Jean Monnet Center at NYU School of Law


III. Overview of the reports

A. The panel reports

1. Procedural and other preliminary issues

(a) No `enhanced' third party rights

The EC and Japan reserved third party rights in each other's case. Both Japan and the EU requested furthermore to be granted additional rights, which would allow them full participation in the proceedings.51 They referred to the grant of such `enhanced' third party rights in the Hormones-case.52

The Panel noted that although the DSU does not expressly provide for these enhanced rights, nothing in the DSU prohibits panels from granting such rights. It recalled that in the Hormones case, the AB confirmed that granting such rights was within the discretion of the Panel under art. 12.1 DSU.53 On the other hand, it noted that the DSU differentiates in terms of rights between main parties and third parties and that this principle should be adhered to in order to respect the spirit of the DSU. The similarity between the Hormones case and this case, namely the review of separate complaints addressing the same subject matter by different panels of the same composition, was not sufficient to warrant the grant of additional third party rights here.54

(b) Methodology for examination of the 1916 Act and its surroundings

In these cases a piece of domestic legislation was contested as such, not a particular instance of application. Furthermore, this law had been in existence for over eighty years. It was enacted in a particular historical, cultural, legal and economic context and has over the years been applied - be it not that often - by a number of courts and commented upon by government officials. The relative relevance of these different sources - text, legislative history, case law and other pieces of information - in assessing the 1916 Act was highly contested. Therefore, a crucial methodological question the panel had to address anew was how to address domestic legislation when reviewing its compatibility with the WTO agreements.

First, the Panel referred to its duty under 11 DSU to make an `objective assessment of the facts before it'. Furthermore the panel considered that both art. 3.2 DSU and the practice of the AB make it clear that it should develop its approach on the basis of that of international courts in similar circumstances.55

In general the Panel held that the understanding of a law under review must start with an analysis of its terms. Even if the text were found clear on its face, it would nevertheless have to have regard to the interpretation by US courts and other US authorities. Otherwise it might develop an understanding of the law different from the way it is actually understood and applied by the US authorities, which would be contrary to its duty under art. 11 DSU.56 Referring to the AB's statements in its report in India - Patents (US)57, it further held that it needed not to accept at face value the characterization that a respondent Member attaches to its law.58 Rather, a panel may analyze the operation of the domestic legislation and determine whether the description of the functioning of the law, as made by the respondent Member is consistent with the legal structure of that Member.59

The Panel went on to determine how it would consider the case law pertaining to the 1916 Act on which the Parties relied. Referring to ICJ and PCIJ jurisprudence60 and the absence of any prohibition to do so in the DSU or the AB's practice, it considered that it was entitled to weigh the jurisprudence of the US courts. The Panel emphasized that this would not require it to develop its own interpretation of US law, but simply to select among the relevant judgments the interpretation most in conformity with the US law as necessary in order to resolve the matter before it. It would respect the formal hierarchy of court decisions in the US federal system to the extent that applicable.61 Moreover, it should also determine which argumentation is more convincing, not only on the basis of the quality of the reasoning but also on what the panel would perceive to be in line with dominant interpretation.62 If the evidence were to be found in equipoise, the Panel would follow the interpretation that favors the party against which the claim was made, considering that the claimant did not convincingly support its claim.63

Next the Panel turned to the historical context of the 1916 Act. It considered that it should pay attention to the legislative history as US courts do.64 The Panel found it also appropriate to have regard to the political and economic context as it emerges from public declarations of the time or studies of the period. When considering the historical evidence, the Panel noted it should not lose sight of the degree of development of antitrust and trade law concepts at the time of the enactment of the 1916 Act.65

The parties had also relied on certain statements made by public officials. In the EC case, the Panel first considered whether these statements could actually generate legal obligations for the United States. Applying the criteria developed by the ICJ66, it found that they could not.67 The Panel also held that these statements could not be regarded as admissions of fact.68 For these reasons, the Panel determined that it should use these statements only insofar as they confirm other evidence.69 The Panel treated in the same way certain other documents relied upon by the Parties, such as a the 1995 Antitrust Enforcement Guidelines For International Operations issued by the US Department of Justice and the Federal Trade Commission.70

(c). Relationship between art. III:4 and VI GATT

Both the EC and Japan had put forward claims based on art. VI and art. III:4 GATT.71

The Panel thus had to decide whether to begin its analysis with article VI or art III:4.

The Panel considered that art. III and VI are based on different premises. Art. III operates on the basis of a comparison between the treatment granted to domestic and imported products respectively, once the latter have been cleared through customs; it therefore applies to internal measures, irrespective of the objective of the measures. In contrast, the basis for applicability of art. VI to domestic legislation is not the type of measures, since other practices than dumping may lead to the imposition of duties, but the type of trade practice at the origin of the measure.

Then the Panel referred to the general principle of international law, recognized e.g. by the Permanent Court of International justice in the Serbian Loans case (1929) 72 and recalled by the AB in the Banana-case73, that when applying a body of norms to a given factual situation, one should consider the situation under the norm which most specifically addresses it.74 The Panel noted that the parties agreed that the 1916 Act addresses transnational price discrimination and that dumping as addressed by art. VI GATT is a form of transnational price discrimination. The terms of art. III:4 are less specific than those of art. VI when it comes to the notion of transnational price discrimination. Therefore the Panel decided to consider the claims based on art. VI first.

