Project International Trade Law

SVKM’S NMIMS SCHOOL OF LAW A PROJECT SUBMITTED ON Case study on Anti-Dumping Measures on Certain Iron or Steel Fasteners from China IN COMPLIANCE TO THE PARTIAL FULFILLMENT OF THE MARKING SCHEME FOR TRIMESTER XI 2017, IN THE SUBJECT OF INTERNATIONAL TRADE LAW SUBMITTED TO FACULTY DR. RAHUL NIKKAM FOR EVALUATION SUBMITTED BY:-SURBHI TOSHNIWAL ROLL NO: - A062 COURSE: - B.B.A. LL.B. (Hons.) RECEIVED BY: - ………………….. ON DATE: - ……………………….. TIME: - ……………………………. INDEX СHАPTER СONTENT PG NO 1 INTRODUCTION (FACTS) 3 2 ISSUE OF THE CASE 4 3 RATIO DECIDENDI 5 4 CRTITICAL ANALYSIS 6 5 PERSONAL OPINION 11 6 CONCLUSION 12 TABLE OF ABBREVIATIONS AD Agreement - Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement) DSU - Dispute Settlement Understanding EU - European Union GATT 1994 - General Agreement on Tariffs and Trade 1994 IA - Investigating Authority IT - Individual Treatment MET - Market Economy Test MFN - Most Favoured Nation NME - Non-market Economy PCN - Product Control Number SCM Agreement - Agreement on Subsidies and Countervailing Measures Chinese Taipei - Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WTO - World Trade Organization ETC-Etecetra STATUTES Anti-dumping (Article VI of GATT 1994) GATT 1994 Agreement Establishing the World Trade Organization: Art. XVI Protocol of Accession CHAPTER – I INTRODUCTION FACTS China's request for the establishment of a panel challenged two measures introduced by the European Union: (1) Article 9(5) of Council Regulation (EC) No. 384/96, as amended on protection against dumped imports from countries not members of the European Community (the "Basic AD Regulation") and (2) Council Regulation (EC) No. 91/2009 of 26 January 2009 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People's Republic of China (the "Definitive Regulation"). Council Regulation (EC) No. 384/96 was repealed and replaced by Council Regulation (EC) No. 1225/2009 after the establishment of this Panel, and China's submissions address Council Regulation No. 1225/2009. China's claims with regard to Council Regulation 1225/2009 challenge that measure "as such", while its claims with regard to Council Regulation 91/2009 challenge the specifics of that measure, which include aspects of the Basic AD Regulation "as applied". China challenged Article 9(5) of the Basic AD Regulation, the provision that deals with the individual treatment of producers from non-market economy ("NME") countries, including China, in the context of dumping determinations in anti-dumping investigations, as Ill as the application of that provision in the fasteners investigation at issue in this dispute. CHAPTER – II ISSUES Whether Article 9(5) of the Basic AD Regulation is inconsistent with Articles 6.10, 9.2, 9.3 and 9.4 of the AD Agreement? Whether Article 9(5) of the Basic AD Regulation is inconsistent with Article I:1 of the GATT 1994? Whether Article 9(5) of the Basic AD Regulation is inconsistent with Article X:3(a) of the GATT 1994? Whether Article 9(5) of the Basic AD Regulation is inconsistent with Article XVI:4 of the WTO Agreement and Article 18.4 of the AD Agreement? Whether Article 9(5) of the Basic AD Regulation, as applied in the fasteners investigation, is inconsistent with Articles 6.10, 9.2 and 9.4 of the AD Agreement? Whether the European Union violated Article 5.4 of the AD Agreement in its standing determination? CHAPTER – III RATIO DECIDENDI Arts. 6.10 (evidence – individual dumping margins) and 9.2 (imposition of anti-dumping duties – individual exporters or producers): The Appellate Body upheld, although for different reasons, the Panel's findings that Art. 9(5) of the Basic AD Regulation was inconsistent as such and as applied in the fasteners investigation with Arts. 6.10 and 9.2 because it conditioned the granting of individual treatment to exporters or producers from NMEs in the determination and imposition of anti-dumping duties on the fulfilment of the individual treatment test. The Appellate Body found that Arts. 6.10 and 9.2 require investigating authorities to determine and impose individual anti-dumping duties on exporters or producers unless specific exceptions are provided for in the covered agreements. It further found that no specific exceptions are provided for in the covered agreements that would allow investigating authorities to determine and impose country-wide anti-dumping duties on exporters originating in NMEs. Neither does China's Accession Protocol provide a legal basis for flexibility in respect of export prices or for justifying an exception to the requirement to determine individual dumping margins in Art. 6.10 ADA Art. 4.1 (definition of domestic industry): The Appellate Body found that the European Union acted inconsistently with Art. 4.1 in defining the domestic industry in the fasteners investigation as comprising producers accounting for 27 per cent of total estimated EU production of fasteners. The domestic industry defined on this basis did not consist of those producers “whose collective output of the products constitutes a major proportion of the total domestic production” within the meaning of Art. 4.1. ADA Arts. 6.4 and 6.2 (evidence – access): The Appellate