    World Trade Organization: Standard of Review and Impact of Trade
    Remedy Rulings (30-JUL-03, GAO-03-824).

    World Trade Organization (WTO) members rely on trade remedies in
    the form of duties or other import restrictions to protect their
    industries from injury due to unfair foreign trade practices or
    unexpected import surges. There is congressional concern that the
    WTO, created in 1995 to administer trade rules, is interfering
    with this ability. There is also congressional concern that the
    WTO is not treating the United States fairly in resolving trade
    remedy disputes. A congressional requester asked GAO to identify
    trends in WTO trade remedy disputes since 1995, including the
    outcomes of these disputes and how they affected members' ability
    to impose trade remedies. The requester also asked GAO to discuss
    the standards of review that the WTO applies when ruling on trade
    remedy disputes and to present U.S. agencies' and legal experts'
    views on the WTO's application of these standards and related
    trade remedy issues. In their comments on a draft of this report,
    the Department of Commerce and the U.S. International Trade
    Commission stated that the report needed to put more emphasis on
    U.S. agencies' concerns about the potential adverse impact of WTO
    rulings on the U.S.'s use of trade remedies. The U.S. Trade
    Representative provided only technical comments on the report.
    GAO modified the report as appropriate.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-03-824
        ACCNO:   A07769
      TITLE:     World Trade Organization: Standard of Review and Impact
    of Trade Remedy Rulings
         DATE:   07/30/2003
      SUBJECT:   Dispute settlement
    	     Foreign trade agreements
    	     International agreements
    	     International organizations
    	     International trade
    	     International trade regulation
    	     Foreign trade policies

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    GAO-03-824

                                           A

    Letter

    July 30, 2003 The Honorable Max Baucus Ranking Minority Member Committee
    on Finance United States Senate Dear Senator Baucus: The World Trade
    Organization (WTO) provides the institutional framework for the
    multilateral trading system. Established in January 1995, the WTO
    administers rules of international trade and provides a forum for
    conducting trade negotiations. In addition, the WTO has a dispute
    settlement system with panels and an Appellate Body that provides a
    multilateral forum for resolving trade disputes among WTO members. A
    dispute arises when one WTO member believes another member has violated a
    WTO agreement and initiates a dispute settlement proceeding through the
    WTO.

    Many disputes in recent years have pertained to WTO members* use of trade
    remedy measures. Members impose trade remedies in the form of duties or
    import restrictions after determining that a domestic industry has been
    injured or threatened with injury by imports. Specifically, member
    governments impose antidumping or countervailing duties 1 when they find
    that imports are priced at less than normal value, 2 or benefit from a
    foreign subsidy, and that such imports injure their domestic industry.
    Similarly, members impose safeguard measures 3 after finding that import
    surges have

    seriously injured or threatened serious injury to domestic industry. The
    WTO permits its 146 members to impose such trade remedy measures but
    requires them to follow certain rules before doing so, as set forth in
    various

    1 Antidumping or countervailing measures take the form of increased duties
    on imports. Dumping is generally considered to be the sale of a commodity
    in a foreign market at a lower price than its normal value. WTO rules
    allow for the imposition of antidumping duties, or fees, to offset
    dumping. Countervailing duties are special customs duties imposed to
    offset subsidies provided on the manufacture, production, or export of a
    particular good. Subsidies essentially lower a producer*s costs or
    increase its revenues.

    2 For the purposes of this report, we use the term *normal value* to mean
    home market value. Normal value is also sometimes referred to as *fair
    market value.* 3 A safeguard is a temporary import control or other trade
    restriction that a WTO member imposes to prevent serious injury to
    domestic industry caused by increased imports.

    WTO agreements. 4 Domestic agencies usually make a number of *domestic
    agency determinations.* 5 When a trade measure is challenged in the WTO
    dispute settlement system and a dispute settlement panel is established,
    the panel reviews the domestic agency determinations supporting the
    measure to determine whether they are consistent with the relevant WTO
    agreements. In addition to cases challenging WTO members* domestic
    determinations to impose specific trade remedy measures, WTO members
    sometimes directly challenge other members* trade remedy laws.

    Over the past several years, Congress has raised concerns that some WTO
    panel and Appellate Body rulings have adversely affected the U. S. *s
    ability to impose trade remedy measures. For example, in the Trade Act of
    2002, 6 Congress voiced concern about certain WTO rulings on trade
    remedies,

    including how the WTO has applied standard of review* that is, how the WTO
    evaluates and defers to the factual and legal determinations of WTO
    members* domestic agencies. In addition, some Members of Congress are
    concerned that some WTO rulings have created new obligations for WTO
    members beyond those found in the WTO agreements. For example, a Senate
    report accompanying the Trade Act of 2002 stated that WTO panels and the
    Appellate Body have substantially rewritten part of the WTO Agreement on
    Subsidies and Countervailing Measures in ways that are disadvantageous to
    the United States. 7 Accordingly, you asked us to conduct a review of WTO
    dispute settlement

    activity during the past 8 years, focusing on trade remedy disputes.
    Specifically, in this report we (1) identified the major trends in WTO
    dispute settlement activity concerning trade remedies; (2) analyzed the

    4 The relevant WTO agreements for trade remedy determinations are the
    Antidumping Agreement, the Agreement on Subsidies and Countervailing
    Measures, the Safeguards Agreement, and parts of the General Agreement on
    Tariffs and Trade 1994 (GATT 1994).

    5 Throughout this report, we use the term *domestic agency determination*
    to refer to a finding by a domestic agency leading to a decision to impose
    one or more trade remedy measures. An example of this would be a domestic
    agency finding in a safeguards case that a product is being imported in
    such increased quantities as to cause or threaten to cause serious injury
    to a domestic industry.

    6 Public Law No. 107- 210, S: 2101, 116 Stat. 933, 993. 7 S. Rep. No. 107-
    139, at 6- 7 (2002).

    outcome of WTO rulings in completed trade remedy cases; 8 (3) assessed the
    major impacts of these rulings on WTO members* laws, regulations,
    practices, and measures 9 and on members* ability to impose trade
    remedies; (4) identified the standards of review for trade remedy cases
    and Appellate Body guidance on how the standards should be applied; and
    (5)

    summarized legal experts* views and U. S. agencies* positions on standard
    of review and other trade remedy issues.

    To address these objectives, we created a database using WTO data on
    dispute settlement complaints filed from 1995 through 2002; reviewed WTO
    and U. S. government documents; and interviewed U. S., WTO, and European
    Union (EU) officials. In addition, we reviewed WTO panel and Appellate
    Body reports in the 25 completed trade remedy cases through 2002. Finally,
    we interviewed 18 U. S. and foreign legal experts, including

    practitioners, academics, and advisors on WTO- related trade remedy
    issues. Appendix I contains a full description of our scope and
    methodology, and appendix II contains summaries of the 25 completed trade
    remedy cases. Appendix III contains the names and affiliations of the 18
    legal experts we interviewed. Appendixes IV and V contain agency comments
    and our responses. Appendix VI identifies the major contributors to this
    report.

    Results in Brief Of the 198 cases filed in the WTO from 1995 through 2002,
    one- third (64) challenged members* trade remedies, and the ratio of trade
    remedy cases

    filed versus other types of cases generally has increased over time. The
    United States was by far the most frequent defendant in trade remedy
    cases, acting as defendant in 30 of the 64 challenges, with 17 of those 30
    cases filed since January 2000. In contrast, the EU had only 5 trade
    remedy cases filed against it. On the other hand, the United States was
    less active in

    filing complaints against other WTO members. For example, the United
    States filed only 5 of the 64 trade remedy cases, while the EU filed 16
    such cases. Overall, WTO members challenged a small proportion of trade
    measures imposed. Of the 1,405 trade measures that members notified the

    8 *Completed* refers to those cases in which the WTO Dispute Settlement
    Body has adopted a panel or Appellate Body report as of December 31, 2002.
    9 We define *measures* broadly to include orders calling for antidumping
    or countervailing duties or some type of safeguard action. For the
    purposes of this report, the term *measure* does not include members*
    laws, regulations, or practices.

    WTO that they imposed from 1995 through 2002, WTO members challenged only
    63 (4 percent) in the WTO dispute settlement system. The United States
    imposed the most measures (239) and had the highest proportion of its
    measures (12 percent) challenged, whereas the next biggest trade remedy
    users had fewer of their measures challenged. For example, India

    had none of its 226 measures challenged, while the EU had 4 of its 182
    measures challenged. According to U. S. agency officials, one reason that
    the United States has been a defendant more often than a complainant in
    trade remedy cases is that the United States has the world*s biggest
    economy and most desirable market.

    In the 25 trade remedy cases completed from 1995 through 2002, the WTO
    generally did not uphold WTO members* domestic determinations to impose
    trade remedy measures but upheld a higher proportion of members* trade
    remedy laws that were challenged. In 17 of the 21 cases involving a total
    of 175 WTO findings 10 on domestic determinations, 11 the WTO rejected 50
    percent or more of the agencies* determinations as not complying with WTO
    agreements, rejecting all determinations in 5 of those cases. Overall, the
    WTO rejected about the same percentage of the U. S. and non- U. S.

    agency determinations in the 21 cases, 57 percent and 56 percent, 10 To
    analyze WTO findings about domestic determinations, for the most part we
    reviewed the concluding sections of panel and Appellate Body reports. When
    several findings were included within a single paragraph in the concluding
    section, we generally counted each finding separately. In the several
    instances in which concluding sections of panel reports did not clearly
    indicate these findings, we obtained our numbers by evaluating the full
    reports.

    11 Four cases did not involve WTO findings on domestic agency
    determinations* 3 challenged only statutes, and 1 was found to be not
    properly before the WTO. Although the Appellate Body ruled that another
    case was not properly before the panel, the panel ruled on a number of
    antidumping issues involving determinations of a domestic agency.

    respectively. 12 In 9 of the 25 cases, there were 13 challenges to trade
    remedy laws, all of which were U. S. laws. The WTO upheld U. S. trade
    remedy laws in 11 of the 13 challenges and rejected U. S. laws in 2
    challenges.

    WTO rulings in the 25 completed cases we examined have not required
    numerous changes to members* laws, regulations, and practices but have
    resulted in the revision or removal of a number of trade remedy measures
    that members imposed. As a result of the 14 cases in which the United
    States was a defendant, two U. S. laws, one regulation, and three
    practices were changed or are subject to change. In addition, the rulings
    in 9 of those cases necessitated the onetime revision to, or removal of,
    21 U. S. trade measures. However, WTO trade remedy rulings resulted in
    fewer changes to the laws, regulations, practices, and measures of other
    WTO members. Specifically, no foreign laws or regulations were affected,
    and only one foreign practice was changed, in the 11 cases in which other
    WTO members were defendants. In addition, only 7 foreign trade measures
    were subject to

    revision or removal. 13 U. S. officials told us that the trade remedy
    rulings have not significantly impaired their ability to impose trade
    remedies to date. However, they were concerned about the potential for
    rulings to have a greater adverse impact in the future. For example, these
    officials cited the possible negative ramifications of WTO rulings in the
    privatization and EU bed linen cases. U. S. officials also said that some
    WTO safeguard rulings have been extremely difficult to implement. For
    instance, some safeguard rulings have placed a greater burden on domestic
    agencies to establish a clearer link between increased imports and serious
    injury to domestic industry. In addition, U. S. officials said that the
    rulings have required U. S. agencies to provide more detailed explanations
    of their analyses and

    procedures for applying their methodologies in trade remedy
    investigations. 12 These data, however, do not distinguish domestic agency
    determinations on the basis of their importance. Thus, these
    determinations ranged in importance from whether domestic agencies
    established the proper link between dumped imports and injury to domestic
    industry to whether the agency followed proper procedures in providing
    public notice of its proceedings. Furthermore, panels and the Appellate
    Body addressed the same issues in a

    number of cases. See appendix I for a further discussion of the
    methodological limitations on these data.

    13 We relied primarily on the WTO and U. S. agencies for information about
    foreign laws, regulations, practices, and measures. For the most part, we
    did not obtain information from foreign governments on these matters.

    The WTO uses two principal standards of review to evaluate the factual and
    legal determinations of WTO member domestic agencies in trade remedy
    cases* article 11 of the WTO Dispute Settlement Understanding and article

    17.6 of the WTO Antidumping Agreement. Article 11 applies to all cases
    brought under the WTO dispute settlement system and requires that panels
    make an objective assessment of the factual and legal determinations of
    WTO member domestic agencies. The Appellate Body has found that in
    applying article 11, panels are not to conduct a new review of domestic
    agency fact- findings nor totally defer to them. Article 17.6 applies only
    to antidumping cases and is more specific and deferential than article 11.
    For factual review, article 17. 6 requires panels to determine whether
    domestic agencies have properly established the facts and evaluated them
    in an unbiased and objective manner, and, if the agencies have done so, it
    does not allow panels to overturn the agencies* determinations. For legal
    review, article 17. 6 requires panels to interpret the Antidumping
    Agreement by applying established international rules for interpreting
    treaties and international agreements. 14 When a panel finds more than one
    permissible interpretation of the Antidumping Agreement, and one of them
    is consistent with a domestic agency*s determination, article 17. 6
    requires the panel to uphold the agency*s determination. The Appellate
    Body has concluded that panels should apply article 17.6 in a certain
    order: first, apply international rules of interpretation; and then,
    consider whether to uphold the domestic agency*s determination. The
    Appellate Body has found that panels have generally interpreted and
    applied both standards of review

    correctly in the relatively few instances where standard of review was
    specifically an issue in a case. Finally, the panels and the Appellate
    Body discussed the standards of review in most of the trade remedy cases,
    but the extent of that discussion varied by trade remedy area, case, and
    issue.

    The most common concern raised by legal experts with whom we spoke,
    although a minority view, related to the way in which the WTO has applied
    article 17. 6 to evaluate legal determinations of domestic agencies. For
    example, some experts believed that Appellate Body guidance to apply
    international rules of treaty interpretation first has resulted in panels*
    improperly rejecting domestic agency interpretations because, in the
    experts* view, these rules necessarily lead to only one interpretation.
    The experts contended that this tendency to find one interpretation made
    panels less likely to consider alternative domestic agency
    interpretations.

    14 Principally, these are articles 31 and 32 of the Vienna Convention on
    the Law of Treaties, U. N. Doc. A/ CONF. 39/ 27 (May 23, 1969).

    Some experts also stated that the panels and the Appellate Body have not
    applied article 17.6 in as deferential a manner as the United States
    intended. Overall, however, a majority of the experts with whom we spoke
    indicated that the WTO had not exceeded its authority in applying the
    standards of review, and that the WTO had treated its members the same in
    trade remedy cases. A majority of experts also said that the WTO has not

    added new obligations or diminished WTO members* rights in these cases;
    however, a significant minority of experts strongly disagreed with these
    views. Finally, many experts considered some of the WTO rulings on
    safeguards to be unclear and difficult to implement, particularly
    regarding

    how agencies should link increased imports and serious injury to domestic
    industry. The U. S. agencies most involved in trade remedy activities said
    that the WTO has improperly applied article 17.6( ii) in some trade remedy
    cases, mainly because it has not applied the article in a way that allows
    for upholding permissible interpretations of WTO members* domestic
    agencies. These agencies also said that in certain trade remedy cases, the
    WTO has found obligations and imposed restrictions on WTO members

    that are not supported by the texts of the WTO trade remedy agreements.
    Background The 1994 Uruguay Round agreements created the WTO dispute
    settlement

    system. The new system replaced the one under the General Agreement on
    Tariffs and Trade (GATT), the predecessor to the WTO. The Uruguay Round
    created a stronger dispute settlement system that, unlike the system under
    the GATT, discourages stalemates by not allowing parties to block
    decisions. In addition, the new system established a standing Appellate
    Body, with the aim of making decisions more stable and predictable.

    The WTO dispute settlement system operates in four major phases:
    consultation, panel review, Appellate Body review (when a party appeals
    the panel ruling), and implementation of the ruling. To initiate, or file,
    a dispute, a WTO member requests consultations with the defending member.
    If the parties do not settle the case during consultations, the
    complainant may then request that a panel be established. Nonpermanent,
    three- person panels issue formal decisions, or reports, for cases that
    are appealed; three members of a permanent, seven- member Appellate Body*
    comprised of individuals with recognized standing in the field of law and
    international trade* review panel findings. The Dispute Settlement Body,
    which is comprised of representatives of all WTO members, approves all

    final reports, and only a consensus of the members can block decisions.
    Thus, no individual member can block a decision.

    When a WTO member challenges a trade remedy measure, the panels and the
    Appellate Body apply standards of review, outlined in certain WTO
    agreements, to evaluate members* factual and legal determinations
    supporting these measures. In the United States, the Department of
    Commerce and the International Trade Commission (ITC) investigate whether
    the United States should impose antidumping or countervailing

    duties to offset unfair foreign trade practices. The ITC also investigates
    whether the conditions exist for the United States to invoke safeguards in
    response to import surges.

    Trade Remedy Cases From 1995 through 2002, WTO members brought 198 formal
    dispute

    settlement cases against other members. 15 One- third (64 cases) involved
    Increased Over Time,

    members* trade remedies, and the ratio of trade remedy cases filed, versus
    but Few Measures

    all other types, generally increased over the time period. Among WTO Were
    Challenged

    members, the United States has been by far the most frequent defendant in
    trade remedy cases but relatively less active in filing complaints.
    Overall, however, WTO members have challenged a relatively small share of
    the trade measures that their fellow members imposed, although the

    proportion of U. S. trade measures challenged was larger. About One- third
    of All Cases

    Overall, about one- third (64) of all WTO cases involved members* trade
    Involved Trade Remedies, remedies. From 1995 to 2000, an increasing
    proportion of the cases filed and Ratio Increased Over pertained to trade
    remedy measures and laws, as shown in figure 1. In 2001 Time and 2002,
    there was somewhat of a shift in this trend. 15 These 198 cases originated
    from 276 separate requests for consultation or filings* the first of the
    four phases in the dispute settlement process. For the purposes of our
    analysis, we

    combined multiple requests for consultation regarding the same measure or
    law into a single case. For instance, nine WTO members requested
    consultations regarding the steel safeguard that the United States imposed
    in March 2002; we counted this as one case, because all of the requests
    for consultation pertained to the same measure.

    Figure 1: Total Number of WTO Cases Versus Trade Remedy Cases Filed per
    Year, 1995- 2002

    United States Has Been the In comparing WTO members* participation in the
    trade remedy cases, the

    Most Frequent Defendant, United States by far has been the most frequent
    defendant but less active as

    but Less Active as a a complainant. As shown in figure 2, the United
    States was a defendant in

    Complainant 30 (47 percent) of the 64 trade remedy cases, a majority of
    which were filed

    since January 2000. The next most frequent defendants were Argentina,
    which defended 6 cases, and the EU, a defendant in 5 cases. On the other
    hand, the United States was less active than other WTO members in filing
    trade remedy cases. As figure 2 also shows, the EU was the most frequent
    complainant in the 64 trade remedy cases, filing 16 complaints. Six WTO
    members each filed more complaints than the United States.

    Figure 2: Most Frequent Complainants and Defendants in WTO Trade Remedy
    Cases, 1995- 2002

    U. S. agency officials said that it was not surprising that the United
    States had been a defendant more often than a complainant in WTO disputes
    since (1) the United States has the world*s biggest economy and most
    desirable market and (2) U. S. laws and procedures are more detailed and
    transparent than those of other members that are large users of trade
    remedies. These officials also pointed to the easy availability in the
    United States of trade lawyers, who could assist in bringing trade remedy
    actions, as another factor.

    Few Imposed Measures Although members notified the WTO that they imposed
    1,405 trade remedy Were Challenged, but U. S. measures from 1995 through
    2002, only a small percentage of these

    Measures Were Challenged measures were challenged in the dispute
    settlement system. Specifically, Most

    WTO members challenged only 63 (4 percent) of the 1,405 measures, but
    nearly one- half of these challenges involved U. S. trade measures. Over
    the same period, as shown in figure 3, the United States imposed the most
    trade remedy measures (239) and had the biggest number and share (29, or

    12 percent) of its measures challenged by other WTO members. On the other
    hand, India, the next biggest user of trade remedy measures, had none of
    its 226 measures challenged. WTO members challenged 4 (2 percent) of the
    EU*s 182 trade remedy measures and 7 (6 percent) of

    Argentina*s 127 trade remedy measures.

    Figure 3: Total Number of WTO Trade Remedy Measures Imposed and Number
    Challenged, by Most Frequent Trade Remedy Users, 1995- 2002

    Notes: Data on trade remedy measures imposed are the most recent available
    from the WTO and are through December 2002.

    Challenges to WTO members* sunset reviews are not included in these
    figures. Sunset reviews are domestic agency reviews of whether to
    terminate antidumping or countervailing duties after a certain period,
    usually 5 years. The duties are terminated unless the authorities
    determine, in a review, that the duties* elimination would likely lead to
    a continuation or recurrence of dumping or subsidies and injury.

    Domestic While the 25 WTO trade remedy rulings completed from 1995 through
    2002 Determinations

    generally rejected domestic agency determinations supporting trade
    measures, the rulings upheld a vast majority of the trade remedy laws that
    Generally Were

    were challenged. The WTO rejected at least half of the domestic agency
    Rejected, but Statutes

    determinations in most of the 21 cases dealing with such determinations.
    Were Upheld The WTO also rejected roughly the same proportion of U. S. and
    non- U. S.

    domestic determinations. The 21 rulings addressed issues ranging from
    whether domestic agencies adequately justified imposing a trade remedy
    measure to whether WTO members followed proper procedures in initiating
    the disputes. Regarding WTO rulings on members* laws, only U. S.

    laws were challenged during the period. The WTO upheld more than
    threequarters of the U. S. laws challenged in 9 cases involving 13
    challenges.

    WTO Rejected Majority of The WTO made findings on a total of 175 domestic
    agency determinations Domestic Determinations;

    in 21 of the 25 trade remedy cases completed through 2002. As shown in U.
    S./ Non- U. S. Rejection

    figure 4, in 17 of the 21 cases the panels rejected 50 percent or more of
    the Ratios Were Similar

    domestic agency*s determinations* rejecting all determinations in 5 cases.
    In all 21 cases, the WTO found at least one aspect of a measure to be
    inconsistent with WTO requirements.

    Figure 4: Number of Findings on Domestic Agency Determinations and
    Percentage of Those Determinations Rejected by the WTO in 21 Completed
    Trade Remedy Cases, 1995- 2002

    Note: The WTO findings on domestic determinations range in importance from
    how well the domestic agency justified imposing the trade remedy by
    adequately establishing a causal link between the increased imports and
    injury to domestic industry to whether the domestic agency followed proper
    procedures by providing public notice of the initiation of its antidumping
    investigation.

    When comparing rulings among WTO members on domestic determinations, the
    United States and other WTO members fared similarly. Overall, as shown in
    figure 5, the WTO rejected almost the same proportion of the U. S. *s and
    other WTO members* domestic determinations* 57 percent and 56 percent,
    respectively.

    Figure 5: Number (Percent) of Domestic Agency Determinations Upheld and
    Rejected by the WTO, the United States Versus Other Members, in Completed
    Trade Remedy Cases, 1995- 2002

    All WTO Challenges to Although to date WTO members have challenged only U.
    S. laws, the WTO

    Trade Remedy Laws upheld a large majority of these laws. As shown in table
    1, in the 13

    Involved U. S. Laws, but instances (in 9 cases), in which WTO members
    directly challenged U. S.

    laws, the WTO upheld U. S. laws in 11 challenges and rejected U. S. laws
    in 2 Most Laws Were Upheld

    challenges. 16 16 In the 13 challenges to U. S. law, 3 were cases
    challenging only laws, while 10 involved both laws and domestic agency
    determinations.

