted as if this were either a complaint brought by the United States against a hypothetical Canadian export restraint, or a complaint by Canada against a hypothetical US countervailing duty proceeding involving a hypothetical product and a hypothetical export restraint. Indeed, the panel even had trouble identifying what its hypothetical measure was. Because there was no actual export restraint before it, it had to construct one, and chose to identify its hypothetical export restraint by relying on the definition of export restraint used by Canada. Thus, the panel's explanation that it was examining the U.S. measures in a particular "substantive context" is groundless. There was nothing substantive regarding the hypothetical situations about which the panel speculated. Given Canada's panel request, the panel should have simply posed the following question: "Assuming for purposes of argument that an export restraint can never be a subsidy, do the U.S. measures require the U.S. to treat an export restraint as a subsidy, however defined?" That would have been a "substantive context." Had the panel taken this approach, there would have been no need to give an advisory opinion on the status of a measure not in existence and not before the panel. Finally, if there were any doubt as to the unprecedented nature of the panel report in this dispute, we would call Members' attention to the "Conclusions and Recommendations" section of the report, and paragraph 9.1, first tic, in particular. There, the panel restates its conclusion that an export restraint, as defined in this dispute, cannot constitute a financial contribution under the SCM Agreement. Mr. Chairman, the United States has examined the "Conclusions and Recommendations" section of every panel report issued under the DSU, and in every report save this one, a panel's conclusions always have been linked to one or more of the measures before the panel. This is the only report of which we are aware in which a panel has rendered a conclusion totally in the abstract. Thus, the panel's protestations to the contrary notwithstanding, the panel did not "apply" or "clarify" the SCM Agreement. Instead, it issued an "interpretation" of the SCM Agreement, a function which Article IX:2 of the WTO Agreement reserves to the Ministerial Conference and the General Council. Mr. Chairman, the United States' concerns are not mere "legalisms." In the view of the United States, all Members B regardless of their views on the substantive subsidy issue B should be concerned about this panel's usurpation of an authority reserved to Members. The WTO dispute settlement system is generally regarded as a success; some refer to it as "the jewel in the WTO's crown." Indeed, since the WTO was established in 1995, Members have invoked the dispute settlement procedures 235 times. However, as we all know, this very success has brought strains in terms of the resource burdens imposed on participants in the system. Moreover, the very success of the system has led to pressures on Members to explore the outermost boundaries of the system and the types of results that the system can generate. One such boundary was crossed in this case, an extremely important one. That boundary is the well-established principle that GATT, and now WTO, dispute settlement is designed to resolve disputes, not to generate advisory opinions on abstract, theoretical legal questions. By requiring that actual measures be identified in panel requests, and that legal findings relate to these actual measures, DSU Articles 6 and 7 prevent advisory opinions. If panels may opine on the implications of measures merely described in a panel request, without regard to the accuracy of that description or the actual existence of the measure described, then this fundamental purpose of Articles 6 and 7 would be undermined, and the dispute settlement system will then be open for business to provide advisory opinions. Members disagree on innumerable legal questions; one need only look to the minutes of various WTO committees to know this. However, if every such abstract disagreement were presented for resolution by panels and the Appellate Body, the system would be overwhelmed. In addition, such a system would produce poor decisions. The reluctance of legal tribunals, both municipal and international, to provide abstract advisory opinions is founded in part on the handicaps that face a jurist who tries to interpret and apply legal provisions based only on hypothetical situations, and in the absence of actual facts. Indeed, this may be why the Uruguay Round drafters created a separate mechanism in the SCM Agreement that allows Members to obtain a non-binding advisory opinion regarding the status of any measure as a subsidy. Now Members may be thinking that none of these dire scenarios could ever come to pass because one would have to have a bona fide measure before a dispute settlement case could be commenced. Not so. It would be an easy task for a Member seeking an advisory opinion to label some document or statement by another Member as a "measure" that it seeks to challenge. According to the panel in DS194, before a panel could find that the purported "measure" is not a