United States Anti-dumping Measures on Certain Shrimp from Viet Nam

Key facts Short title: US Shrimp (Viet Nam) Complainant: Viet Nam Respondent: United States of America Third Parties: China; European Union; India; Japan; Korea, Republic of; Mexico; Thailand Agreements cited: (as cited in request for consultations) Agreement Establishing the World Trade Organization: Art. XVI:4 Protocol of Accession: General Anti-dumping (Article VI of GATT 1994): Art. 1, Annex II, 6.8, 6.10, 9.1, 9.3, 9.4, 11.2, 11.3, 2.1, 18.1, 18.4, 2.4, 2.4.2 GATT 1994: Art. I, II, VI:1, VI:2(a) Request for Consultations received: 1 February 2010 Summary of the dispute to date Consultations Complaint by Viet Nam. On 1 February 2010, Viet Nam requested consultations with the United States concerning a number of anti-dumping measures on certain frozen warmwater shrimp from Viet Nam. In addition to several administrative and new shipper reviews, the request for consultations concerns several US laws, regulations, administrative proceedings and practices, including zeroing. Viet Nam considers that these measures are inconsistent with the United States' obligations under: Articles I, II, VI:1 and VI:2 of the GATT 1994; several provisions of the Anti-Dumping Agreement; Article XVI:4 of the WTO Agreement; and Viet Nam's Protocol of Accession. On 12 February 2010, the European Union and Japan requested to join the consultations. On 15 February 2010, Thailand requested to join the consultations. On 7 April 2010, Viet Nam requested the establishment of a panel. At its meeting on 20 April 2010, the DSB deferred the establishment of a panel.

Panel and Appellate Body proceedings At its meeting on 18 May 2010, the DSB established a panel. The European Union, Japan, Korea, Mexico and Thailand reserved their third-party rights. Subsequently, China and India reserved their third-party rights. On 14 July 2010, Viet Nam requested the Director-General to determine the composition of the panel. On 26 July 2010, the Director-General composed the panel. The Report of the Panel was issued to the parties on 19 May 2011 and was circulated to Members on 11 July 2011.

Summary of key findings Overview In this dispute, Viet Nam challenged certain aspects of the U.S. Department of Commerce (USDOC)'s final determinations in the U.S. anti-dumping proceedings against Certain Frozen Warmwater Shrimp from Viet Nam (Shrimp). Specifically, Viet Nam challenged the continued use, by the USDOC, of