Body agreed with the Panel that, by failing to disclose information regarding the product types used for the basis of price comparisons in the dumping determination, the European Union violated Art. 6.4 and thereby Art. 6.2. ADA Art. 2.4 (dumping determination – fair comparison): The Appellate Body agreed with the Panel that the European Union did not violate Art. 2.4 by not making adjustments for certain physical and quality differences alleged by China. It however reversed the Panel's finding on the last sentence of Art. 2.4 and held that the European Union had failed to indicate the information necessary to ensure a fair comparison as required by that provision. CHAPTER – IV – CRITICAL ANALYSIS The decision of the Appellate Body on various issues though in favour of China, is still not satisfactory as China had appealed certain issues which were decided by the Panel Report. The Appellate Body had decided certain issues such as - (a) With respect to Article 9(5) of the Basic AD Regulation See also Panel Report, para, 8.2(a): (i) upholds the Panel's finding, in paragraph 7.77 of the Panel Report, that Article 9(5) of the Basic AD Regulation concerns not only the imposition of anti-dumping duties, but also the calculation of dumping margins, and that it could be challenged "as such" under Article 6.10 of the Anti-Dumping Agreement, which addresses the calculation of margins of dumping for each exporter or producer; (ii) upholds, albeit for different reasons, the Panel's finding, in paragraph 7.98 of the Panel Report, that Article 9(5) of the Basic AD Regulation is inconsistent "as such" with Article 6.10 of the Anti-Dumping Agreement, because it conditions the determination of individual dumping margins for exporters or producers from NMEs on the fulfilment of the IT test; (iii) upholds, albeit for different reasons, the Panel's finding, in paragraph 7.112 of the Panel Report, that Article 9(5) of the Basic AD Regulation is inconsistent "as such" with Article 9.2 of the Anti-Dumping Agreement, because it conditions the imposition of individual duties on exporters or producers from NMEs on the fulfilment of the IT test; (iv) finds that, in making the findings that Article 9(5) of the Basic AD Regulation is inconsistent "as such" with Articles 6.10 and 9.2 of the Anti-Dumping Agreement, the Panel did not act inconsistently with Article 11 of the DSU; (v) declares moot and of no legal effect the Panel's finding, in paragraph 7.127 of the Panel Report See also Panel Report, para, 8.2 (b), that Article 9(5) of the Basic AD Regulation is inconsistent with the MFN obligation in Article I:1 of the GATT 1994 (vi) upholds the Panel's finding, in paragraph 7.137 of the Panel Report, that the European Union has acted inconsistently with Article XVI:4 of the WTO Agreement and Article 18.4 of the Anti-Dumping Agreement by failing to ensure the conformity of its laws, regulations, and administrative procedures with its obligations under the relevant agreements; (vii) upholds the Panel's finding, in paragraph 7.148 of the Panel Report See also, Panel Report, para 8.2(b)., that Article 9(5) of the Basic AD Regulation is inconsistent with Articles 6.10 and 9.2 of the Anti-Dumping Agreement "as applied" in the fasteners investigation; (b) With respect to the Panel's findings under Articles 4.1 and 3.1 of the Anti-Dumping Agreement See also, Panel Report, para. 8.3(b).: (i) finds that the Panel erred in finding, in paragraph 7.230 of the Panel Report, that "the European Union did not act inconsistently with Article 4.1 of the [Anti-Dumping Agreement] in defining a domestic industry comprising producers accounting for 27 per cent of total estimated EU production of fasteners" on the basis that the collective output of these producers represented "a major proportion" of the total domestic production; (ii) finds that the Panel did not err in finding, in paragraph 7.241 of the Panel Report, that China failed to establish that the European Union acted inconsistently with Article 3.1 of the Anti-Dumping Agreement in the selection of a sample of the domestic industry for purposes of making an injury determination; and (iii) finds that the Panel did not err in its interpretation or application of Articles 4.1 and 3.1 of the Anti-Dumping Agreement, or acted inconsistently with Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement, when finding, in paragraph 7.219 of the Panel Report, that "the mere fact that the domestic industry as ultimately defined does not include any particular proportion of producers expressing different views with respect to the complaint, or producers who did not come forward within the 15 day period, does not demonstrate that the European Union acted inconsistently with Article 4.1 of the [Anti-Dumping Agreement] in defining the domestic industry" or acted inconsistently with Article 3.1 of that Agreement; (c) With respect to the Panel's findings regarding certain aspects of the dumping determination in the fasteners investigation: (i) finds that the Panel did not err in finding, in paragraph 7.494 of the Panel Report See also Panel Report, para 8.2(e)., that the European Union violated Article 6.4 of the Anti-Dumping Agreement "by not providing a timely opportunity for Chinese producers to see information regarding the product types on the basis of which normal value was established"; (ii) finds that the Panel did not err in finding, in paragraph 7.495 of the Panel Report, that "the Chinese exporters could not defend their interests in this investigation because the Commission only provided information concerning the product types used in the determination of the normal value at a very late stage of the proceedings" and that, therefore, "the European Union acted inconsistently with Article 6.2" of the Anti-Dumping Agreement; (iii) finds that the Panel did not act inconsistently with Article 11 of the DSU in not addressing China's argument that the European Union failed to inform the interested parties of the "product types" it used to compare the export price and normal value; (iv) finds that the Panel erred in its application of Article 2.4 of the Anti-Dumping Agreement by failing to take into account the last sentence of Article 2.4 in the light of the relevant facts of the case and of its finding under Article 6.4 of the Anti-Dumping Agreement; and finds, instead, that, in not disclosing the information on the product types on a timely basis, the European Union acted inconsistently with Article 2.4 of the Anti-Dumping Agreement by failing to indicate to the parties in question what information was necessary to ensure a fair comparison; (v) finds that the Panel did not err in its interpretation of Article 2.4 of the Anti-Dumping Agreement when finding, in paragraph 7.306 of the Panel Report, that the European Union did not act inconsistently with Article 2.4 of that Agreement by not making adjustments for every element of the PCN; (vi) finds that the Panel did not act inconsistently with Article 11 of the DSU, when finding, in paragraph 7.302 of the Panel Report, that there is no inherent reason to conclude that every element of the PCN necessarily reflects a difference that affects price comparability; and (vii) finds that the Panel did not err in its interpretation and application of Article 2.4 of the Anti-Dumping Agreement in finding, in paragraph 7.311 of the Panel Report, that the European Union did not have to make adjustments for alleged quality differences; (d) With respect to Articles 6.5 and 6.5.1 of the Anti-Dumping Agreement: (i) upholds the Panel's findings, in paragraphs 7.516 and 7.517 of the Panel Report See also Panel Report, para 8.2(f), that the European Union failed to ensure that the domestic producers, Agrati and Fontana Luigi, provide appropriate statements of the reasons why information provided in confidence was not susceptible of summary; (ii) finds that China's claim under Article 6.5 that the European Union failed to establish that "good cause" existed to support the confidential treatment of information submitted by the analogue country producer participating in the investigation, Pooja Forge, was within the Panel's terms of reference; but finds that China failed to substantiate this claim; and therefore (iii) reverses the Panel's finding, in paragraph 7.525 of the Panel Report, that the European Union acted inconsistently with its obligations under Article 6.5 with respect to the treatment of confidential information submitted by Pooja Forge; and (iv) upholds the Panel's finding, in paragraph 7.455 of the Panel Report See also Panel Report, para. 8.3(h), that the European Union did not act inconsistently with its obligations under Article 6.5 when the Commission granted the request to treat the identity of the complainants and the supporters of the complaint as confidential; and (v) finds that China's claim under Article 11 of the DSU regarding the confidential treatment of the identity of the complainants and the supporters of the complaint is not within the scope of this appeal because it was not included in China's Notice of Other Appeal; (e) Reverses the Panel's finding, in paragraph 7.458 of the Panel Report, that China's claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement regarding the non-disclosure of the identity of the complainants were within its terms of reference under Article 6.2 of the DSU; and therefore, declares moot the Panel's finding, in paragraph 7.459 of the Panel Report, that the European Union did not act inconsistently with Articles 6.2 and 6.4 of the Anti-Dumping Agreement by not disclosing the identity of the complainants and the supporters of the complaint; and (f) With respect to Article 6.1.1 of the Anti-Dumping Agreement: (i) upholds the Panel's finding, in paragraph 7.579 of the Panel Report See also Panel Report, para. 8.3(k)., that the "'Market Economy Treatment and/or Individual Treatment claim form' is not a 'questionnaire' within the meaning of Article 6.1.1"; and that, therefore, the European Union did not act inconsistently with its obligations under Article 6.1.1 of the Anti-Dumping Agreement when it did not provide the Chinese exporters with 30 days to submit their responses; and (ii) finds that China's claims under Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement regarding the Market Economy Treatment and/or Individual Treatment Claim Form are not within the