UNITED STATES COUNTERVAILING AND ANTI-DUMPING MEASURES ON CERTAIN PRODUCTS FROM CHINA

Transcription

1 7 July 2014 ( ) Page: 1/100 Original: English UNITED STATES COUNTERVAILING AND ANTI-DUMPING MEASURES ON CERTAIN PRODUCTS FROM CHINA AB Report of the Appellate Body

2 - 2 - Table of Contents 1 INTRODUCTION ARGUMENTS OF THE PARTICIPANTS AND THIRD PARTICIPANTS Claims of error by China Appellant Interpretation and application of Article X:2 of the GATT Article 11 of the DSU China's request for completion of the analysis Arguments of the United States Appellee Interpretation and application of Article X:2 of the GATT Article 11 of the DSU China's request for completion of the analysis Claims of error by the United States Other appellant Article 6.2 of the DSU Arguments of China Appellee Article 6.2 of the DSU Arguments of the third participants Australia European Union Japan ISSUES RAISED IN THIS APPEAL ANALYSIS OF THE APPELLATE BODY Article 6.2 of the DSU Function of Article 6.2 of the DSU The measure(s) at issue as identified in the panel request The United States' claim that China's panel request is inconsistent with Article 6.2 of the DSU The text and narrative of the panel request Abandoned claims Conclusions Article X:2 of the GATT The Panel's findings Interpretation and application of Article X: Function of Article X: China's appeal of the Panel's interpretation of Article X: Determination of the meaning of municipal law for purposes of Article X: Identification of the baseline of comparison under Article X: The Panel's application of the baseline of comparison to the measure at issue Conclusions...69

3 Article 11 of the DSU Completion of the analysis under Article X:2 of the GATT FINDINGS AND CONCLUSIONS ANNEX ANNEX ANNEX

4 - 4 - CASES CITED IN THIS REPORT Short Title Australia Apples Australia Salmon Brazil Desiccated Coconut Brazil Retreaded Tyres Canada Aircraft (Article 21.5 Brazil) Canada Autos Canada Periodicals Canada Renewable Energy / Canada Feed-in Tariff Program Canada Wheat Exports and Grain Imports Chile Price Band System Chile Price Band System (Article 21.5 Argentina) China Auto Parts China Rare Earths China Raw Materials EC Approval and Marketing of Biotech Products EC Asbestos EC Bananas III EC Bed Linen (Article 21.5 India) EC Export Subsidies on Sugar Full Case Title and Citation Appellate Body Report, Australia Measures Affecting the Importation of Apples from New Zealand, WT/DS367/AB/R, adopted 17 December 2010, DSR 2010:V, p Appellate Body Report, Australia Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p Appellate Body Report, Brazil Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, p. 167 Appellate Body Report, Brazil Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p Appellate Body Report, Canada Measures Affecting the Export of Civilian Aircraft Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW, adopted 4 August 2000, DSR 2000:IX, p Appellate Body Report, Canada Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, p Appellate Body Report, Canada Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, p. 449 Appellate Body Reports, Canada Certain Measures Affecting the Renewable Energy Generation Sector / Canada Measures Relating to the Feed-in Tariff Program, WT/DS412/AB/R / WT/DS426/AB/R, adopted 24 May 2013 Appellate Body Report, Canada Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004, DSR 2004:VI, p Appellate Body Report, Chile Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002, DSR 2002:VIII, p (Corr.1, DSR 2006:XII, p. 5473) Appellate Body Report, Chile Price Band System and Safeguard Measures Relating to Certain Agricultural Products Recourse to Article 21.5 of the DSU by Argentina, WT/DS207/AB/RW, adopted 22 May 2007, DSR 2007:II, p. 513 Appellate Body Reports, China Measures Affecting Imports of Automobile Parts, WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12 January 2009, DSR 2009:I, p. 3 Panel Reports, China Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/R / WT/DS432/R / WT/DS433/R / and Add.1, circulated to WTO Members 26 March 2014 [appeal in progress] Appellate Body Reports, China Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, adopted 22 February 2012, DSR 2012:VII, p Panel Reports, European Communities Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R / WT/DS292/R / WT/DS293/R / Add.1 to Add.9 and Corr.1, adopted 21 November 2006, DSR 2006:III, p. 847 Appellate Body Report, European Communities Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, p Appellate Body Report, European Communities Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, p. 591 Appellate Body Report, European Communities Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India Recourse to Article 21.5 of the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965 Appellate Body Report, European Communities Export Subsidies on Sugar, WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, adopted 19 May 2005, DSR 2005:XIII, p. 6365