certain practices, as well as their application in the second and third administrative reviews. The practices challenged by Viet Nam were the following: The USDOC's use of zeroing in the calculation of dumping margins; The USDOC's limitation of the number of exporters or producers selected for individual investigation or review. The application of a Vietnam-wide entity rate determined on the basis of adverse facts available to certain Vietnamese exporters or producers that could not establish that they act independently from the Vietnamese Government in their commercial and sales operations; In addition, Viet Nam made claims with respect to the all others rate applied by the USDOC in the second and third administrative reviews. Finally, Viet Nam also challenged, as such, the U.S. zeroing methodology, as it relates to the calculation of margins of dumping in the context of administrative reviews. US requests for preliminary rulings The United States raised preliminary objections regarding the Panel's terms of reference. In particular, the United States argued that the measure described by Viet Nam as the continued use of challenged practices in successive proceedings under the Shrimp anti-dumping order: (1) fell outside the Panel's terms of reference because it was not identified in Viet Nam's panel request; and (2) was not subject to WTO dispute settlement because it purported to include future measures. The Panel upheld the United States' request for a preliminary ruling in this respect. The Panel concluded that Viet Nam's panel request did not identify the continued use of challenged practices measure as a measure at issue in the dispute, as required by Article 6.2 of the DSU. Viet Nam's claims with respect to zeroing The Panel upheld Viet Nam's claim that the USDOC's use of zeroing to calculate the dumping margins of respondents selected for individual examination in the second and third administrative reviews was inconsistent with Article 2.4 of the Anti-Dumping Agreement. The Panel exercised judicial economy with respect to additional claims of violation under Articles 9.3, 2.1 and 2.4.2 of the Anti-Dumping Agreement. The Panel upheld Viet Nam's claims that the United States' zeroing methodology, as it relates to the use of simple zeroing in administrative reviews, is inconsistent with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994. The Panel first concluded that Viet Nam had established the existence of the zeroing methodology as a rule or norm of general and prospective application. The Panel then relied on prior Appellate Body rulings to conclude that simple zeroing in administrative reviews is, as such, inconsistent with these two provisions. Viet Nam's claims with respect to the USDOC's decisions to limit the number of selected respondents Viet Nam argued that the USDOC had applied the second sentence of Article 6.10 of the Anti-Agreement, which allows under certain circumstances an investigating authority to determine an individual margin of dumping for only some of the respondents, in a manner that deprived Vietnamese respondents of substantive rights under the first sentence of Article 6.10 (establishing the general principle that individual margins are to be assigned to each respondent) as well as under Articles 9.3, 11.1 and 11.3 of the Anti-Dumping Agreement. The Panel rejected these claims. It reasoned that Viet Nam was not claiming that the USDOC's use of limited examinations in the second and third administrative reviews was inconsistent with the second sentence of Article 6.10, and considered that none of the provisions cited by Viet Nam imposed any restrictions on an authority's ability to limit its examination, other than those set forth in that provision. In addition, Viet Nam made two distinct claims under Article 6.10.2 of the Anti-Dumping Agreement: Viet Nam claimed that the USDOC had violated the first sentence of Article 6.10.2 of the Anti-Dumping Agreement, which provides that an authority which has limited its examination shall nevertheless determine individual margins of dumping for non-selected respondents that submit a voluntary response. The Panel rejected Viet Nam's claim under this provision, as it found that Viet Nam had failed to identify any instance in which Vietnamese respondents actually submitted a voluntary response. Viet Nam further claimed that the USDOC had acted inconsistently with its obligations under the second sentence of Article 6.10.2, which provides that [v]oluntary responses shall not be discouraged. The Panel rejected this claim, concluding that Viet Nam had not demonstrated that the USDOC's actions in the administrative reviews at issue had impermissibly discouraged the submission of voluntary responses by Vietnamese respondents. Viet Nam's claims with respect to the "all others" rate applied to non-selected respondents Article 9.4 does not explicitly address the maximum allowable all others rate which may be imposed on non-selected respondents in a situation in which all individual dumping margins calculated for selected respondents are zero, de minimis, or based on facts available; in past decisions, the Appellate Body has referred to this as a lacuna in Article 9.4. Faced with a lacuna situation in the two administrative reviews at issue, the USDOC had applied an all others rate originally determined in the original investigation, which corresponded to the weighted average of the individual margins calculated in that investigation, and which had been calculated with the use of zeroing. Viet Nam claimed that the "all others" rate applied by the USDOC in these administrative reviews was inconsistent with Article 9.4 of the Anti-Dumping Agreement. Specifically, Viet Nam argued that the application of an all others rate established on the basis of margins calculated with zeroing is inconsistent with this provision. The Panel upheld Viet Nam's claim on this basis. The Panel did not address a second argument of Viet Nam in support of its Article 9.4 claim, namely that the application of an all others rate that fails to consider the results of the individually-investigated respondents in the contemporaneous proceeding and produces an anti-dumping duty prejudicial to companies not selected for individual investigation is inconsistent with this provision. The Panel also exercised judicial economy with respect to additional claims of violation under Articles 9.3, 2.4.2, and 2.4 of the Anti-Dumping Agreement.

Viet Nam's claims with respect to rate assigned to the Vietnam-wide entity The Panel upheld a claim by Viet Nam that the USDOC had acted inconsistently with Article 9.4 of the Anti-Dumping Agreement when it failed to apply to the Vietnam-wide entity the all others rate applied to respondents not selected for individual examination. The Panel reasoned that Article 9.4 does not entitle the authorities of the importing Member to render application of the all others rate conditional on the fulfilment of certain requirements, such as independence from the Government. The Panel also considered that the existence of a lacuna situation did not allow investigating authorities to not assign an all others rate to respondents otherwise entitled to receive such a rate. In addition, the Panel found that the USDOC's application of a facts available rate to the Vietnam-wide entity in the second administrative review, and a rate that was in substance a facts available rate in the third administrative review, was inconsistent with Article 6.8 of the Anti-Duping Agreement. Other issues pertaining to the Panel's terms of reference Viet Nam made claims of violation under Article 17.6(i) of the Anti-Dumping Agreement with respect to the all others rate and to the rate assigned to the Vietnam-wide entity. In each instance, the Panel considered that Viet Nam's claims were outside its terms of reference due to Viet Nam's failure to include a claim under this provision in its request for the establishment of a panel. In addition, the Panel found that certain claims by Viet Nam, which Viet Nam referred to as consequential claims, were outside its terms of reference because they pertained to a measure not within the Panel's terms of reference. Recommendation Pursuant to Article 19.1 of the DSU, having found that the United States has acted inconsistently with provisions of the Anti-Dumping Agreement and of the GATT, the Panel recommended that the United States bring its measures into conformity with its obligations under those Agreements. ________________________________________