scope of this appeal because these claims were not included in China's Notice of Other Appeal. The Appellate Body recommended that the DSB request the European Union to bring its measures, found in this Report and in the Panel Report as modified by this Report, to be inconsistent with the Anti-Dumping Agreement and the WTO Agreement, into conformity with its obligations under those Agreements. CHAPTER – V- APPLICATION OF PRINICIPLES: PERSONAL PERSPECTIVE In my analysis in the preceding two subsections, I have declined to uphold China's appeal of the Panel's findings that the European Union did not act inconsistently with Article 4.1 of the Anti-Dumping Agreement by excluding producers from the domestic industry definition who did not support the complaint and who did not respond to the sampling forms within 15 days. Given that, with regard to these aspects of the fasteners investigation In my view, with regard to China's other appeal of the Panel's findings under Articles 4.1 and 3.1 of the Anti-Dumping Agreement, I have reached the following findings. I find that the Panel erred in finding that "the European Union did not act inconsistently with Article 4.1 of the [Anti-Dumping Agreement] in defining a domestic industry comprising producers accounting for 27 per cent of total estimated EU production of fasteners" on the basis that the collective output of these producers represented "a major proportion" of the total domestic production. Panel Report, para. 7.230. However, I find that the Panel did not err in finding that China failed to establish that the European Union acted inconsistently with Article 3.1 of the Anti-Dumping Agreement by making an injury determination on the basis of a sample of producers that was allegedly not representative. I also do not consider that the Panel erred in its interpretation or application of Articles 4.1 and 3.1 of the Anti-Dumping Agreement, or acted inconsistently with Article 11 of the DSU, when finding that "the mere fact that the domestic industry as ultimately defined does not include any particular proportion of producers expressing different views with respect to the complaint, or producers who did not come forward within the 15-day period, does not demonstrate that the European Union acted inconsistently with Article 4.1 of the [Anti-Dumping Agreement] in defining the domestic industry" Panel report, para. 7.219 or acted inconsistently with Article 3.1 of that Agreement. CHAPTER –VI CONCLUSION China claimed that the Commission acted inconsistently with Article 6.5 of the AD Agreement by treating as confidential the information submitted by an analogue country producer regarding the list and characteristics of its products. China asserted that this information was neither by nature confidential nor was it submitted on a confidential basis and that no good cause was shown for its confidential treatment. It also claimed that, should the Panel disagree with that assertion, the EU violated Article 6.5.1 of the AD Agreement by failing to require that producer to provide a non-confidential summary of that information. The Panel found that the Commission failed to act consistently with Article 6.5 of the AD Agreement by treating as confidential the information submitted by that producer and that accordingly, it need not make a finding with respect to China's claim under Article 6.5.1 of the AD Agreement.       China's claim regarding interested parties' rights to have access to information and defend their interests China claimed that by failing to provide the Chinese producers with the information regarding the list and characteristics of the products sold by the analogue country producer and which were used in the determination of the normal value, the EU violated its obligations under Article 6.4 of the AD Agreement. It argued that by failing to provide such an opportunity, the EU also violated Article 6.2 of the AD Agreement. First, China contended that the violation of Article 6.4 also led to a violation of Article 6.2. Second, China maintained that, even if there was no violation of Article 6.4, the EU has in any case violated Article 6.2 by not allowing the Chinese producers to access information needed for the defence of their interests. China also claimed that the EU violated Article 6.1.2 of the AD Agreement as it did not provide the Chinese producers with prompt access to such information. The Panel concluded that the Commission violated Article 6.4 of the AD Agreement by failing to provide the Chinese producers with timely opportunities to see the information on the list and characteristics of the products, which was not confidential and was relevant to the presentation of the Chinese producers' cases and used by the Commission.  