5 - 5 - Short Title EC Fasteners (China) EC Hormones EC IT Products EC Poultry EC Sardines EC Seal Products EC Selected Customs Matters EC Selected Customs Matters EC Tariff Preferences EC Trademarks and Geographical Indications (Australia) EC Tube or Pipe Fittings EC and certain member States Large Civil Aircraft Guatemala Cement I India Additional Import Duties India Patents (US) Japan Agricultural Products II Japan Alcoholic Beverages II Japan Apples Japan DRAMs (Korea) Korea Alcoholic Beverages Korea Dairy Full Case Title and Citation Appellate Body Report, European Communities Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R, adopted 28 July 2011, DSR 2011:VII, p Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135 Panel Reports, European Communities and its member States Tariff Treatment of Certain Information Technology Products, WT/DS375/R / WT/DS376/R / WT/DS377/R, adopted 21 September 2010, DSR 2010:III, p. 933 Appellate Body Report, European Communities Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998, DSR 1998:V, p Appellate Body Report, European Communities Trade Description of Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, p Appellate Body Reports, European Communities Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R / WT/DS401/AB/R, adopted 18 June 2014 Appellate Body Report, European Communities Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p Panel Report, European Communities Selected Customs Matters, WT/DS315/R, adopted 11 December 2006, as modified by Appellate Body Report WT/DS315/AB/R, DSR 2006:IX, p Appellate Body Report, European Communities Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted 20 April 2004, DSR 2004:III, p. 925 Panel Report, European Communities Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by Australia, WT/DS290/R, adopted 20 April 2005, DSR 2005:X, p Appellate Body Report, European Communities Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted 18 August 2003, DSR 2003:VI, p Appellate Body Report, European Communities and Certain Member States Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7 Appellate Body Report, Guatemala Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, p Appellate Body Report, India Additional and Extra-Additional Duties on Imports from the United States, WT/DS360/AB/R, adopted 17 November 2008, DSR 2008:XX, p Appellate Body Report, India Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, p. 9 Appellate Body Report, Japan Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, p. 277 Appellate Body Report, Japan Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, p. 97 Appellate Body Report, Japan Measures Affecting the Importation of Apples, WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, p Appellate Body Report, Japan Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/AB/R and Corr.1, adopted 17 December 2007, DSR 2007:VII, p Appellate Body Report, Korea Taxes on Alcoholic Beverages, WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, p. 3 Appellate Body Report, Korea Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, p. 3

6 - 6 - Short Title Thailand H-Beams US 1916 Act (EC) US Anti-Dumping and Countervailing Duties (China) US Anti-Dumping and Countervailing Duties (China) US Carbon Steel US Continued Suspension US Continued Zeroing US COOL US Corrosion-Resistant Steel Sunset Review US Countervailing and Anti-Dumping Measures (China) US Countervailing Duty Investigation on DRAMS US FSC US Gambling US Gasoline US Hot-Rolled Steel US Lamb US Large Civil Aircraft (2 nd complaint) US Offset Act (Byrd Amendment) US Oil Country Tubular Goods Sunset Reviews Full Case Title and Citation Appellate Body Report, Thailand Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p Panel Report, United States Anti-Dumping Act of 1916, Complaint by the European Communities, WT/DS136/R and Corr.1, adopted 26 September 2000, upheld by Appellate Body Report WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, p Appellate Body Report, United States Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted 25 March 2011, DSR 2011:V, p Panel Report, United States Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/R, adopted 25 March 2011, as modified by Appellate Body Report WT/DS379/AB/R, DSR 2011:VI, p Appellate Body Report, United States Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p Appellate Body Report, United States Continued Suspension of Obligations in the EC Hormones Dispute, WT/DS320/AB/R, adopted 14 November 2008, DSR 2008:X, p Appellate Body Report, United States Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p Appellate Body Reports, United States Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012, DSR 2012:V, p Appellate Body Report, United States Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3 Panel Report, United States Countervailing and Anti-Dumping Measures on Certain Products from China, WT/DS449/R and Add.1, circulated to WTO Members 27 March 2014 [appeal in progress] Appellate Body Report, United States Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p Appellate Body Report, United States Tax Treatment for "Foreign Sales Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, p Appellate Body Report, United States Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, DSR 2005:XII, p (Corr.1, DSR 2006:XII, p. 5475) Appellate Body Report, United States Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3 Appellate Body Report, United States Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, p Appellate Body Report, United States Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, p Appellate Body Report, United States Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012, DSR 2012:I, p. 7 Appellate Body Report, United States Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003, DSR 2003:I, p. 375 Appellate Body Report, United States Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17 December 2004, DSR 2004:VII, p. 3257