    Table 1: U. S. Trade Remedy Laws Challenged in WTO Dispute Settlement,
    1995- 2002 Ruling Law challenged WTO dispute settlement case outcome

    Sections 733( e) and United States * Antidumping Measures

    Law upheld 735( a)( 3) of the Tariff Act of

    on Certain Hot- Rolled Steel Products 1930

    from Japan (DS 184) Section 771( 7)( c)( iv) of the

    United States * Antidumping Measures Law upheld Tariff Act of 1930 on
    Certain Hot- Rolled Steel Products

    from Japan (DS 184) Sections 776( a) and 782( d)

    United States * Antidumping and Law upheld and (e) of the Tariff Act of

    Countervailing Measures on Steel Plate 1930

    from India (DS 206) Section 751( b) of the Tariff

    United States * Antidumping Duty on Law upheld Act of 1930 and

    Dynamic Random Access Memory accompanying regulations Semiconductors
    (DRAMS) of One Megabyte or Above Originating from Korea (DS 99)

    Section 751( c)( 2) of the United States * Countervailing Duties on

    Law upheld Tariff Act of 1930 Certain Corrosion- Resistant Carbon

    Steel Flat Products from Germany (DS 213)

    Sections 751( c)( 1)( A) and United States * Countervailing Duties on Law
    upheld 752( b) of the Tariff Act of

    Certain Corrosion- Resistant Carbon 1930

    Steel Flat Products from Germany (DS 213)

    Section 752( b)( 4)( B) of the United States * Countervailing Duties on

    Law upheld Tariff Act of 1930 Certain Corrosion- Resistant Carbon

    Steel Flat Products from Germany (DS 213)

    Section 771( 5)( F) of the United States * Countervailing Measures Law
    upheld Tariff Act of 1930 Concerning Certain Products from the

    European Communities (DS 212) Sections 777A( e)( 2)( A) and

    United States * Preliminary Law upheld (B) of the Tariff Act of 1930
    Determinations With Respect to Certain and accompanying Softwood Lumber
    from Canada (DS 236) regulations

    Section 129( c)( 1) of the United States * Section 129( c)( 1) of the

    Law upheld Uruguay Round Agreements

    Uruguay Round Agreements Act (DS Act

    221) Section 771( 5)( B)( iii) of the United States * Measures Treating
    Law upheld Tariff Act of 1930 Export Restraints as Subsidies (DS 194)
    Section 735( c)( 5)( A) of the

    United States * Antidumping Measures Law rejected Tariff Act of 1930 on
    Certain Hot- Rolled Steel Products

    from Japan (DS 184) Section 801 of the Revenue

    United States * Antidumping Act of 1916 Law rejected Act of 1916 a (DS
    136/ 162)

    Legend: DRAMS dynamic random access memory semiconductors URAA Uruguay
    Round Agreements Act Source: GAO analysis of WTO panel and Appellate Body
    reports. a The official name of the law is section 801 of the Revenue Act
    of 1916; however, for purposes of this

    report, we use the name of the law that the WTO used* the Antidumping Act
    of 1916.

    Addressing why only U. S. trade remedy laws were challenged, a U. S.
    agency official said that U. S. laws tend to be more vulnerable because
    they are more detailed than those of other members, and their language is
    not

    the same as the language in the WTO agreements. In contrast, according to
    the official, some WTO members essentially take the language in the
    relevant WTO agreement and make it their law. Rulings Resulted in

    The 25 WTO trade remedy rulings completed from 1995 through 2002 did not
    result in many changes to WTO members* laws, regulations, or Few Changes
    to

    practices. 17 However, the rulings more often resulted in the onetime
    Members* Laws,

    revision to, or removal of, trade remedy measures. The rulings affected a
    Regulations, and

    number of U. S. laws, regulations, practices, and measures; but for other
    Practices but Caused

    WTO members, no laws or regulations were affected, and only one practice
    was subject to change. Furthermore, fewer foreign trade measures were

    Numerous Changes to subject to removal or revision. Nonetheless, U. S.
    officials told us that the

    U. S. Measures rulings to date had not significantly impaired their
    ability to impose trade

    remedies. However, they told us they were concerned about the potential
    for rulings to have a greater adverse impact in the future. In addition,
    U. S. agencies said that, with few exceptions, the rulings did not
    question U. S. methodologies for determining whether to impose remedies
    but have

    required them to provide fuller explanations and justifications for their
    decisions.

    Rulings Caused Few WTO rulings resulted in a small number of changes to
    members* laws,

    Changes to Members* Laws, regulations, and practices, with all but one of
    those changes involving U. S. Regulations, or Practices

    trade remedies. In the 14 completed trade remedy cases in which the United
    States was the defendant, two U. S. laws, one regulation, and three
    practices were changed or are subject to change, as shown in table 2. In
    the 11 cases involving other WTO members, only one practice was subject to

    change. 17 *Practices* refer to WTO members* uncodified methodologies and
    procedures in investigating injury to domestic industry and in determining
    the appropriate trade remedy measures, according to Commerce Department
    officials.

    Table 2: Impact of WTO Rulings on Members* Laws, Regulations, Practices,
    and Measures, 1995- 2002

    Measures Laws

    Regulations Practices subject to subject to

    subject to subject to

    revision or Defendants

    change change

    change removal

    United States 2 1 3 21 Other WTO members 0 0 1 7 Source: GAO analysis of
    compliance action documents filed with the WTO by members, plus
    information from U. S. agencies. Notes: The 21 U. S. measures were subject
    to revision or removal in 9 cases. While 7 of those cases each involved 1
    measure, 2 cases involved more than 1 measure* 1 case involved 12 measures
    and 1 case involved 2 measures.

    In 2 cases, WTO members technically removed the relevant measures in
    response to other judicial bodies that made similar rulings to the WTO:
    one case was in direct response to a North American Free Trade Agreement
    (NAFTA) panel ruling, and the other was in response to U. S. domestic
    litigation (see app. II, case summaries 7 and 9).

    Specifically, the two U. S. laws subject to change are a section of the
    Antidumping Act of 1916 and a section of the Tariff Act of 1930 18
    involving calculation of the *all others* rate. 19 In the 1916 Antidumping
    Act case, the WTO found the U. S. law to be in violation of GATT 1994 and
    the WTO Antidumping Agreement because it authorized imposing fines,
    imprisonment, and recovery of damages in response to the dumping of

    products in the U. S. market* remedies that are not provided for in those
    agreements. Both the U. S. Senate and the House of Representatives have
    introduced legislation to repeal the 1916 Act. 20 The proposed change to
    the Tariff Act of 1930 involves making calculation of the *all others*
    rate consistent with the WTO Antidumping Agreement. The WTO granted the

    United States until the end of December 2003 to comply, but so far
    Congress has not addressed this change.

    18 Sections 735( c)( 5) of the Tariff Act of 1930, codified at 19 U. S. C.
    S: 1673d( c)( 5). 19 The *all others* rate is the rate used to calculate
    antidumping duties for exporters and producers who are not individually
    investigated. 20 While the House bill (H. R. 1073), introduced on March 4,
    2003, and one of the Senate bills (S. 1155), introduced on May 23, 2003,
    explicitly state that the repeal would not affect pending cases, another
    Senate bill (S. 1080), introduced on May 19, 2003, would apply to any
    pending cases on the date of enactment.

    The one change to a U. S. regulation stemmed from a case involving U. S.
    antidumping duties imposed on imports of Korean dynamic random access
    memory semiconductors (DRAMS). To implement the ruling, the United States
    replaced its regulatory standard for revoking an antidumping order* that
    dumping was *not likely* to occur* with the standard in the WTO
    Antidumping Agreement* that *continued imposition of the antidumping duty
    is necessary to offset dumping.*

    The three changes to U. S. practices involved a revision of the
    *arm*slength* 21 methodology in antidumping cases and two privatization
    methodologies that the Commerce Department used in countervailing duty

    cases to calculate the extent to which the benefit of past subsidies are
    passed on to private purchasers of state- owned enterprises. 22 The United
    States revised its *arms- length* methodology to conform to the WTO

    Antidumping Agreement by expanding the scope of sales to an affiliated
    business that could be considered to be made in the ordinary course of
    trade. Commerce revised its countervailing duty methodology to conform to
    the Appellate Body*s first privatization decision, but the Appellate Body
    later ruled that the revised methodology was also inconsistent with the
    Subsidies and Countervailing Measures Agreement. Commerce revised its
    methodology a second time 23 to reflect the Appellate Body*s finding that
    an arm*s- length, fair market value sale of a subsidized, state- owned
    entity to a private buyer creates a presumption that the privatized entity
    no longer benefits from past subsidies. 21 The *arm*s- length* methodology
    involves determining whether home market sales by an

    exporter to an affiliated party are made at arm*s length, that is, in the
    ordinary course of trade. 22 The privatization cases concern the issue of
    whether past subsidies provided to a stateowned enterprise continue to
    benefit the enterprise after it is sold to a private buyer. The two
    relevant U. S. methodologies are commonly referred to as the *gamma* and
    *same person* methodologies and are described by the Appellate Body in
    paragraphs 12- 16 of

    United States* Countervailing Measures Concerning Certain Products from
    the European Communities, WT/ DS212/ AB/ R (see case summary 22 in app.
    II). The U. S. Court of Appeals for the Federal Circuit rejected the gamma
    methodology in Delverde, SRL v. United States, 202 F. 3d 1360, 1362- 63
    (Fed. Cir. 2000). This occurred before the WTO

    Appellate Body ruled in the first WTO privatization case* United States*
    Imposition of Countervailing Duties on Certain Hot- Rolled Lead and
    Bismuth Carbon Steel Products Originating in the United Kingdom, WT/
    DS138/ AB/ R (see case summary 9 in app. II).

    23 The final modification to the U. S. privatization methodology was
    published in the Federal Register on June 23, 2003. 68 Fed. Reg. 37125.

    Aside from the changes to U. S. laws, regulations, and practices, 1 case
    resulted in a change to an EU practice. In that case, 24 the WTO ruled
    that the EU*s practice of *zeroing* was not permitted under the WTO
    Antidumping Agreement. Zeroing 25 in that case concerned the EU*s changing
    negative dumping margins to zero when comparing dumping

    margins of different models of like products* for example, comparing
    dumping margins of high- end satin sheets with low- end polyester/ cotton
    blend sheets.

    Rulings Brought about In contrast to the relatively few changes in
    members* laws, regulations, and

    Increased Removals and practices, most of the rulings in the 25 completed
    trade remedy cases 26 Revisions of Specific Trade

    involved a case- specific removal or revision of a WTO member*s trade
    Measures

    remedy measure. More U. S. measures were affected than those of all other
    members. In the 14 completed cases brought against the United States, 21
    U. S. trade measures were subject to revision or removal, 27 while the 11
    completed cases against other countries resulted in 7 trade measures being
    subject to revision or removal, as shown in table 2.

    24 European Communities* Antidumping Duties on Imports of Cotton- Type Bed
    Linen from India, WT/ DS141/ AB/ R (see case summary 10 in app. II). 25
    The dumping margin is the amount by which the imported merchandise is sold
    below normal value. For example, if the export price is $200 and the
    normal value is $220, the dumping margin is $20. This margin is expressed
    as a percentage of the export price; in this example, the margin is 10
    percent. The term *zeroing* is used to describe designating dumping
    margins for non- dumped sales (i. e., sales made above the normal value)
    as zero. Thus, if the export price is $220 and the normal value is $200,
    the level of dumping (i. e., the amount by which normal value exceeds the
    export price) is zero, not negative $20. By zeroing comparisons where the
    export price exceeds normal value, dumping margins tend to be higher.

    26 Four U. S. cases did not involve domestic agency determinations, and
    thus did not concern trade measures; 3 directly challenged laws, and 1 was
    found not to be properly before the WTO.

    27 The 21 U. S. measures were subject to revision or removal in 9 cases.
    While 7 of those cases each involved only 1 measure, 2 cases concerned
    more than 1 measure. United States* Countervailing Measures Concerning
    Certain Products from the European Communities,

    WT/ DS212/ AB/ R, involved 12 measures, and United States* Antidumping
    Measures on Stainless Steel Plate in Coils and Stainless Steel Sheet and
    Strip from Korea, WT/ DS179/ R (see case summary 14 in app. II), concerned
    2 measures.

    Specifically, the United States reduced antidumping margins on measures in
    response to 3 WTO rulings, 28 removed countervailing duty measures in 1
    case as a result of domestic litigation, 29 and is revising countervailing
    duty measures in 2 other cases. 30 And in 3 cases, the United States
    removed, or allowed to expire, safeguard measures that the Appellate Body
    found inconsistent with the WTO Safeguards Agreement. 31 By contrast,
    other WTO members removed antidumping measures in 3

    cases 32 and are due to remove or revise antidumping measures in 2 cases.
    33 28 These cases were United States* Antidumping Measures on Stainless
    Steel Plate in Coils and Stainless Steel Sheet and Strip from Korea, WT/
    DS179/ R; United States* Antidumping Measures on Certain Hot- Rolled Steel
    Products from Japan,

    WT/ DS184/ AB/ R (see case summary 15 in app. II); and United States*
    Antidumping and Countervailing Measures on Steel Plate from India, WT/
    DS206/ R (see case summary 19 in app. II).

    29 See Delverde, SRL v. United States, 202 F. 3d 1360, 1362- 63 (Fed. Cir.
    2000). 30 These cases were United States* Countervailing Duties on Certain
    Corrosion- Resistant Carbon Steel Flat Products from Germany, WT/ DS213/
    AB/ R (see case summary 23 in app. II), and United States* Countervailing
    Measures Concerning Certain Products from the European Communities, WT/
    DS212/ AB/ R (see case summary 22 in app. II).

    31 These cases were United States* Definitive Safeguard Measures on
    Imports of Circular Welded Carbon Quality Line Pipe from Korea, WT/ DS202/
    AB/ R (see case summary 18 in app. II); United States* Definitive
    Safeguard Measures on Imports of Wheat Gluten from the European
    Communities, WT/ DS166/ AB/ R (see case summary 12 in app. II); and United
    States* Safeguard Measures on Imports of Fresh, Chilled, or Frozen Lamb
    Meat from New Zealand and Australia, WT/ DS177/ AB/ R and WT/ DS178/ AB/ R
    (see case summary 13 in app.

    II). 32 The cases were Guatemala* Definitive Antidumping Measures on Grey
    Portland Cement from Mexico, WT/ DS156/ R (see case summary 11 in app.
    II); Argentina* Definitive Antidumping Measures on Imports of Ceramic
    Floor Tiles from Italy, WT/ DS189/ R (see case summary 16 in app. II); and
    Mexico* Antidumping Investigation of High- Fructose

    Corn Syrup (HFCS) from the United States, WT/ DS132/ R (see case summary 7
    in app. II). In the latter case, Mexico actually removed its antidumping
    measure pursuant to a panel ruling under the North American Free Trade
    Agreement. The WTO panel had made similar rulings and recommendations
    regarding Mexico*s compliance with the Antidumping Agreement. 33 These
    cases are Egypt* Definitive Antidumping Measures on Steel Rebar from
    Turkey, WT/ DS211/ R (see case summary 21 in app. II), and European Union*
    Antidumping Duties

    on Imports of Cotton- Type Bed Linen from India, WT/ DS141/ AB/ R (see
    case summary 10 in app. II).

    In addition, other members removed safeguard measures as a result of 2 WTO
    rulings. 34 U. S. Officials Are

    While U. S. officials told us that WTO trade remedy rulings had not yet
    Concerned about the

    significantly impaired the U. S. *s fundamental right and ability to use
    its Potential Impact of WTO

    trade remedies, they are concerned about the rulings* potential to do so
    in Rulings on U. S. Ability to

    the future. For example, Commerce Department officials said that
    implementing the second Appellate Body ruling on privatization may have a
    Impose Trade Remedy

    substantial impact on similar proceedings in the future as well as
    existing Measures

    countervailing duty orders. In addition, U. S. officials expressed concern
    about the potential negative ramifications of the WTO ruling in the EU bed
    linen case. First, U. S. officials said that although the United States
    did not change its *zeroing* practice as a result of the ruling against
    the EU, they noted that the ruling could affect a current Canadian dispute
    against the United States involving U. S. zeroing practices. 35
    Furthermore, the EU has recently challenged 21 Commerce Department
    antidumping determinations with regard to the U. S. * zeroing practice.
    The EU alleged that U. S. application of its zeroing practice is
    inconsistent with the WTO Antidumping Agreement and GATT 1994. The EU also
    asserted that U. S. laws and regulations providing for this zeroing
    practice appear to be inconsistent with those agreements. As shown by this
    challenge, U. S. officials believe that when the WTO strikes down a
    practice, there is significant potential for WTO members to challenge
    similar practices of other members. Accordingly, these officials said they
    are monitoring WTO rulings and recommendations in cases not

    involving the United States in order to prepare for similar, potential
    challenges against the United States.

    34 These cases were Argentina* Safeguard Measures on Imports of Footwear,

    WT/ DS121/ AB/ R (see case summary 5 in app. II), and Korea* Definitive
    Safeguard Measure on Imports of Certain Dairy Products, WT/ DS98/ AB/ R
    (see case summary 3 in app. II). 35 According to a Commerce Department
    official, the WTO panel is due to issue an interim ruling in a case
    involving a final dumping determination on softwood lumber from Canada in
    September and a final ruling in December 2003. See United States* Final
    Dumping

    Determination on Softwood Lumber from Canada, WT/ DS264.

    In the safeguards area, U. S. officials indicated that some WTO rulings 36
    were confusing and extremely difficult to implement, particularly
    regarding certain aspects of causation* the extent to which increases in
    imports cause serious injury, or threaten serious injury, to domestic
    industry. U. S. officials also said that they have had to increase the
    level of detail they

    provide in explaining their analyses and how they apply their
    methodologies in safeguard investigations. For example, they cited
    safeguard rulings dealing with *nonattribution,* an aspect of causation
    requiring that injury to domestic industry caused by factors other than
    increased imports not be attributed to increased imports. 37 U. S.
    officials

    said that these rulings could be viewed as calling for domestic agencies
    to quantify the amount of injury due to increased imports versus the
    amount due to other factors* a task they consider to be difficult, if not
    impossible. Moreover, the officials said they would now have to expend
    more resources in conducting safeguard investigations.

    Two Standards of WTO panels use two standards of review in evaluating the
    factual and legal

    Review Apply to WTO determinations of WTO members* domestic agencies in
    trade remedy cases. Article 11 of the WTO Dispute Settlement Understanding
    applies to Trade Remedy Cases

    all cases brought under the WTO dispute settlement system and calls for an
    objective assessment of domestic agency determinations. The Appellate Body
    has stated that in applying article 11, panels should not conduct a new
    review of domestic agency fact- finding nor totally defer to domestic
    agency determinations. Article 17.6 of the Antidumping Agreement applies
    only to antidumping cases and is more specific and deferential than
    article 11. Appellate body guidance on article 17.6 calls for panels first
    to apply established international rules of treaty interpretation to
    interpreting provisions of the Antidumping Agreement before deciding
    whether to uphold a domestic agency*s interpretation. In the relatively
    few number of instances in which the Appellate Body has considered
    standard of review

    36 In addition to the safeguard rulings in this study, a WTO panel in July
    2003 issued a decision on challenges brought by a number of WTO members
    against U. S. safeguards imposed on certain steel products. The panel
    found against the United States on unforeseen developments and aspects of
    causation, among other issues. See United States* Definitive Safeguard
    Measures on Imports of Certain Steel Products, WT/ DS248- 49, 251- 54,
    258- 59/ R.

    37 The Appellate Body has found, with regard to the issue of
    nonattribution, that members must separate and distinguish the injurious
    effects of other factors from the injurious effects of increased or dumped
    imports to comply, respectively, with article 4.2( b) of the Safeguards
    Agreement and article 3.5 of the Antidumping Agreement.

    issues, it has found that panels have generally interpreted and applied
    both standards of review correctly. Finally, panel and Appellate Body
    decisions generally discuss the standards of review, but the extent of the
    discussion varies by trade remedy area, case, and issue. WTO Has Two
    Principal

    The standard of review that WTO panels and the Appellate Body apply in
    Standards of Review

    WTO dispute settlement cases refers to how they evaluate and defer to the
    factual and legal determinations of domestic agencies of WTO members. 38
    The two principal standards of review that WTO panels and the Appellate

    Body use to evaluate these determinations are article 11 of the WTO
    Dispute Settlement Understanding and article 17.6 of the WTO Antidumping
    Agreement. 39 Article 11 applies to cases brought under all the WTO
    agreements that are covered by the dispute settlement system and
    supplements article 17.6 in antidumping cases. Article 17.6 only applies
    to

    cases brought under the Antidumping Agreement, which is the only WTO
    agreement that has a specific standard of review. 40

    38 In the 25 trade remedy cases we reviewed, panels and the Appellate Body
    also resolved 13 direct challenges to U. S. laws. For many of these
    challenges to laws, panels and the Appellate Body did not specifically
    mention articles 11 or 17.6 or articulate any other standard of review for
    evaluating whether the laws were consistent with WTO obligations.

    39 Some experts view article 3.2 of the Dispute Settlement Understanding
    as an additional standard of review. Under article 3.2, WTO members
    recognize that the dispute settlement system serves both to preserve the
    rights and obligations of WTO members under the WTO agreements covered by
    dispute settlement and to clarify the provisions of those agreements in
    accordance with customary rules of interpretation of public international
    law. It also

    provides that Dispute Settlement Body recommendations and rulings cannot
    add to or diminish the rights and obligations provided in the WTO
    agreements. Although panels and the Appellate Body have not specifically
    identified article 3.2 as a standard of review, they frequently do refer
    to it when interpreting provisions of WTO trade remedy agreements. 40 A
    WTO ministerial decision adopted by the Uruguay Round Trade Negotiations
    Committee in December 1993 states that the standard of review in article
    17.6 *shall be reviewed after three years with a view to considering the
    question of whether it is capable of general application.* This has not
    been done. In addition, in the WTO countervailing duty case,

    United States* Imposition of Countervailing Duties on Certain Hot- Rolled
    Lead and Bismuth Carbon Steel Products Originating in the United Kingdom,
    WT/ DS138/ AB/ R, the United States argued that article 17. 6 should also
    apply to countervailing duty cases brought under the WTO Subsidies and
    Countervailing Measures Agreement. Part of the U. S. argument was based on
    a WTO ministerial declaration that called for *consistent resolution of
    disputes arising from anti- dumping and countervailing duty measures.* The
    Appellate

    Body, however, rejected this position and found that article 11 was the
    appropriate standard of review to apply in these disputes.

    Article 11 Calls for an Article 11 obligates a panel to make an *objective
    assessment of the matter

    Objective Assessment before it, including an objective assessment of the
    facts of the case and the

    applicability of and conformity with the relevant* WTO agreement. 41 The
    Appellate Body has interpreted this requirement to mean that panels should
    neither conduct a new review of domestic agency fact- findings,

    often referred to as a *de novo review,* nor totally defer to domestic
    agency determinations. In rejecting both these extremes, the Appellate
    Body has found that the panels are poorly suited to engage in new reviews
    and cannot ensure an objective assessment by totally deferring to domestic
    agency determinations. What the panels should do in safeguards cases,
    according to the Appellate Body, is ascertain whether domestic agencies
    have evaluated all relevant facts and provided an adequate, reasoned, and
    reasonable explanation about how the facts supported their determinations.
    42 Article17.6 Is More Specific

    Article 17. 6 is more specific than article 11 and calls for more
    deference to and Deferential than Article

    domestic agency determinations. Article 17.6 is divided into two subparts*
    11

    factual and legal* and establishes standards of review for panel
    evaluations of domestic agency determinations. Under the factual standard
    of review in article 17.6( i), panels must determine whether domestic
    agencies have properly established the facts and evaluated them in an
    unbiased and objective manner. When a panel finds that the domestic agency
    has performed this task, the panel cannot overturn the domestic agency*s
    determination even if it might have reached a different conclusion. The
    Appellate Body has stated that the panel*s obligation under the factual
    standard in article 17. 6( i) closely reflects the obligation imposed on
    panels under article 11. 43 Under the legal standard of review in article
    17.6( ii), panels must apply

    established international rules in interpreting provisions of the WTO
    Antidumping Agreement. These rules are set forth in articles 31 and 32 of

    41 Article 11 also obligates panels to *make such other findings as will
    assist the Dispute Settlement Body in making* recommendations and rulings.
    42 See Fresh Lamb Meat from New Zealand and Australia, above, paragraphs
    97- 108.

    43 In paragraphs 55 and 62 of United States* Antidumping Measures on
    Certain Hot- Rolled Steel Products from Japan, WT/ DS184/ AB/ R, the
    Appellate Body described the complementary interaction between articles 11
    and 17.6, particularly regarding panel review of factual determinations of
    domestic agencies.

    the Vienna Convention on the Law of Treaties 44 and provide a method for
    interpreting provisions of the Antidumping Agreement. When a panel applies
    these rules and finds that there is more than one permissible way to
    interpret a provision of the Antidumping Agreement, the panel must uphold
    the domestic agency*s determination if it is consistent with one of the
    permissible interpretations. The Appellate Body*s guidance to panels about
    how they are to apply this standard is consistent with the sequence
    implied above. Thus, panels should first use the international rules to
    interpret the WTO provision in question, and only after completing this
    task should panels then decide whether to uphold the domestic agency*s
    legal determination. The Appellate Body has stated that application of the
    international rules could give rise to at least two permissible
    interpretations of some provisions of the Antidumping Agreement. 45
    Appellate Body Generally

    WTO members did not often challenge panel interpretations and Upheld
    Panels* Treatment of

    applications of the standards of review, and most challenges involved
    Standards, but Treatment

    article 11. In most instances, the Appellate Body upheld the panels* Was
    Seldom Challenged

    treatment of the standards. In the 14 instances in which the Appellate
    Body specifically ruled on panel interpretations and applications of
    standard of review, it found that the panels had correctly addressed the
    standards in 11 instances* 9 involving article 11 and 2 involving article
    17.6.

