WTO ARBITRATORS AGREE ON EU REQUEST FOR SANCTIONS IN DISPUTE OVER US 1916 ANTI-DUMPING ACT

News Release

Pascal Lamy

No. 28/04
February 24, 2004

WTO ARBITRATORS AGREE ON EU REQUEST FOR SANCTIONS IN DISPUTE OVER US 1916 ANTI-DUMPING ACT

Today, the WTO arbitrators have accepted the EU request seeking authorisation to impose sanctions on the US given its non-compliance with a WTO ruling condemning the US 1916 Anti-Dumping Act in 2000. The sanctions would take the form of a specific legislation applicable to dumped imports from the US and mirroring the US 1916 Anti-Dumping Act. The EU may now adopt a mirror regulation at any time, but it strongly hopes that rapid action by Congress will make such a step unnecessary.

EU Trade Commissioner Pascal Lamy commented: "The decision of the arbitrators is a welcome reaffirmation that the WTO is a rule-based system and members may not ignore their obligations with impunity. I welcome the recent move the US Congress to bring legislation forward to implement the WTO ruling. I hope that rapid action from Congress will make sanctions unnecessary."

With today’s decision, the arbitrators have given green light to the European Union to adopt a regulation mirroring the US 1916 Anti-Dumping Act. This regulation would be applicable exclusively to products originating in the United States. Today’s decision cannot be appealed but still needs to be endorsed by a formal decision of the Dispute Settlement Body (DSB). The DSB decision is acquired unless all Members, including the EU, vote against it.

Three repealing bills are pending in Congress and one was finally referred by the Congressional Committee for consideration to the House of Representatives in January 2004. However, there has not been any indication so far that full implementation would promptly follow.

The US 1916 Anti-Dumping Act provides for damages to the complainant equivalent to three times the damage suffered, fines up to US$ 5,000 or imprisonment up to one year.

The EU mirror legislation would entitle companies in the EU to bring complaints against US companies under the same basic conditions as those required under the 1916 Anti-Dumping Act, i.e., if products from the US are being dumped with an intent to harm an EU industry or to restrict trade in the EU and if damage is being caused to the complainant.

The complaint would trigger an investigation by the Commission and would eventually lead to the imposition of a duty on imports of the product concerned from the US. The level of the duty would be set so as to collect over its five-year anticipated lifetime three times the damage caused.

Background

In September 2000, the WTO condemned the 1916 Anti-Dumping Act for allowing sanctions against dumping not permitted under the WTO agreements. The Anti-Dumping Agreement limits the action against dumping to the imposition of duties or minimum import prices.

As a result of this condemnation, the US had to repeal the Act by December 2001. But more than three years after the WTO ruling, the 1916 Anti-Dumping Act is still in force threatening EU companies with business activities in the US. Since the matter was referred to the WTO in June 1998, four new complaints were brought against EU companies in the steel or newspaper printing machines sectors, involving large litigation costs. The threat represented by the 1916 Act is further evidenced by a recent jury verdict of 3 December 2003 condemning a Japanese company to US$ 31.5 million damages.

The EU made all efforts to accommodate the US difficulty in complying with the WTO decision. The period of time within which the US was to repeal the Act was extended for five months and the arbitration on the EU request for sanctions suspended for more than a year and a half. But, the persisting inaction of the US left no other option than to seek the authorisation to apply sanctions in the hope that this would trigger action from Congress.

The US defended that the EU could not impose any sanctions on the allegation that the 1916 Anti-Dumping Act would not have affected EU exports to the US. Today’s decision rejected the US proposition that only trade flows may measure the harm inflicted and clearly confirmed that the 1916 Anti-Dumping Act is already nullifying benefits accruing to the EU under the WTO.

In parallel to the reactivation of the arbitration, the Council adopted on 15 December 2003 a Regulation to provide relief to the EU companies facing claims based on the 1916 Anti-Dumping Act. This Regulation entered into force on 9 January 2004 and merely seeks to neutralise the effects of the 1916 Anti-Dumping Act in the EU. Thus, it prohibits the recognition and enforcement in the EU of Court or administrative decisions based on the 1916 Anti-Dumping Act. It also allows 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. This Regulation does not affect any obligations of the EU and therefore did not require authorisation from the WTO.

For more information:

http://www.wto.org/

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