Pascal Lamy

No. 58/03
September 22, 2003

EU seeks retaliatory and protective measures in
US 1916 Anti-Dumping Act dispute

Three years after the US Anti-Dumping Act of 1916 was found incompatible with World Trade Organization (WTO) rules, the European Union is still waiting for concrete signs that the US will repeal its condemned legislation. Confronted with persisting inaction, the EU has decided to reactivate the arbitration process that will decide on retaliatory measures. The European Commission has also proposed to the EU Council the adoption of appropriate measures to protect the EU companies affected by the application of the 1916 Anti-Dumping Act.

EU Trade Commissioner Pascal Lamy commented: "The EU considers retaliatory measures as last resort and has given the US more than enough time to comply with the WTO decision in this dispute. Time has come for the US to show diligence and commitment to its WTO obligations. The sign that international trade law will simply be ignored is very disturbing and cannot go unchallenged. I hope that our move will give the impetus for immediate action by Congress to repeal the 1916 Anti-Dumping Act and terminate all pending cases."

The retaliatory measures requested by the EU consist in the following: the EU would be allowed to impose import duties equivalent to three times the amount of the damage suffered by EU companies on products of US companies found to dump in the EU.

In parallel, the Commission has proposed to the Council to adopt a Regulation that would provide relief to the EU companies that are facing claims based on the 1916 Anti-Dumping Act. The US failure to abide by its compliance duty is putting EU companies in the unacceptable position of having to defend themselves against the application of a law which was condemned three years ago and should have been repealed long ago. The protective measures are WTO compatible and merely seek to neutralise the effects of the 1916 Anti-Dumping Act in the EU caused by the failure of the US to terminate pending cases. The regulation would:

• prohibit the recognition and enforcement in the EU of court or administrative decisions based on the Anti-Dumping Act of 1916; and
• allow EU companies or individuals to counter-sue the US plaintiff in order to recover any outlays, costs, damages and expenses caused by the application of the Anti-Dumping Act of 1916.

Currently three EU companies are facing claims in the US based on the 1916 Anti-dumping Act.

Background

In September 2000, the WTO found the US Anti-Dumping of 1916 incompatible with the WTO agreement on anti-dumping.

This Act provides remedies to dumping in the form of fines, imprisonment and damages equivalent to threefold the damages sustained, none of which is permitted under WTO rules. As a result of this condemnation, the US had to repeal the Act. But, on the third anniversary of this condemnation, the 1916 Anti-Dumping Act is still in force.

In those three years, the EU has shown its readiness to respond to the US difficulty in complying with the WTO decision.

The EU accepted the extension of the period of time within which the US was to repeal the 1916 Anti-Dumping Act (from July 2001 to December 2001). The EU requested the authorization to apply retaliatory measures in January 2002. However, it accepted a suspension of the arbitration in February 2002—on the express understanding that a bill that had finally been introduced on 20 December 2001 to repeal the 1916 Anti-Dumping Act would terminate the ongoing cases before US courts.

This bill was not even discussed in Congress, nor were two other bills introduced later, and the three became void in November 2002—when the then current Congress adjourned as the result of the mid-term elections. The whole process had to restart again in the new Congress that met in January 2003. While three repealing bills are now pending, Congress has so far failed to give any signs that implementation was this time on the right track. Again, to date, none of the bills has been even discussed and two would not terminate the pending court cases, which is not acceptable.

Confronted with non-implementation, the WTO member that prevailed in the dispute may seek the authorisation to suspend tariff concessions or other obligations. The EU has always considered this option as a last resort and favoured all solutions that could bring compliance. But, the persisting inaction of the US leaves the EU no other option than to exercise this right under the WTO.

For more information:

http://www.wto.org/

http://europa.eu.int/comm/trade

See also: IP/00/950, IP/01/355