    Panels/ Appellate Body As indicated above, panels have the responsibility
    for applying the

    Discuss Standard of Review standards of review in articles 11 and 17. 6
    when evaluating determinations

    in Cases, but Extent Varied of WTO member domestic agencies. The Appellate
    Body*s function is to

    review how panels have interpreted and applied these standards and to
    uphold, modify, or reverse panel actions. For the most part, Appellate
    Body

    44 These provisions call for applying general and supplementary methods to
    interpreting provisions of treaties and international agreements. Under
    article 31, general rules for interpreting treaty provisions are first
    applied, and supplementary methods under article 32 are used to (1)
    confirm the meaning resulting from application of article 31 or (2)
    determine the meaning when the interpretation under article 31 is
    ambiguous or obscure or leads to an unreasonable result.

    45 United States* Antidumping Measures on Certain Hot- Rolled Steel
    Products from Japan, WT/ DS184/ AB/ R, paragraphs 59- 60. See also,
    Thailand* Antidumping Duties on Angles, Shapes, and Sections of Iron or
    Non- Alloy Steel and H- Beams from Poland,

    WT/ DS/ AB/ R, paragraphs 125- 27 (see case summary 6 in app. II).

    decisions in trade remedy cases have included longer and more detailed
    discussions of standard of review than the panels. 46 Aside from
    differences between the panels and the Appellate Body, the

    extent to which standards of review are discussed vary by trade remedy
    area, case, and issue. Thus, standards of review are discussed, at least
    to some extent, in all safeguard and antidumping cases involving
    determinations of domestic agencies but are not mentioned in a number of
    countervailing duty cases. In many of the safeguard and antidumping cases,

    the panels discuss article 11 or article 17. 6, respectively, at the
    beginning of the case, indicating that they are the standards of review to
    be applied in evaluating the domestic agency determinations involved,
    though the

    amount of introductory discussion varies from case to case. The standards
    of review are sometimes also discussed, or alluded to, later in panel and
    Appellate Body reports in connection with evaluations of particular
    domestic agency determinations. These allusions to the standards of review
    involve use of language from the standards themselves or interpretations
    of the standards rather than any specific mention of them. For example, in
    the safeguard cases, panels often invoke Appellate Body

    guidance about what kind of domestic agency explanation is necessary* an
    *adequate, reasoned, and reasonable explanation** without mentioning
    article 11. Similarly, in antidumping cases, panels sometimes refer to the
    requirement in article 17.6( i) to conduct an *unbiased and objective*
    evaluation of domestic agency fact- finding without specifically
    mentioning 17.6( i). Finally, for some issues, panels neither specifically
    mention nor allude to standard of review provisions. Expert Views and U.
    S.

    How the WTO has interpreted and applied the standard of review in trade
    Agency Positions on

    remedy cases and how it has resolved important trade remedy issues are
    highly controversial issues in the United States. Further, a number of
    these Standard of Review important trade remedy issues are highly complex,
    technical, and not easily

    and Other Trade explained, as evidenced by their lengthy treatment in WTO
    panel and

    Remedy Issues Appellate Body reports. Accordingly, we decided to interview
    a wide range

    of WTO legal experts to obtain their views on these issues. 46 The
    Appellate Body decisions in United States* Safeguard Measures on Imports
    of Fresh, Chilled, or Frozen Lamb Meat from New Zealand and Australia, WT/
    DS177/ AB/ R, and United States* Antidumping Measures on Certain Hot-
    Rolled Steel Products from Japan, WT/ DS184/ AB/ R, contain the most
    detailed discussions, respectively, of articles 11 and 17.6.

    The most common concern identified by the experts with whom we spoke,
    although a minority view, was about how the WTO was applying article 17.6(
    ii) in antidumping cases. Notwithstanding this concern, overall a majority
    of the experts believed that the WTO had not exceeded its authority in
    applying the standard of review in the trade remedy cases we reviewed.
    Commenting on more general issues surrounding the WTO trade remedy
    rulings, almost all of the experts believed that the United States and
    other WTO members have received the same treatment in trade

    remedy cases. In addition, a majority of the experts who responded
    concluded that WTO decisions generally have not added to obligations or
    diminished rights of WTO members and that it was appropriate for the WTO
    to interpret vague and ambiguous provisions in WTO agreements, sometimes
    referred to as *gap filling.* However, a significant minority of

    experts strongly disagreed with this view about WTO members* obligations
    and rights and considered gap filling to be inconsistent with several
    provisions of the Dispute Settlement Understanding. Regarding specific
    rulings, a number of experts cited some safeguard rulings as confusing and
    unclear. In contrast to the majority views expressed above, the U. S.
    agencies most involved in trade remedy activities believed that article
    17. 6( ii) has been improperly applied in some trade remedy cases, mainly
    because the WTO has not applied article 17.6( ii) in a way that allows for
    upholding permissible interpretations of WTO members* domestic agencies.
    They also believed that in certain trade remedy cases, the WTO has found
    obligations and imposed restrictions on WTO members that are not supported
    by the texts of the WTO trade remedy agreements.

    Significant Minority A common concern raised by a significant minority of
    experts with whom

    Expressed Concerns about we spoke was that the WTO was not properly
    applying the legal standard of WTO Application of Article

    review in article 17. 6( ii) of the Antidumping Agreement. Specifically,
    these 17.6( ii)

    experts maintained that Appellate Body guidance calling for panels to
    first apply international rules in the Vienna Convention on the Law of
    Treaties to interpret provisions of the Antidumping Agreement before they
    evaluate the domestic agencies* legal determinations necessarily leads to
    only one

    interpretation. Consequently, panels never reach the point of applying the
    part of article 17.6( ii) that allows for multiple permissible
    interpretations and upholding an agency determination that is based on one
    of these

    interpretations. 47 In fact, while several experts mentioned specific
    rulings in which panels or the Appellate Body had upheld domestic agency
    determinations as permissible, it was unclear whether this was due to
    these bodies going through the article 17.6( ii) analysis or solely
    because they agreed with the domestic agency. In this regard, in the trade
    remedy cases we reviewed, no expert pointed to a clear instance in which a
    panel first applied the Vienna Convention, found several permissible
    interpretations, and then upheld the agency determination because it was
    consistent with one of them. 48 One expert, who was a former U. S.
    negotiator in the Uruguay Round, stated that U. S. negotiators in the
    round had not fully appreciated how application of the Vienna Convention
    would limit the possibility of panels or the Appellate Body finding
    multiple permissible interpretations of the Antidumping Agreement.

    Some experts also believed that panels and the Appellate Body have not
    applied the legal standard of review in article 17. 6( ii) in the
    deferential way intended by the United States, as expressed in the U. S.
    Statement of

    Administrative Action (SAA) accompanying the U. S. Uruguay Round
    Agreements Act. 49 The SAA describes article 17. 6 as a special standard
    of review analogous to the deferential standard applied by U. S. courts in

    reviewing actions by the Commerce Department and the ITC, commonly 47 Some
    of these experts stated that by not applying part of article 17.6( ii),
    panels and the Appellate Body are violating the principle that every
    provision of a treaty or international agreement should be given effect.

    48 In United States* Antidumping Measures on Certain Hot- Rolled Steel
    Products from Japan, WT/ DS184/ R, on an issue involving calculation of
    normal value, the Appellate Body upheld a U. S. determination as resting
    on an interpretation of article 2.1 of the Antidumping Agreement that was,
    in principle, permissible *following application of the rules of treaty

    interpretation in the Vienna Convention.* Nevertheless, the Appellate Body
    did not first set forth several permissible interpretations and then
    uphold the United States determination because it was consistent with one
    of them. In the April 2003 WTO panel report,

    Argentina* Definitive Anti- Dumping Duties on Poultry from Brazil, WT/
    DS241/ R, the panel appeared to go further in applying the article 17.6(
    ii) process in finding permissible an Argentinean interpretation dealing
    with the definition of *domestic industry.*

    49 The SAA is an authoritative expression of the United States about the
    interpretation and application of the Uruguay Round Agreements and the
    Uruguay Round Agreements Act. Public Law No. 103- 465, 108 Stat. 4815,
    codified at 19 U. S. C. S:S: 3512( d). H. R. Doc. No. 103- 316, at 818
    (Vol. 1 1994).

    referred to as the Chevron standard. 50 Thus, from the U. S. perspective,
    article 17.6 was intended to ensure that WTO panels neither second- guess
    the factual conclusions of domestic agencies, even when panels might have
    reached a different conclusion, nor rewrite, under the guise of legal

    interpretation, the provisions of the Antidumping Agreement. Majority Said
    WTO Did Not Despite the concerns expressed above, the majority of the
    experts with Exceed Its Authority in

    whom we spoke indicated that the panels and the Appellate Body generally
    Applying Standard of

    had not exceeded their authority in applying the standards of review in
    articles 11 and 17. 6 in the trade remedy cases we reviewed. 51 These
    experts Review

    indicated that panels and the Appellate Body had properly applied article
    11 in safeguards and countervailing duty cases as well as the factual
    standard of review in article 17. 6( i) in antidumping cases. Several of
    this group even questioned whether article 11 was intended to be a
    standard of review provision at all and, if it was, that it did not intend
    the same level of

    deference as article 17.6. 52 Majority support for how panels and the
    Appellate Body applied the legal standard in article 17.6( ii) included
    experts who thought the panels and the Appellate Body had generally
    applied the article correctly and provided the right amount of deference,
    those who believed the article was not particularly deferential, and those
    who considered the article to primarily set forth a method for
    interpreting provisions of the Antidumping Agreement rather than for
    conferring deference. Finally, a number of experts, including a few with
    divergent opinions about whether the legal standard in article 17.6( ii)
    had been properly applied, stated that evaluation of panel and Appellate
    Body decisions should focus on their substantive rulings and not the
    technical issue of standard of review.

    50 The Chevron standard or doctrine was established by the United States
    Supreme Court in Chevron U. S. A., Inc. v. Natural Resources Defense
    Council, Inc., 467 U. S. C. 837, 842- 45 (1984). Under the Chevron
    doctrine, when a reviewing court determines that the law is clear on a
    particular issue, the court as well as the agency must give effect to the
    law. If, however, the law is silent or ambiguous, the court is to uphold
    an agency*s interpretation when it is

    reasonable, even if it is different from the interpretation of the law
    that the court would have reached.

    51 A majority of experts also agreed that, both in a WTO and domestic
    political context, the United States has had the most concerns about how
    standard of review has been applied in trade remedy cases.

    52 This included one expert who was highly critical about how panels and
    the Appellate Body had applied article 17.6( ii) in a number of instances
    in antidumping cases.

    A majority of experts also maintained that the United States was not
    successful in getting the standard of review it wanted in the Antidumping
    Agreement and that the SAA only expresses the U. S. *s view about the
    intent of article 17.6. They pointed out that while the United States was
    the main proponent for having a strongly deferential standard included in
    the Antidumping Agreement, 53 numerous WTO members opposed the United
    States on this issue. Although the experts agreed that the lack of written
    negotiating history makes it difficult to determine how much deference
    article 17.6 was intended to provide, a large number believed that the
    language that was ultimately agreed to did not include the Chevron
    standard. 54 Large Majority Said All WTO

    Experts with markedly divergent views on other issues were in near Members
    Were Treated the

    unanimous agreement that the United States generally was being treated
    Same in Trade Remedy

    about the same as other WTO members in trade remedy cases. Although Cases
    several experts pointed out that the United States was the most frequent
    defendant and was losing more often than other WTO members, they believed
    that the panels and the Appellate Body had ruled against other WTO members
    with the same frequency and in the same or similar manner as they had for
    the United States. Several experts also were emphatic in describing the
    WTO as a plaintiff*s court in trade remedy cases and pointed out that in
    nearly all trade remedy decisions and all the safeguards decisions we
    reviewed, respondents were asked to take some action* for example, to
    ensure that a safeguard measure was applied consistent with the Safeguards
    Agreement. When asked why respondents usually lose trade remedy cases,
    some experts cited a WTO free trade bias or bias against trade remedies as
    the principal reason. 55 Several others said that WTO members only bring
    trade remedy actions in the WTO that they are confident they can win. As
    to why the United States was the most frequent defendant in trade remedy
    cases, several experts mentioned the fact that the United States was the
    biggest market as well as the biggest user of trade remedies. In addition,
    several experts believed that some of the Commerce Department*s decisions
    to impose trade remedy measures were unfounded.

    53 The United States also wanted article 17.6 to apply to countervailing
    duty cases. 54 Among other things, the U. S. *s draft language for article
    17.6( ii) that incorporated the Chevron term *reasonable interpretation*
    was changed to *permissible interpretation.*

    55 A few of these experts viewed a bias toward liberalizing trade
    positively and consistent with WTO agreement provisions.

    Majority Said No New A majority of experts who responded to this issue
    agreed that panels and

    Obligations or Diminished the Appellate Body generally have not added to
    the obligations or

    Rights, but Minority diminished the rights of the United States and other
    WTO members in trade Strongly Disagreed

    remedy cases. They believed panels and the Appellate Body generally had
    ruled appropriately in these cases, including the rulings on issues that
    the experts cited most frequently as being important and controversial*
    zeroing, facts available, 56 nonattribution, unforeseen developments, and
    privatization. 57 A number of these experts believed that the panels and
    the

    Appellate Body had both the authority and the need to interpret vague or
    ambiguous provisions, or to fill gaps, 58 in the trade remedy agreements
    when no provision clearly deals with an issue. A number also cited article
    3.2 of the Dispute Settlement Understanding, which calls for dispute
    settlement to *clarify the . . . provisions of the [WTO] Agreements,* as
    support for panel and Appellate Body interpretations of vague or ambiguous
    provisions. Furthermore, a number stated that it is a common and accepted
    practice for courts to interpret vague or ambiguous provisions of laws and
    agreements, or to fill gaps, when the meaning of a legal provision is
    unclear.

    A significant minority of experts, however, strongly believed that panel
    and Appellate Body findings on a number of important issues, including
    those listed above, had added to obligations or diminished the rights of
    the United States and other WTO members. For example, some in this group
    believed that panels or the Appellate Body should have upheld the domestic
    agency determinations on the antidumping issues of zeroing, facts
    available, and nonattribution as permissible under the legal standard

    of review in article 17. 6( ii). In addition, they contended that gap
    filling was prohibited by articles 3.2 and 19.2 of the Dispute Settlement
    Understanding, both of which preclude the Dispute Settlement Body from

    56 Under the *facts available* provisions in article 6.8 and annex II of
    the WTO Antidumping Agreement, domestic agencies are authorized to make
    antidumping determinations on the basis of whatever facts are available to
    them when the defending party fails to provide relevant facts within a
    reasonable period of time or significantly impedes the investigation.

    57 The Appellate Body ruled against respondents on nearly all of these
    issues and, with the exception of zeroing, all involved cases in which the
    United States was a respondent. 58 Not all of the experts agreed on the
    meaning of *gap filling.* Some viewed the term negatively in that it led
    to inappropriately adding obligations to WTO agreements, while others
    agreed that it was synonymous with interpreting vague or ambiguous
    provisions. When asked about which of several factors had influenced WTO
    decisions, gap filling was among the most frequently cited by the experts.

    adding to obligations or diminishing the rights of WTO members as provided
    in the WTO agreements covered by dispute settlement. Furthermore, they
    believed that the WTO had engaged in improper gap filling in its rulings
    regarding the aforementioned issues, including privatization. They said
    that WTO provisions on these issues were unclear and that privatization
    was not specifically referred to in the Subsidies and Countervailing
    Measures Agreement. Finally, some experts concluded that it was improper
    for the panels and the Appellate Body to rule on issues that the
    negotiating members had intentionally left unclear. They believed that the
    proper way to deal with vague and ambiguous language in the WTO agreements
    was through additional negotiations rather than through panel or Appellate
    Body rulings.

    Experts Believed Some A substantial number of experts stated that WTO
    rulings on the safeguard

    Safeguard Rulings Were issues of causation and unforeseen developments
    were confusing and

    Confusing and Unclear difficult to follow. This group included experts
    with sharply divergent

    views on other trade remedy issues. Specifically, these experts believed
    that the lack of clarity in the rulings on the causation issue of
    nonattribution has made it difficult for domestic agencies to implement
    the rulings. Some in this group were concerned that the rulings seemed to
    require a quantitative analysis of each factor causing serious injury to
    domestic industry to ensure the factors were not being improperly
    attributed to increased imports, 59 and several questioned whether
    domestic agencies could perform this kind of analysis. The experts also
    had

    concerns about how domestic agencies could implement the Appellate Body
    rulings on the issue of unforeseen developments. Specifically, they were
    unsure how WTO members would show that increased imports causing serious
    injury resulted from developments they had not foreseen when they made
    tariff concessions or assumed other obligations under GATT. A few experts
    were surprised that the Appellate Body had resurrected the GATT
    requirement on unforeseen developments, which they thought had been
    abandoned and had not been specifically included in

    the Safeguards Agreement. 59 In the antidumping context, the Appellate
    Body recognized that it might not be easy to separate and distinguish the
    injurious effects of different causal factors but found that this was what
    was intended by the nonattribution language in the Antidumping Agreement.

    United States* Antidumping Measures on Certain Hot- Rolled Steel Products
    from Japan,

    WT/ DS184/ AB/ R, paragraph 228.

    U. S. Agency Positions on In its December 2002 report to Congress, 60 the
    executive branch concluded

    Standard of Review and that, overall, the United States had fared well in
    WTO dispute settlement, Other Trade Remedy Issues

    including in a number of trade remedy cases. Nevertheless, the report
    raised concerns about how the WTO had applied standard of review in trade
    remedy cases and stated that some rulings were troubling in *their failure
    to recognize that agreement terms may be susceptible of multiple,
    reasonable interpretations among which WTO members may properly

    choose.* The report specifically criticized the Appellate Body ruling in

    United States* Antidumping Measures on Certain Hot- Rolled Steel Products
    from Japan for how it had applied the legal standard of review in article
    17. 6( ii).

    The executive branch report also stated that in certain trade remedy
    cases, the WTO had found obligations and imposed restrictions on WTO
    members that were not supported by the texts of the WTO agreements. 61 The
    report mentioned the rulings on facts available, unforeseen developments,
    nonattribution, and several others as examples. The report qualified these

    criticisms by stating that not all of the WTO findings it cited were based
    on a problematical analytical approach or that the WTO would have
    necessarily found in favor of the United States had the proper approach
    been used. Nevertheless, the report emphasized that the problematic

    findings were troubling due to their lack of grounding in the texts of the
    negotiated agreements.

    During the course of our work, the Commerce Department and ITC officials
    reiterated these concerns. ITC officials indicated that they do not agree
    that the WTO has properly applied standard of review in trade remedy
    cases. Specifically, they stated that the WTO has applied article 17.6(
    ii) of the Antidumping Agreement in a manner that raises a question about
    whether the second sentence of the provision, requiring the WTO to uphold
    domestic agency determinations that rest on permissible

    60 The report was entitled Executive Branch Strategy Regarding WTO Dispute
    Settlement Panels and the Appellate Body: Report to the Congress
    Transmitted by the Secretary of Commerce, at 6- 10 (Dec. 30, 2002), and
    was required by the Trade Act of 2002, Public Law No. 107- 210, S: 2105(
    b)( 3), 116 Stat. 1016. The report was prepared by the Commerce Department
    in consultation with the Secretary of State, the Secretary of the
    Treasury, the Attorney General, and the U. S. Trade Representative.

    61 In contrast, an EU and a WTO official we interviewed stated that
    standard of review has been properly applied by the WTO in trade remedy
    cases and that WTO rulings have not added to obligations or diminished
    rights of WTO members.

    interpretations of the Antidumping Agreement, has real meaning. In these
    officials* view, the WTO has not allowed for more than one permissible
    interpretation of the relevant provisions. In this regard, the United
    States recently proposed that article 17.6 be considered as a topic for
    discussion in the Negotiating Group on Rules in the ongoing WTO
    negotiations. In its submission, the United States stated that panels and
    the Appellate Body have not accepted WTO members* reasonable, permissible
    interpretations of the Antidumping Agreement.

    ITC officials also stated that in some instances, the Appellate Body had
    ruled incorrectly on important issues and created new obligations, which
    do not appear in and are unsupported by the plain language of the relevant
    agreements. One example involved the Appellate Body findings on the
    nonattribution provision of the Safeguards Agreement. The ITC also found
    it particularly significant that the WTO had enunciated systemic
    requirements for this issue, as well as unforeseen developments, 62 even

    though they are not specifically covered by U. S. law. Agency Comments and

    We requested comments on a draft of this report from the Secretary of Our
    Evaluation

    Commerce, the Chairman of the U. S. International Trade Commission, and
    the U. S. Trade Representative (USTR). The Commerce Department and the ITC
    provided written comments, which are reprinted in appendixes IV and V. We
    obtained oral comments from USTR officials, including the Assistant

    U. S. Trade Representative for Monitoring and Enforcement. The Commerce
    Department had three areas of concern regarding our report. First, it
    emphasized the potential future impact of WTO trade remedy rulings on the
    U. S. *s ability to impose trade remedies, noting that this potential is
    far more significant than these rulings* limited impact to date. Commerce
    cited, in particular, the possible negative ramifications of two WTO
    rulings. Specifically, it said that the ruling on privatization could
    impact a significant number of U. S. countervailing duty orders, and that
    as a result of the EU bed linen ruling, the EU has recently challenged
    more than 20 U. S. antidumping investigations and reviews. As a result of
    this increased emphasis, we modified the sections of this report that
    present U. S. agency views on the potential future ramifications of WTO
    decisions

    62 In the recent panel report, United States* Definitive Safeguard
    Measures on Imports of Certain Steel Products, WT/ DS248- 49, 251- 54,
    258- 59/ R, the panel found against the United States on the issue of
    unforeseen developments, among others.

    on the U. S. *s ability to impose trade remedies. Second, Commerce raised
    concerns regarding the composition of the group of legal experts we
    consulted and our characterization of their views as *majority* and
    *minority.* However, we believe that our methodology for selecting these
    experts was sound (see app. I). In addition, we believe that our report
    sufficiently addresses the concerns of the minority of experts.
    Nevertheless, we have made modifications to the relevant sections of our

    report to ensure that majority positions and minority concerns are
    presented in a balanced manner. Finally, Commerce expressed concern that
    we did not adequately address the executive branch*s views on the WTO*s
    application of standard of review and other trade remedy issues. As a
    result, we modified our report to give more prominent treatment to U. S.
    agency positions.

    The ITC had two main areas of concern regarding the report. First, the ITC
    said that the report understated the full effect of WTO rulings on the
    ability of the United States to impose and maintain trade remedy measures
    in that the full effect of WTO rulings likely has not yet been realized,
    citing for

    example several systemic WTO requirements for safeguard determinations. In
    response to this comment as well a similar comment from the Commerce
    Department, we modified the relevant sections of the report as discussed
    above and used examples that the ITC cited. Second, the ITC did not agree
    that WTO panels and the Appellate Body have properly applied the standard
    of review in article 17.6( ii) of the Antidumping Agreement. In

    response to this concern, we have incorporated the ITC*s views in our
    report.

    In addition, we obtained technical comments from the Commerce Department
    and the ITC, which we have incorporated into the report as appropriate.
    For example, Commerce noted that we had included challenges to WTO
    members* sunset reviews in some of our statistics on trade remedy
    measures. As a result, we eliminated the sunset review challenges from our
    statistics.

    USTR provided technical comments such as clarification of certain
    terminology. For example, USTR noted that the term *domestic
    determination* usually connotes a final decision by the appropriate agency
    as to whether dumping has occurred or whether increased imports have
    caused injury or are threatening injury to domestic industry. Accordingly,
    we clarified our definition in this report and made other technical
    changes

    as appropriate. USTR also noted that U. S. trade remedy measures had been
    challenged more frequently than those of other WTO members in part

    because U. S. trade remedy laws and investigations are more transparent.
    We have added this point to our report.

    We are sending copies of this report to interested congressional
    committees, the U. S. Trade Representative, the Secretary of Commerce, and
    the Chairman of the U. S. International Trade Commission. We will also
    make copies available to others upon request. In addition, the report will
    be available at no charge on the GAO Web site at http:// www. gao. gov.

    If you or your staff have any questions about this report, please contact
    me at (202) 512- 4128. Other GAO contacts and staff acknowledgments are
    listed in appendix VI. Sincerely yours,

    Loren Yager, Director, International Affairs and Trade

    Appendi Appendi xes x I

    Objectives, Scope, and Methodology The Ranking Minority Member of the
    Senate Committee on Finance asked us to conduct a review of the World
    Trade Organization*s (WTO) dispute settlement activity during the past 8
    years, focusing on trade remedy disputes. Specifically, in this report we
    (1) identified the major trends in WTO dispute settlement activity
    concerning trade remedies; (2) analyzed the outcome of WTO rulings in
    completed trade remedy cases; (3) assessed

    the major impacts of these rulings on WTO members* laws, regulations, and
    practices and on their ability to impose trade remedies; (4) identified
    the standards of review for trade remedy cases and Appellate Body guidance
    on how they should be applied; and (5) summarized legal experts* views and
    U. S. agencies* positions on standard of review and other trade remedy
    issues.