measure at all within the meaning of the DSU, or that the measure does not mandate behavior alleged to be WTO-inconsistent, the panel first would have to opine on the relevant substantive obligations in order to provide a so-called "substantive context" for its analysis. Members also may be thinking that no Member of the WTO would bring such a frivolous case. Again, not so. The very case we are discussing constitutes Exhibit 1 for the proposition that WTO Members will seek to use the dispute settlement process to obtain advisory opinions. Again, we must reiterate that on the very issue dealt with by this dispute, Canada took the position in 1999 that US law was discretionary regarding the treatment of export restraints, but only one year later commenced a WTO dispute alleging that the same law had somehow become a mandatory measure. Mr. Chairman, this brings me back to my initial point; namely, that the United States has mixed views regarding this report. Even though the panel found in favor of the United States, we gave serious consideration to appealing the panel's decision to render an advisory opinion. However, we ultimately declined to do so for several reasons. First, the panel's ruling on the subsidy issue is clearly obiter dictum. In other words, as previously discussed, the panel's consideration of the subsidy issue was unnecessary to the decision in the case, because the outcome would have been the same regardless of the status of export restraints under the SCM Agreement. Furthermore, the panel's consideration exceeded its mandate. It is of no legal effect. In light of the fact that this portion of the panel report is obiter dictum and beyond the panel's authority, the United States ultimately concluded that no useful purpose would be served by asking the Appellate Body to reiterate what its jurisprudence to date already establishes; namely, that the obiter dictum of panels is non-binding, without legal effect, and moot. In addition, the panel's dictum was very narrow dictum, as the panel itself recognized that it was using a narrow definition of "export restraint", and that its conclusions would not necessarily apply to actual, real-world measures that might be encompassed by a different definition of the term. (Paras.8.15-8.17; 8.76.) Moreover, the parties, including the EC as a third party, agreed that this dispute concerned the issue of export restraints operating independently of other related government measures, and not in tandem with another government measure. Finally, we are confident that future panels will decline to emulate this panel's actions. The panel's justifications for what it did are so manifestly transparent and wrong, we believe that future panels will abide by the Appellate Body's repeated admonition that the function of panels in the WTO dispute system is to resolve disputes, and not to make law. In conclusion, in light of the fact that the erroneous part of the panel report has no legal effect, the United States can support the report's adoption.
The United States has been following this case with interest, and we are hopeful that this decision will assist Canada and Brazil in finding a way to resolve their differences. I would like to speak briefly about two aspects of the panel's decision relating to export credit practices and item (k) of the SCM Agreement's Illustrative List of Export Subsidies. First, the panel states (at para. 5.61) that the ordinary meaning of the second paragraph of item (k) suggests that export credit practices that conform with the interest rate provisions of the OECD Arrangement are export subsidies, but are nevertheless not prohibited. To clarify, such practices are subsidies only if they confer a benefit on the recipient. Depending on the terms available in the marketplace, they may not always do so. Second, on a more substantive note, the panel's conclusions on the interrelationship between item (k) and the matching provisions of the OECD Arrangement cause us great concern from a systemic standpoint. The Panel concluded that the item (k) safe harbor is not available to parties who match export financing offers that derogate from the terms of the OECD Arrangement. The panel's interpretation threatens to undercut Arrangement and SCM Agreement disciplines on export subsidies. The ability of Members to match non-conforming offers creates an incentive for other Members not to make non-conforming offers, lest they find themselves in a subsidy "race to the bottom." Interpreting the second paragraph of item (k) in a way that prohibits Members who are concerned about respecting their obligations under Article 3 of the SCM Agreement from matching non-conforming offers removes any such incentive. Conversely, an interpretation of the second paragraph of item (k) that would shield matching offers from the Article 3 prohibition, particularly when the initial non-conforming offers are not themselves shielded, would provide an especially strong incentive against making non-conforming offers in the first instance. The panel's interpretation invites an increase in market
distortive subsidy practices, an outcome which is directly contrary