7 - 7 - Short Title US Section 211 Appropriations Act US Shrimp US Softwood Lumber IV US Softwood Lumber IV (Article 21.5 Canada) US Softwood Lumber VI (Article 21.5 Canada) US Steel Safeguards US Underwear US Upland Cotton US Upland Cotton (Article 21.5 Brazil) US Wheat Gluten US Wool Shirts and Blouses US Zeroing (EC) US Zeroing (Japan) (Article 21.5 Japan) Full Case Title and Citation Appellate Body Report, United States Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589 Appellate Body Report, United States Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, p Appellate Body Report, United States Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, p. 571 Appellate Body Report, United States Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada Recourse by Canada to Article 21.5 of the DSU, WT/DS257/AB/RW, adopted 20 December 2005, DSR 2005:XXIII, p Appellate Body Report, United States Investigation of the International Trade Commission in Softwood Lumber from Canada Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p Appellate Body Report, United States Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 2003:VII, p Appellate Body Report, United States Restrictions on Imports of Cotton and Man-made Fibre Underwear, WT/DS24/AB/R, adopted 25 February 1997, DSR 1997:I, p. 11 Appellate Body Report, United States Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3 Appellate Body Report, United States Subsidies on Upland Cotton Recourse to Article 21.5 of the DSU by Brazil, WT/DS267/AB/RW, adopted 20 June 2008, DSR 2008:III, p. 809 Appellate Body Report, United States Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, p. 717 Appellate Body Report, United States Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323 Appellate Body Report, United States Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/AB/R, adopted 9 May 2006, and Corr.1, DSR 2006:II, p. 417 Appellate Body Report, United States Measures Relating to Zeroing and Sunset Reviews Recourse to Article 21.5 of the DSU by Japan, WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441

8 - 8 - PANEL EXHIBITS CITED IN THIS REPORT Exhibit No. Description CHI-1 United States Public Law No , An act to apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries, and for other purposes, 126 Stat. 265 (13 March 2012) CHI-2 United States Court of Appeals for the Federal Circuit, Georgetown Steel Corporation v. United States, 801 F.2d 1308 (Fed. Cir. 1986) CHI-3 United States Court of International Trade, GPX International Tire Corporation v. United States, 645 F. Supp. 2d 1231 (CIT 18 September 2009) CHI-6 United States Court of Appeals for the Federal Circuit, GPX International Tire Corporation v. United States, 666 F.3d 732 (Fed. Cir. 2011) CHI-7 United States Court of Appeals for the Federal Circuit, GPX International Tire Corporation v. United States, 678 F.3d 1308 (Fed. Cir. 2012) CHI-14 USDOC, Countervailing Duties: Final Rule, United States Federal Register, Vol. 63, No. 227 (25 November 1998), pp CHI-15 Memorandum dated 18 September 2002 from Richard W. Moreland, Deputy Assistant Secretary, Group I Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, "Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Sulfanilic Acid from Hungary" CHI-83 Legal Opinion of Richard H. Fallon, Jr, Professor of Law, Harvard University CHI-124 Supplemental Legal Opinion of Richard H. Fallon, Jr, Professor of Law, Harvard University USA-2 United States Code, Title 19, Chapter 4, Section 1671 USA-7 USDOC, Carbon Steel Wire Rod From Czechoslovakia: Final Negative Countervailing Duty Determination, United States Federal Register, Vol. 49, No. 89 (7 May 1984), pp USA-10 USDOC, Carbon Steel Wire Rod From Poland: Final Negative Countervailing Duty Determination, United States Federal Register, Vol. 49, No. 89 (7 May 1984), pp USA-21 General Issues Appendix, appended to the Final Affirmative Countervailing Duty Determination: Certain Steel Products From Austria, United States Federal Register, Vol. 58, No. 130 (9 July 1993), pp USA-23 USDOC, Notice of Initiation of Countervailing Duty Investigations: Coated Free Sheet Paper From the People's Republic of China, Indonesia, and the Republic of Korea, United States Federal Register, Vol. 71, No. 227 (27 November 2006), pp USA-25 USDOC, Coated Free Sheet Paper from the People's Republic of China: Amended Affirmative Preliminary Countervailing Duty Determination, United States Federal Register, Vol. 72, No. 67 (9 April 2007), pp USA-26 Memorandum dated 29 March 2007 from Shauna Lee-Alaia, et al., Office of Policy, Import Administration, to David M. Spooner, Assistant Secretary for Import Administration, "Countervailing Duty Investigation of Coated Free Sheet Paper from the Peoples' Republic of China Whether the Analytical Elements of the Georgetown Steel Opinion are Applicable to China's Present-Day Economy" USA-27 USDOC, Coated Free Sheet Paper from the People's Republic of China: Final Affirmative Countervailing Duty Determination, United States Federal Register, Vol. 72, No. 206 (25 October 2007), pp USA-28 United States Court of International Trade, Government of the People's Republic of China v. United States, 483 F. Supp. 2d 1274 (CIT 2007) USA-41 United States Federal Rules of Appellate Procedure (1 December 2010), Rule 41(b) USA-43 United States Court of Appeals for the Federal Circuit, GPX International Tire Corporation v. United States, Corrected Petition for Rehearing En Banc of Defendant-Appellant, United States (Fed. Cir /1108/ March 2012)