    To identify the major trends in dispute settlement activity during the
    last 8 years, we developed a database containing all members* requests for
    consultation (complaints) filed from 1995 through 2002. We obtained the
    data for the database from the WTO Web site, including data on each
    request for consultation; data on the complainant( s), defendant, and
    complaint date; and a short title. To determine which disputes related to
    trade remedies, we examined the short titles of the cases; the initial

    complaint filed with the WTO; and WTO documents, including the Update of
    WTO Dispute Settlement Cases, January 2003. Our analysis of trade remedy
    cases focused exclusively on cases brought under the WTO trade remedy
    agreements* the Antidumping Agreement, the Agreement on Safeguards, the
    Subsidies and Countervailing Measures Agreement, and parts of the General
    Agreement on Tariffs and Trade 1994.

    To obtain the number 198 for formal dispute settlement cases filed with
    the WTO from 1995 through 2002, we combined multiple complaints against
    one WTO member on the same law, measure, or action into one distinct case
    for the purposes of our analysis. We did this because multiple WTO

    members can file complaints against one member. For example, 9 WTO members
    filed complaints regarding 1 U. S. steel safeguard measure imposed in
    March 2002. As a result, the 276 separate complaints filed from 1995
    through 2002 resulted in 198 distinct cases.

    To determine which WTO members imposed the most trade remedy measures from
    1995 through 2002, we used WTO data that were based on the notifications
    filed with the WTO by each member. We excluded challenges to WTO members*
    sunset reviews in our data on trade remedy measures in response to agency
    comments. For antidumping and countervailing duty measures, we used
    summary data that the WTO

    Secretariat compiled. Department of Commerce officials noted that these
    WTO data differ from Commerce*s data on U. S. antidumping and
    countervailing measures and recommended that we use Commerce data.
    However, because the WTO is the only source of comparable data on the

    use of trade remedy measures by all WTO members, we ultimately used the
    WTO data. For safeguards, we analyzed the information contained in the
    annual reports of the WTO Committee on Safeguards. These reports included
    information on both preliminary and definitive safeguard measures imposed.

    To analyze the outcome of WTO rulings in the completed trade remedy cases,
    we compiled statistics on panel and Appellate Body findings about whether
    domestic agency determinations and members* laws were found to be
    consistent or inconsistent with WTO trade remedy provisions. We defined
    *completed* cases as those cases in which the Dispute Settlement

    Body had adopted a panel or Appellate Body decision as of December 31,
    2002. To analyze WTO findings about domestic determinations, for the most
    part, we reviewed the concluding findings at the end of the panel and
    Appellate Body reports. When several findings were included within a
    single paragraph in the concluding findings, we generally counted each
    finding separately. In the several instances in which concluding sections
    of panel reports did not clearly indicate these findings, we obtained our
    numbers by evaluating the full reports. For our statistics on findings
    about domestic agency determinations, we did not distinguish between more
    important issues* such as the causal relationship between increased
    imports and injury to domestic industry* and those that seemed less
    important* for example, notification requirements and certain evidentiary
    issues. To analyze direct challenges to members* laws in the completed
    cases, we analyzed the full panel and Appellate Body reports.

    To assess the major impacts of the WTO rulings in the completed trade
    remedy cases on members* laws, regulations, and practices, and on their
    ability to impose trade remedies, we identified compliance actions taken,
    or in the process of being taken, by WTO members as a result of the
    rulings. First, we consulted the WTO Web site to find any and all official
    documents filed in the completed trade remedy cases. WTO members and
    relevant parties in the cases file such documents with the WTO to report
    actions taken following the rulings and recommendations of adopted panel
    and Appellate Body reports. Alternatively, some documents indicate only

    agreements between the relevant parties for compliance actions to be
    taken, or the status of any ongoing negotiations regarding compliance. For
    cases where official documentation regarding compliance actions was not

    found on the WTO Web site, we searched the Dispute Settlement Body
    archives. We also consulted U. S. agency officials on the one case in
    which the United States was the complainant. For the cases in which the
    United States was the defendant, we also consulted officials from the
    Commerce Department, the U. S. International Trade Commission (ITC), and
    the U. S. Trade Representative (USTR). These officials provided us the
    most up- to- date information on the status of bilateral negotiations and
    U. S. intentions for certain completed cases where compliance information
    was not yet publicly available. In addition, we monitored congressional
    Web sites to glean information on the status of

    legislation in cases involving challenges to U. S. laws. Finally, we
    obtained copies of the changes to one U. S. regulation and two established
    practices from the Federal Register.

    For cases not involving the United States, for the most part, we did not
    consult with foreign government officials. We relied primarily on official
    documents that WTO members and relevant parties had filed with the WTO to
    report their compliance actions and on pertinent comments from U. S.
    agency officials.

    To identify the WTO standards of review for trade remedy cases, we
    analyzed the standards and obtained the views of legal experts, including
    practitioners and academics (see below). To identify how the panels and
    the Appellate Body were interpreting and applying the standards, we read
    the panel and Appellate Body reports for the trade remedy cases completed

    from 1995 through 2002 as well as Appellate Body reports for other
    relevant WTO dispute settlement cases. In reading these reports, we
    identified Appellate Body guidance on how the standards should be applied.
    Finally,

    we also read the provisions of the Vienna Convention on the Law of
    Treaties that the Appellate Body had identified as pertinent to how one of
    the standards should be applied.

    To obtain and summarize legal experts* views on WTO standard of review and
    other trade remedy issues, we conducted structured interviews with 18
    legal experts, including practitioners, academics, and advisers on
    WTOrelated trade remedy issues. In addition, we interviewed a current WTO
    official and an European Union (EU) official; however, in response to
    agency comments, we reviewed our decision rule on the composition of our
    expert group and excluded the WTO official and EU representative from our
    discussion of expert views, since we did not include U. S. agency
    officials in this group.

    To identify the legal experts for our study, we conducted literature
    searches, read formal publications on WTO standard of review and trade
    remedies, sought recommendations from other experts and the International
    Trade Committee of the American Bar Association, and attended seminars on
    issues surrounding standard of review and trade

    remedies. Our main criteria for selecting the experts for our study were
    that they (1) had past experience with WTO trade remedy cases; (2) had
    been active in writing and/ or speaking about issues pertaining to WTO
    dispute settlement, including standard of review and trade remedies; and
    (3) constituted a mix of experts representing or affiliated with U. S.
    domestic interests, foreign interests, or both. We did not choose experts
    on the basis of their expressed views, because we did not believe that
    this was

    methodologically sound. To obtain the views of the experts, we conducted
    structured interviews to ensure that we asked all of the experts the same
    questions. We coded the answers to key survey questions to help us analyze
    the experts* views and assess the frequency with which particular views
    were held.

    To write the case summaries, we consulted the WTO Web site and reviewed
    the panel and Appellate Body reports for the 25 completed trade remedy
    cases. We also reviewed the dispute settlement commentaries on the www.
    WorldTradeLaw. net Web site.

    We performed our work from September 2002 to July 2003 in accordance with
    generally accepted government auditing standards.

    Summaries of Completed WTO Trade Remedy

    Appendi x II

    Cases Between the inception of the World Trade Organization (WTO) in 1995
    and December 31, 2002, the WTO ruled on 25 cases involving the trade
    remedies of antidumping, countervailing duties (CVD), and safeguards.
    Table 3 lists the cases in order of their WTO dispute case number. It is
    followed by a brief summary of each case that includes information on the
    case's outcome and major issues.

    Table 3: WTO Trade Remedy Dispute Settlement Cases Completed Between 1995
    and December 31, 2002 Circulation GAO case Case name:

    WTO dispute date of panel or number Defendant * subject case number

    Appellate Body report a 1 Brazil * Measures Affecting Desiccated Coconut
    DS 22 02/ 21/ 1997 2 Guatemala * Antidumping Investigation Regarding
    Portland Cement DS 60 11/ 02/ 1998

    from Mexico 3 Korea * Definitive Safeguard Measure on Imports of Certain
    Dairy DS 98 12/ 14/ 1999 Products 4 United States * Antidumping Duty on
    Dynamic Random Access

    DS 99 01/ 29/ 1999 Memory Semiconductors (DRAMS) of One Megabyte or Above
    Originating from Korea

    5 Argentina * Safeguard Measures on Imports of Footwear DS 121 12/ 14/
    1999 6 Thailand * Antidumping Duties on Angles, Shapes, and Sections of

    DS 122 03/ 12/ 2001 Iron or Non- Alloy Steel and H- Beams from Poland 7
    Mexico * Antidumping Investigation of High- Fructose Corn Syrup

    DS 132 01/ 28/ 2000 (HFCS) from the United States 8 United States *
    Antidumping Act of 1916 DS 136/ 162 08/ 28/ 2000

    9 United States * Imposition of Countervailing Duties on Certain Hot DS
    138 05/ 10/ 2000 Rolled Lead and Bismuth Carbon Steel Products Originating
    in the United Kingdom

    10 European Union * Antidumping Duties on Imports of Cotton- Type Bed DS
    141 03/ 01/ 2001 Linen from India 11 Guatemala * Definitive Antidumping
    Measures on Grey Portland

    DS 156 10/ 24/ 2000 Cement from Mexico 12 United States * Definitive
    Safeguard Measures on Imports of Wheat

    DS 166 12/ 22/ 2000 Gluten from the European Communities 13 United States
    * Safeguard Measures on Imports of Fresh, Chilled, or

    DS 177/ 178 05/ 01/ 2001 Frozen Lamb Meat from New Zealand and Australia
    14 United States * Antidumping Measures on Stainless Steel Plate in

    DS 179 12/ 22/ 2000 Coils and Stainless Steel Sheet and Strip from Korea
    15 United States * Antidumping Measures on Certain Hot- Rolled Steel

    DS 184 07/ 24/ 2001 Products from Japan 16 Argentina * Definitive
    Antidumping Measures on Imports of Ceramic

    DS 189 09/ 28/ 2001 Floor Tiles from Italy

    (Continued From Previous Page)

    Circulation GAO case Case name:

    WTO dispute date of panel or number Defendant * subject case number

    Appellate Body report a 17 United States * Measures Treating Export
    Restraints as Subsidies DS 194 06/ 29/ 2001 18 United States * Definitive
    Safeguard Measures on Imports of Circular

    DS 202 02/ 15/ 2002 Welded Carbon Quality Line Pipe from Korea 19 United
    States * Antidumping and Countervailing Measures on Steel

    DS 206 06/ 28/ 2002 Plate from India 20 Chile * Price Band System and
    Safeguard Measures Relating to

    DS 207 05/ 03/ 2002 Certain Agricultural Products 21 Egypt * Definitive
    Antidumping Measures on Steel Rebar from Turkey DS 211 08/ 08/ 2002

    22 United States * Countervailing Measures Concerning Certain DS 212 12/
    09/ 2002 Products from the European Communities (* Privatization*) 23
    United States * Countervailing Duties on Certain Corrosion- Resistant

    DS 213 11/ 28/ 2002 Carbon Steel Flat Products from Germany (* Sunset*) 24
    United States * Section 129( c)( 1) of the Uruguay Round Agreements

    DS 221 07/ 15/ 2002 Act 25 United States * Preliminary Determinations With
    Respect to Certain

    DS 236 09/ 27/ 2002 Softwood Lumber from Canada Source: GAO analysis of
    WTO data.

    a In cases that concluded with the adoption of the panel report, the
    circulation date of the panel report is listed. In all other cases, the
    circulation date of the Appellate Body report is listed.

    GAO Case Number 1: Complainant: Philippines 1 Brazil * Measures

    Defendant: Brazil Affecting Desiccated Coconut (DS 22)

    Nature of Complaint In June 1994, Brazil initiated a countervailing duty
    (CVD) investigation to determine whether imports of desiccated coconut and
    coconut milk from

    Cote d*Ivoire, Indonesia, Malaysia, the Philippines, and Sri Lanka had
    been subsidized. Brazil imposed provisional CVDs on imports of desiccated
    coconut from all of these countries except Malaysia in March 1995 and
    final CVDs in August 1995.

    The Philippines challenged the Brazilian CVDs under various provisions of
    the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the World
    Trade Organization (WTO) Agreement on Agriculture. Brazil*s

    principal argument was that none of the WTO provisions relied upon by the
    Philippines applies in this case because the Brazilian subsidy
    investigation was initiated on the basis of an application received prior
    to the date the WTO Agreement entered into force.

    Outcome The Appellate Body upheld the panel finding that GATT 1994
    provisions on CVD investigations did not apply because this dispute
    involved application

    of a Brazilian CVD measure based on an investigation initiated prior to
    January 1, 1995* the date on which the WTO Agreement entered into effect.
    Accordingly, the Appellate Body upheld the panel*s finding that the
    dispute was not properly before it. Compliance Action No compliance action
    was necessary.

    1 Canada, the EU, Indonesia, Sri Lanka, and the United States were third
    parties in this case.

    Tabl e 4: Case 1 * Major Case Issue and Panel/ Appellate Body Findings
    Major case issue Panel findings Appellate Body findings

    Whether GATT 1994 rules on CVD GATT 1994 rules on CVDs did not

    Upheld the panel. investigations, particularly article VI, and the

    apply to this dispute because the WTO Agreement on Subsidies and Brazilian
    investigation that led to the CVDs may only be imposed in accord with
    Countervailing Measures (SCM Agreement)

    CVD measure was initiated prior to the article VI of GATT 1994 and the SCM

    applied to the Philippines* challenge of Brazil*s WTO Agreement*s entering
    into effect

    Agreement. Article VI cannot be applied CVD measures on desiccated coconut
    imports.

    for Brazil. independently of the SCM Agreement.

    The imposition of CVDs must comply Article 32. 3 of the SCM Agreement
    clearly both with article VI of GATT 1994 and

    states that for CVD investigations, the dividing the SCM Agreement.
    Article 32.3 of the

    line between the GATT 1947 system of SCM Agreement indicates that it only

    arrangements and the WTO Agreement is to applies to CVD investigations
    initiated be determined by the date on which the pursuant to applications
    made on or

    application was made for the CVD after the date of entry into force for a

    investigation. The Tokyo Round SCM WTO member of the WTO Agreement.

    Committee was to handle disputes arising out of CVD investigations
    initiated pursuant to Pursuant to a GATT Tokyo Round SCM

    applications made prior to the date the WTO Committee decision, the
    Philippines

    Agreement became effective. could have invoked the Tokyo Round SCM Code
    dispute settlement provisions to resolve this dispute.

    Source: GAO analysis of WTO panel and Appellate Body reports.

    GAO Case Number 2: Complainant: Mexico 2 Guatemala *

    Defendant: Guatemala Antidumping Investigation Regarding Portland Cement
    from Mexico (DS 60)

    Nature of Complaint Mexico challenged both the initiation of Guatemala*s
    antidumping investigation of imports of grey portland cement from Mexico
    and various decisions and conduct of the Guatemalan domestic authority
    during the investigation. Guatemala*s principal claim was that Mexico*s
    panel request did not identify any of the three measures listed in article
    17.4 of the Antidumping Agreement (ADA), and therefore the panel should
    not hear the claim.

    Outcome The panel found that Guatemala had failed to comply with article
    5.3 of the ADA by initiating the antidumping investigation on the basis of
    insufficient evidence of dumping, injury, and casual link between dumping
    and injury. The panel also found that the matters referred to in Mexico*s
    panel request for establishment of a panel were properly before it. The
    Appellate Body reversed the panel and determined that the dispute was not
    properly before the panel because Mexico*s panel request did not identify
    the measure it was complaining about. Consequently, it did not consider
    the panel*s findings on article 5. 3.

    Compliance Action After the Appellate Body effectively dismissed this
    case, Mexico brought the case again with a new panel request (see our case
    summary 11 of

    Guatemala * Definitive Antidumping Measures on Grey Portland Cement from
    Mexico, DS 156). The new panel considered many of the same issues that
    were involved in this case.

    2 Canada, El Salvador, Honduras, and the United States were third parties
    in this case.

    Tabl e 5: Case 2 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether article 17 of the ADA provides for a Article 17 of the ADA
    provides for a Reversed the panel. coherent set of rules for dispute
    settlement coherent set of rules for dispute specific to antidumping cases
    that replaces the settlement specific to antidumping cases

    Only when a provision of the DSU and a more general approach of the
    Dispute that replaces the more general approach special or additional
    provision of another Settlement Understanding (DSU).

    of the DSU. WTO Agreement are mutually inconsistent can the special or
    additional provision be read to prevail over the DSU provision.

    Whether Mexico was required by article 6.2 of Mexico*s panel request did
    not have to

    Reversed the panel. the DSU and article 17 of the ADA to identify at
    identify one of the three types of least one of the three antidumping
    measures in

    measures in article 17.4. In disputes under the ADA relating to the
    article 17.4 in its panel request* definitive

    initiation and conduct of an antidumping antidumping duties, acceptance of
    a price

    Article 17.4 is a *timing provision* investigation, members must identify
    in undertaking, or a provisional measure.

    establishing when a panel may be their panel requests one of the three
    requested but not establishing the

    measures listed in article 17.4 of the ADA. appropriate subject of a
    request. A formalistic requirement that Mexico identify one of the three
    types of measures identified in article 17.4 would undermine the status of
    the special

    dispute settlement rules in the ADA. Whether it was appropriate for the
    panel to

    Consistent with the authority in article Since the dispute was not
    properly before make suggestions about how Guatemala might

    19. 1 of the DSU, it was appropriate for the the panel, the Appellate Body
    came to no deal with its substantive violation of the

    panel to suggest that Guatemala revoke conclusions about whether the panel
    was standards for initiation of an antidumping

    its existing antidumping measure on right or wrong on this issue.
    investigation.

    imports of Mexican cement. Source: GAO analysis of WTO panel and Appellate
    Body reports.

    GAO Case Number 3: Complainant: European Union (EU) 3 Korea * Definitive

    Defendant: Korea Safeguard Measure on Imports of Certain Dairy Products
    (DS 98)

    Nature of Complaint The EU challenged Korea*s imposition of a safeguard
    measure on imports of skimmed milk powder preparations from the EU. The
    safeguard

    measure was in the form of a quantitative restriction on imports of these
    dairy products. The EU argued that Korea*s safeguard measure was
    inconsistent with various provisions of the Safeguards Agreement as well
    as article XIX: 1 of GATT 1994. Generally, the EU contended that Korea had
    not shown that increases in imports resulted from *unforeseen
    developments,* had not examined all factors in its examination of serious
    injury, and had not adequately considered the extent of application of the
    safeguard measure. Outcome The Appellate Body upheld several panel
    findings that Korea had acted

    inconsistently with the Safeguards Agreement because of its determinations
    regarding serious injury. The Appellate Body also reversed a panel finding
    on the issue of *unforeseen developments.* Accordingly, it recommended
    that Korea bring its safeguard measure into conformity with the Safeguards
    Agreement.

    Compliance Action Korea reported to the WTO that it had effectively
    terminated the safeguard measure on imports of the dairy products on May
    20, 2000. By lifting the safeguard measure, Korea considers that it has
    implemented the

    recommendations and rulings of the Dispute Settlement Body (DSB). 3 The
    United States was a third party in this case.

    Table 6: Case 3 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether Korea was required to examine if Korea was not required to examine
    Reversed the panel. increases in imports were the result of

    whether import trends under investigation *unforeseen developments* as
    described in were the result of *unforeseen Although article XIX: 1( a)
    does not article XIX: 1( a) of GATT 1994.

    developments.* establish independent conditions for

    application of a safeguard, *unforeseen The *unforeseen developments*
    clause in developments* must be demonstrated as article XIX: 1( a) does
    not provide an a matter of fact for a safeguard measure independent basis
    for finding that a to be applied. safeguard measure violates WTO rules.

    The Appellate Body could not decide whether Korea had violated article
    XIX: 1( a) due to insufficient facts on the record.

    Whether Korea was required by article 5.1 of the When members apply a
    safeguard Upheld the panel finding that the first Safeguards Agreement to
    ensure that the measure, they must (1) apply a measure

    sentence of article 5.1 imposes an safeguard applied was not more
    restrictive than no more restrictive than necessary to obligation on a WTO
    member applying a necessary to prevent or remedy serious injury prevent or
    remedy serious injury and

    safeguard measure to ensure the and facilitate adjustment. facilitate
    adjustment and (2) provide a measure is *commensurate with the reasoned
    explanation about how

    goals of preventing or remedying serious authorities reached a conclusion
    that the

    injury and of facilitating adjustment.* measure satisfied all requirements
    of article 5.1.

    Reversed the panel finding that article 5.1 requires members to explain
    how it Korea violated article 5.1 by not including ensures these goals are
    met when

    in its recommendations and making recommendations about determinations an
    explanation of how it application of a measure that is not a concluded
    that the measure was

    quantitative restriction. necessary to remedy serious injury and
    facilitate adjustment of the industry.

    Absent a factual record, the Appellate Body could not determine whether
    Korea had violated the second sentence of

    article 5.1. How the standard of review under article 11 of the

    A panel should consider whether a Under article 11, a panel has a duty to
    WTO DSU should be applied to evaluations domestic authority (1) examined
    all facts

    examine and consider all evidence under article 4.2 of the Safeguards
    Agreement. in its possession (or facts it should have in

    before it, not just evidence submitted by its possession) and (2) provided
    an one or the other party, and to evaluate adequate explanation about how
    facts

    the relevance and probative force of each supported the determinations.

    piece of evidence. Whether Korea*s finding that serious injury Korea
    violated article 4.2( a) by not

    Not appealed. occurred was consistent with article 4.2( a) of the
    adequately examining all serious injury Safeguards Agreement.

    factors. Source: GAO analysis of WTO panel and Appellate Body reports.

    GAO Case Number 4: Complainant: Korea United States *

    Defendant: United States Antidumping Duty on Dynamic Random Access Memory
    Semiconductors (DRAMS) of One Megabyte or Above Originating from Korea (DS
    99)

    Nature of Complaint Korea challenged the U. S. *s failure to revoke an
    antidumping order on Korean dynamic random access memory semiconductors
    (DRAMS) of one megabyte or above. Korea contended that the U. S.
    regulatory standard 4 under which it refused to revoke the antidumping
    order with respect to two Korean producers violated the ADA. Korea also
    challenged the Department of Commerce*s rejection of certain cost
    information and its application of the de minimis 5 standard during the
    administrative review of the antidumping order.

    Outcome The panel found that the U. S. regulatory standard for revoking an
    antidumping order was inconsistent with the ADA. However, the panel also

    upheld several aspects of the U. S. *s application of its antidumping
    laws. The panel recommended that the DSB request that the United States
    bring its regulatory standard for revoking an antidumping order, and the
    results of its third administrative review, into conformity with its
    obligations under the ADA. The parties did not appeal the panel findings.

    4 The regulatory provision in question deals with revocation of an
    antidumping order based on the absence of dumping and should not be
    confused with the regulatory provision dealing with *sunset reviews.*

    5 De minimis refers to the level below which a dumping margin or subsidy
    is considered to be negligible. Antidumping or CVD actions are terminated
    in cases where the margin of dumping or level of subsidy is below the de
    minimis level.

    Compliance Action The United States took several compliance actions as a
    result of the panel*s findings. The United States deleted the *not likely*
    criterion from its

    regulation and replaced it with a requirement that the Secretary of
    Commerce consider *whether the continued application of the antidumping
    duty order is otherwise necessary to offset dumping.* Using this modified
    standard, the United States found that the continued application of the
    dumping order was necessary to offset dumping and, accordingly, did not
    revoke the antidumping order. Korea asserted that these actions failed to
    comply with the DSB*s recommendations and rulings. During the compliance
    panel proceeding, however, the United States revoked the antidumping order
    as a result of the U. S. sunset review process, primarily because the
    petitioner withdrew from the proceeding. The United States and Korea then
    notified the DSB of a mutually agreedupon solution to the dispute, and the
    compliance panel proceeding was terminated.

    Table 7: Case 4 * Major Case Issues and Panel Findings Major case issues
    Panel findings

    Whether the U. S. regulatory standard for revoking an antidumping The U.
    S. regulatory standard requiring a finding that it is *not likely* order,
    requiring the United States to find that the foreign producer is

    that the producer will sell the merchandise in the future at less than
    *not likely* to sell products at less than foreign market value, a foreign
    market value was inconsistent with article 11. 2. violates article 11. 2
    of the ADA.

    The *not likely* standard is not equivalent to the standard in article 11.
    2 that requires the domestic authority to examine whether *injury would be
    likely to continue or recur* if the dumping duty were removed.

    Whether the U. S. rejection of certain cost data submitted by a The U. S.
    rejection of the data did not violate the ADA. Korean firm violated
    article 2. 2. 1.1 of the ADA relating to the calculation of costs.