to the entire premise of the SCM Agreement. Mr. Chairman, although the United States is pleased that the panel and the Appellate Body rejected many of Japan's challenges to the WTO-consistency of the U.S. antidumping duty measures, this dispute nevertheless has given the United States reason for serious concern. We will turn to those systemic issues in a moment, but first we will address briefly the matters specific to this dispute. Perhaps foremost among those is the panel's rejection of Japan's claim that the investigation was conducted in a biased and unreasonable manner. Additionally, the panel and Appellate Body upheld the provisions of U.S. law concerning the circumstances under which antidumping duties can be imposed at the preliminary stage of the investigation and the analysis of captive production. Finally, the United States was satisfied with the panel's determination that the causation analysis conducted by the United States relating to injury from subject imports is consistent with the requirements of the Antidumping Agreement. The Appellate Body, however, declined to reach the latter issue while rejecting the panel's construction of the causation requirements under the Agreement. We will return to that last issue shortly. Mr. Chairman, I would now like to address our concerns. I would first like to raise a systemic concern. While the Appellate Body properly rejected Japan's claim that the "captive production" provision of the U.S. antidumping duty statute is facially inconsistent with the Antidumping Agreement, the Appellate Body went on, however, to address an issue that Japan did not appeal: whether the application of the captive production provision in the hot-rolled steel antidumping investigation was consistent with the Antidumping Agreement. By taking up an issue that no Member had brought to it for resolution, the Appellate Body exceeded the bounds of its authority. The second area of concern, Mr. Chairman, is the Appellate Body's discussion of the standard of review set out in Article 17.6 of the Antidumping Agreement. Article 17.6 (i) provides that a panel is not to overturn the evaluation of a national authority, even though the panel itself might have reached a different conclusion, if the panel determines that the authorities' establishment of the facts was proper and its evaluation of those facts was unbiased and objective. Similarly, Article 17.6 (ii)requires that in instances in which a panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find a national authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations. The United States is concerned that the Appellate Body's discussion of Article 17.6 gives entirely insufficient emphasis to the distinct nature of review provided for in the Antidumping Agreement. While the Appellate Body acknowledges in paragraph 59 of its report that the second sentence of Article 17.6(ii) presupposes that application of the rules of treaty interpretation in Articles 31 and 32 of the Vienna Convention could give rise to at least two interpretations of some of the provisions of the Agreement, it then seems to diminish the importance of this text. Later in the report, the Appellate Body states that Article 17.6 only departs from the general review provided for in Article 11 of the DSU by allowing a panel to find a measure in conformity when it rests upon one of the permissible interpretations. This distinction in the standard of review should not be minimized and any suggestion that the rule provided for in Article 17.6 is not materially different from that generally provided for in the DSU ignores the identification of Article 17.6 as a "special or additional rule and procedure" in Article 1.2 of the DSU. The specific and unique provisions in Article 17.6 were deliberately included to provide a special standard of review in antidumping investigations intended to prevent panels from second-guessing the factual and legal determinations made by national authorities, and were an important part of the balance of rights and obligations assumed by the Members in agreeing to the Antidumping Agreement. They cannot be minimized or eliminated by dispute settlement reports. In this connection, the Appellate Body aptly observed in its report in Hormones that to adopt a standard of review that is not clearly rooted in the text of a specific agreement, may well amount to changing the finely drawn balance in the competences conceded by the Members to the WTO and those jurisdictional competences retained by the Members for themselves; and, as the Appellate Body stated, neither a panel nor the Appellate Body is authorized to do that. Moreover, any such result, of course, is proscribed by Article 3.2 of the DSU which instructs that "[r]ecommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements." Mr. Chairman, the third area of serious U.S. concern is the causation analysis in antidumping investigations, specifically, the requirement that injury due to other causes should not be improperly attributed to dumped imports. The United States notes that the panel found WTO-consistent the causation analysis of the United States in the hot-rolled steel investigation, and notes that the Appellate Body declined to make findings on whether that analysis