9 - 9 - USA-85 USA-93 Exhibit No. Description Supreme Court of the United States, Ed Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995) United States Court of International Trade, GPX International Tire Corporation v. United States, 587 F. Supp. 2d 1278 (CIT 2008) USA-94 USDOC, Rescission of Initiation of Countervailing Duty Investigation and Dismissal of Petition: Chrome-Plated Lug Nuts and Wheel Locks From the People's Republic of China, United States Federal Register, Vol. 57, No. 59 (26 March 1992), pp USA-95 Final Negative Countervailing Duty Determinations: Oscillating and Ceiling Fans From the People's Republic of China, United States Federal Register, Vol. 57, No. 109 (5 June 1992), pp USA-96 Omnibus Trade and Competitiveness Act of 1988, Pubic Law No , 102 Stat (23 August 1988) USA-115 Legal Opinion of John C. Jeffries, Jr, Professor of Law, University of Virginia, in response to Legal Opinion of Richard H. Fallon, Jr, Professor of Law, Harvard University USA-119 Table setting out the Administrative Notice to the Government of China and to Chinese Producers/Exporters Regarding Application of U.S. CVD Laws to China USA-125 USDOC, Drawn Stainless Steel Sinks From the People's Republic of China: Initiation of Countervailing Duty Investigation, C , United States Federal Register, Vol. 77, No. 59 (27 March 2012), pp

10 ABBREVIATIONS USED IN THIS REPORT Abbreviation Anti-Dumping Agreement CAFC CFS CFS Paper CIT CVD DSB DSU Description Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 United States Court of Appeals for the Federal Circuit Coated free sheet United States Court of International Trade, Government of the People's Republic of China v. United States, 483 F. Supp. 2d 1274 (CIT 2007) United States Court of International Trade Countervailing duty Dispute Settlement Body Understanding on Rules and Procedures Governing the Settlement of Disputes GATT 1994 General Agreement on Tariffs and Trade 1994 Georgetown Steel GPX GPX I United States Court of Appeals for the Federal Circuit, Georgetown Steel Corporation v. United States, 801 F.2d 1308 (Fed. Cir. 1986) (Panel Exhibit CHI-2) GPX International Tire Corporation United States Court of International Trade, GPX International Tire Corporation v. United States, 587 F. Supp. 2d 1278 (CIT 2008) (Panel Exhibit USA-93) GPX II United States Court of International Trade, GPX International Tire Corporation v. United States, 645 F. Supp. 2d 1231 (CIT 2009) (Panel Exhibit CHI-3) GPX V United States Court of Appeals for the Federal Circuit, GPX International Tire Corporation v. United States, 666 F.3d 732 (Fed. Cir. 2011) (Panel Exhibit CHI-6) GPX VI United States Court of Appeals for the Federal Circuit, GPX International Tire Corporation v. United States, 678 F.3d 1308 (Fed. Cir. 2012) (Panel Exhibit CHI-7) NME Non-market economy Panel Report Panel Report, United States Countervailing and Anti-Dumping Measures on Certain Products from China, WT/DS449/R, 27 March 2014 PL United States Public Law No , An act to apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries, and for other purposes, 126 Stat. 265 (13 March 2012) (Panel Exhibit CHI-1) Preliminary Ruling Preliminary Ruling of the Panel dated 7 May 2013, contained in document WT/DS449/4 SCM Agreement Agreement on Subsidies and Countervailing Measures Sulfanilic Acid Memorandum dated 18 September 2002 from Richard W. Moreland, Deputy Assistant Secretary, Group I Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, "Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Sulfanilic Acid from Hungary" (Panel Exhibit CHI-15) US Tariff Act United States Tariff Act of 1930, United States Code, Title 19, Chapter 4 USDOC United States Department of Commerce Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, UN Treaty Series, Vol. 1155, p. 331 Wireking United States Court of Appeals for the Federal Circuit, Guangdong Wireking Housewares & Hardware Co., Ltd. v. United States, (Fed. Cir. 2014) Working Procedures Working Procedures for Appellate Review, WT/AB/WP/6, 16 August 2010 WTO World Trade Organization WTO Agreement Marrakesh Agreement Establishing the WTO