    Korea failed to establish that an objective and impartial investigating
    authority could not properly have found that the data did not reasonably
    reflect the costs associated with the production and sale of DRAMS.

    Whether the de minimis standard for antidumping investigations in The de
    minimis standard in article 5.8 does not apply to duty article 5.8 of the
    ADA also applies to duty assessment procedures

    assessments under article 9.3. under article 9.3.

    Source: GAO analysis of the WTO panel report. a The term *foreign market
    value* was later replaced with *normal value.*

    GAO Case Number 5: Complainant: European Union (EU) 6 Argentina *
    Safeguard

    Defendant: Argentina Measures on Imports of Footwear (DS 121)

    Nature of Complaint The EU challenged Argentina*s imposition of safeguards
    on imports of EU footwear. The safeguard measure took the form of minimum
    specific duties

    on these imports. For several years prior to this EU challenge, Argentina
    had maintained various measures regarding imports of footwear and other
    clothing and textiles. The EU contended that the safeguard measure
    violated article XIX: 1( a) of GATT 1994 and various provisions of the
    Safeguards Agreement.

    Outcome The Appellate Body upheld panel findings that Argentina*s
    safeguard investigation and determinations of increased imports, serious
    injury, and causation were inconsistent with articles 2 and 4 of the
    Safeguards Agreement, and thus there was no legal basis for applying
    safeguards. As a result, it recommended that the DSB request that
    Argentina bring its safeguard measures into conformity with its
    obligations under the Safeguards Agreement.

    Compliance Action Argentina indicated to the WTO in February 2000 that it
    intended to implement the DSB*s rulings and recommendations.

    6 Brazil, Indonesia, Paraguay, the United States, and Uruguay were third
    parties in this case.

    Tabl e 8: Case 5 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether safeguard measures that meet the Safeguard measures that meet the
    Reversed the panel*s conclusion, but in requirements of the Safeguards
    Agreement

    requirements of the Safeguards Agreement view of other findings did not
    decide must also satisfy the requirements of article also satisfy the
    requirements of article

    whether Argentina demonstrated that XIX: 1( a) of GATT 1994 with respect
    to

    XIX: 1( a) of GATT 1994 on *unforeseen increased imports occurred as a
    result of *unforeseen developments.* developments.*

    *unforeseen developments.* The *unforeseen developments* clause
    establishes certain *factual circumstances* that must be demonstrated in a
    safeguard investigation.

    Whether Argentina violated article 2 of the Argentina violated article 2
    because Reversed the panel finding that it was Safeguards Agreement by
    including imports

    members of a customs union, like dealing with a safeguard measure applied
    from MERCOSUR a countries in its

    MERCOSUR, must apply a safeguard by MERCOSUR on behalf of a member
    investigation of imports, injury, and causation,

    measure to imports from all sources state. The safeguard was applied by
    but excluding them from application of the considered in its analysis of
    imports during

    Argentina, not MERCOSUR. safeguards measure. the investigation. Upheld the
    panel*s parallelism analysis and

    concluded that Argentina could not impose safeguards only on non- MERCOSUR
    sources on the basis of investigation of imports from all sources,
    including imports

    from MERCOSUR member states. Whether the panel correctly applied the

    The task of a panel is not to conduct a de

    The panel correctly stated and applied the proper standard of review in
    article 11 of the novo review of Argentina*s investigation.

    appropriate standard of review set forth in DSU to the EU claims under
    articles 2 and 4

    article 11. of the Safeguards Agreement.

    The panel reviewed the full file and noted portions of the record relied
    on by The panel did not conduct a de novo review Argentina.

    of the evidence or substitute its analysis and judgment for that of the
    Argentine authorities. Whether Argentina*s examination of increased
    Argentina*s examination of increased Upheld the panel*s conclusions, but

    imports, serious injury, and causation was imports, serious injury, and
    causation were disagreed with the panel*s interpretation of consistent
    with articles 2 and 4 of the

    inconsistent with articles 2 and 4. the requirement in article 2.1 on
    increased Safeguards Agreement.

    imports. In its causation analysis under article 4.2( b), Argentina did
    not adequately

    It was not reasonable for the panel to consider factors operating within
    the market

    examine the trend in imports over a 5- year other than increased imports,
    so that injury period. Article 2.1 requires that the increase caused by
    these other factors could be

    in imports must have been recent, sudden, identified and properly
    attributed.

    sharp, and significant enough, both quantitatively and qualitatively, to
    cause or threaten to cause serious injury.

    Source: GAO analysis of WTO panel and Appellate Body reports. a MERCOSUR
    is a South American customs union composed of Argentina, Brazil, Paraguay,
    and Uruguay. Bolivia, Chile, and Peru are associate members.

    GAO Case Number 6: Complainant: Poland 7 Thailand *

    Defendant: Thailand Antidumping Duties on Angles, Shapes, and Sections of
    Iron or Non- Alloy Steel and HBeams from Poland (DS 122)

    Nature of Complaint Poland challenged Thailand*s imposition of antidumping
    duties on imports of certain Polish steel products. The final antidumping
    duty was a percentage of a determined value of these products. Poland
    contended that Thailand*s injury and dumping determinations were
    inconsistent with various provisions of the ADA.

    Outcome The Appellate Body affirmed the panel*s findings that Thailand had
    violated the ADA with regard to Thailand*s findings about injury to
    domestic industry and the causal relationship between dumped imports and
    injury to

    domestic industry. Although the Appellate Body also upheld the panel*s
    application of the standard of review in article 17.6( ii) of the ADA, it
    reversed a panel interpretation of article 17. 6( i). As a result of these
    rulings,

    the Appellate Body recommended that the DSB request that Thailand bring
    its antidumping measure into conformity with its obligations under the
    ADA.

    Compliance Action Thailand reexamined aspects of the injury determination
    that the panel and Appellate Body had found to be inconsistent with the
    ADA and found that

    the antidumping measure should be maintained. Subsequently, in December
    2001, Thailand informed the WTO that it had fully implemented the DSB*s
    recommendations. In January 2002, Poland and Thailand

    7 The EU, Japan, and the United States were third parties in this case.

    announced they had reached agreement that this case should no longer be on
    the DSB*s agenda.

    Table 9: Case 6 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether Thai authorities had sufficient Poland did not establish that the
    contents of the Not appealed. evidence of dumping, injury, and the

    application were insufficient to meet the causal link between them to
    initiate an requirements of article 5.2. investigation under article 5.2
    of the ADA.

    Whether Thailand*s injury determination Confidential government documents,
    which had Reversed the panel. was based on an *objective examination* not
    been made available to the parties, could of the facts, as required by
    articles 3.1 and

    not be reviewed by the panel. Investigating authorities may rely on 17.6(
    i) of the ADA, since it included

    confidential information not shared with the evaluation of confidential
    information that

    Articles 3.1 and 17. 6( i) dictate that the parties. was not made
    available to the parties. reasoning supporting an injury determination

    must be formally or explicitly stated in the The *facts* referred to in
    article 17. 6( i) documentary record of the investigation to

    embrace all facts, confidential and which interested parties have access
    and that nonconfidential, that are made available to the factual basis
    relied upon by the authorities

    the authorities of the importing member. must be discernible from those
    documents.

    Whether Thailand was required to The text of article 3. 4 is mandatory,
    and each of Upheld the panel*s interpretation of article consider all of
    the15 injury factors listed in the 15 individual factors listed must be

    3.4 and its application of the standard of article 3.4 of the ADA in
    making an injury evaluated. Therefore, Thailand acted

    review in article 17.6( ii). determination.

    inconsistently with article 3. 4 of the ADA. Since article 3.4 requires
    consideration of all its listed factors, the panel could not

    have found Thailand*s argument, that not all factors need to be
    considered, a permissible interpretation under article 17.6( ii).

    Whether Thailand was required to Thailand was not required to consider all
    the Not appealed. consider all the factors listed in article 3.5

    factors listed in article 3.5 since that list is of the ADA with respect
    to demonstrating a

    merely illustrative. casual relationship between dumped imports and injury
    to the domestic industry.

    Thailand had considered the factors raised by Poland. Source: GAO analysis
    of WTO panel and Appellate Body reports.

    GAO Case Number 7: Complainant: United States 8 Mexico * Antidumping

    Defendant: Mexico Investigation of HighFructose Corn Syrup (HFCS) from the
    United States (DS 132)

    Nature of Complaint The United States challenged Mexico*s imposition of
    antidumping duties on imports of two grades of high- fructose corn syrup
    (HFCS) from the United States. The final antidumping measure imposed
    duties of up to $175.50 per metric ton of imported HFCS and ordered the
    collection of duties retroactive to the imposition of provisional duties.
    The United States contended that both the initiation of the antidumping
    investigation and the determination of threat of injury were inconsistent
    with the ADA.

    Outcome Although the panel upheld the way in which Mexico initiated its
    antidumping investigation, it concluded that Mexico*s imposition of the

    antidumping measure was inconsistent with various provisions of the ADA.
    As a result, the panel recommended that the DSB request that Mexico bring
    its antidumping measure into conformity with its obligations under the
    ADA. The panel findings were not appealed.

    Compliance Action Mexico revised its antidumping determination following
    the panel report. 9 However, in a subsequent proceeding, Mexico again
    concluded that the imports of HFCS constituted a threat of material injury
    to the domestic sugar industry. As a result, the United States requested a
    compliance review under article 21.5 of the DSU. In the article 21. 5
    proceeding, the Appellate Body upheld panel findings that Mexico*s revised
    determination

    8 Jamaica and Mauritius were third parties in this case. 9 A North
    American Free Trade Agreement (NAFTA) panel also found that Mexico failed
    to establish a threat of material injury to the domestic injury.

    was inconsistent with various provisions of the ADA. According to U. S.
    officials, Mexico revoked the antidumping measure in May 2002.

    Table 10: Case 7 * Major Case Issues and Panel Findings Major case issues
    Panel findings

    Whether Mexico had enough evidence of a threat of injury or of a A panel*s
    role under the standard of review in article 17.6( i) is to causal link
    between dumped imports and injury to initiate an examine whether an
    unbiased and objective investigating authority antidumping investigation
    as provided by article 5. 3 of the ADA.

    evaluating the evidence and information before it could properly have
    determined that sufficient evidence of dumping, injury, and causal link
    existed to justify initiating the antidumping investigation. A panel*s
    role is not to newly evaluate the evidence and information.

    An unbiased and objective investigating authority could have found
    sufficient evidence to justify initiation of an antidumping investigation
    under article 5.3.

    Under the standard of review in article 17.6( i), as well as article 17.
    5( ii), in evaluating the consistency of the initiation with article 5.3,
    a panel may only consider what was actually available to the investigating
    authority at the time of initiation of the antidumping investigation.

    Whether in reaching a determination that a threat of material injury A
    threat of injury determination requires that the factors in both exists,
    Mexico had to consider factors set forth in both articles 3.7

    articles 3.7 and 3. 4 be considered. and 3. 4 of the ADA, which deal
    respectively with threat of material injury and the impact of dumped
    imports on the domestic industry.

    The Mexican investigating authority*s determination of threat of material
    injury failed to adequately address the factors set forth in article 3.4
    of the ADA concerning the impact of dumped imports on the domestic
    industry. Accordingly, its determination of threat of material injury was
    inconsistent with the ADA.

    Whether Mexico properly concluded in its final determination that Mexico
    ignored possible effects of imports on the portion of the the relevant
    domestic industry for purposes of its threat of injury domestic industry*s
    production sold in the household sector and determination was Mexican
    sugar producers, instead of the

    ignored the effect of the household sector on the condition of the
    industry as a whole.

    domestic producers of sugar. Accordingly, Mexico failed to make a
    determination of threat of material injury to the domestic industry as a
    whole, consistent with the requirements of article 3 of the ADA. Source:
    GAO analysis of the WTO panel report.

    GAO Case Number 8: Complainants: European Union (EU), Japan 10 United
    States *

    Defendant: United States Antidumping Act of 1916 (DS 136/ 162)

    Nature of Complaint Japan and the EU separately challenged section 801 of
    the Revenue Act of 1916 (1916 Act) 11 as being inconsistent with article
    VI of GATT 1994 and various provisions of the ADA. Section 801 of the 1916
    Act allows for private claims against, and criminal prosecutions of,
    parties that import or assist in importing goods into the United States at
    a price substantially less than actual market value or wholesale price.
    The Japan and EU challenges were to the law itself rather than to its
    implementation.

    Outcome The Appellate Body affirmed the panel conclusions that antidumping
    legislation, including the 1916 Act, can be directly challenged, absent
    any

    particular application. It also upheld the panel findings that the 1916
    Act itself was inconsistent with article VI of GATT 1994 and various
    provisions of the ADA. Accordingly, the Appellate Body recommended that
    the United States bring the 1916 Act into conformity with its obligations
    under these agreements.

    Compliance Action The United States continues to work to enact legislation
    to implement the WTO ruling. Although a number of bills have been
    introduced in the

    Congress calling for repeal of section 801 of the 1916 Act, to date no
    legislation has been passed. As of July 15, 2003, the latest bills were H.
    R. 1073, introduced in the House of Representatives on March 4, 2003; S.
    1080, introduced in the Senate on May 19, 2003; and S. 1155, introduced in
    the Senate on May 23, 2003. The bills are somewhat different in that the
    repeals under H. R. 1073 and S. 1155 would not affect pending cases,
    whereas the S. 1080 repeal would apply to them.

    10 India and Mexico were third parties in this case. 11 15 U. S. C. S: 72.

    Table 11: Case 8 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether panels have jurisdiction to hear The panel had jurisdiction to
    hear direct Upheld the panel. challenges of antidumping law, absent any

    challenges to the 1916 Act. specific application of the law. GATT and WTO
    case law firmly establish that members may directly challenge legislation.
    Nothing is inherent in antidumping legislation that would

    distinguish it from other types of legislation for these purposes.

    Whether the 1916 Act constitutes a The 1916 Act is mandatory. Upheld the
    panel. mandatory or discretionary law within WTO and GATT practice.

    The discretion enjoyed by the United States The relevant discretion for
    purposes of Department of Justice about whether to distinguishing between
    mandatory and initiate a case is not the kind of discretion to
    discretionary legislation is discretion vested transform the 1916 Act into
    discretionary

    in the executive, and not the judicial, branch legislation. of government.

    Whether article VI of GATT 1994 and the These WTO provisions apply to the
    1916

    Upheld the panel. ADA apply to the 1916 Act. Act. Article VI and the ADA
    apply to any specific

    action against dumping. The civil and criminal proceedings and penalties
    provided for in the 1916 Act are specific actions

    against dumping. Whether the 1916 Act is inconsistent with

    The 1916 Act violates various requirements Upheld the panel. article VI of
    GATT 1994 and various

    of article VI and the ADA. provisions of the ADA.

    Article VI and the ADA limit permissible The 1916 Act violates article VI:
    2 of GATT

    responses to dumping to definitive 1994 by providing for imposition of
    fines or antidumping duties, provisional measures, imprisonment or for
    recovery of treble

    and price undertakings. To the extent that damages.

    the 1916 Act provides for civil and criminal proceedings and penalties, it
    is inconsistent with these obligations. Source: GAO analysis of WTO panel
    and Appellate Body reports.

    GAO Case Number 9: Complainant: European Union (EU) 12 United States *

    Defendant: United States Imposition of Countervailing Duties on Certain
    Hot- Rolled Lead and Bismuth Carbon Steel Products Originating in the
    United Kingdom (DS 138)

    Nature of Complaint The United States imposed CVDs on imports of certain
    hot- rolled lead and bismuth carbon steel products originating in the
    United Kingdom, as a result of alleged subsidies 13 the British Government
    granted to British Steel Corporation, a state- owned company, between 1977
    and 1986. The British Government began the privatization of British Steel
    in 1986 and completed it in 1988. The Commerce Department found the sale
    to be at arm*s length for fair market value and consistent with commercial
    considerations. Notwithstanding these factors, the Commerce Department
    imposed CVDs

    on these United Kingdom imports, initially in 1993 and in subsequent
    annual reviews, on the grounds that a certain proportion of the subsidies
    granted to British Steel had passed through to the new entities. The EU
    claimed that the U. S. methodology 14 in calculating the amount of these
    subsidies was inconsistent with several provisions of the WTO SCM
    Agreement.

    Outcome The Appellate Body upheld the panel finding that the financial
    contributions provided to British Steel did not confer a benefit on the
    new

    12 Brazil and Mexico were third parties in this case. 13 The subsidies
    principally were in the form of equity infusions. 14 This methodology is
    commonly referred to as the *gamma* methodology.

    owners. In doing so, the Appellate Body also upheld a panel finding that
    faulted the Commerce Department*s methodology in presuming that a benefit
    had been provided to the new owners. Accordingly, it found that the U. S.
    CVDs were inconsistent with the SCM Agreement and recommended that the DSB
    request that the United States bring its measures into

    conformity with its obligations under that agreement. The panel suggested
    that the United States take all appropriate steps, including revision of
    its administrative practices, to prevent a violation of the SCM Agreement,
    but the Appellate Body did not make this specific recommendation.

    Compliance Action Prior to the issuance of the Appellate Body report, the
    Commerce Department revoked the CVD measure in response to a request from
    the U. S. industry. However, the Commerce Department changed its
    methodology as a result of related domestic litigation. 15 15 See
    Delverde, SRL v. United States, 202 F. 3d 1360, 1362- 1363 (Fed. Cir.
    2000).

    Table 12: Case 9 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether the panel should have applied the Article 11 is the standard of
    review that

    Upheld the panel. standard of review in article 17. 6 of the ADA to

    should be applied in cases involving a dispute under Part V of the SCM
    Agreement.

    Part V of the SCM Agreement. Article The Decision on Review of Article
    17.6, b 17. 6 only applies in cases brought

    which provides that article 17. 6 shall be under the ADA.

    reviewed after a period of 3 years with a view to considering its general
    application, Ministerial Declaration on Dispute supports the conclusion
    that the article 17. 6 Settlement under article VI of the ADA a standard
    applies only to disputes arising is not mandatory and simply recognizes

    under the ADA. the need for consistent resolution of antidumping and CVD
    disputes but does not mandate any action.

    Whether Commerce Department administrative The Commerce Department should

    Upheld the panel. reviews should have examined whether a

    have examined whether there was a benefit accrued to the new owners of
    British benefit. Given changes in ownership leading to Steel.

    creation of the new entity, the Commerce Irrebuttable presumption in U. S.
    CVD Department was required to examine whether law that nonrecurring
    subsidies pass

    a benefit accrued to the new owners. through to a new owner violates the
    SCM Agreement.

    Disagreed with the panel*s view that the method for establishing the
    existence of a benefit is always the same for the original investigation
    and an administrative review. Whether a benefit was provided to the new
    Because the privatization was done Upheld the panel. owners as a result of
    the contributions made to through an arm*s length, fair market British
    Steel.

    value transaction, subsidies provided to British Steel did not constitute
    a benefit to the new owners. Whether the panel exceeded its mandate by No
    benefit was conferred. Upheld the panel. finding that no benefit was
    conferred on the new owners of British Steel.

    Panel acted within the scope of its DSU mandate to resolve this issue.

    Source: GAO analysis of WTO panel and Appellate Body reports. a The full
    name is the Ministerial Declaration on Dispute Settlement Pursuant to the
    Agreement on

    Implementation of Article VI of the General Agreement on Tariffs and Trade
    1994 or Part V of the Agreement on Subsidies and Countervailing Measures.
    b The full name is the Decision on Review of Article 17.6 of the Agreement
    on Implementation of Article

    VI of the General Agreement on Tariffs and Trade 1994.

    GAO Case Number 10: Complainant: India 16 European Union *

    Defendant: European Union (EU) Antidumping Duties on Imports of Cotton-
    Type Bed Linen from India (DS 141)

    Nature of Complaint India challenged the EU*s imposition of antidumping
    duties on imports of various types of cotton bed linens from India. Due to
    the high number of domestic producers involved in its investigation, the
    EU established a

    sample of domestic producers consisting of 17 of the 35 companies
    identified as the EU industry. The dumping duties that were imposed
    differed in amount depending on the exporter in question. India argued
    that the imposition of antidumping duties was inconsistent with various
    provisions of the ADA. One of the principal issues involved the EU*s
    practice of zeroing in calculating antidumping margins.

    Outcome The Appellate Body affirmed the panel*s finding that the EU*s
    practice of zeroing was inconsistent with the ADA. The Appellate Body also
    reversed several panel findings and concluded that the EU had acted
    inconsistently

    with the ADA in calculating amounts for administrative, selling, and
    general costs and profits in its investigation. As a result, the Appellate
    Body recommended that the DSB request that the EU bring its antidumping
    measure into conformity with its obligations under the ADA.

    Compliance Action After the DSB adopted the Appellate Body report, the EU
    established lower dumping margins for Indian imports of bed linens.
    Although it also

    concluded that dumped imports from India were still causing material
    injury to the EU industry, the EU suspended application of the duties for
    these imports. In a subsequent proceeding, the EU determined that there
    was a causal link between dumped imports from India and material injury to
    the EU industry, but the EU continued to suspend imposition of the

    16 Egypt, Japan, and the United States were third parties in this case.

    antidumping duties. Because India believed that the EU had not complied
    with the recommendations of the DSB, it brought a proceeding under article
    21. 5 of the DSU contesting compliance. Although the panel in the article
    21.5 proceeding determined that the EU had implemented the recommendation
    of the DSB, the Appellate Body reversed and found that the EU was still
    acting inconsistently with the ADA. Accordingly, it recommended that the
    DSB request that the EU bring its antidumping measure into conformity with
    that agreement.

    Tabl e 13: Case 10 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether the EU violated the ADA by converting The EU acted inconsistently
    with article 2.4.2

    Upheld the panel. negative dumping margins to zero in

    of the ADA by calculating margins of dumping establishing overall margins
    of dumping. through a methodology that included zeroing

    The EU clearly identified cotton- type of negative price differences.

    bed linen as the product under investigation. The dumping calculation can
    only be for the product as a whole and not for individual

    In determining a dumping margin for a transactions concerning that product
    or product, article 2.4.2 refers to a discrete models of that product.

    comparison of all comparable transactions. By not offsetting dumping By
    using zeroing for some models, the EU

    margins, the EU did not take into failed to carry out a comparison with
    all account export transactions involving transactions, as required by
    article 2.4.2.

    models of cotton- type bed linen that were not dumped. This inflated the
    margin of dumping.

    Export transactions involving types or models falling within the scope of
    a like product are *comparable export transactions* within the meaning of

    article 2.4.2. Whether the panel failed to apply the legal

    In accord with the provisions of the Vienna The panel applied the standard
    of standard of review in article 17. 6( ii) of the ADA Convention
    governing treaty interpretation,

    review in article 17.6( ii). by not finding that the EU*s zeroing practice
    was

    the panel looked first to the ordinary meaning a permissible
    interpretation.

    of the phrase *a comparison of a weighted The panel viewed the EU
    interpretation average normal value with a weighted

    of article 2.4.2 of the ADA, allowing it to average of all comparable
    export use zeroing, as impermissible. Thus, transactions* in article
    2.4.2, in its context and

    the panel was not faced with a choice in light of its object and purpose,
    in among multiple permissible determining whether zeroing was permitted.

    interpretations that, under article 17.6( ii), would have required it to
    give deference to the EU interpretation.

    Whether the EU*s methodology for determining The EU*s methodology was
    consistent with

    Reversed the panel. amounts for administrative, selling, and general

    article 2.2.2( ii). costs and for profit, in constructing normal Method
    for calculating amounts for value, was proper under article 2.2.2( ii) of
    the

    The method for calculating amounts for administrative, selling, and
    general ADA.

    administrative, selling, and general costs and costs and profits can only
    be used if profits under article 2.2.2( ii) may be applied data relating
    to more than one other where there is data for only one other exporter

    exporter or producer are available. or producer. Source: GAO analysis of
    WTO panel and Appellate Body reports.

    GAO Case Number 11: Complainant: Mexico 17 Guatemala * Definitive

    Defendant: Guatemala Antidumping Measures on Grey Portland Cement from
    Mexico (DS 156)

    Nature of Complaint In 1999, Mexico challenged Guatemala*s imposition of
    an antidumping measure on imports of portland cement from Mexico. The
    measure was in the form of an antidumping duty of 89. 54 percent that was
    imposed on

    these imports. In its challenge, Mexico contended that the initiation and
    conduct of the antidumping investigation and the imposition of the measure
    violated article VI of GATT 1994 and various provisions of the ADA.