(d) Relationship between art. VI GATT and the Anti-dumping Agreement

In the Japan case, the Panel also explicitly determined how it should read the relationship between art. VI GATT and the Anti-Dumping Agreement. It concluded that it could make findings under the provisions of art. VI GATT, without at the same time having to make findings under the provisions of the Anti-Dumping Agreement, and vice versa. However, art. VI GATT and the Anti-Dumping Agreement represent an inseparable package of rights and disciplines. This requires interpreting each of the provisions invoked in conjunction with the other relevant provisions of this `inseparable package'.75

(e) Jurisdiction to hear claims against the 1916 Act as such

The US objected in both cases against the jurisdiction of the panel to hear claims directed against the 1916 Act as such. It argued that art. 17.4 Anti-Dumping Agreement as interpreted in certain paragraphs of the AB's report in the Guatemala - Cement case76 interpreting this provision, restrict the Panel's jurisdiction to claims against the specific antidumping actions enumerated in that provision.

The panel in both cases first considered that art. 17 does not replace the DSU as a coherent system of dispute settlement for the Anti-Dumping Agreement.77 Further, art. 17.2 and 17.3 do not limit the scope of possible consultations under the Anti-Dumping Agreement. Turning to art. 17.4, it found nothing in that provision expressly limiting the scope of application of the DSU except in relation to the specific issue of Member's anti-dumping actions. The Panel found confirmation of this reading in art. 18.4 Anti-Dumping Agreement.78 The Panel read this article as requiring the continuous conformity of the Members' anti-dumping legislations as of the date of entry into force of the WTO Agreement, whether that legislation is applied or not. If dispute settlement could be initiated in relation to some specific anti-dumping action only, i.e. if the conformity of a domestic anti-dumping law could only be reviewed when that law is applied the provisions of article 18.4 would be deprived of their meaning and useful effect.

The AB report in the Guatemala - Cement case did not contradict but confirm this reading. The AB's holding that a specific anti-dumping action must be identified as part of the matter referred to the panel was clearly limited to disputes relating to the initiation and conduct of anti-dumping investigations.79

Finally, the panels held that its finding that art. 17.4 did not preclude it from reviewing anti-dumping laws as such applied a fortiori with respect to art. VI GATT.

2. Applicability of art. VI GATT 1994

The views of the Parties as to applicability were diametrically opposed. Japan80 and the EC81 argued, in short, that art. VI was applicable to the 1916 Act because this act addresses `dumping' as defined in art. VI:1 GATT 1994. The US contested the applicability of art. VI GATT. It argued that art. VI only addresses actions taken for the purpose of offsetting or preventing injurious dumping, by imposing anti-dumping duties. The 1916 Act was not such a law, because it only addresses `a specific form of price discrimination with predatory intent' and does not impose anti-dumping duties, but damages. For the US, the EC and Japan's interpretation would mean that the GATT anti-dumping provisions govern any law based upon the concept of international price discrimination regardless of any other elements required to be proven; the text of neither art. VI GATT nor the Anti-dumping Agreement provided support for such a broad interpretation. 82

The Panel first assessed the scope of art. VI. It concluded that the key to the applicability of art. VI to the 1916 Act is whether that law objectively addresses `dumping' within the meaning of that article.83 Although art. VI provides that `dumping' can be subject to sanctions only if it causes material injury, this does not affect the fact that, on the basis of the structure of art. VI GATT, dumping within the meaning of the definition of art. VI:1 has to be found in the first place.84 For `dumping' to exist the following conditions must be met: (i) products must be imported and cleared through customs (introduction into the commerce) (ii) those imported products must be priced lower than their `normal value' as further defined in that article.85

The Panel then considered whether the 1916 Act was such a law. In accordance with the methodological approach to domestic law it had carved out as a preliminary issue, the Panel first addressed the text of the 1916 Act. It found that the price discrimination test in the Act was sufficiently similar to the art. VI:1 `dumping' definition.86 On the US objection that the test in the 1916 Act has additional requirements compared with art. VI, the panel responded that conditions, which make the establishment of dumping more difficult, do not make the price discrimination test fall outside the scope of art. VI.87 The Panel further found that the terms of the `dumping' definition were sufficiently broad to encompass certain other textual differences.

The Panel further considered that the specific intent requirement of the 1916 Act did not affect the basic objective requirement of price discrimination.88 In the same line of reasoning, the Panels also considered that it did not matter that the 1916 Act may address effects of `dumping', different from those enumerated in art. VI. Also, the Panels rejected the US argument that the existence of an antitrust objective in a law addressing cross-border price discrimination removed it from the scope of art. VI. Equally irrelevant was the circumstance that the 1916 Act does not impose anti-dumping duties.89

As a next step in its analysis, the Panel considered whether the historical context and legislative history of the 1916 Act contained evidence that it should amend its understanding of the price discrimination test of the 1916 Act, based on its text alone. The Panels considered that this was not the case.90 As a last step in its analysis, the Panel considered the impact of the US case law91 related to the 1916 Act. As a preliminary remark, the Panel pointed out that it did not consider the classification of the Act by US courts of great importance and considered that it would only have regard to the case law insofar as it addressed the price discrimination test. After reviewing all the case law relied on by the Parties, it found nothing in the case law warranting amendment of its understanding of the price discrimination test.

Thus the Panel had arrived at the conclusion that art. VI GATT was applicable to the 1916 Act. According to the Panel this also implied applicability of the Anti-Dumping Agreement.