11 WORLD TRADE ORGANIZATION APPELLATE BODY United States Countervailing and Anti-Dumping Measures on Certain Products from China China, Appellant/Appellee United States, Other Appellant/Appellee Australia, Third Participant Canada, Third Participant European Union, Third Participant India, Third Participant Japan, Third Participant Russia, Third Participant Turkey, Third Participant Viet Nam, Third Participant AB Appellate Body Division: Bhatia, Presiding Member Chang, Member Zhang, Member 1 INTRODUCTION 1.1. China and the United States each appeals certain issues of law and legal interpretations developed in the Panel Report, United States Countervailing and Anti-Dumping Measures on Certain Products from China 1 (Panel Report). The Panel was established 2 to consider a complaint by China with respect to measures taken by the United States regarding the application of countervailing duties to imports from non-market economy (NME) countries, and the United States' failure to investigate and avoid double remedies in certain countervailing and anti-dumping duty investigations The measure at issue in this dispute is Section 1 of US Public Law No (PL ), introducing the new Section 701(f) of the United States Tariff Act of (US Tariff Act). Before the Panel, China also challenged the failure of the United States authorities to investigate and avoid double remedies in 26 countervailing duty investigations and reviews initiated between 20 November 2006 and 13 March The new Section 701(f) of the US Tariff Act, which is established by Section 1 of PL , applies the countervailing duty provisions of the US Tariff Act to NME countries, except in cases where "the administering authority is unable to identify and measure subsidies provided by the government of the [NME] country or a public entity within the territory of the [NME] country because the economy of that country is essentially comprised of a single entity." Section 701(f) applies to countervailing duty proceedings initiated on or after 20 November 2006, as well as to all resulting actions by the US Customs and Border Protection and all relating civil actions, criminal proceedings, and other proceedings before a US federal court. 7 1 WT/DS449/R, 27 March At its meeting held on 17 December 2012, the Dispute Settlement Body (DSB) established a panel pursuant to the request of China in document WT/DS449/2, in accordance with Article 6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). (Panel Report, para. 1.3) 3 See Request for the Establishment of a Panel by China, WT/DS449/2. 4 United States Public Law No , An act to apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries, and for other purposes, 126 Stat. 265 (13 March 2012) (Panel Exhibit CHI-1). 5 United States Code, Title 19, Chapter 4. 6 Panel Report, para See also ibid., para Panel Report, para

12 China originally identified a broad set of claims and measures in its panel request 8, but eventually narrowed them down during the course of the Panel proceedings. 9 China claimed before the Panel that Section 1 of PL is inconsistent, as such, with Articles X:1, X:2, and X:3(b) of the General Agreement on Tariffs and Trade 1994 (GATT 1994). First, China claimed that Section 1 is inconsistent with the requirement in Article X:1 to publish "promptly", because it was "made effective" as of 20 November 2006, but was not published until 13 March Second, China claimed that Section 1 is inconsistent with Article X:2, because it is a measure of general application, which effects an "advance" in a rate of duty and imposes a "new or more burdensome" requirement or restriction on imports, enforced by the United States prior to its official publication on 13 March Third, China claimed that Section 1 of PL is inconsistent with Article X:3(b), because "it amends United States law retroactively and makes it applicable to judicial proceedings concerning administrative actions taken prior to its enactment" China also claimed before the Panel that the United States failed to investigate and avoid double remedies in 26 countervailing duty investigations and reviews initiated between 20 November 2006 and 13 March According to China, the resulting countervailing duty measures, including any countervailing duties collected pursuant to their authority, are inconsistent with Articles 10, 19, and 32 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) On 15 March 2013, the United States submitted a request for a preliminary ruling challenging the consistency of certain aspects of China's panel request with Article 6.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). The United States argued that Parts C and D of China's panel request regarding the failure of the US Department of Commerce (USDOC) to investigate and avoid double remedies fail to meet the requirement in Article 6.2 to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly" and, thus, were not within the Panel's terms of reference. 15 In a letter to the Panel dated 25 March 2013, China indicated that it would not pursue the entirety of its claims in Part C, and some of its claims under Part D, so that its only remaining claims under Part D were those under Articles 10, 19, and 32 of the SCM Agreement. The Panel issued its Preliminary Ruling 16 on 8 China's original claims included: a. Section 1 of PL , including the new Section 701(f) of the US Tariff Act that it establishes, is inconsistent, as such, with Articles X:1, X:2, X:3(a), and X:3(b) of the GATT 1994; b. Section 2 of PL amending Section 777A of the US Tariff Act is inconsistent, as such, with Article X:3(a) of the GATT 1994; c. the United States lacks the legal authority to identify and avoid double remedies in respect of certain investigations and reviews initiated between 20 November 2006 and 13 March 2012, and is thereby prevented in all such investigations and reviews from ensuring that the imposition of countervailing duties is consistent with Articles 10, 15, 19, 21, and 32 of the SCM Agreement and Article VI of the GATT 1994, and from ensuring that the imposition of anti-dumping duties in the associated anti-dumping investigations and reviews is consistent with Articles 9 and 11 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement) and Article VI of the GATT 1994; and d. the United States failed to investigate and avoid double remedies in certain investigations and reviews initiated between 20 November 2006 and 13 March 2012; that the resulting countervailing duty measures, including any countervailing duties collected pursuant to their authority, are inconsistent with Articles 10, 15, 19, 21, and 32 of the SCM Agreement and Article VI of the GATT 1994; and that the associated anti-dumping measures in each such instance, including any anti-dumping duties collected pursuant to their authority, are inconsistent with Articles 9 and 11 of the Anti-Dumping Agreement and Article VI of the GATT (Panel Report, para. 3.1) 9 In its letter to the Panel dated 25 March 2013, China indicated that it would not pursue the entirety of its claims in Part C of the panel request, and some of its claims under Part D of the panel request, so that its only remaining claims under Part D were those under Articles 10, 19, and 32 of the SCM Agreement. In addition, in response to Panel question No. 39, China also stated that it was not pursuing its claims under Article X:3(a) of the GATT (Panel Report, fn 11 to para. 3.2) 10 Panel Report, para Panel Report, para Panel Report, para Panel Report, para Panel Report, paras and Panel Report, para Preliminary Ruling by the Panel of 7 May 2013, contained in document WT/DS449/4 (Preliminary Ruling).