    Mexico*s challenge was a follow- up to an earlier Mexican challenge to
    Guatemala*s imposition of antidumping duties on imports of the same
    product (see case summary 2). Although the panel in that case ruled that
    Guatemala had acted inconsistently with several provisions of the ADA and
    recommended that Guatemala revoke the dumping order, the Appellate Body
    reversed the panel and found that the dispute was not properly before the
    panel. Outcome The panel determined that Guatemala did not properly
    determine that there

    was sufficient evidence to justify initiation of the antidumping
    investigation. It also found that Guatemala did not properly determine
    that the imports under investigation were being dumped, that the domestic
    producer of cement in Guatemala was being injured, or that the imports
    were the cause of the injury. Accordingly, it concluded that Guatemala had
    acted inconsistently with various provisions of the ADA. Under the
    authority provided in article 19.1 of the DSU, the panel recommended that
    Guatemala revoke its antidumping measure on these imports. However, the

    17 Ecuador, El Salvador, the EU, Honduras, and the United States were
    third parties in this case.

    panel rejected a Mexican request that the panel recommend that Guatemala
    refund previously collected antidumping duties. The panel findings were
    not appealed.

    Compliance Action In December 2000, Guatemala informed the WTO that it had
    removed the antidumping measures in question and complied with its
    recommendations.

    Table 14: Case 11 * Major Case Issues and Panel Findings Major case issues
    Panel findings

    Whether the panel should perform a de novo review of the evidence It is
    not the panel*s role under article 17 to perform a de novo review under
    the standard of review in article 17.6( i) of the ADA. of the evidence
    that was before the investigating authority. The panel must determine
    whether an unbiased and objective investigating authority evaluating the
    evidence before it at the time of the investigation could properly have
    made the determinations

    Guatemala made. A panel is not to examine any new evidence that was not
    part of the record of the investigation.

    Whether Guatemala had sufficient evidence to justify initiation of An
    objective and unbiased investigating authority could not have the
    antidumping investigation, consistent with article 5.3 of the properly
    determined that there was sufficient evidence of dumping ADA.

    and threat of injury to justify Guatemala*s initiating an antidumping
    investigation under article 5.3. Whether Guatemala informed the Mexican
    exporter of the essential

    Guatemala*s disclosing to Mexico the essential facts forming the facts
    that would be taken into account in imposing the definitive

    basis of its preliminary antidumping determination and offering to
    antidumping measure, as required by various provisions in article

    provide interested parties with copies of all information in its file 6.9
    of the ADA.

    were not sufficient to satisfy the requirements of article 6.9. Article 6.
    9 is intended to allow exporters a fair opportunity to comment on the
    important issues in an investigation after the record is closed to new
    facts. An interested party will not know whether a particular fact is
    important unless the investigating authority has

    explicitly identified it as one of the essential facts. Whether Guatemala
    was entitled to rely on the best information Guatemala was not entitled to
    rely on the best information available. available, as permitted by article
    6.8 of the ADA, for calculating

    Guatemala did not act as an objective and impartial investigating normal
    value because the Mexican exporter refused to cooperate authority in
    finding that the Mexican exporter significantly impeded in the
    investigation.

    Guatemala*s investigation because it objected to Guatemala*s including
    nongovernmental experts with a conflict of interest in its verification
    team.

    Although there are consequences under article 6.8 when interested parties
    fail to cooperate with an investigating authority, they do not apply here
    since the Guatemalan authority did not act in a reasonable, objective, and
    impartial manner.

    Source: GAO analysis of the WTO panel report.

    GAO Case Number 12: Complainant: European Union (EU) 18 United States *

    Defendant: United States Definitive Safeguard Measures on Imports of Wheat
    Gluten from the European Communities (DS 166)

    Nature of Complaint The EU challenged a United States safeguard measure
    imposed on imports of wheat gluten 19 from the EU. The safeguard measure
    consisted of a quantitative restriction on these imports for 3 years. The
    United States excluded products from Canada, a U. S. NAFTA 20 partner, and
    from certain

    other WTO members from the application of the safeguard. The EU contended
    that the safeguard measure violated provisions of the Safeguards Agreement
    and GATT 1994. The EU complaints were directed at the U. S. *s serious
    injury determination, its causation 21 analysis, and its findings about
    the relationship between the members included in its investigation and
    those covered by the safeguard measure. Outcome The Appellate Body found
    that the U. S. *s safeguard measure was applied inconsistently with the
    Safeguards Agreement and GATT 1994 and

    recommended that the DSB request that the United States bring the measure
    into conformity with those agreements. Although the Appellate Body upheld
    part of the panel findings on serious injury, it reversed the panel
    findings on another serious injury issue and on an important aspect of the
    panel*s causation analysis. In addition, the Appellate Body agreed

    18 Australia, Canada, and New Zealand were third parties in this case. 19
    Wheat Gluten is a by- product of the industrial production of starch and,
    among other things, is used to enrich protein in flours for bread, pasta,
    etc. 20 The parties to NAFTA are Canada, Mexico, and the United States.

    21 Causation in safeguards cases refers to whether increased imports cause
    or threaten to cause serious injury to domestic industry.

    with the panel that the United States inappropriately excluded imports
    from Canada from its safeguard measure after including such imports in its
    injury investigation.

    Compliance Action The safeguard measure expired in June 2001.

    Table 15: Case 12 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether the United States was required to The United States need only
    consider Reversed the panel. examine only the relevant factors listed in
    factors other than those in article 4.2( a) that article 4.2( a) of the
    Safeguards Agreement

    are clearly raised by the interested parties in The United States must
    evaluate all relevant in evaluating serious injury to a domestic

    the investigation. factors, not just those raised by interested industry.
    parties. Whether the causation standard in article

    Increased imports alone must cause serious Reversed the panel. 4.2( b) of
    the Safeguards Agreement

    injury. requires that increased imports alone cause Domestic authorities
    must only find a causal serious injury to the domestic industry.

    link between increased imports and serious injury that shows a genuine and
    substantial relationship of cause and effect between the imports and
    injury.

    Whether the United States, consistent with Did not fully analyze this
    issue. The United States did not adequately show article 4.2( b) of the
    Safeguards Agreement,

    that injury caused to the domestic industry adequately explained that
    injury to the by increases in average capacity to produce domestic
    industry from factors other than wheat gluten was not attributed to
    increased

    increased imports was not attributed to imports. increased imports.

    Whether the United States properly The United States was not justified in

    Upheld the panel. excluded Canadian imports from the

    excluding imports from Canada from its safeguard measure after including
    such

    safeguard measure. Although the United States examined imports in its
    investigation to determine

    imports from Canada separately, it did not whether serious injury to the
    domestic

    The United States failed to consider whether establish that imports from
    the other sources

    industry had occurred. non- Canadian imports themselves caused satisfied
    the conditions for application of a

    serious injury. safeguard measure.

    Whether the panel properly applied the The panel applied the standard of
    review to

    The panel properly applied article 11 to standard of review in article 11
    of the DSU in

    evaluating four factors. three factors, but violated article 11 evaluating
    factors dealing with serious regarding the fourth factor** profits and
    injury, as required by article 4.2( a) of the losses** by improperly
    relying on Safeguards Agreement.

    supplementary information the United States provided to the panel that was
    not part of the domestic proceeding.

    Source: GAO analysis of WTO panel and Appellate Body reports.

    GAO Case Number 13: Complainants: Australia, New Zealand 22 United States
    *

    Defendant: United States Safeguard Measures on Imports of Fresh, Chilled,
    or Frozen Lamb Meat from New Zealand and Australia (DS 177/ 178)

    Nature of Complaint Australia and New Zealand challenged a U. S. safeguard
    measure imposed on imports of fresh, chilled, and frozen lamb meat from
    New Zealand and Australia. The measure was in the form of a tariff rate
    quota 23 that was to span 3 years. The safeguard measure did not apply to
    imports from Canada, Mexico, certain other U. S. trading partners, and
    developing countries.

    Australia and New Zealand contended that the safeguard measure violated
    various provisions of the Safeguards Agreement and GATT 1994. Their
    complaints were directed at U. S. findings about the definition of the
    domestic lamb meat industry, the existence of serious injury, and the
    causal relationship between increased imports and injury to the domestic
    lamb meat industry. Outcome The Appellate Body found that the United
    States safeguard measure was

    applied inconsistently with the Safeguards Agreement and GATT 1994 and
    recommended that the DSB request that the United States bring its measure
    into conformity with those agreements. Although the Appellate Body upheld
    a number of important panel findings* including those involving the
    definition of the domestic lamb meat industry, serious injury, and a part
    of the panel*s causation analysis* it reversed the panel*s

    interpretation of the causation requirements in the Safeguards Agreement.
    22 Canada, the EU, Iceland, and Japan were third parties in this case. 23
    Tariff rate quotas consist of two different tariff rates. A lower rate is
    applied to a certain quota amount of a product, and a higher tariff rate
    applies to amounts that exceed that quota.

    The Appellate Body also concluded that the panel incorrectly applied the
    standard of review in article 11 in evaluating the U. S. *s determination
    about the existence of a threat of serious injury. Compliance Action In
    August 2001, the United States decided to end the application of the

    safeguard measure on imports of lamb meat, effective in November 2001.

    Table 16: Case 13 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether the United States violated article Found a violation.

    Upheld the panel finding though it didn*t XIX: 1( a) of GATT 1994 by
    failing to agree with all of the panel*s reasoning. demonstrate, as a
    matter of fact, the

    Investigating authorities must clearly existence of *unforeseen
    developments*

    examine the existence of *unforeseen Failure to address *unforeseen prior
    to applying a safeguard measure.

    developments* and come to a reasoned developments* is not surprising. U.
    S. legal conclusion about it.

    measures do not obligate it to examine them in its investigation into the
    situation of a domestic industry. Whether the United States appropriately

    Found the U. S. definition improper. Upheld the panel. defined the
    domestic industry in its safeguard investigation by including growers

    An enterprise can only be considered a Input products can only be included
    in and feeders of live lambs.

    producer of goods it actually makes. defining the domestic industry if
    they are Growers and feeders of live lambs are

    *like or directly competitive* with the end producers of live lambs, not
    lamb meat. products.

    Whether the panel appropriately interpreted The panel*s task was limited
    to reviewing the

    Upheld the panel*s interpretation of the and applied the standard of
    review in article U. S. threat of injury determination and

    standard of review, but found that the panel 11 in its evaluation of the
    U. S. determination

    examining whether the determination did not apply it properly in examining
    that a threat of serious injury to the domestic provided an adequate
    explanation of how

    whether the United States provided a industry existed.

    the facts supported it. The panel should not reasoned and adequate
    explanation of how conduct a new review of the evidence.

    the facts supported its determination that a threat of serious injury
    existed.

    Whether the U. S. examination of causation United States violated article
    4.2( b) by Upheld the panel finding but reversed its was consistent with
    article 4.2( b) of the

    applying a *substantial cause* a standard interpretation that increased
    imports alone Safeguards Agreement. and by failing to ensure that the
    threat of

    must cause, or threaten to cause, serious serious injury caused by other
    factors was

    injury. not attributed to increased imports.

    Since the United States did not provide a Increased imports alone must be
    sufficient meaningful explanation of the injurious to cause serious
    injury.

    effects of six factors it considered, it was impossible to determine
    whether injury caused by those factors was attributed to

    increased imports. Source: GAO analysis of WTO panel and Appellate Body
    reports.

    a The panel explained that under the U. S. standard, the U. S.
    International Trade Commission examines whether imports are an important
    cause of injury and no less important than any other single cause.

    GAO Case Number 14: Complainant: Korea 24 United States *

    Defendant: United States Antidumping Measures on Stainless Steel Plate in
    Coils and Stainless Steel Sheet and Strip from Korea (DS 179)

    Nature of Complaint Korea challenged several aspects of the U. S.
    antidumping investigation and measures on imports of stainless steel plate
    in coils (plate) and stainless steel sheet and strip (sheet) from Korea.
    Specifically, Korea challenged the U. S. treatment of currency conversions
    and of sales to U. S. companies that failed to pay for the imports due to
    bankruptcy. Finally, Korea challenged the U. S. calculation of the dumping
    margin.

    Outcome The panel found several aspects of the U. S. investigation to be
    inconsistent with the ADA. It found that the currency conversions in the
    sheet investigation were inconsistent with the ADA, though it also found
    that the conversions in the plate investigation were consistent with the
    ADA. The panel also found the U. S. treatment of sales for which payment
    was never received and its use of multiple averaging periods in its
    calculation of dumping margins were inconsistent with the ADA.
    Accordingly, the panel recommended that the United States bring its
    antidumping duties on Korean steel plate and sheet into compliance with
    the ADA. The panel findings were not appealed.

    Compliance Action As of April 2003, the antidumping orders were still in
    effect. According to officials from the Commerce Department, the United
    States made some

    revisions in its calculation of dumping margins in this case. 24 The EU
    and Japan were third parties in this case.

    Table 17: Case 14 * Major Case Issues and Panel Findings Major case issues
    Panel findings

    Whether the U. S. actions regarding currency conversions violated The U.
    S. treatment of currency conversions in the stainless steel the ADA. plate
    investigation complied with the ADA. However, in the sheet

    investigation, the United States acted inconsistently with the ADA by
    performing unnecessary currency conversions.

    Whether the United States treatment of sales for which payment The United
    States acted inconsistently with article 2.4 of the ADA was never received
    due to a company*s bankruptcy violated article

    by improperly adjusting for unpaid sales. 2.4 of the ADA.

    Whether the U. S. use of multiple averaging periods for comparing The U.
    S. *s use of multiple averaging periods in this investigation prices* by
    dividing the period of investigation into two averaging was inconsistent
    with the requirement of article 2.4. 2 to compare a periods to take into
    account a major devaluation of the Korean *weighted average normal value
    with a weighted average of all won* violated articles 2.4.2, 2.4.1, and
    2.4 of the ADA. comparable export transactions.* However, the U. S. *s use
    of multiple averaging periods was not inconsistent with article 2. 4. 1 or
    the first sentence in the chapeau of article 2. 4 of the ADA.

    Source: GAO analysis of the WTO panel report.

    GAO Case Number 15: Complainant: Japan 25 United States *

    Defendant: United States Antidumping Measures on Certain Hot- Rolled Steel
    Products from Japan (DS 184)

    Nature of Complaint Japan challenged the U. S. *s imposition of
    antidumping duties on imports of hot- rolled steel products from Japan.
    Japan claimed that certain provisions of U. S. antidumping laws,
    regulations, and administrative procedures were inconsistent with the ADA.
    For example, Japan challenged the U. S. *s application of *facts
    available* and adverse facts as inconsistent with its ADA obligations.
    Japan also challenged the U. S. *s statutory method 26 for calculating an
    *all others* rate as inconsistent with the ADA.

    Outcome The Appellate Body upheld panel findings of U. S. violations
    relating to the use of facts available, adverse facts, calculation of all
    other rates, and

    application of the arm*s- length test. 27 The Appellate Body also reversed
    the panel finding on the issue of nonattribution without specifically
    finding against the United States on that issue. Although the Appellate
    Body upheld a panel finding that United States law on captive production
    was consistent with the ADA, it reversed the panel*s finding that the
    United States had applied the law properly. As a result of the findings
    against the United States, the Appellate Body recommended that the DSB
    request that the United States bring its measures into conformity with the
    ADA. The

    25 Brazil, Canada, Chile, the EU, and Korea were third parties in this
    case. 26 Section 735( c)( 5)( A) of the Tariff Act of 1930. 27 This test
    relates to whether certain sales are *in the ordinary course of trade.*
    The United States treated home market sales by an exporter to an
    affiliated customer as within the ordinary course of trade so long as
    prices to the affiliated customers were on average at least 99.5 percent
    of the average prices charged to unaffiliated customers.

    Appellate Body also made important statements about the standard of review
    in article 17. 6 of the ADA. 28 Compliance Action In November 2002, the
    United States completed a new antidumping

    determination that implemented the recommendations and rulings of the DSB.
    As a result of the changes made to the dumping margin calculations, the
    dumping margins for all three companies and all others were reduced.

    The United States also revised its rules regarding its arm*s- length test
    to determine if sales are *in the ordinary course of trade.* The United
    States continues work to implement the recommendations and rulings
    regarding the U. S. antidumping statutory provision on the *all others
    rate.* The United States and Japan agreed to extend the deadline for
    implementation to December 2003, or until the end of the first session of
    the next Congress, whichever is earlier. 28 The Appellate Body concluded
    that there was no conflict between the factual standard of

    review in article 17.6( i) and article 11, and that the legal standard of
    review in article 17.6( ii) supplements rather than replaces article 11.
    The Appellate Body also concluded that the second sentence of article
    17.6( ii) presupposes that application of the rules in articles 31 and 32
    of the Vienna Convention on the Law of Treaties could give rise to, at
    least, two permissible interpretations of some ADA provisions.

    Table 18: Case 15 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether the United States violated article The United States acted
    inconsistently with

    Upheld the panel, but on the basis of 6.8 and annex II of the ADA by using
    facts

    the ADA because an objective and modified reasoning. available instead of
    certain information from unbiased investigating authority could not two
    companies submitted after the have concluded the two companies failed to
    expiration of the deadline for such

    provide necessary information within a information.

    reasonable period of time. Whether the United States violated article

    The United States acted inconsistently with Upheld the panel. 6.8 and
    annex II of the ADA by using certain the ADA by using certain adverse
    adverse information because a company did

    information because the use of adverse not provide information the United
    States facts is only appropriate when a party does had requested.

    not cooperate in an investigation. An unbiased and objective investigating
    authority could not have found that the Japanese company failed to
    cooperate. Whether the U. S. *s statutory methodology for U. S. law
    governing calculation of a dumping Upheld the panel. calculating a dumping
    margin for exporters

    margin for all other exporters, and its and producers was not individually

    application, was inconsistent with article investigated* the *all others
    rate** and its

    9. 4 of the ADA because it required application violated article 9. 4 of
    the ADA.

    consideration of margins that were based, in part, on facts available.
    Whether the United States *captive The captive production law is not on
    its face Upheld the panel with regard to the challenge production* law a
    is, on its face, and, as or as applied inconsistent with the ADA.

    to the captive production law, but reversed applied, inconsistent with the
    ADA.

    the panel with respect to its application. The U. S. International Trade
    Commission (ITC) made an affirmative injury or threat of

    The captive production provision does not injury determination whether
    they applied

    require an exclusive focus on the merchant the captive production
    provision or not.

    market, nor does it exclude an equivalent examination of the captive
    market. The ITC provided no adequate explanation about why it failed to
    examine the merchant market without also examining the captive market in a
    comparable manner, and therefore acted inconsistently with articles 3.1
    and 3.4 of the ADA.

    Whether the U. S. *s application of the arm*slength U. S. application of
    the arm*s- length test

    Upheld the panel finding on the basis of test was inconsistent with
    article 2.1

    violated the ADA because it did not rest on modified reasoning. of the
    ADA.

    a permissible interpretation of the phrase *sales in the ordinary course
    of trade.*

    (Continued From Previous Page)

    Major case issues Panel findings Appellate Body findings

    Whether the U. S. *s reliance on downstream The United States acted
    inconsistently with

    Reversed the panel. sales between parties affiliated with an article 2.1
    of the ADA by using in its investigated exporter and independent

    calculation of normal value, certain Reliance by the United States on
    purchasers to calculate normal value was

    downstream sales made by an investigated downstream sales to calculate
    normal value inconsistent with article 2.1 of the ADA. exporter*s
    affiliates to independent

    rested upon an interpretation of article 2.1 of producers. the ADA that,
    in principle, is permissible following application of the rules of treaty
    Normal value is to be determined on the

    interpretation in the Vienna Convention. basis of the prices of sales made
    by the investigated companies themselves, in the

    ordinary course of trade. Whether the United States violated article

    The United States did not violate article 3.5 Reversed the panel reasoning
    without 3.5 of the ADA by failing to ensure that injury of the ADA because
    it did not attribute

    specifically finding against the United States. caused by factors other
    than dumped

    injury actually caused by other factors to imports was not attributed to
    the dumped

    dumped imports. Investigating authorities must separate and imports.
    distinguish the injurious effects of other factors from the injurious
    effects of dumped imports. Source: GAO analysis of WTO panel and Appellate
    Body reports.

    a Section 771( 7)( C)( iv) of the Tariff Act of 1930, as amended. This
    provision distinguishes between the segment of the market consisting of
    commercial shipments on the open market and the captive segment of the
    market, which refers to internal transfers of the product that generally
    do not enter the open market because the product is used by an integrated
    producer to manufacture a downstream product. Domestic producers whose
    production is captive, therefore, do not compete directly with

    importers because their imports generally are not used in the captive
    production of the downstream product. Japan argued that the captive
    production provision ignores the fact that a significant part of the
    domestic industry* captive production* is shielded or protected from the
    effects of allegedly dumped imports.

    GAO Case Number 16: Complainant: European Union (EU) 29 Argentina *
    Definitive

    Defendant: Argentina Antidumping Measures on Imports of Ceramic Floor
    Tiles from Italy (DS 189)

    Nature of Complaint The EU challenged Argentina*s imposition of
    antidumping measures on imports of ceramic floor tiles from Italy. The
    antidumping measures took the form of specific antidumping duties that
    were based on the difference between the actual import price and a
    designated minimum export price, whenever the former was lower than the
    latter. The EU claimed that the antidumping measures were inconsistent
    with various provisions of the ADA. Among other things, the EU maintained
    that Argentina disregarded important information provided by exporters,
    failed to allow for differences in physical characteristics between models
    of tiles exported to Argentina and those sold in Italy, and did not inform
    Italian exporters of important facts that formed the basis for the
    decision to apply antidumping

    measures. Outcome The panel found that Argentina acted inconsistently with
    various

    provisions of the ADA and upheld most of the EU claims. As a result, the
    panel recommended that Argentina bring its antidumping measures into
    conformity with its obligations under the ADA. The panel findings were not
    appealed.

    Compliance Action In May 2002, Argentina informed the DSB that on April
    24, 2002, it had revoked the antidumping measure at issue in this case.

    29 Japan, Turkey, and the United States were third parties in this case.

    Table 19: Case 16 * Major Case Issues and Panel Findings Major case issues
    Panel findings

    Whether Argentina acted inconsistently with article 6. 8 and annex II
    Argentina acted inconsistently with article 6. 8 and annex II of the of
    the ADA by calculating dumping margins on the basis of facts ADA by (1) in
    large part disregarding exporter information used for available and
    disregarding, in whole or in part, information

    determining normal value and export prices; (2) not informing the
    submitted to the Argentine investigating authority by Italian tile

    exporters why it rejected the information; (3) not providing exporters
    exporters.

    with an opportunity to provide further explanations of questions asked,
    within a reasonable period; and (4) not giving, in any published
    determinations, the reasons for rejection of evidence or information.

    In applying the standard of review in article 17. 6( i), the panel found
    that the Argentine authority failed to perform an objective and unbiased
    evaluation of the facts by apparently deciding to disregard, in large
    part, the information provided by the exporters.

    Whether Argentina acted inconsistently with article 2.4 of the ADA An
    objective and unbiased evaluation of the facts of this case would by
    failing to make due allowance for physical differences affecting

    have required Argentina to make additional adjustments for physical price
    comparability between the various models of tiles exported to

    differences affecting price comparability. Therefore, Argentina acted
    Argentina and those sold domestically. inconsistently with article 2.4.

    Whether Argentina acted inconsistently with article 6.9 of the ADA
    Argentina violated article 6.9 by failing to inform the exporters of the
    by failing to disclose to the exporters the *essential facts* under
    *essential facts* under consideration. consideration that formed the basis
    for the Argentina decision about whether to apply definitive antidumping
    measures.

    The exporters could not have been aware, simply by reviewing the complete
    record of the investigation, that evidence submitted by petitioners and
    derived from secondary sources, rather than from

    facts the exporters submitted, would form the primary basis for the
    determination of the existence and extent of dumping.

    Source: GAO analysis of the WTO panel report.

    GAO Case Number 17: Complainant: Canada 30 United States *

    Defendant: United States Measures Treating Export Restraints as Subsidies
    (DS 194)

    Nature of Complaint Canada directly challenged a number of U. S. legal
    measures 31 that it argued required the United States to treat export
    restraints 32 as financial contributions, and thus potential subsidies, 33
    in violation of the SCM Agreement. Canada argued that export restraints
    could result in providing subsidies to other products that used or
    incorporated the restricted product when the domestic price of the
    restricted product was affected by

    the restraint. Canada*s challenge was only to U. S. legal measures and not
    to a particular instance in which an export restraint had been the subject
    of a CVD investigation.

    Outcome The panel found against Canada and concluded that U. S. CVD law is
    not inconsistent with the SCM Agreement; U. S. law does not require that
    export restraints be treated as financial contributions and thus
    subsidies. In addition, the panel suggested that three of the legal
    measures Canada contested could not be challenged independently of the
    relevant U. S.