Then the Panel considered the final argument made by the US that the Panel's interpretation of the scope of art. VI GATT was so broad that it would apply to all antitrust laws when such laws address situations of transnational price discrimination.92 It first reminded that its mandate was to review the conformity of the 1916 Act with the WTO Agreement, not to address the general issue of the relationship between trade law and antitrust law. 93 Furthermore, the panel was not convinced that its findings would have the effect the US referred to. Transnational price discrimination of the type covered by the `dumping' definition of art. VI:1 was only one narrowly defined type of price discrimination that may be considered by antitrust law and in particular did not cover purely domestic price discrimination. Moreover, it was the understanding of the Panel that price discrimination covered by art. VI:1 would not be sufficient as such to form the basis of a claim of violation of antitrust law. According to the panel, under antitrust law it was necessary to prove other specific practices (such as price conspiracy or abuse of a dominant market position), of which international price discrimination may at most constitute supporting evidence. 94

3. Application of the mandatory vs. discretionary law distinction

In relation to their review of the question of applicability of art. VI GATT to the 1916 Act, the Panels in both cases addressed a defense invoked by the United States, based on the distinction between mandatory and discretionary legislation.95 The United States argued that the 1916 Act was non-mandatory or discretionary legislation within the meaning of the GATT/WTO practice, because (i) with respect to both civil and criminal proceedings, US courts have interpreted in the past and/or could in the future interpret the 1916 Act in a manner consistent with the WTO obligations of the United States and (ii) the US Department of Justice has discretion to initiate or not criminal proceedings under the 1916 Act. Since the 1916 Act thus did not mandate WTO-inconsistent action, it cannot itself be WTO-inconsistent, according to the US.

The Panel first held that it would address these arguments not as questions of admissibility of the claims raised by the EC and Japan, but as part of its review of the claims under art. VI and if necessary art. III:4.96
The Panel in both cases considered the first prong of the United States' argument to be merely a question of assessing the current meaning of the law instead of one drawing on the mandatory/non-mandatory distinction. Regarding this aspect, the US had relied heavily on the Panel report in United States - Tobacco case, where the panel allegedly had found that a law did not mandate GATT-inconsistent action where the language of that law was susceptible of a range of meaning, including meanings permitting GATT-consistent action.97 According to the Panel the only similarity between that case and the ones at hand was that in both cases the question interpretation of a possibly ambiguous term was at issue. In the US-Tobacco-case, however, the ambiguous term at issue had not yet been applied, contrary to what was the case for the 1916 Act. In such a case the possibility of future WTO consistent application is relevant. It makes the burden of proof for the claimant more demanding, in that he must also prove intended future inconsistent application for its claim to succeed.98 In the cases at hand such a more extensive burden of proof did not apply.99

According to the Panel, the mandatory/non-mandatory distinction was more appropriately related to the second prong of the US argument.100 101 The answer centered in both cases on the relationship between the mandatory/non-mandatory distinction in GATT/WTO practice and art. 18.4 Anti-dumping Agreement which requires Members to bring their anti-dumping laws into conformity with the Anti-dumping Agreement as of the date of entry into force of the WTO Agreement. In both cases, the Panel referred to the EC- Audio Cassettes cases in which the panel had affirmed its mandate under art. 16.6 Tokyo Round Anti-Dumping Agreement to review as such Member's legislation to which these agreements applied. The latter provision was the direct predecessor of and nearly identical in wording to art. 18.4 Anti-Dumping Agreement. Therefore the Panel considered that the reasoning in the EC - Audio Cassettes report should be applied in the cases at hand. Paraphrasing the panel in that case102, it held that a different interpretation of art. 18.4 would undermine the obligations contained in that article and would be contrary to the general principle of useful effect by making all the disciplines of the Anti-Dumping Agreement unenforcible, as soon as a Member would claim that the investigating authority has discretion to initiate or not an anti-dumping investigation.103

In the Japan case, the Panel added to this a more formal rationale, based on general principles of hierarchy of norms of international law. The notion `mandatory/non-mandatory legislation' is a `generally recognized concept of international law' - maybe a rule of international customary law - whereas art. 18.4 Anti-dumping Agreement is a treaty provision. Both norms conflicting, the treaty provision has to prevail.104 The Japan Panel concluded more boldly than it had done in the EC case: `to the extent that art. 18.4 requires the conformity of the 1916 Act with the Anti-Dumping Agreement as of the date of entry into force of the WTO Agreement for the United States the notion of mandatory/non-mandatory legislation is no longer relevant in determining whether the Panel can or cannot review the conformity of the 1916 Act with the Anti-Dumping Agreement'. 105

Accordingly, in both cases the Panel rejected the United States' defense.

4. Violations of the anti-dumping provisions

(a) The injury requirements of art. VI:1 GATT

Art. VI:1 GATT provides that dumping is to be condemned if it causes or threatens material injury `to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry'. Despite the strong resemblance of this formula with the first part of the intent requirement of the 1916 Act, the Panel found that the 1916 Act violated art. VI:1 because the 1916 Act did not provide for the actual injury requirements set out in art. VI:1.106

(b) The type of anti-dumping measures allowed under the GATT 1994

Both the EU and Japan claimed that the 1916 Act violated art. VI:2 GATT 1994107 and art. 18.1 Anti-Dumping Agreement108 because it provides for other sanctions than anti-dumping duties 109. The US disagreed and moreover reiterated its view that art. VI only governed laws and measures that address dumping through the imposition of anti-dumping duties.

The Panel started its analysis with a review of the ordinary meaning of the words of art. VI:2 first sentence GATT. The US argued that the use of the term `may' in that provision showed that Member had the choice to impose other measures than anti-dumping duties. The panel conceded that without the addition of the word `only' the term `may' could be read as merely giving a choice between duties and other measures. However, such a reading disregarded the immediate context of the term: anti-dumping duties `may be imposed in order to offset dumping'. According to the panel, this indicated that the purpose of anti-dumping couldn't be to impose punitive measures. This was enough for the panel to conclude that the ordinary meaning of the words of art. VI:2 , first sentence support the view that the anti-dumping duties are the only type of measures allowed under art. VI GATT.110

The panel in both cases found this interpretation confirmed by the context of art. VI, in particular art. 1 and 18.1 Anti-Dumping Agreement.