was WTO-consistent, but not before rejecting the panel's construction of Article 3.5 of the Agreement. The United States does not believe that the Appellate Body should have reversed the panel's findings regarding the required showing of causation. The panel appropriately concluded there is no requirement in the Agreement to isolate the injurious effects of factors other than dumped imports; the only requirement is to ensure that any injurious effects resulting from other causes not be attributed to dumped imports. In this respect, the panel appropriately followed the sound reasoning of the GATT panel report in Atlantic Salmon, which was adopted before the Antidumping Agreement came into force and is therefore part of the GATT acquis. As such, it created a legitimate expectation among Members concerning the interpretation of the causation requirement: this report reflected Members' understanding of that obligation at the time the United States agreed to the Antidumping Agreement. Further, the United States presented a detailed analysis to the Appellate Body of why the causation analysis reflected in the Wheat Gluten and Lamb Appellate Body Reports involving the Safeguards Agreement are different from that in the Antidumping Agreement. These are two separate agreements, with different objects and purposes and with wholly different texts pertaining to the question of causation and the manner of establishment of a causal link between imports and injury. The Appellate Body made no reference at all to these important differences and appears to have disregarded the interpretative principle that the use of distinct language connotes an intended difference in meaning. Instead, the Appellate Body's findings seem to depend solely on the similarity of the non-attribution texts in the two agreements, failing both to acknowledge the distinct context for that language and to ascribe any meaning or importance to the detailed direction regarding causation found in the Antidumping Agreement, but absent from the Safeguards Agreement. Considering the importance of this issue to Members' rights under the Antidumping Agreement, the Appellate Body should have explained why no consideration was due to paragraphs 3.2 and 3.4 of the Agreement in establishing the relevant causation analysis. Finally, the Appellate Body seemingly construed the causation requirements of the Agreement to require what will be in many circumstances virtually impossible despite rules of treaty interpretation that instruct that treaty language should not be made a nullity. Thus, while acknowledging the difficulties of trying somehow to separate and distinguish the injurious effects of different factors, which may be intertwined and produce a combined effect, the Appellate Body then dispensed with such concerns, by saying that B quote B "this is what is envisaged by the non-attribution language." In the view of the United States, whether a particular analysis is feasible or not is very relevant to the manner in which the Agreement should be construed, particularly where the text is susceptible to an interpretation which make its provisions meaningful. The fourth area of concern, Mr. Chairman, involves the U.S. provision of law on the calculation of antidumping duties applied to companies that were not investigated B called the "all others" provision. We will not re-argue our case here, Mr. Chairman, other than to say that the Antidumping Agreement does not explicitly require that margins containing any amount of "facts available" be excluded from the "all others" calculation: it is silent as to the amount of "facts available" that triggers exclusion. Given that the Antidumping Agreement is ambiguous on the degree of facts available which requires exclusion, Article 17.6 requires that permissible interpretations such as that of the United States be accepted. Further, the Appellate Body resolved the ambiguity in a way that does not foster predictability in the calculation of the "all others" rate and that does not fully take into account the practical side of calculating an "all others" rate. Finally, Mr. Chairman, the Appellate Body was right to find that the Antidumping Agreement permits Members to base normal value on sales in the home market by the exporter's domestic affiliates, and not just on direct sales by the exporter. However, the United States believes that the Appellate Body was mistaken in upholding the panel's findings with respect to various other aspects of how the United States calculates antidumping duties, including the use of "facts available" in this specific investigation, as well as the test applied to determine whether related party sales are at arm's length. In conclusion, Mr. Chairman, the United States believes that the panel and Appellate Body were correct to reject the broad challenge to investigations under the U.S. antidumping duty law. The United States has serious concerns, however, about some of the findings in this case. The Antidumping Agreement is a critical part of the balance of rights and obligations assumed by WTO Members, and it is critical that dispute settlement findings maintain this balance.
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