    30 Australia, the EU, and India were third parties in this case. 31 Canada
    challenged the following U. S. legal measures: Section 771( 5) of the
    Tariff Act of 1930, codified at 19 U. S. C. S: 1677( 5), as amended by the
    Uruguay Round Agreements Act; the U. S. *s Statement of Administrative
    Action accompanying the Uruguay Round

    Agreements Act; the Commerce Department*s preamble to CVD regulations; and
    U. S. *practice* related to the treatment of export restraints. 32 For
    purposes of this dispute, the panel considered an export restraint to be
    *a border measure that takes the form of a government law or regulation
    which expressly limits the quantity of exports or places explicit
    conditions on the circumstances under which exports are permitted, or that
    takes the form of a government- imposed fee or tax on exports of the
    product calculated to limit the quantity of exports.*

    33 Under article 1.1 of the SCM Agreement, the definition of a subsidy has
    two elements: (1) a financial contribution, (2) which confers a benefit.
    The parties agreed that an export restraint could confer a benefit.

    statute. 34 To facilitate its analysis of the challenge to the U. S. legal
    measures, the panel first concluded that export restraints, as defined in
    the dispute, do not constitute financial contributions within the meaning
    of the SCM Agreement. The panel findings were not appealed.

    Compliance Action No compliance action was necessary. 34 These measures
    were the Statement of Administrative Action, the preamble to the relevant
    Commerce Department regulations, and the Commerce Department*s
    administrative practice.

    Tabl e 20: Case 17 * Major Case Issues and Panel Findings Major case
    issues Panel findings

    Whether export restraints can be considered *financial Export restraints,
    as defined in this dispute, do not constitute contributions,* and thus
    subsidies, within the meaning of article 1.1

    financial contributions, and thus subsidies, within the meaning of of the
    SCM Agreement (Definition of a Subsidy).

    article 1.1. Export restraints in this case cannot be considered
    governmententrusted or government- directed provision of goods.

    Rejects U. S. approach that to the extent that an export restraint causes
    an increased domestic supply of the restrained good* in effect, it is a
    subsidy. Whether U. S. law requires the treatment of export restraints as

    Section 771( 5) of the Tariff Act, as read in light of the Statement of
    financial contributions, in conflict with article 1. 1 of the SCM

    Administrative Action (SAA) accompanying the Uruguay Round Agreement.

    Agreements Act and the preamble to the U. S. CVD regulations, does not
    mandate the treatment of export restraints as financial contributions.
    Section 771( 5) does not specifically address export restraints. The SAA
    and preamble do not require the Commerce Department to interpret section
    771( 5) as requiring that export restraints be treated as financial
    contributions. Moreover, Canada did not show that the Commerce Department
    practice required export restraints

    to be treated as financial contributions. Source: GAO analysis of the WTO
    panel report.

    GAO Case Number 18: Complainant: Korea 35 United States *

    Defendant: United States Definitive Safeguard Measures on Imports of
    Circular Welded Carbon Quality Line Pipe from Korea (DS 202)

    Nature of Complaint Korea challenged the U. S. imposition of a safeguard
    measure on imports of certain line pipe from Korea. The safeguard measure
    that was imposed was in the form of a duty increase for 3 years. The
    measure applied to imports from all WTO members except Canada and Mexico.
    Korea maintained that parts of the U. S. investigation as well as the
    safeguard measure itself violated provisions of the Safeguards Agreement
    and GATT 1994.

    Outcome The panel and the Appellate Body found several aspects of the U.
    S. safeguard measure to be inconsistent with provisions of the Safeguards
    Agreement and GATT 1994. This included U. S. determinations about
    causation. The Appellate Body also reversed several panel findings about
    exclusion of certain WTO members from the safeguard measure and the extent
    of application of the measure, which resulted in findings against the
    United States. The Appellate Body also reversed the panel on one of its
    injury findings, which resulted in upholding a United States
    determination. As a result of the findings against the United States, the
    Appellate Body recommended that the DSB request that the United States
    bring its measure into conformity with the Safeguards Agreement and GATT
    1994. Compliance Action In July 2002, the United States and Korea agreed
    on several steps to

    implement the recommendations of the DSB. They agreed that the United
    States would increase the amount of imports exempt from additional 35
    Australia, Canada, the EU, Japan, and Mexico were third parties in this
    case.

    tariffs, beginning in September 2002 and ending in March 2003. The measure
    then expired in March 2003.

    Table 21: Case 18 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether the United States improperly Korea failed to show that the United
    States

    Reversed the panel. excluded Canada and Mexico from had violated the
    Safeguards Agreement by application of the safeguard measure after

    excluding Mexico and Canada from the The United States violated articles 2
    and 4

    including them in its analysis of whether measure.

    of the Safeguards Agreement by excluding serious injury occurred.

    Canada and Mexico from the safeguard without providing a reasoned and
    adequate explanation that imports from other sources by themselves
    satisfied the conditions for applying the safeguard.

    Whether the United States adequately The United States violated article
    4.2( b) of

    Upheld the panel. explained that the injury to the domestic

    the Safeguards Agreement by not industry caused by factors other than

    adequately explaining how it ensured that increased imports was not
    attributed to

    injury caused by other factors was not increased imports.

    attributed to increased imports. The ITC*s *more important cause of
    injury* standard does not satisfy the requirements of article 4.2( b).

    Whether Korea made a prima facie case that Korea failed to make a prima
    facie case. Reversed the panel. the United States imposed a safeguard
    measure beyond the extent necessary to

    The United States violated article 5.1 of the prevent or remedy serious
    injury and to Safeguards Agreement by applying the line facilitate
    adjustment.

    pipe measure beyond the extent necessary. Whether U. S. determination of
    *serious

    The United States violated articles 3.1 and Reversed the panel. injury or
    threat of serious injury* was

    4. 2 (c) of the Safeguards Agreement by not consistent with articles 3.1
    and 4.2( c) of the explicitly finding that increased imports

    The ITC*s determination of serious injury or Safeguards Agreement.

    either (1) have caused serious injury or (2) threat of serious injury was
    consistent with threaten to cause serious injury. the Safeguards
    Agreement.

    Articles 3. 1 and 4.2( c) do not require a discrete determination either
    of serious injury or threat of serious injury.

    Source: GAO analysis of WTO panel and Appellate Body reports.

    GAO Case Number 19: Complainant: India 36 United States *

    Defendant: United States Antidumping and Countervailing Measures on Steel
    Plate from India (DS 206)

    Nature of Complaint India challenged several aspects of the U. S.
    antidumping investigation for imports of steel plate from India.
    Specifically, India challenged the U. S. rejection of certain sales
    information and its reliance on facts available in its investigation.
    India further challenged U. S. statutory provisions 37 governing the use
    of *facts available* and the U. S. treatment of India as a developing
    country.

    Outcome The panel upheld the U. S. statutory provisions governing the use
    of *facts available,* but found that the United States had not provided a
    legally sufficient justification for rejecting some sales information
    during its investigation. Accordingly, the panel recommended that the DSB
    request that the United States bring its antidumping measure into
    conformity with its obligation under the ADA. The panel also found that
    the U. S. *practice* governing total facts available is not a *measure*
    that can violate the ADA. The panel findings were not appealed.

    Compliance Action In February 2003, the United States informed the DSB
    that it had implemented the WTO*s ruling by issuing a second determination
    regarding

    antidumping duties imposed on imports of steel plate from India. Also in
    February 2003, the United States and India came to an agreement regarding
    the procedure to be followed if India believes that the United States has
    not fully complied with the findings and recommendations of the DSB. 36
    Chile, the EU, and Japan were third parties in this case. 37 Sections 776(
    a) and 782( d) and (e) of the Tariff Act of 1930.

    Tabl e 22: Case 19 * Major Case Issues and Panel Findings Major case
    issues Panel findings

    Whether the U. S. rejection of certain sales information and its The
    United States acted inconsistently with article 6.8 and annex II reliance
    completely on *facts available* violated article 6.8 and of the ADA
    because it did not provide a legally sufficient justification annex II of
    the ADA.

    for rejecting certain sales data from the Indian producer and instead
    relied entirely on *facts available* when calculating dumping margins.

    Whether the U. S. statutory provisions governing the use of *facts U. S.
    statutory provisions do not on their face require the available* are
    inconsistent with article 6. 8 and annex II of the ADA. investigating
    authority to act inconsistently with article 6.8 and annex II of the ADA.
    Whether the United States failed to give *special regard* to India as

    The United States did not act inconsistently with article 15 of the a
    developing country under article 15 of the ADA. ADA because the article
    imposes *no specific or general obligation* on members to take any
    particular action when considering the application of antidumping measures
    to developing country

    members. Whether the U. S. *practice* related to *total facts available*
    is a The U. S. *practice* is not a separate measure that can *measure*
    that can violate the ADA. independently give rise to a WTO violation.

    Source: GAO analysis of the WTO panel report.

    GAO Case Number 20: Complainant: Argentina 38 Chile * Price Band

    Defendant: Chile System and Safeguard Measures Relating to Certain
    Agricultural Products (DS 207)

    Nature of Complaint Argentina made two distinct challenges to Chilean
    restrictions on imports of Argentine wheat, wheat flour, sugar, and edible
    vegetable oils. Thus, Argentina challenged both Chile*s price band system,
    39 which Chile applied to calculate tariff rates on these imports, and its
    imposition of safeguard measures on these imports. In certain situations,
    the use of Chile*s price

    band system resulted in tariff rates higher than the bound tariff rate in
    Chile*s WTO schedule. Chile also used its price band system to calculate
    the safeguard measures it imposed on the Argentine imports. Argentina
    claimed (1) that Chile*s price band system violated GATT 1994 and the WTO
    Agreement on Agriculture and (2) that Chilean safeguards violated various
    provisions of the Safeguards Agreement as well as GATT 1994. Argentina*s
    safeguards challenges were directed at how Chile evaluated increases in
    imports, the causal connection between imports and injury to Chile*s
    domestic industry, and the scope of the safeguard measures.

    Outcome With respect to the safeguards issues, the panel determined that
    Chile had violated various provisions of the Safeguards Agreement and GATT
    1994. Nevertheless, the panel did not make a recommendation regarding
    removal of the safeguard measures because they had been removed before the

    38 Australia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, the EU,
    Guatemala, Honduras, Japan, Nicaragua, Paraguay, the United States, and
    Venezuela were third parties in this case.

    39 Under this system, the total amount of a tariff duty that was applied
    to these Argentine imports was (1) an applied tariff rate of 8 percent and
    (2) a specific price band duty that was determined for each import by
    comparing a reference price with the upper or lower threshold of a price
    band. These upper and lower price bands were calculated for each imported
    product on the basis of certain international prices. The reference prices
    were set for each product based on prices in certain foreign markets.

    panel published its report. Although the panel findings on safeguards were
    not appealed, the Appellate Body upheld panel findings that Chile*s price
    band system was inconsistent with GATT 1994 and the Agreement on
    Agriculture. As a result, the Appellate Body recommended that the DSB
    request that Chile bring its price band system into conformity with its
    obligations under the Agreement on Agriculture.

    Compliance Action No action was required with regard to the safeguard
    measures. Chile*s compliance with regard to its price band system involves
    the WTO Agreement on Agriculture and is due by December 23, 2003.

    Table 23: Case 20 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body Decisions

    Whether the panel violated article 11 of the The duties called for under
    Chile*s price

    Reversed the panel finding with respect to the DSU by finding that the
    duties resulting from band system are inconsistent with both second
    sentence of article II: 1( b) because Chile*s price band system were
    inconsistent the first and second sentences of article

    Argentina had not made any claim under that with the second sentence of
    article II: 1( b) of II: 1( b). sentence. GATT 1994.

    Although the panel acted in good faith, by making a finding on a claim
    that was not before it, it did not make an objective assessment of the
    matter and, thus, acted inconsistently with article 11 of the DSU. In
    making an objective assessment under article 11, a panel is also obligated
    to ensure that due process is respected.

    Whether Chile demonstrated that its Chile violated article XIX: I( a) by
    failing

    Not appealed. safeguard measures were applied as a result

    to demonstrate that the safeguard of *unforeseen developments,* as
    required by measures were applied as the result of article XIX: 1( a) of
    GATT 1994.

    *unforeseen developments.* *Unforeseen developments* is a circumstance
    that must be demonstrated as a matter of fact.

    Whether Chile showed sudden and recent Chile acted inconsistently with
    articles Not appealed. increases in imports of products that justified

    2.1 and 4.2( a) of the Safeguards imposing safeguard measures.

    Agreement by failing to find a sudden and recent increase in imports of
    products. Whether Chile limited its safeguard measures Chile violated
    article 5.1 by not ensuring Not appealed. to remedying serious injury to
    and facilitating that its safeguards were only applied to adjustment for
    its domestic industry, as

    the extent necessary to prevent or required by article 5.1 of the
    Safeguards

    remedy serious injury and facilitate Agreement.

    adjustment. Chile*s use of the price band system to calculate safeguards
    was improper.

    Source: GAO analysis of WTO panel and Appellate Body reports.

    GAO Case Number 21: Complainant: Turkey 40 Egypt * Definitive

    Defendant: Egypt Antidumping Measures on Steel Rebar from Turkey (DS 211)

    Nature of Complaint Turkey challenged Egypt*s imposition of antidumping
    duties on imports of steel rebar from Turkey. The antidumping duties
    imposed ranged from about 23 percent to 61 percent, depending on the
    exporter. Turkey

    contended that Egypt*s determinations of injury and dumping and the causal
    relationship between the dumped imports and injury to domestic injury were
    inconsistent with the ADA. A number of Turkey*s claims involved
    questionnaires that the Egyptian investigating authority sent to
    respondent companies requesting information about sales prices and the
    cost of producing rebar. Outcome Although the panel upheld 19
    determinations of the Egyptian investigating

    authority, it found that Egypt had violated articles 3.4 and 6.8 of the
    ADA. Accordingly, the panel recommended that Egypt bring its definitive
    antidumping measure on imports of steel rebar from Turkey into compliance
    with the ADA. The panel findings were not appealed.

    Compliance Action In November 2002, Egypt and Turkey informed the WTO that
    they had agreed Egypt would implement the DSB*s recommendations and
    rulings by

    July 31, 2003. In May 2003, Egypt reported to the WTO that it was
    reexamining the dumping calculations of two Turkish companies, and the
    general injury assessment, in light of this case.

    40 Chile, the EU, Japan, and the United States were third parties in this
    case.

    Table 24: Case 21 * Major Case Issues and Panel Findings Major case issues
    Panel findings

    Whether the panel should engage in a new* de novo* review of The standard
    of review in article 17. 6( i) of the ADA precludes a de the facts
    submitted to Egypt. novo review by the panel. It was necessary for the
    panel to undertake a detailed review of the evidence submitted by Egypt to
    determine whether an objective and unbiased investigating authority could
    have reached the determinations that Turkey challenged.

    The panel would not consider evidence that was not before the Egyptian
    investigating authority because this could be construed as a de novo
    review. Whether Egypt appropriately resorted to *facts available* with
    Egypt appropriately resorted to facts available with regard to three
    regard to five Turkish exporters, as permitted by article 6. 8 and

    Turkish exporters in calculating costs of production. An unbiased Annex II
    of the ADA.

    and objective investigating authority could have found that the three
    exporters failed to provide the necessary information Egypt requested.
    Egypt did not appropriately resort to facts available with regard to two
    exporters. Although Egypt received information from the two exporters that
    it had identified as being necessary to be provided, it

    still found that the exporters had failed to provide the necessary
    information. Egypt also did not inform the exporters of this finding and,
    before resorting to the use of *facts available,* did not give the
    exporters the required opportunity to provide further explanations.

    Whether Egypt failed to evaluate all of the factors listed in article
    Although Egypt gathered data on all of the factors listed in article 3.4
    of the ADA, which deals with the examination of dumped

    3.4, it failed to evaluate a number of these factors and thus acted
    imports on the domestic industry.

    inconsistently with that provision. Under the standard of review in
    article 17.6( i) panels must determine whether an investigating
    authority*s examination of the facts is objective and unbiased.

    Source: GAO analysis of the WTO panel report.

    GAO Case Number 22: Complainant: European Union (EU) 41 United States *

    Defendant: United States Countervailing Measures Concerning Certain
    Products from the European Communities (* Privatization*) (DS 212)

    Nature of Complaint The EU challenged U. S. CVDs resulting from 12
    investigations on imports of certain EU steel products. 42 The steel
    products subject to these proceedings were formerly produced by state-
    owned enterprises that had been privatized in arm*s- length transactions
    for fair market value. The EU complained that the two methodologies 43 the
    United States used to determine whether past subsidies continued to
    benefit the privatized

    company violated the SCM Agreement. In addition, the EU claimed that a
    provision of U. S. countervailing law* section 771( 5)( F) of the Tariff
    Act of 1930 44 *was, on its face, inconsistent with that agreement.

    Outcome The panel found that where a privatization is at arm*s length and
    for fair market value, the benefit from a prior subsidy to a state- owned
    enterprise is not passed on to the privatized entity. The Appellate Body
    affirmed the

    41 Brazil, India, and Mexico were third parties in this case. 42 The 12
    proceedings included 6 original investigations, 2 administrative reviews,
    and 4 sunset reviews.

    43 These are called the *gamma* and *same person* methodologies. The
    Appellate Body had faulted the gamma methodology in United States*
    Imposition of Countervailing Duties on Certain Hot- Rolled Lead and
    Bismuth Carbon Steel Products Originating in the United Kingdom, WT/
    DS138/ AB/ R. A United States Court of Appeals found this methodology to
    be

    inconsistent with United States law. Delverde, SRL v. United States, 202
    F. 3d 1360, 1368- 69 (Fed. Cir. 2000). 44 19 U. S. C. S: 1677( 5)( F).

    panel*s finding that the Commerce Department*s privatization methodologies
    were inconsistent with the SCM Agreement but disagreed with the panel
    reasoning that a fair market value sale of a government entity necessarily
    extinguishes prior subsidy benefits. The Appellate Body reversed the panel
    and found that section 771( 5)( F) of the Tariff Act of 1930 was
    consistent with the SCM Agreement.

    Compliance Action On June 23, 2003, the Commerce Department published in
    the Federal Register its final modification to its privatization practice
    45 in order to comply with the WTO*s rulings and recommendations. The
    parties have agreed that the United States will use the new methodology in
    the 12 disputed investigations and reviews by November 8, 2003, and in
    future cases. In addition, Commerce is evaluating how many other CVD
    orders might be affected by this new methodology. 45 68 Fed. Reg. 37125
    (June 23, 2003).

    Table 25: Case 22 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether the United States acted The United States violated the SCM

    Upheld the panel. inconsistently with the SCM Agreement in 12 Agreement by
    failing to determine CVD investigations and reviews by imposing

    whether the new privatized producer and maintaining CVDs without
    determining received any benefit from financial whether a subsidy benefit
    continued to exist contributions previously provided to stateowned after
    privatization at arm*s length and for fair

    producers. Accordingly, the United market value.

    States violated articles 14 and 19 of the SCM Agreement, which prohibit
    imposition of CVDs where there has been no subsidization. Whether a
    subsidy benefit that is derived Once an importing member determines

    Reversed the panel finding on when a subsidy from a nonrecurring financial
    contribution

    that a privatization has taken place at benefit is extinguished by
    privatization, but continues to exist following a transfer of

    arm*s length and for fair market value, it upheld the panel finding that
    *gamma* and ownership of a state- owned enterprise to a must conclude that
    no benefit resulting *same person* methodologies are inconsistent new
    private owner at arm*s length and for fair

    from the prior subsidization continues to with the SCM Agreement. market
    value.

    accrue to the privatized producer. There is only a rebuttable presumption,
    rather Both *gamma* and *same person* than an inflexible rule, that
    benefits derived methodologies, which the Commerce from pre- privatization
    financial contributions Department used to determine if a

    expire following privatization at arm*s length subsidy benefit is
    extinguished by and for fair market value. privatization, violate the SCM
    Agreement.

    *Same person* methodology impedes the Commerce Department from complying
    with its obligation to examine whether a countervailable subsidy continues
    to exist where the pre- and post- privatization entities are the same
    legal person.

    Whether section 771( 5)( F) of the Tariff Act of Section 771( 5)( F)
    violates the SCM

    Reversed the panel. 1930 allows the United States to exercise its

    Agreement because it prohibits the discretion in a WTO- compatible manner.

    Commerce Department from Section 771( 5)( F) does not mandate a method
    systematically concluding that contrary to the SCM Agreement for
    privatizations at arm*s length and for fair

    determining the continued existence of a market value extinguish prior
    subsidy subsidy benefit after a privatization. Therefore benefits. it does
    not prevent the Commerce Department

    from exercising a WTO- compatible discretion. Source: GAO analysis of WTO
    panel and Appellate Body reports.

    GAO Case Number 23: Complainant: European Union (EU) 46 United States *

    Defendant: United States Countervailing Duties on Certain
    CorrosionResistant Carbon Steel Flat Products from Germany (* Sunset*) (DS
    213)

    Nature of Complaint The EU challenged provisions of U. S. countervailing
    law and regulations as well as application of the law and regulations to a
    sunset review of a CVD order on certain imports of carbon steel from
    Germany. The EU argued that, among other things, the United States had
    acted inconsistently with the SCM Agreement by automatically self-
    initiating the sunset review, by

    failing to apply a 1 percent de minimis 47 standard of subsidization set
    forth in the SCM Agreement, and by applying an improper standard to
    determine whether a continuation or recurrence of subsidization was
    likely.

    Outcome The Appellate Body upheld the panel findings that U. S. laws*
    regarding (1) the automatic self- initiation of sunset reviews and (2) the
    obligation in the

    SCM Agreement to determine the likelihood of continuation or recurrence of
    subsidization in sunset reviews* were consistent with the SCM Agreement.
    Nevertheless, with regard to the de minimis standard, the Appellate Body
    reversed the panel 48 and found that the 1 percent de minimis standard
    applied only to initial CVD investigations and not to sunset reviews of
    CVD orders. Accordingly, it found that U. S. law setting

    46 Japan and Norway were third parties in this case. 47 De minimis
    subsidization is the level below which a subsidy is considered to be
    negligible. CVD actions are terminated in cases where the level of subsidy
    is below the de minimis level. 48 Although the panel*s majority found that
    U. S. law was inconsistent with the SCM Agreement, in a rare dissent in
    WTO dispute settlement cases, one panelist concluded to the contrary.

    forth a de minimis subsidization threshold for sunset reviews below that
    set forth for original investigations, as well as its application, was
    consistent with the SCM Agreement. In an issue that was not appealed, the
    panel found that the United States had acted inconsistently with the SCM
    Agreement in the sunset review by failing to properly determine the
    likelihood of the continuation or recurrence of subsidization. On the
    basis of this finding, the Appellate Body

    recommended that the United States bring its CVD measure into conformity
    with the SCM Agreement. 49 Compliance Action The United States has agreed
    to implement the panel*s finding on the

    likelihood of continuation or recurrence of subsidization. Commerce
    Department officials said that implementation would require the agency to
    conduct a new sunset analysis with respect to this particular German steel
    order, but would not require a regulatory change.

    49 The United States Court of International Trade also found that the
    Commerce Department*s determination of likelihood of subsidization was
    inconsistent with U. S. law. AG Der Gillinger Huttenwerke v. United
    States, 193 F. Supp. 2d 1339 (CIT 2002).

    Table 26: Case 23 * Major Case Issues and Panel/ Appellate Body Findings
    Major case issues Panel findings Appellate Body findings

    Whether absence of an evidentiary standard for U. S. law does not violate
    article 21. 3.

    Upheld the panel. self- initiation of sunset reviews in U. S. CVD law is
    consistent with article 21.3 of the SCM

    Article 21.3 does not require that Agreement.

    investigating authorities apply any evidentiary standard before they
    selfinitiate sunset reviews. Whether the SCM Agreement requires that a 1

    The1 percent de minimis standard in Reversed the panel. percent de minimis
    standard of subsidization

    article 11. 9 of the SCM Agreement be applied during sunset reviews.

    applies to sunset reviews described in U. S. law is consistent with the
    SCM article 21. 3.

    Agreement because the 1 percent de minimis standard in article 11.9 is not
    implied in article The  1/2 percent standard in U. S. CVD 21. 3. law
    violates article 21. 3.

    A finding that the de minimis standard of article 11.9 is implied in
    sunset reviews would upset the delicate balance of rights and obligations
    attained in negotiations. Whether U. S. CVD law and regulations

    U. S. CVD law is consistent. Upheld the panel. mandate WTO- inconsistent
    behavior regarding the obligation under article 21. 3 for an The language
    of U. S. law is nearly The panel acted properly under article 11 of
    investigating authority to determine the identical to article 21.3. Though
    a U. S. the DSU in evaluating this issue. likelihood of continuation or
    recurrence of

    regulation imposes severe limitations subsidization in a sunset review. on
    the Commerce Department*s ability

    The panel properly applied the distinction to reach a new rate of
    subsidization, it between mandatory and discretionary does not mandate
    WTO- inconsistent

    legislation. behavior.

    Whether U. S. CVD law was properly applied The United States violated
    article 21.3

    Not appealed. regarding the Commerce Department*s of the SCM Agreement by
    making an obligation to determine the likelihood of improper likelihood
    determination.

    continuation or recurrence of subsidization in a sunset review.