13 May 2013, prior to the filing of the first written submissions of the parties 17, and circulated it to Members of the World Trade Organization (WTO) on 7 June In its Preliminary Ruling, which forms an integral part of the Panel Report 18, the Panel found that: a. in the light of China's representation that it would not pursue certain claims 19, the Panel declined to rule on whether the panel request was consistent with Article 6.2 of the DSU insofar as it relates to those claims; and b. the general references to Articles 10, 19, and 32 of the SCM Agreement contained in Part D of the panel request are consistent with the requirements of Article 6.2 of the DSU, on the basis that the general references warrant the inference that the obligations at issue are those contained in Articles 10, 19.3, and 32.1 of the SCM Agreement, and the United States had not established that Part D of the panel request failed to "plainly connect" the challenged measures with those obligations The Panel Report was circulated to WTO Members on 27 March With respect to China's claims under Article X of the GATT 1994 concerning Section 1 of PL , the Panel found that: a. the United States did not act inconsistently with Article X:1 of the GATT 1994, because Section 1 was "made effective" by the United States on 13 March 2012 (and not on 20 November 2006), and published on the same day; b. although, through Section 1(b) and relevant determinations or actions made or taken by the United States between 20 November 2006 and 13 March 2012 in respect of imports from China, the United States enforced Section 1 before it had been officially published, the United States did not act inconsistently with Article X:2 of the GATT 1994, because Section 1 does not "effect[] an advance in a rate of duty or other charge on imports under an established and uniform practice, or impos[e] a new or more burdensome requirement, restriction, or prohibition on imports"; and c. the United States did not act inconsistently with Article X:3(b) of the GATT 1994, because that provision, which requires that administrative agencies implement and be governed by decisions of the tribunals maintained to review their administrative action relating to customs matters, does not prohibit a Member from taking legislative action in the nature of Section 1 of PL With respect to China's claims under the SCM Agreement concerning the United States' alleged failure to investigate and avoid double remedies in 26 investigations and reviews initiated between 20 November 2006 and 13 March 2012, the Panel found that: a. in respect of one proceeding (Drawn Stainless Steel Sinks From the People's Republic of China 22 ), China failed to demonstrate that the measure fell within the description of its claim as set out in its panel request and, in any event, failed to demonstrate that the United States acted inconsistently with Article 19.3 of the SCM Agreement or, consequently, Articles 10 or 32.1 of the SCM Agreement; and b. in the other 25 proceedings 23, the United States acted inconsistently with Article 19.3 of the SCM Agreement and, consequently, Articles 10 and 32.1 of the SCM Agreement, by virtue of the USDOC's concurrent imposition of countervailing duties and anti-dumping 17 Panel Report, para Panel Report, para. 6.6 (referring to Preliminary Ruling, para. 4.3). See also ibid., para China's letter to the Panel dated 25 March 2013, pp These abandoned claims include Part C of China's panel request in its entirety, and the references in Part D to Articles 15 and 21 of the SCM Agreement, Article VI of the GATT 1994, and Articles 9 and 11 of the Anti-Dumping Agreement. 20 Panel Report, para. 8.1.a; Preliminary Ruling, para Panel Report, para. 8.1.b. 22 USDOC, Drawn Stainless Steel Sinks From the People's Republic of China: Initiation of Countervailing Duty Investigation, C , United States Federal Register, Vol. 77, No. 59 (27 March 2012), pp (Panel Exhibit USA-125). 23 These investigations and reviews at issue are identified in paragraph of the Panel Report.