According to the panel art. 18.1 Anti-dumping Agreement limited legitimate anti-dumping measures to those expressly provided for in art. VI GATT and the Anti-Dumping Agreement. Apart from provisional measures and price undertakings, duties are the only type of remedies foreseen in the Anti-Dumping Agreement. The panel did not agree with the US argument that footnote 24 to art. 18.1 showed that a Member was not `locked' into levying anti-dumping duties when faced with a factual situation constituting injurious dumping.111

Regarding art. 1 Anti-Dumping agreement112, the panel in the Japan case similarly held that this provision limits legitimate anti-dumping measures to duties.113 It held that the term `anti-dumping measure' in that article must be read as "a measure aimed at counteracting dumping as such, as defined in article VI:1 GATT". Such a measure can only be taken in accordance with the WTO anti-dumping provisions, which refer to no other remedy than anti-dumping duties.114

The panel in the Japan case then considered that the approach proposed by the US, which would allow Members to take any type of measure against dumping as such outside the framework of article VI, subject to the discipline of the other provisions of the WTO Agreement, was incommensurate with the object and purpose of the WTO and GATT. Although the preamble of the WTO Agreement and the GATT do not in particular refer to anti-dumping, the panel found it relevant that the both the WTO and GATT preambles referred to `the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations and that the WTO preamble refers to the development of a "more viable and durable multilateral trading system".115 In both cases the Panel finally found its interpretation confirmed by the travaux préparatoires of the WTO anti-dumping provisions.116

For these reasons, the panel concluded that art. VI:2 GATT 1994 provides that only measures in the form of anti-dumping duties may be applied to counteract dumping as such. By providing for fines, imprisonment and treble damages, the 1916 Act violates this provision and art. 18.1 of the Anti-Dumping Agreement.

(c) Other violations

In both cases the Panel considered whether it had to apply the principle of judicial economy and therefore not further consider other claims under the anti-dumping provisions. According to the panel in the EC case, changing the 1916 Act to include an injury requirement and to provide only for duties instead of criminal and civil penalties was maybe not sufficient to assure WTO compliance. Therefore, further findings under the Anti-Dumping Agreement would probably further assist the DSB in making sufficiently precise recommendations and rulings in order to assure prompt compliance.117

A first set of additional claims made by Japan addressed the textual differences between the 1916 Act and the WTO anti-dumping provisions in defining the relevant price benchmarks and the fact that the text of the 1916 Act did not provide for protection against currency fluctuations for those against whom dumping is alleged, unlike 2.4.1 Anti-Dumping Agreement. Here the Panel considered the possibility of interpreting the 1916 Act in conformity with the WTO provisions crucial, in not finding a violation. First, as to both parts of the claim, the Panel held that the textual differences could very well be overcome by interpretation. Secondly, it took note of the US explanation of the so-called Charming Betsy doctrine118 and Japan's failure to show circumstances that would bar the US courts to apply this doctrine here. Thirdly, Japan failed to show any past court decisions that applied inconsistent interpretations.119

However in both cases, the panel found violations of art. 4 and 5 Anti-Dumping Agreement. First, proceedings under the 1916 Act can be initiated by `any person injured...' This constituted a per se violation of the requirement under art. 4.1, 5.1 and 5.4 Anti-Dumping Agreement that proceedings be made on behalf of the domestic industry and supported by a minimum proportion of the domestic industry.120 Moreover, under the 1916 Act there is no obligation to respect the obligations of art. 5.2 Anti-Dumping Agreement in terms of the type of evidence to be included in an application. In the EC case, the panel also found a violation of art. 5.5 in that the 1916 Act does not provide for a mechanism of notification to the exporting country.

5. Other claims

Both the EC and Japan had also made claims based on art. III:4 and XI GATT. The panel decided to exercise judicial economy in this respect and therefore did not further to consider these claims.121 Finally, the panel did consider the claim made under art. XVI:4 GATT. The panel held that by violating art. VI GATT, the 1916 Act automatically violated art. XVI:4. Therefore it did not feel it had to apply judicial economy regarding this aspect of the case. 122

6. Recommendations

Art.19.1 of the DSU provides that in case of a finding of inconsistency, Panels shall recommend that the Member concerned bring the measure into conformity. A panel may also suggest ways in which the Member could achieve this. On the basis of this article, the Panel refused to grant directly Japan's request that it would recommend the repeal of the 1916 Act. However, it suggested that repeal might be one way to achieve conformity. This suggestion seemed justified given the very limited practical impact of the 1916 Act compared with other US antitrust and anti-dumping instruments, combined with the concern expressed in the fourth sentence of art. 3.7 DSU, that in the absence of a mutually agreed solution, the first objective of dispute settlement is to secure the withdrawal of the measures found to be inconsistent.123

In the EC case, the panel restricted itself to a general recommendation.124

B. Overview of the Appellate Body report

1. Enhanced third party rights125

The AB confirmed the refusal by the panel in both cases to grant `enhanced' third party rights. It emphasized that under the DSU, as it currently stands, third parties are not entitled to such rights. Referring to the EC-Hormones report, the AB considered that it is a matter of discretion for the panel whether to grant `enhanced' third party rights. Such discretion must be exercised, with particular regard for the necessity of ensuring due process to all parties.126

2. Jurisdiction of the panel to hear claims against the 1916 Act as such

(a) General

In the EC case, the US did not raise any jurisdictional objection until the stage of interim review. The panel stated that "there would be a number of reasons to reject the US argument as untimely"127, but considered the objection nevertheless and rejected it. The US appealed on this point.