The Panel also found that by not allowing the Chinese producers to have access to the information on the file regarding the list and characteristics of the products, the Commission also violated Article 6.2. In addition, the Panel found that China has not shown that the EU violated Article 6.1.2 of the AD Agreement by not making the analogue country's producer's information promptly available to the Chinese producers. China's claim with respect to the Commission's failure to provide information to enable Chinese exporters to request adjustments China argued that by failing to provide the Chinese producers/exporters with the information concerning the characteristics of the products sold by the analogue country producer, the Commission violated Article 2.4 of the AD Agreement. It also submitted that the Commission imposed an undue burden on the Chinese producers by rejecting their requests for adjustments on the grounds that they were not based on evidence. The Panel concluded that the Commission violated Article 2.4 of the AD Agreement by failing to provide the Chinese producers with information regarding the characteristics of the analogue country producer's products that were used in determining normal values in the review investigation.   China's claim with respect to failure to ensure that price comparisons were made on the basis of same types of fasteners China submitted that the EU acted inconsistently with Article 2.4 of the AD Agreement by failing to ensure that the export price of standard fasteners sold by Chinese producers to the EU was compared to the normal value of standard fasteners sold by the analogue country producer, in the calculation of the dumping margins for the Chinese producers.  China also requested the Panel to exercise its fact-seeking power under Article 13 of the DSU to request the EU to provide a copy of the analogue country producer's information used to distinguish between standard and special fasteners and to verify the accuracy of the split made by that producer. The Panel rejected China's claim under Article 2.4 of the AD Agreement and considered making a request under Article 13 of the DSU unnecessary in its evaluation of China's claim. China's claim with respect to the Commission's failure to make adjustments for differences that affect price comparability China asserted that the EU acted inconsistently with Article 2.4 of the AD Agreement by failing to make adjustments for certain factors that affected price comparability. Specifically, China took issue with three differences that allegedly affected price comparability and that were not taken into acco8nt by the Commission: (i) differences in taxation, (ii) differences in physical characteristics, and (iii) certain other differences. The Panel rejected China's argument that the Commission violated Article 2.4 of the AD Agreement.   China's claim with respect to the Commission's failure to take into account all comparable export transactions China argued that, in calculating the dumping margins in the review investigation, the Commission left out the export transactions for which there was no match in the analogue country producer's sales. China contended that by failing to take into account all comparable export transactions, the Commission acted inconsistently with the obligation to conduct a fair comparison between the normal value and the export price as required by Article 2.4 of the AD Agreement. It further submitted that the comparison made by the Commission resulted in a presumption of dumping for those export transactions that were not used in the dumping determination and thus, such comparison must be considered as failing to meet the requirement of a fair comparison. The Panel concluded that the Commission violated Article 2.4.2 of the AD Agreement by not taking into consideration, in its dumping determinations, Chinese producers' export models that did not match any of the models sold by the analogue country producer. The Panel exercised judicial economy with respect to the consequential claim under Article 2.4 of the AD Agreement. China's claim with respect to the definition of domestic industry China recalled that, in the original investigation, the Commission excluded from the domestic industry European producers that did not express willingness to be part of the injury sample.  In the original dispute, the Appellate Body found that excluding domestic producers from the definition of domestic industry on the basis of this self-selection gave rise to a material risk of distortion in defining that industry, and that the original panel had erred in finding that the Commission's domestic industry definition was not inconsistent with Article 4.1 of the AD Agreement. Finally, China contended that the EU acted inconsistently with Article 3.1 of the AD Agreement because the Commission's injury determination in the review investigation was based on a wrongly-defined domestic industry. The Panel found that by defining the domestic industry on the basis of domestic producers that came forward in response to a notice of initiation which stated that only those producers willing to be included in the injury sample would be considered introduced a material risk of distortion to the IA's injury analysis that would necessarily render the resulting injury determination inconsistent with the obligation to make an objective injury analysis based on positive evidence laid down in Article 3.1 of the AD Agreement. It also concluded that the Commission's injury determination, based on the data obtained from a wrongly-defined domestic industry, was inconsistent with Article 3.1 of the AD Agreement. 15