    The Commerce Department*s decision regarding the rate at which
    subsidization was likely to continue or recur lacked an adequate factual
    basis. Source: GAO analysis of WTO panel and Appellate Body reports.

    GAO Case Number 24: Complainant: Canada 50 United States * Section

    Defendant: United States 129( c)( 1) of the Uruguay Round Agreements Act
    (DS 221)

    Nature of Complaint Canada directly challenged section 129( c)( 1) of the
    U. S. Uruguay Round Agreements Act (URAA), claiming that it was
    inconsistent with provisions of a number of WTO agreements. 51 Canada
    specifically argued that section 129( c)( 1) of the URAA has the effect of
    requiring the United States to act

    inconsistently with or precludes the United States from complying with
    various agreements.

    Outcome Canada failed to establish that section 129( c)( 1) is
    inconsistent with WTO rules. The panel findings were not appealed.

    Compliance Action No compliance action was necessary. 50 Chile, the EU,
    India, and Japan were third parties in this case. 51 Section 129 of the
    URAA generally authorizes the U. S. Trade Representative (USTR) to request
    the Commerce Department or the ITC to take actions not inconsistent with
    WTO rulings in antidumping or CVD cases. Subsection 129( c)( 1) provides
    that Commerce

    Department determinations under section 129 shall apply to unliquidated
    entries of merchandise that enter or are withdrawn from a warehouse for
    consumption on or after the date on which USTR directs Commerce to
    implement a WTO ruling.

    Tabl e 27: Case 24 * Major Case Issue and Panel Findings Major case issue
    Panel findings

    Whether section 129( c)( 1) of the URAA requires the United States Section
    129( c)( 1) does not mandate action that is inconsistent with to act
    inconsistently with provisions of several WTO agreements

    WTO rules, nor preclude action that is consistent with the rules. with
    respect to unliquidated entries of merchandise occurring prior to the date
    that the United States Trade Representative (USTR)

    Section 129( c)( 1) does not apply to unliquidated entries occurring
    directs implementation of a WTO ruling.

    prior to the date that USTR directs implementation of a DSB ruling.
    Section 129( c)( 1) only addresses entries that take place on or after the
    implementation date.

    Source: GAO analysis of the WTO panel report.

    GAO Case Number 25: Complainant: Canada 52 United States *

    Defendant: United States Preliminary Determinations With Respect to
    Certain Softwood Lumber from Canada (DS 236)

    Nature of Complaint Canada challenged the U. S. imposition of provisional
    CVD measures on certain softwood lumber imports from Canada. Canada also
    claimed that the U. S. law and regulations concerning expedited and
    administrative reviews of CVD orders were, in several respects,
    inconsistent with the SCM Agreement and Article VI of GATT 1994.

    Outcome Although the panel upheld the United States on several issues,
    including the direct challenges to U. S. law, it found that the
    methodology the

    Commerce Department used to determine the subsidy benefit was inconsistent
    with the SCM Agreement. The panel also found that the Commerce
    Department*s retroactive application of the provisional measure was
    inconsistent with the SCM Agreement. Accordingly, it recommended that the
    DSB request that the United States bring its provisional measure into
    conformity with its obligations under that agreement. The panel

    findings were not appealed. Compliance Action In November 2002, the United
    States notified the DSB that the CVD

    measures challenged by Canada were no longer in effect and that the
    provisional cash deposits had been refunded. Canada, however, argued that
    Commerce*s final determination was substantially unchanged and
    subsequently brought another WTO complaint challenging that

    52 The EU, India, and Japan were third parties in this case.

    determination. The WTO panel*s decision in that case is due to be made
    public around the time this report is issued. 53 53 United States* Final
    Countervailing Duty Determination With Respect to Certain

    Softwood Lumber from Canada, WT/ DS257.

    Table 28: Case 25 * Major Case Issues and Panel Findings Major case issues
    Panel findings

    Whether Canadian provincial sales of timber from public lands Canadian
    provincial stumpage programs by which standing timber was can amount to a
    subsidy within the meaning of article 1 of the being supplied to tenure
    holders is a provision of a good within the SCM Agreement, which defines a
    subsidy for purposes of the

    meaning of article 1.1( a)( l)( iii) of the SCM Agreement. agreement.

    The Commerce Department*s determination that the provision of stumpage
    constituted a financial contribution was not in violation of article 1.1.
    Whether the U. S. *s use of U. S. rather than Canadian

    By using U. S. stumpage prices to determine the benefit to the recipient,
    stumpage prices to determine whether a benefit was provided the United
    States acted inconsistently with article 14 of the SCM was consistent with
    the SCM Agreement.

    Agreement, which deals with calculation of subsidy benefits. U. S.
    stumpage prices do not constitute the prevailing market conditions in
    Canada. The United States provided no rationale consistent with article
    14( d) for rejecting Canadian private stumpage prices as the basis for
    calculating the benefit.

    Whether the United States was required to determine whether The United
    States acted inconsistently with article 1.1( b) of the SCM a benefit was
    passed to downstream producers of lumber by Agreement by assuming that the
    subsidy passed through to the unrelated upstream producers of log inputs.

    producers of the lumber. The United States should have examined whether
    certain lumber producers benefited from the financial contribution given
    to tenure holders that do not own processing facilities or who sell logs
    and lumber to the lumber producers. Whether the U. S. *s retroactive
    application of the provisional

    The U. S. *s retroactive application of the provisional measure in the
    form measure was inconsistent with article 20.6 of the SCM of cash
    deposits or bonds is inconsistent with article 20. 6 of the SCM Agreement.

    Agreement since that provision allows only for retroactive application of
    definitive duties, not preliminary duties.

    Imposition of provisional measures, such as the requirement of a cash
    deposit or the posting of a bond, is not necessary to preserve the right
    to apply definitive duties retroactively.

    Whether provisions of the U. S. Tariff Act of 1930 and The U. S. Tariff
    Act and accompanying regulations do not preclude the accompanying
    regulations a mandate action inconsistent with U. S. executive branch from
    acting consistently with its obligations under articles 19 and 21 of the
    SCM Agreement concerning articles 19 and 21 of the SCM Agreement with
    respect to expedited and expedited and administrative reviews of CVDs.

    administrative reviews. Legislation that merely gives the executive
    authority discretion to act inconsistently with the SCM Agreement cannot
    be challenged before a panel, independent of its actual application.

    Source: GAO analysis of the WTO panel report. a The challenge was to
    sections 777A( e)( 2)( A) and (B) of the Tariff Act of 1930 and 19 C. F.
    R. S:S:

    351.214( k) and 351. 213( b) and (k).

    Appendi x III

    Experts That GAO Interviewed for this Report Raj Bhala, Rice Distinguished
    Professor, School of Law, University of Kansas Richard Cunningham, Senior
    International Trade Partner, Steptoe & Johnson LLP

    William Davey, Professor of Law, University of Illinois College of Law
    James Durling, Partner, Willkie, Farr & Gallagher David Gantz, Professor
    of Law and Director, International Trade Law Program, James E. Rogers
    College of Law, University of Arizona

    John Greenwald, Partner, Wilmer, Cutler & Pickering Gary Horlick, Partner,
    Wilmer, Cutler & Pickering Robert Howse, Professor of Law, University of
    Michigan School of Law John Jackson, Professor of Law, Georgetown
    University Law Center Peter Lichtenbaum, Partner, Steptoe & Johnson LLP
    Robert Lighthizer, Partner, Skadden, Arps, Slate, Meagher & Flom LLP
    Mitsuo Matsushita, Professor Emeritus, Tokyo University, and Counsel,
    Nagashima, Ohno & Tsunematsu law firm in Tokyo

    Christopher Parlin, Counsel, Kaye Scholer LLP Joost Pauwelyn, Associate
    Professor of Law, Duke University Law School John Ragosta, Partner, Dewey
    Ballantine LLP Frieder Roessler, Executive Director, Advisory Center on
    WTO Law Terence Stewart, Managing Partner, Stewart and Stewart Law Offices
    Daniel Tarullo, Professor of Law, Georgetown University Law Center

    Comments from the Department of

    Appendi x IV

    Commerce Note: GAO comments supplementing those in the report text appear
    at the end of this appendix.

    See comment 1. See comment 2.

    See comment 3. See comment 4.

    See comment 5. See comment 6.

    See comment 7. See comment 8.

    See comment 9.

    The following are GAO*s comments on the Department of Commerce*s letter
    dated July 14, 2003. GAO Comments 1. Our report presents data on changes
    to WTO members* laws,

    regulations, and practices that have resulted from WTO rulings through
    December 2002. The data clearly indicate there have been few changes in
    WTO members* laws, regulations, and practices to date.

    2. In response to the Commerce Department*s (and the ITC*s) comment( s),
    we modified our characterization of U. S. agency views on the impact of
    WTO rulings on the U. S. *s ability to impose trade remedies. The sections
    of this report that provide U. S. agencies* viewpoints now reflect the
    agencies* increased emphasis on the potential future ramifications of WTO
    decisions indicated by the Commerce Department (and ITC).

    3. The Commerce Department states that our report*s presentation implies
    that the impact of the WTO dispute settlement system on members* ability
    to impose trade remedies must be small based on statistical information we
    present. However, our report simply provides data on the number of WTO
    members* measures that were notified to the WTO from 1995 through 2002 and
    the number that were

    challenged. Moreover, we have modified the report to reflect agency
    concerns about the impact of the dispute settlement system on members*
    ability to impose trade remedies.

    4. While our report provides aggregate data on the number of trade remedy
    measures imposed by all WTO members from 1995 to 2002, it was beyond the
    scope of our review to analyze trends in the growth of these measures for
    individual WTO members and reasons for the challenges to these measures.

    5. While the Commerce Department raised concerns regarding the composition
    of the group of legal experts we consulted, we believe that our
    methodology for selecting these experts as outlined in appendix I is
    sound. As noted, we selected individuals who were identified as leading
    experts on WTO dispute settlement. These individuals* academics,
    practitioners, and advisors on WTO- related trade remedy issues* have been
    active in writing and/ or speaking about issues

    pertaining to WTO dispute settlement. Moreover, the Commerce Department*s
    assertion that we only included three experts

    representing domestic petitioners* interests is incorrect. Although we did
    not choose experts on the basis of their expressed views because we
    believe that approach would have been methodologically flawed, our
    information indicates that of the nine practitioners we interviewed, three
    represent domestic petitioners, three represent foreign respondents, and
    three represent both. Nevertheless, in responding to agency comments, we
    reviewed our decision rule on the composition of the group of experts we
    consulted. Subsequently, we excluded the

    views of the current WTO official and the EU representative from our
    discussion of expert views since we did not include current U. S.
    officials in this group. However, we briefly noted the views of the

    current WTO and EU officials. 6. While we believe that our report
    sufficiently emphasizes the concerns

    of the minority of experts regarding standards of review and the other
    trade remedy issues discussed in this report, we have made modifications
    to the relevant sections of our report to ensure that

    majority positions and minority concerns are presented in a balanced
    manner. 7. See comment 2. 8. In response to the Commerce Department*s (and
    the ITC*s)

    comment( s), we added a section to our report presenting U. S. agencies*
    positions on WTO dispute settlement issues, including the executive
    branch*s position as outlined in its December 2002 report to Congress.

    9. In response to the Commerce Department*s comments, we have added
    material to our report that discusses relevant aspects of the recent U. S.
    submission to the WTO Negotiating Group on Rules.

    Comments from the United States

    Appendi x V

    International Trade Commission Note: GAO comments supplementing those in
    the report text appear at the end of this appendix. See comment 1.

    See comment 2. See comment 3.

    See comment 4.

    The following are GAO*s comments on the U. S. International Trade
    Commission*s letter dated July 14, 2003.

    GAO Comments 1. In response to the ITC*s (and Commerce*s) comment( s), we
    modified our characterization of U. S. agency views on the impact of WTO
    rulings on the U. S. *s ability to impose trade remedies. The sections of
    this report that provide U. S. agencies* viewpoints now reflect the
    agencies* increased emphasis on the potential future ramifications of WTO
    decisions.

    2. In response to the ITC*s comments, we have added some discussion of the
    safeguards issues that the ITC raises in the report*s section on expert
    views and U. S. agencies* positions.

    3. In response to the ITC*s comments, we have added some discussion of
    their views on article 17. 6( ii) in the report*s section on expert views
    and U. S. agencies* positions.

    4. See comment 1.

    Appendi x VI

    GAO Contacts and Staff Acknowledgments GAO Contacts Elizabeth Sirois (202)
    512- 8989 Nina Pfeiffer (202) 512- 9639 Richard Seldin (202) 512- 4094
    Staff

    In addition to those named above, Jason Bair, Josey Ballenger, Sharron
    Acknowledgments

    Candon, Martin De Alteriis, Rona Mendelsohn, Mary Moutsos, Mark Speight,
    and Laura Turman made key contributions to this report.

    (320154)

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    Report to the Ranking Minority Member, Committee on Finance, U. S. Senate

    July 2003 WORLD TRADE ORGANIZATION Standard of Review and Impact of Trade
    Remedy Rulings

    GAO- 03- 824

    Contents Letter 1

    Results in Brief 3 Background 7 Trade Remedy Cases Increased Over Time,
    but Few Measures Were

    Challenged 8 Domestic Determinations Generally Were Rejected, but Statutes

    Were Upheld 12 Rulings Resulted in Few Changes to Members* Laws,
    Regulations,

    and Practices but Caused Numerous Changes to U. S. Measures 16 Two
    Standards of Review Apply to WTO Trade Remedy Cases 22 Expert Views and U.
    S. Agency Positions on Standard of Review and Other Trade Remedy Issues 26

    Agency Comments and Our Evaluation 34 Appendixes

    Appendix I: Objectives, Scope, and Methodology 37

    Appendix II: Summaries of Completed WTO Trade Remedy Cases 41 GAO Case
    Number 1: Brazil * Measures Affecting Desiccated

    Coconut (DS 22) 43 GAO Case Number 2: Guatemala * Antidumping
    Investigation

    Regarding Portland Cement from Mexico (DS 60) 45 GAO Case Number 3: Korea
    * Definitive Safeguard Measure on

    Imports of Certain Dairy Products (DS 98) 47 GAO Case Number 4: United
    States * Antidumping Duty on Dynamic

    Random Access Memory Semiconductors (DRAMS) of One Megabyte or Above
    Originating from Korea (DS 99) 49 GAO Case Number 5: Argentina * Safeguard
    Measures on Imports of

    Footwear (DS 121) 52 GAO Case Number 6: Thailand * Antidumping Duties on
    Angles,

    Shapes, and Sections of Iron or Non- Alloy Steel and H- Beams from Poland
    (DS 122) 54 GAO Case Number 7: Mexico * Antidumping Investigation of

    High- Fructose Corn Syrup (HFCS) from the United States (DS 132) 57 GAO
    Case Number 8: United States * Antidumping Act of 1916 (DS

    136/ 162) 60 GAO Case Number 9: United States * Imposition of
    Countervailing

    Duties on Certain Hot- Rolled Lead and Bismuth Carbon Steel

    Products Originating in the United Kingdom (DS 138) 62 GAO Case Number 10:
    European Union * Antidumping Duties on Imports of Cotton- Type Bed Linen
    from India (DS 141) 65

    GAO Case Number 11: Guatemala * Definitive Antidumping Measures on Grey
    Portland Cement from Mexico (DS 156) 68 GAO Case Number 12: United States
    * Definitive Safeguard

    Measures on Imports of Wheat Gluten from the European Communities (DS 166)
    71 GAO Case Number 13: United States * Safeguard Measures on Imports of
    Fresh, Chilled, or Frozen Lamb Meat from New

    Zealand and Australia (DS 177/ 178) 74 GAO Case Number 14: United States *
    Antidumping Measures on

    Stainless Steel Plate in Coils and Stainless Steel Sheet and Strip from
    Korea (DS 179) 77 GAO Case Number 15: United States * Antidumping Measures
    on

    Certain Hot- Rolled Steel Products from Japan (DS 184) 79 GAO Case Number
    16: Argentina * Definitive Antidumping Measures

    on Imports of Ceramic Floor Tiles from Italy (DS 189) 83 GAO Case Number
    17: United States * Measures Treating Export

    Restraints as Subsidies (DS 194) 85 GAO Case Number 18: United States *
    Definitive Safeguard

    Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea
    (DS 202) 88 GAO Case Number 19: United States * Antidumping and

    Countervailing Measures on Steel Plate from India (DS 206) 91 GAO Case
    Number 20: Chile * Price Band System and Safeguard

    Measures Relating to Certain Agricultural Products (DS 207) 93 GAO Case
    Number 21: Egypt * Definitive Antidumping Measures on

    Steel Rebar from Turkey (DS 211) 96 GAO Case Number 22: United States *
    Countervailing Measures

    Concerning Certain Products from the European Communities (*
    Privatization*) (DS 212) 98 GAO Case Number 23: United States *
    Countervailing Duties on

    Certain Corrosion- Resistant Carbon Steel Flat Products from Germany (*
    Sunset*) (DS 213) 101 GAO Case Number 24: United States * Section 129( c)(
    1) of the

    Uruguay Round Agreements Act (DS 221) 104 GAO Case Number 25: United
    States * Preliminary Determinations

    With Respect to Certain Softwood Lumber from Canada (DS 236) 106

    Appendix III: Experts That GAO Interviewed for this Report 109

    Appendix IV: Comments from the Department of Commerce 110 GAO Comments 114

    Appendix V: Comments from the United States International Trade Commission
    116 GAO Comments 118

    Appendix VI: GAO Contacts and Staff Acknowledgments 119 GAO Contacts 119
    Staff Acknowledgments 119

    Tables Table 1: U. S. Trade Remedy Laws Challenged in WTO Dispute
    Settlement, 1995- 2002 15

    Table 2: Impact of WTO Rulings on Members* Laws, Regulations, Practices,
    and Measures, 1995- 2002 17 Table 3: WTO Trade Remedy Dispute Settlement
    Cases Completed Between 1995 and December 31, 2002 41

    Table 4: Case 1 * Major Case Issue and Panel/ Appellate Body Findings 44
    Table 5: Case 2 * Major Case Issues and Panel/ Appellate Body Findings 46

    Table 6: Case 3 * Major Case Issues and Panel/ Appellate Body Findings 48
    Table 7: Case 4 * Major Case Issues and Panel Findings 51 Table 8: Case 5
    * Major Case Issues and Panel/ Appellate Body Findings 53

    Table 9: Case 6 * Major Case Issues and Panel/ Appellate Body Findings 56
    Table 10: Case 7 * Major Case Issues and Panel Findings 59 Table 11: Case
    8 * Major Case Issues and Panel/ Appellate Body Findings 61

    Table 12: Case 9 * Major Case Issues and Panel/ Appellate Body Findings 64
    Table 13: Case 10 * Major Case Issues and Panel/ Appellate Body

    Findings 67 Table 14: Case 11 * Major Case Issues and Panel Findings 70
    Table 15: Case 12 * Major Case Issues and Panel/ Appellate Body

    Findings 73 Table 16: Case 13 * Major Case Issues and Panel/ Appellate
    Body

    Findings 76 Table 17: Case 14 * Major Case Issues and Panel Findings 78
    Table 18: Case 15 * Major Case Issues and Panel/ Appellate Body

    Findings 81

    Table 19: Case 16 * Major Case Issues and Panel Findings 84 Table 20: Case
    17 * Major Case Issues and Panel Findings 87 Table 21: Case 18 * Major
    Case Issues and Panel/ Appellate Body

    Findings 90 Table 22: Case 19 * Major Case Issues and Panel Findings 92
    Table 23: Case 20 * Major Case Issues and Panel/ Appellate Body

    Findings 95 Table 24: Case 21 * Major Case Issues and Panel Findings 97
    Table 25: Case 22 * Major Case Issues and Panel/ Appellate Body

    Findings 100 Table 26: Case 23 * Major Case Issues and Panel/ Appellate
    Body

    Findings 103 Table 27: Case 24 * Major Case Issue and Panel Findings 105
    Table 28: Case 25 * Major Case Issues and Panel Findings 108

    Figures Figure 1: Total Number of WTO Cases Versus Trade Remedy Cases
    Filed per Year, 1995- 2002 9

    Figure 2: Most Frequent Complainants and Defendants in WTO Trade Remedy
    Cases, 1995- 2002 10 Figure 3: Total Number of WTO Trade Remedy Measures
    Imposed

    and Number Challenged, by Most Frequent Trade Remedy Users, 1995- 2002 11
    Figure 4: Number of Findings on Domestic Agency Determinations

    and Percentage of Those Determinations Rejected by the WTO in 21 Completed
    Trade Remedy Cases, 1995- 2002 13 Figure 5: Number (Percent) of Domestic
    Agency Determinations

    Upheld and Rejected by the WTO, the United States Versus Other Members, in
    Completed Trade Remedy Cases, 1995- 2002 14

    Abbreviations

    ADA Antidumping Agreement CVD countervailing duties DRAMS dynamic random
    access memory semiconductors DSB Dispute Settlement Body DSU Dispute
    Settlement Understanding EU European Union GATT General Agreement on
    Tariffs and Trade HFCS high- fructose corn syrup ITC International Trade
    Commission NAFTA North American Free Trade Agreement SAA Statement of
    Administrative Action SCM Subsidies and Countervailing Measures URAA
    Uruguay Round Agreements Act USTR United States Trade Representative WTO
    World Trade Organization

    This is a work of the U. S. government and is not subject to copyright
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    a

    GAO United States General Accounting Office

    About a third of the cases filed in the WTO dispute settlement system from
    1995 through 2002 challenged members* trade remedies, with the ratio of
    such cases increasing over time. Although a relatively small proportion of
    WTO members* trade remedy measures were challenged in the WTO, the United
    States faced substantially more challenges than other WTO members. The WTO
    generally rejected members* decisions to impose trade remedies in

    the 25 trade remedy disputes resolved from 1995 through 2002. However, GAO
    found that the WTO ruled for and against the U. S. and other members in
    roughly the same ratios. Overall, WTO rulings resulted in few changes to
    members* laws, regulations, and practices but had a relatively greater
    impact on those of the United States. While U. S. agencies stated that WTO
    rulings have not yet significantly impaired their ability to impose trade
    remedies, they had concerns about the potential future adverse impact of
    WTO rulings.

    Of the legal experts GAO consulted, a majority concluded that the WTO has
    properly applied standards of review and correctly ruled on major trade
    remedy issues. However, a significant minority strongly disagreed with
    these conclusions. U. S. agencies also said that the WTO has not always
    properly applied the standards and has, in some cases, imposed obligations

    on members that are not found in WTO agreements. Nonetheless, the experts
    almost unanimously agreed that the WTO was not treating the United States
    any differently than other members.

    Total Number of WTO Trade Remedy Measures Imposed and Number Challenged,
    by Most Frequent Trade Remedy Users, 1995- 2002

    World Trade Organization (WTO) members rely on trade remedies in the form
    of duties or other import

    restrictions to protect their industries from injury due to unfair foreign
    trade practices or unexpected import surges. There is congressional
    concern that the WTO, created in 1995 to administer trade rules, is
    interfering with this

    ability. There is also congressional concern that the WTO is not treating
    the United States fairly in resolving trade remedy disputes.

    A congressional requester asked GAO to identify trends in WTO trade remedy
    disputes since 1995, including the outcomes of these disputes and how they
    affected members* ability to impose trade

    remedies. The requester also asked GAO to discuss the standards of review
    that the WTO applies when ruling on trade remedy disputes and to present
    U. S. agencies* and legal experts* views on the WTO*s application of these
    standards and related trade remedy issues.

    In their comments on a draft of this report, the Department of Commerce
    and the U. S. International Trade Commission stated that the report needed
    to put more emphasis on U. S. agencies* concerns about the potential

    adverse impact of WTO rulings on the U. S. *s use of trade remedies. The
    U. S. Trade Representative provided only technical comments on the report.
    GAO modified the report as appropriate.

    www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 824. To view the full product,
    including the scope and methodology, click on the link above. For more
    information, contact Loren Yager at (202) 512- 4346 or yagerl@ gao. gov.
    Highlights of GAO- 03- 824, a report to the

    Ranking Minority Member, Committee on Finance, U. S. Senate

    July 2003

    WORLD TRADE ORGANIZATION Standard of Review and Impact of Trade Remedy
    Rulings

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    Contents

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    Contents

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    Page 1 GAO- 03- 824 WTO Trade Remedy Rulings United States General
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    Appendix I

    Appendix I Objectives, Scope, and Methodology

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    Appendix I Objectives, Scope, and Methodology

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    Appendix I Objectives, Scope, and Methodology

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    Appendix II

    Appendix II Summaries of Completed WTO Trade Remedy Cases

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    Appendix III

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    Appendix IV

    Appendix IV Comments from the Department of Commerce

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    Appendix IV Comments from the Department of Commerce

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    Appendix V

    Appendix V Comments from the United States International Trade Commission

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    Appendix V Comments from the United States International Trade Commission

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    Appendix VI

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