14 duties calculated on the basis of an NME methodology on the same products, without having investigated, either in the countervailing duty investigations and reviews or in the parallel anti-dumping investigations and reviews, whether double remedies arose from such concurrent duties Pursuant to Article 19.1 of the DSU, the Panel then recommended that the United States bring the investigations and reviews identified in paragraph of the Panel Report, excluding the investigation of Drawn Stainless Steel Sinks from the People's Republic of China, into conformity with its obligations under the SCM Agreement On 8 April 2014, China notified the Dispute Settlement Body (DSB), pursuant to Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel and filed a Notice of Appeal 26 and an appellant's submission pursuant to Rule 20 and Rule 21, respectively, of the Working Procedures for Appellate Review 27 (Working Procedures) China's appeal in this dispute was filed simultaneously with the appeal by the United States of the panel report in a different dispute, namely, China Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum (China Rare Earths) (DS431). 28 In a letter dated 9 April 2014, the Chairman of the Appellate Body explained to the parties to this dispute, as well as to the parties to the China Rare Earths (DS431; DS432; DS ) disputes, that, in the past, the Appellate Body had attributed appeal numbers sequentially based on the date and time of receipt of the Notice of Appeal. Given the unprecedented situation of simultaneous filings of appeals, however, the Appellate Body Chair invited the parties in these disputes to provide their views, by 10 April 2014, as to the considerations relevant to the Appellate Body's determination of how to allocate appeal numbers AB and AB between the two appeals in US Countervailing and Anti-Dumping Measures (China) (DS449) and China Rare Earths (DS431) On 10 April 2014, the Appellate Body received comments from China, the European Union, Japan, and the United States. On the same day, the Appellate Body Chair sent a letter to the parties to this dispute and to the China Rare Earths (DS431; DS432; DS433) disputes informing them that, having given careful consideration to their submissions, the Appellate Body had determined that, in the face of the unprecedented situation of simultaneous appeals, the Appellate Body's usual manner of assigning such numbers according to the sequence in which they were appealed was not available. The Appellate Body underlined the necessity of assigning an appeal number to each appeal before the Appellate Body Members constituting the respective divisions could be selected. The Appellate Body recalled, in this connection, that Rule 6(2) of the Working Procedures calls for the Members constituting a division to be selected taking into account, inter alia, "the principles of random selection [and] unpredictability". The Appellate Body expressed the view that, in order to ensure respect for these principles, in the specific circumstances of a simultaneous filing of two appeals, the appeal numbers should be assigned to each dispute by means of a random draw. To this end, the Appellate Body invited the parties to this dispute and to the China Rare Earths (DS431; DS432; DS433) disputes to the Appellate Body Secretariat on Friday, 11 April 2014, in order to witness the assignment of appeal numbers to the appeals in DS449 and DS431 through a random draw. The Appellate Body Chair also adverted, in his letter, to the Appellate Body's regret at the unfortunate circumstances that had led to this situation, and to the need for parties to WTO disputes to coordinate, communicate, and cooperate amongst themselves, as well as with the Appellate Body and the Appellate Body Secretariat, in the planning, filing, and conduct of their appeals. 24 Panel Report, para. 8.1.c. 25 Panel Report, para WT/DS449/6 (attached as Annex 1 to this Report). 27 WT/AB/WP/6, 16 August WT/DS431/R, 26 March The panel report in DS431 (complaint by the United States) was circulated together with the panel reports in DS432 (complaint by the European Union) and DS433 (complaint by Japan) in the form of a single document constituting three separate panel reports. China subsequently appealed the panel reports in DS432 and DS433 on 25 April 2014.

15 On Friday, 11 April 2014, a random draw was held at the Appellate Body Secretariat in the presence of the parties to this dispute and to the China Rare Earths (DS431; DS432; DS433) disputes. As a result of this draw, the appeal initiated by the United States in China Rare Earths (DS431) was assigned appeal number AB , and the appeal by China in US Countervailing and Anti-Dumping Measures (China) (DS449) was assigned appeal number AB Also on 11 April 2014, the United States requested an extension for the filing of the relevant documents for an other appeal pursuant to Rule 16(2) of the Working Procedures on account of "exceptional circumstances", particularly: (i) the filing of China's Notice of Appeal and appellant submission 12 days after the circulation of the Panel Report in this dispute (DS449); (ii) the simultaneous filing of the appeals in this dispute and in China Rare Earths (DS431); and (iii) the granting of an extension to China to file its Notice of Other Appeal in China Rare Earths (DS431). On 14 April 2014, the Appellate Body Division hearing this appeal issued a Procedural Ruling 30 extending the time-period for the United States to file its Notice of Other Appeal and other appellant's submission to 17 April The Division also extended the deadlines for the filing of the appellees' submissions to 1 May 2014 and the third participants' submissions to 5 May The Division based its decision on Rule 16(1) and (2) of the Working Procedures On 16 April 2014, Japan requested the Appellate Body, pursuant to Rule 16 of the Working Procedures, to extend the date for the filing of the third participants' submission to 7 May 2014, because the original deadline fell within a holiday period in Japan. On 24 April 2014, the Division denied Japan's request on the ground that the difficulties that Japan could encounter in finalizing its submission during this period did not constitute "exceptional circumstances" that would result in a "manifest unfairness" within the meaning of Rule 16(2) of the Working Procedures On 17 April 2014, the United States notified the DSB, pursuant to Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel and filed a Notice of Other Appeal 31 and an other appellant's submission pursuant to Rule 23 of the Working Procedures. On 30 April 2014, China and the United States each filed an appellee's submission. 32 On 5 May 2014, Australia, the European Union, and Japan each filed a third participant's submission. 33 Canada, India, and Turkey (on 5 May 2014), Russia (on 12 May 2014), and Viet Nam (on 13 May 2014) each indicated its intention to appear at the oral hearing as a third participant The oral hearing in this appeal was held on 15 and 16 May The participants and third participants Australia and Japan made opening statements. The participants and third participants responded to questions posed by the Members of the Division hearing the appeal. 2 ARGUMENTS OF THE PARTICIPANTS AND THIRD PARTICIPANTS 2.1 Claims of error by China Appellant 2.1. China claims that the Panel erred in the interpretation and application of Article X:2 of the GATT 1994, because it concluded that the relevant baseline of comparison under ArticleX:2 is any "established and uniform practice" of a government agency, and in finding that Section 1 of PL does not effect an "advance" in a rate of duty or other charge on imports under an "established and uniform practice", or impose a "new or more burdensome" requirement, restriction, or prohibition on imports in relation to this established and uniform practice. 35 Moreover, China claims that the Panel acted inconsistently with Article 11 of the DSU in its determination of the meaning of US municipal law, and in finding that the USDOC practice of applying US countervailing duty law to imports from China as an NME country was "presumptively lawful". 36 China requests the Appellate Body to reverse the Panel's finding that the United States 30 Attached as Annex 3 to this Report. 31 WT/DS449/7 (attached as Annex 2 to this Report). 32 Pursuant to Rules 22 and 23(4) of the Working Procedures. 33 Pursuant to Rule 24(1) of the Working Procedures. 34 Pursuant to Rules 24(2) and 24(4) of the Working Procedures. 35 China's appellant's submission, para. 68 (referring to Panel Report, paras and ). 36 China's appellant's submission, paras (quoting Panel Report, para ).

