Wednesday, November 2, 2011

Panel report out on China-EU footwear dispute

The WTO, on 28 October 2011, issued the report of the panel that had examined China’s complaint in the case “European Union — Anti-dumping measures on certain footwear from China” (DS405).

Summary of key findings
In sum, the Panel found Article 9(5) of the Basic AD Regulation inconsistent with the European Union's WTO obligations, and that the European Union had acted inconsistently with the AD Agreement in some aspects of the original investigation and expiry review, but rejected the bulk of China's specific claims of violation in connection with the original investigation and expiry review, and resulting Definitive and Review Regulations. More particularly:
  • The Panel concluded that Article 9(5) of the Basic AD Regulation was “as such” inconsistent with the European Union's obligations under Articles 6.10, 9.2 and 18.4 of the AD Agreement, Article I:1 of the GATT 1994, and Article XVI:4 of the WTO Agreement, and that the application of Article 9(5) of the Basic AD Regulation in the footwear original investigation was inconsistent with Articles 6.10 and 9.2 of the AD Agreement.
  • The Panel found that the European Union acted inconsistently with Article 2.2.2(iii) of the AD Agreement with respect to the determination of the amounts for SG&A and profit for one producer-exporter in the original investigation, and that the European Union acted inconsistently with its obligations under Articles 6.5 and 6.5.1 of the AD Agreement with respect to the confidential treatment, or the non-confidential summarization, of certain information in the original investigation and the expiry review.
  • The Panel found that that China had not established that the European Union acted inconsistently with:
    1. Article 6.10.2 of the AD Agreement in the examination of individual treatment requests of four Chinese producers in the original investigation;
    2. Articles 2.4 and 6.10.2 of the AD Agreement, Paragraph 15(a)(ii) of China's Accession Protocol, and Paragraphs 151(e) and (f) of China's Accession Working Party Report, in the examination of certain Chinese producers' applications for market economy treatment in the original investigation;
    3. Article 6.10 of the AD Agreement in selecting the sample for the dumping determination in the original investigation;
    4. Article 11.3 of the AD Agreement in the procedure for and selection of Brazil as analogue country in the expiry review;
    5. Articles 2.1 and 2.4 of the AD Agreement and Article VI:1 of the GATT 1994 in the procedure for and selection of Brazil as analogue country in the original investigation;
    6. Article 11.3 of the AD Agreement with respect to the PCN system used in the expiry review;
    7. Article 2.4 of the AD Agreement and Article VI:1 of the GATT 1994 with respect to the PCN system used, and the adjustment for leather quality made, in the original investigation;
    8. Article 2.6 of the AD Agreement, read together with Articles 3.1 and 4.1 of the AD Agreement, with respect to the scope of the product under consideration, or the like product;
    9. Articles 3.1 and 6.10 of the AD Agreement and Article VI:1 of the GATT 1994 in the procedure for and selection of the sample for the injury analysis in the original investigation and the expiry review;
    10. Article 11.3 of the AD Agreement in the procedure for and selection of the sample for the injury determination in the expiry review;
    11. Article 3.3 of the AD Agreement in making a cumulative assessment in the original investigation;
    12. Article 11.3 of the AD Agreement in finding likelihood of continuation or recurrence of injury in the expiry review;
    13. Articles 3.4, 3.1 and 3.2 of the AD Agreement in the evaluation of injury indicators in the original investigation;
    14. Articles 3.5 and 3.1 of the AD Agreement in determining causation in the original investigation;
    15. Article 6.1.1 of the AD Agreement and Paragraph 15(a) of China's Accession Protocol in allowing less than 30 days to respond to the MET/IT claim forms in the original investigation;
    16. Article 6.1.2 of the AD Agreement with respect to certain questionnaire responses in the expiry review;
    17. Article 6.4 of the AD Agreement, and as a consequence or independently, Article 6.2 of the AD Agreement, with respect to certain information in the original investigation and expiry review;
    18. Article 6.5 of the AD Agreement, and as a consequence or independently, Article 6.2 of the AD Agreement, in the confidential treatment of certain information in the original investigation;
    19. Article 6.5.1 of the AD Agreement, and as a consequence or independently, Article 6.2 of the AD Agreement, in connection with the non-confidential summarization of certain information in the original investigation;
    20. Article 6.5.2 of the AD Agreement, and as a consequence, Article 6.2 of the AD Agreement, with respect to certain information in the non-confidential questionnaire responses of the sampled EU producers in the original investigation;
    21. Article 6.5 in the confidential treatment of certain information in the expiry review;
    22. Article 6.5.1 of the AD Agreement in connection with the non-confidential summarization of certain information in the expiry review;
    23. Article 6.5.2 of the AD Agreement with respect to certain information in the expiry review;
    24. Article 6.2 of the AD Agreement with respect to certain information in the expiry review;
    25. Articles 3.1 and 6.8 of the AD Agreement in not applying facts available in the expiry review;
    26. Article 6.9 of the AD Agreement with respect to the time provided for submission of comments on the Additional Final Disclosure in the original investigation;
    27. Article 12.2.2 of the AD Agreement in connection with the information and explanations provided in respect of specific issues in the original investigation and expiry review; and
    28. Articles 3.1, 3.2, 9.1 and 9.2 of the AD Agreement with respect to the imposition and collection of anti-dumping duties in the original investigation.
  • The Panel had first considered, and for the most part rejected, the European Union's preliminary objections to China's claims. In addition, the Panel concluded that Article 17.6(i) of the AD Agreement does not impose any obligations on the investigating authorities of WTO Members in anti-dumping investigations that could be the subject of a finding of violation, and therefore dismissed all of China's claims of violation of Article 17.6(i). The Panel applied judicial economy with respect to some of China's claims regarding all three measures.
  • The Review and Definitive Regulations having expired as of 31 March 2011, the Panel concluded that there was no basis for a recommendation to “bring the [expired] measure[s] into conformity” under Article 19.1 of the DSU. With respect to Article 9(5) of the Basic AD Regulation, the Panel recommended that the European Union bring this measure into conformity with its obligations under the WTO Agreements. The Panel declined to make a suggestion on how the DSB recommendations and rulings may be implemented by the European Union.
DS405: European Union — Anti-Dumping Measures on Certain Footwear from China
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