(b) Timely objection against jurisdiction

The EC argued before the AB that the appeal of the US on this point should be rejected not only because it was not well founded, but also because the US objection of jurisdiction was not timely raised. It invoked the principle that `procedural objections must be made in a timely manner and in good faith'. 128

The AB rejected the argument of untimeliness. It agreed with the panel that the interim review stage was not an appropriate point in the proceedings to invoke jurisdictional objections for the first time. Such objections should be raised as early as possible and panels must insure that requirements of due process are met. However, it also agreed with the Panel that some issues of jurisdiction may be of such a nature that they have to be addressed by the Panel at any time.129 Referring to a number of opinions of other international tribunals130 the AB considered that it is "a widely accepted rule that an international tribunal is entitled to consider the issue of its own jurisdiction on its own initiative and to satisfy itself that it has jurisdiction in any case that comes before it".131 Objections of jurisdiction are not simply procedural objections, since the vesting of jurisdiction is a fundamental prerequisite for lawful proceedings.132

(c) Jurisdiction to consider claims against the 1916 Act as such

The AB confirmed the Panel's holding on the basis of the following reasoning. For the DSU to apply to claims that the 1916 Act is inconsistent with article VI GATT and the Anti-Dumping Agreement, a legal basis to bring the claims must be found in the GATT and the Anti-Dumping Agreement respectively. Insofar as the claims of the EC and Japan were based on art VI GATT, such a legal basis is found in art. XXIII:1(a). Prior to the entry into force of the WTO agreement it was firmly established that this article allowed a party to challenge legislation as such, independently from the application of that legislation in specific instances. The AB noted that this practice has continued after the entry into force of the GATT.133 The legal basis for bringing claims under the Anti-Dumping Agreement is found in art. 17 of that agreement. The possibility to challenge legislation as such under art. XXIII should be regarded as applying also to claims under art. 17, unless this possibility is excluded. No express exclusion could be found in art. 17 or elsewhere in the Anti-dumping Agreement. Nor could an implicit exclusion be found in art. 17. Art. 17.4 of the Anti-dumping Agreement and the interpretation thereof in Guatemala - Cement134, on which the US relied, did not suggest that review of anti-dumping legislation as such was precluded. In that case, the AB had simply found that for Mexico to challenge Guatemala's initiation and conduct of the anti-dumping investigation, Mexico was required to identify one of the three anti-dumping measures listed in art. 17.4. Since it did not do so, the Panel in that case did not have jurisdiction.135

Like the Panel the AB found its conclusion confirmed by art. 18.4.136 It also found support in art. 18.1. This article provides that no specific action against dumping of exports from another Member can be taken except in accordance with the provisions of GATT 1994 and the Anti-dumping Agreement. If art. 17.4 were read as in any case restricting the jurisdiction of the Panel to claims against the specific measures referred to in that provision, it would be impossible to test the consistency with art. 18.1 of Member's legislation providing for a response to dumping that does not consist of one of those types of measures or of particular responses thereunder.137

3. Mandatory and discretionary legislation

On appeal, the AB upheld the conclusion of the panel. First, as a terminological matter, it considered the term `discretionary' more appropriate than `non-mandatory'. Next, it noted that the relevant discretion, for purposes of distinguishing between mandatory and discretionary legislation, is discretion vested in the executive branch of government. It considered the discretion enjoyed by the US Department of Justice as not of such nature or breadth as to transform the 1916 Act into discretionary legislation and therefore agreed with the Panel's finding on this point.138

Then, the AB considered certain aspects of the Panel's reasoning the US took issue with. First, it confirmed the Panel's qualification of the mandatory vs. discretionary argument as a defense, the burden of proof for which rested with the US.139 Most important was the US critique on the conclusion of the Panel in the Japan case quoted above, "[t]hat the notion of mandatory/non-mandatory legislation is no longer relevant in determining whether the Panel can or cannot review the conformity of the 1916 Act with the Anti-dumping Agreement". The AB refused to answer the question whether indeed the `mandatory vs. discretionary legislation' distinction had become irrelevant for claims brought under the Anti-dumping Agreement or to consider whether art. 18.4 Anti-dumping Agreement had supplanted or modified the distinction, since these answers would have no impact on the outcome of the case. According to the AB the Japan panel need not have opined on the issue either.140

4. Applicability of art VI GATT and the Anti-Dumping Agreement to the 1916 Act

The AB upheld the panels' conclusion of applicability of art. VI GATT and the Anti-Dumping Agreement.