16 did not act inconsistently with Article X:2 and to complete the analysis and find, instead, that Section 1 of PL is inconsistent with Article X:2 of the GATT Interpretation and application of Article X:2 of the GATT China takes issue with the Panel's interpretation that the "practice" of a government agency must be the baseline of comparison for determining whether a newly published measure of general application effects an "advance" in a rate of duty or imposes a "new or more burdensome" requirement or restriction on imports. In China's view, there is no genuine interpretative support for the aforementioned conclusion China argues that the Panel erred in finding that the phrase "under an established and uniform practice" defines the relevant baseline of comparison under Article X:2 of the GATT 1994, because, based on its ordinary meaning and its location within the first clause of Article X:2, it is clear that this phrase qualifies the immediately preceding reference to "measure[s] of general application effecting an advance in a rate of duty or other charge on imports". China claims that it does not follow from the meaning of the term "advance" that the phrase "under an established and uniform practice" defines the relevant baseline of comparison for purposes of determining whether a measure effects an "advance in a rate of duty". There is no textual, interpretative, or grammatical basis for this phrase to refer to the baseline or define the relevant prior rate against which the impugned measure could be compared. China believes that doing so would amount to inserting words into Article X:2 that are simply not there In China's view, the phrase "under an established and uniform practice" describes a further characteristic of the measure that is being challenged and, in particular, how the measure must effect an advance in a rate of duty or other charge on imports namely, "under an established and uniform practice". China observes that this was also the understanding of the panel in EC IT Products, which found that the phrase "under an established and uniform practice" modifies both "advance in a rate of duty" and "other charge on imports", and means that these must be applied in the whole customs territory ("uniform") and that its application should be on a secure basis ("established") China notes that the phrase "under an established and uniform practice" reads in French "en vertu d'usages établis et uniformes" and in Spanish "en virtud del uso establecido y uniforme". China points out that "en vertu de" and "en virtud de" can be translated into English as "by virtue of" or "as consequence of". The term "by virtue of" also suggests that the phrase "under an established and uniform practice" describes how the measure of general application must effect an advance in a rate of duty or other charge on imports, in order to fall within the scope of Article X: According to China, "[t]he baselessness of the Panel majority's interpretation is further demonstrated by the fact that the phrase 'under an established and uniform practice' has no textual connection to the second category of measures described by Article X:2, namely those measures of general application that 'impos[e] a new or more burdensome requirement, restriction or prohibition on imports, or on the transfer of payments therefor'." 41 Instead, China contends, "the Panel appears to have concluded, without any interpretative basis whatsoever, that the phrase 'under an established and uniform practice' in the first clause of Article X:2 also serves to define the relevant baseline of comparison for the types of measures described by the second clause of Article X:2." 42 In China's view, this "makes no sense on its face", because, if the phrase "under an established and uniform practice" were meant to serve as the relevant baseline of 37 China's appellant's submission, paras. 69 and China's appellant's submission, para China's appellant's submission, para. 34 (referring to Panel Reports, EC IT Products, paras , , and ). 40 China's appellant's submission, para China's appellant's submission, para China's appellant's submission, para. 38. (fn omitted)