It first noted the definition of `dumping' in art. VI:1 and emphasized that this definition neither referred to a particular intent, nor to the injurious effects that dumping may have.141

Next, it considered that the question of applicability of art. VI to the 1916 Act depended in the first place on whether this provision regulates all possible measures that members can take in response to dumping. If it did not and art. VI regulates only the imposition of anti-dumping duties, then it would not be applicable to the 1916 Act.142

Although art. VI:2 only refers to anti-dumping duties, it does not specify that duties are the only anti-dumping measures Member-States are allowed to take.143 Like the Panel in both cases had done in its review of the violation claims based on art. VI:2, the AB then turned to the meaning of `may' in art. VI:2 GATT. Reading art. VI:2 in conjunction with art. 9 Anti-Dumping Agreement144, it found no support for the US' reading of the term as allowing for a choice between duties and other anti-dumping measures. Nevertheless, the AB was not convinced at this point in its analysis whether or not art. VI regulated all possible anti-dumping measures.145

Therefore it turned to art. 1 Anti-dumping Agreement, in particular the meaning of an `anti-dumping measure' in that article. The ordinary meaning of that phrase seemed to encompass all measures taken against dumping, without restriction to particular types of measures. Reading art. 1 together with art. VI seemed to imply that art. VI applied to all measures taken against dumping.146 The AB found further clarification in art. 18.1 Anti-Dumping Agreement. This provision contains a prohibition on the taking of `any specific action against dumping' when such action is not `in accordance with the provisions of GATT 1994, as interpreted by this agreement'. Considering the ordinar147y meaning of the words, the phrase `specific action against dumping' must, according to the AB at a minimum encompass action that may be taken only when the constituent elements of `dumping' are present.148 The `provisions of the GATT 1994, as interpreted by this agreement' must be read as referring to art. VI GATT, since this is the only provision interpreted by the Anti-Dumping Agreement. Footnote 24 to art. 18.1 confirmed, rather than contradicted this reading.

On the basis of all this, the AB concluded that art. VI is applicably to any `specific action against dumping', I.e. action that is taken in response to situations presenting the constituent elements of dumping.149

Next, considering the wording of the 1916 Act, the AB found that the constituent elements of `dumping' are necessary requirements for the imposition of criminal and civil penalties under this act. Therefore the 1916 Act provided for `specific action against dumping' and fell within the scope of art. VI GATT. 150

Finally, the AB agreed with the panels' holding that the applicability of art. VI automatically entailed applicability of the Anti-Dumping Agreement.151 152

5. Violation of art. VI:2 of the GATT 1994 and certain provisions of the Anti-Dumping Agreement

The US had appealed against all the findings of violations of the WTO anti-dumping provisions by the panel. However, it had based most of these appeals on the sole basis that art. VI and the Anti-Dumping Agreement were not applicable to the 1916 Act. Having upheld the conclusion of the panels as to applicability, the AB also upheld the findings of violation. Only the appeal against the finding of violation of art. VI:2 was left to be considered. The US argued that this provision only regulated the imposition of anti-dumping duties, leaving other measures to counteract dumping unadressed.

The AB upheld the Panel's finding. Referring to its own conclusions as to the applicability question, the AB held that the only measures allowed by art. VI, read together with the Anti-Dumping Agreement are definitive anti-dumping duties, provisional measures and price undertakings. By providing for criminal and civil sanctions, the 1916 thus violated art. VI:2. 153

6. Conditional appeals: Articles III:4 and XI GATT and article XVI:4 WTO Agreement

The EC and Japan had asked the AB to make a finding that the 1916 violated art. III:4, XI and XVI:4 GATT, in case it would decide to reverse the conclusions of the panel as to applicability of art. VI and the Anti-Dumping Agreement, cq. on the issue of the distinction between mandatory and discretionary legislation. Since the latter condition had not been fulfilled, the AB declined to rule on these `conditional appeals'.154

51 EC panel report, para. 6.29 et seq. and Japan panel report, para. 6.29 et seq. EC requested the right to be present throughout both substantive meetings of the Panel and to make a submission on each occasion, whereas Japan requested to receive all necessary documents - i.e. submission and written statements of the parties - and a right to attend all sessions of the second substantive meeting of the panel.

52 Appellate Body Report on European Communities - Measures Concerning Meat and Meat Products, adopted on 13 February 1998, WT/DS26/R (complaint by the United States), WT/DS48/R.

53 Id., para. 143.

54 Of primary importance was the decision in that case to deliberate concurrently in both cases, which in turn was premised on particular circumstances, such as the highly technical and factually intensive nature of the case, the fact that the panels had decided to hold one single meeting with the parties and the experts consulted pursuant to art. 11.2 SPS.

55 EC panel report, para. 6.39 and Japan panel report, para. 6.39.

56 EC panel report, para. 6.47 and Japan panel report, para. 6.47.

57 Appellate Body Report on India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R (complaint by US), adopted 16 January 1998, para. 65.

58 Related to this, a little further in the report the panel recalled with reference to panel report on EEC - Regulation on Imports of Parts and Components (adopted on 16 may 1990, BISD 37S/132, para. 5.6-5.7). that the mere description of or categorization of a measure by a Member should not be considered as a decisive factor for the application of the WTO Agreement to that measure. Such categorizations or descriptions may be valid under US law but not necessarily under WTO law. Therefore, it would not accept at face value the use of terms such as `anti-dumping' , `antitrust' or `predatory pricing' in court decisions, administrative documents or in academic works, when those terms are not further substantiated. (EC panel report, para. 6.58 and Japan panel report, para. 6.58).

59 EC panel report, para. 6.48-6.50 and Japan panel report, para. 6.48-6.50.

60 In particular ICJ, Elletronica Sicula S.p.A (ELSI) (United States of America v. Italy), ICJ Reports 1989, 47, para. 62: "Where the determination of a question of municipal law is essential to the Court's decision in a case, the Court will have to weigh the jurisprudence of the municipal courts, and `If this is uncertain or divided it will rest with the Court to select the interpretation which it considers most in conformity with the law;' (PCIJ, Brazilian Loans, Series Am Nos. 20/21, p. 124)".

61 Given the absence of any Supreme Court decision specifically addressing the interpretation of the 1916 Act, it would attach most value to circuit court of appeals decisions followed by district court decisions. The panel noted that this approach was insufficient when comparing decisions from different districts, because the hierarchy of interpretations only exists within the same circuit. The panel did not answer the question, but considered that it would first ascertain very carefully the comparability of the different decisions, before giving preference to one interpretation rather than another. EC panel report, para. 6.55 and Furthermore, it would allocate more weight to a final judgment than to an interim or `interlocutory' decision. EC panel report, para. 6.56 and Japan panel report, para. 6. 58.

62 Id.; the panel emphasized that this was consistent with US court practice that if a precedent is not binding, the weight afforded to it will depend on the persuasive value of the reasoning in the decision.

63 EC panel report, para. 6.57 and Japan panel report, para. 6.57.

64 EC panel report, para. 6.58 and Japan panel report, para. 6.58. Given the importance attached by US courts to this legislative history, the Panel also considered that terms used in 1916 would have to be understood in their historical and not in their current meaning, unless it would be shown that the US courts have done otherwise.

65 EC panel report, para. 6. 59 and Japan panel report, para. 6. 59.

66 The Panel referred in particular to ICJ, Nuclear Tests Case, judgments of 20 December 1974, ICJ Reports 1974, at . 253 and 457.

67 EC panel report, para. 6.62.

68 EC panel report, para. 6. 63 and Japan panel report, para. 6.61.

69 EC panel report, para. 6. 64 and Japan panel report, para. 6.62.

70 EC panel report, para. 6. 65 and Japan panel report, para. 6.63.

71 The EC had made the claim based on art. III:4 in the alternative, i.e. if the panel were to find that the 1916 Act was wholly or partly consistent with art. VI (see EC panel report, para. 6.67). Japan made the claims concurrently.

72 PCIJ, Series A, No.20/21, at 30

73 Appellate Body report on European Communities - Bananas, WT/DS27/AB/R, adopted on 25 September 1997, para. 204.

74 Japan report, para. 6.75.

75 Japan panel report, para-6.92-6.94.

76 Appellate Body report on Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico, adopted on 25 November 1998, WT/DS60/AB/R.

77 EC panel report, para. 5.21 and Japan panel report, para. 6.85, referring to para. 67 of the AB report in Guatemala - Cement.

78 Art. 18.4 reads: "Each Member shall take all necessary steps of a general or particular character to ensure no later than the date of entry into force of the wto agreement the conformity of its laws, regulations and administrative procedures with the provision of this Agreement as they may apply for the Member in question".

79 See para. 79 of the AB report in Guatemala - Cement (supra note 77) stating that: "we find that in disputes under the Antidumping Agreement relating to the initiation and conduct of anti-dumping investigations, a definitive anti-dumping duty, the acceptance of a price undertaking or a provisional measure must be identified as part of the matter referred to the DSB pursuant to the provisions of Article 17.4 of the Antidumping Agreement and art. 6.2 DSU" (emphasis added by the panel).

80 Japan Panel Report para. 6.109.

81 EC panel report, para. 6.92.

82 EC panel report, para. 6.93 and Japan panel report, para.6.110 .

83 EC Panel report, para. 6.117 and Japan Panel report, para. 6.143.

84 EC Panel report, para. 6.104 .

85 EC Panel report, para. 6.103 and Japan Panel report, para. 6.117.

86 EC Panel report, para. 6.109 and Japan Panel report, para. 6.123.

87 EC Panel report, para. 6.111 and Japan Panel report, para. 6.121.

88 EC Panel report, para. 6.112 and Japan Panel report para. 6.130.

89 EC panel report para. 131-132 and Japan panel report, para. 6.136-37. First, it found no indication that the terms of the price discrimination test were understood differently at the time of its enactment. Moreover, even though the 1916 Act might pursue antitrust objectives, it found no express indication in the legislative history that price discrimination in the 1916 Act as such should be understood in any particular antitrust context. That the 1916 Act was presented at the time of its enactment as `supplementing' or `complementing' the existing antitrust laws did not mean necessarily that it had to be interpreted as an antitrust law, because at the time the Act was enacted, the current distinction between anti-dumping and antitrust was not yet clearly made, both being part of a single notion of `unfair competition'.

90 EC Panel report, para. 6.119-132 and Japan Panel report, para. 6.141-151.

91 EC Panel report, para. 6.133-161 and Japan Panel report, para. 6.158-80.

92 EC panel report, para. 6. 170 and Japan panel report, para. 6. 194

93 EC panel report, para. 6.171 and Japan panel report, para. 6. 195

94 EC panel report, para. 6.172-6.175 and Japan panel report, para. 6.196-6.199.

95 EC panel report, para. 6.81-91 and 6.165-6.169; Japan Panel Report, para. 6.95-6.107 and 6.185-6.192.

96 EC panel report, para. 6.82 and Japan panel report, para. 6.96. In a footnote under these paragraphs, the Panel pointed out that this approach was consistent with the practice of other panels, which addressed the distinction. It is somewhat incoherent of the Panel to then further discuss this issue during its review of the applicability of art. VI to the 1916 Act, instead of addressing it under its conformity review (see further infra).

97 United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco, panel report adopted on 4 October 1994, BISD 41S/131; for the full exposition of the US argument in this respect: see EC panel report, para. 3.30.

98 EC Panel report, para. 6.86-88 and Japan Panel report, 6.100-6.103.

99 EC Panel report, para. 6.88 and Japan Panel report, para. 6.103

100 EC panel report para. 6.83 and 6.90 and Japan panel report para. 6.97 and 6.105.

101 Finding that the answer to the argument required a more elaborate review of the case law and treaty provisions invoked by the Panels, it decided on grounds of judicial economy to postpone this review until it had made a finding on the applicability of article VI, see EC Panel report para. 6.91 and Japan panel report, para. 6.107. For the sake of clarity we do not follow this order here.

102 Cf. the unadopted panel report on EC - Anti-Dumping Duties on Audio Tapes in Cassettes Originating in Japan, ADP 136, para. 362.

103 EC panel report, para. 6.167 and Japan report, para. 6.189-6.190.

104 Japan panel report, para. 6.189. As to the hierarchy between customary rules and treaty rules it referred to the ICJ Judgment, Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), ICJ Reports 1986, p. 137, para. 274.

105 Id.

106 EC Panel report, para. 6.177-180 and Japan Panel report, para. 6.252-253.

107 Art. VI:2 GATT 1994 provides: " In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater than the margin of dumping in respect of such product."

108 Art. 18.1 Anti-Dumping Agreement reads: "No specific action against dumping of exports from another Member can be taken except in accordance with the provisions of GATT 1994, as interpreted by this agreement." Footnote 24 to art. 18.1 reads as follows: "This is not intended to preclude action under other relevant provisions of GATT 1994, as appropriate".

109 To be precisely, only Japan made a claim based on both provisions in its request for the establishment of a panel. The EC had only mentioned art. VI:2 in its request, but referred to art. 18.1 and art. 1 Anti-dumping Agreement in later submissions. These later references were made too late for them to be considered as a claim and the EC confirmed that it had only intended them as arguments in support of their claim on the basis of art. VI:1. The Panel rejected the US objection that by allowing these later references as argument, it would help the EC in `curing a defective claim'. It noted that other panels had found it appropriate to rely on provisions mentioned by parties as arguments in their analysis of the context of a given provision. Doing so was especially appropriate where, as in the current case, the provision on which the claim was based could, on its own, already be interpreted as supporting the claim (see infra, PDK). In that hypothesis, the Panel would further have to consider the context of this provision, among which relevant provisions of the Anti-Dumping Agreement. See EC Panel report, para. 6.21-26 and 6.193.

110 EC Panel report, para. 6.187-189 and Japan Panel report, para. 6.210-212.

111 EC panel report, para. 6.197-198 and Japan panel report, para. 6.217-218.

112 Art. 1 Anti-Dumping Agreement provides:

"An anti-dumping measure shall be applied only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordance with the provisions of this agreement. The following provisions govern the application of Article VI of GATT 1994 in so far as action is taken under anti-dumping legislation or regulations"

Footnote 1 reads:

`The term `initiated' as used in this Agreement means the procedural action by which a Member formally commences an investigation as provided in Article 5.'

113 In the EC case, the Panel also referred to art. 1, asserting the same conclusion, without further argumentation. See in particular EC panel report, para. 6.195.

114 Japan panel report, para. 6.221-222.

115 Japan panel report, para. 6.223-225.

116 EC panel report, para. 6.199-2.202 and Japan panel report, para. 6.226-229.

117 See EC panel report, para. 6.206 and Japan panel report, para. 6.234.

118 See Murray v. Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804). In this case, the US Supreme Court established the doctrine that in the absence of conflict, US judges should, whenever possible, interpret US laws in conformity with the international obligations of the United States.

119 Japan panel report, para. 6.242-250. Similar reasoning brought the panel in the Japan case to dismiss a claim based on art. 5.10 Anti-Dumping Agreement, see Id., para. 6.259-260.

120 EC Panel Report, para. 6.211-212 (finding merely a finding of violation of art. 4) and Japan Panel Report, para. 6.256-257.

121 EC panel report, para. 6.217-219 and Japan Panel report, para. 6.265-281.

122 EC panel report, para. 6.220-224 and Japan Panel report, para. 6.282-288.

123 Japan panel report, para. 6.290-6.292.

124 EC panel report, para. 7.2.

125 Appellate Body report, para. 139-150.

126 Id., para. 150: "Such discretionary authority is, of course not unlimited and is circumscribed, for example, by the requirements of due process".

127 EC panel report, para. 5.19.

128 Appellate Body report, para. 53.

129 See EC panel report, para. 5.17.

130 E.g. International Court of Justice and its predecessor, the Permanent Court of International Justice and the Iran-US Claims Tribunal.

131 Appellate Body report, para. 54, fn. 30.

132 Id.

133 Id., para. 57-61

134 Supra note 77..

135 Appellate Body report, para 70-75.

136 Id., para. 76-79.

137 Id., para. 80-82.

138 Id., para. 88-90.

139 Id., para. 94-97.

140 Ibid,, para. 98-99 ; the AB referred to footnote 23 and paras. 7.53 and 7.54 of the Section 301 panel report, o.c.

141 Ibid, para. 105-107.

142 Ibid, para. 108-109.

143 Ibid, para. 110.

144 Art. 9 Anti-Dumping Agreement provides inter alia that "it is desirable that the imposition {of an anti-dumping duty} be permissive in the territory of all Members".

145 Ibid, para. 113-117.

146 Ibid, para. 118-120.

147 The AB found it not necessary to determine whether the concept of `specific action against dumping' may be broader. Id., para. 122, fn. 66.

148 The AB noted that therefore intent is not necessary to determine whether an action is "specific action against dumping". Id.

149 Ibid, para. 121-126.

150 Ibid, para. 126-130.

151 Ibid, para. 133.

152 In a footnote, the Appellate Body nevertheless criticized the Panel for its use of the term "transnational price discrimination", which it considered problematic. Dumping is only a specific form of transnational price discrimination, since it requires importation and a lower price in the import market than in the export market or relevant third country market.

153 Ibid, para. 134-137.

154 Id., para. 152-155.




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