Shrimp: tm Protocol: ngh nh th, bn d tho u tin hoc nguyn gc ca mt hip nh ngoi giao, nht l ca nhng iu khon tha thun cho mt hip c Anti-dumping: chng bn ph gi Anti-dumping duty(ies): thu chng bn ph gi Deferred: b hon li Adverse*: bt li, i ch th ch = adverse elements: phn t chng i = adverse party: bn i phng = adverse wind, page: gi ngc, trang sch bn kia Successive: lin tc k tip ln lt = successive attempts, Proceeding: v kin Explicitly: r rng dt khot de minimis: bin ph gi ti thiu lacuna*: ch thiu st, k h - lacunae, lacunas /l3kiu:n3/ Pertain to: gn lin i i vi = joy pertains to youth, the manor and the land pertaining to it, evidence pertaining to the case Recommend: khuyn ngh

COMMON USED TERMS 1. it purported to include future measures 2. Viet Nam's claims with respect to zeroing 3. actions in the administrative reviews at issue 4. impermissibly discouraged the submission of voluntary responses 5. claims were outside its terms of reference

WTO finds for Vietnam in U.S. shrimp dumping case

Source Los Angeles Times

July 11, 2011 The decision is the latest in which 'zeroing' a framework used by the U.S. for calculating duties on goods sold at less than their price on the exporter's home market has been found illegal. GENEVA World Trade Organization judges on Monday ruled that the United States is violating global trade rules in using its controversial "zeroing" method to impose anti-dumping tariffs on shrimp from Vietnam. The decision by a three-member panel was the latest of a series in which zeroing a framework for calculating duties on goods sold at less than their price on the exporter's home market has been found illegal under WTO agreements. The panel said the United States "has acted inconsistently with provisions of the Anti-Dumping Agreement and the GATT" key WTO accords and said the U.S. should bring its calculation method into line with the two agreements. Zeroing, which is used by the U.S. Department of Commerce and can be applied to a variety of goods, has been widely condemned by other countries. The European Union, China, India, Japan and Mexico declared an interest in Vietnam's case taken to the WTO in February 2010 and China launched its own case over shrimp in February of this year. WTO rules allow countries to impose duties on imports that they determine to be dumped, but the calculation of how much the duties should be involves comparing batches of goods. In zeroing, U.S. officials do not take into account cases in which the imported goods are cheaper on their home market but apply across the board a duty rate based only on those that are more expensive at home. Other shrimp producers argue that this is unfair.

Argentina, Brazil, Canada, Ecuador, the EU, Japan, Mexico, South Korea and Thailand have all won zeroing cases at the WTO, and in January the United States promised its trading partners that it would change the method.
In the interim, it has reduced its use of zeroing. But in March, the U.S. International Trade Commission voted to continue import duties for five more years on shrimp from Thailand, the U.S. main supplier, as well as from China, Vietnam, Brazil and India. That came after strong lobbying from U.S. shrimpers in the Gulf of Mexico, reeling from last year's huge oil spill and from devastating hurricanes, who want zeroing to be continued to shield them while their industry recovers. _____________ batch: m chuyn t /baetS/

WTO rules against US in dumping flap

Source: Vietnam Law and Legal forum Release: (7/13/2011 2:41:11 PM) The World Trade Organization (WTO) on July 11 issued the panel report on Vietnam's claim against the United States (US) relating to anti-dumping measures on its frozen shrimp and several US laws, regulations and practices, including the notorious zeroing methodology used when calculating the anti-dumping margin in shrimp administrative reviews. Following a series of zeroing decisions by the WTO's Panels and Appellate Body, the Panel upheld Vietnam's claim that the USs zeroing methodology as it relates to the use of simple zeroing in administrative reviews, was as such inconsistent with the Anti-Dumping Agreement and General Agreement on Tariffs and Trade (GATT) 1994. The anti-dumping tariffs levied by the US on most of Vietnam's shrimp exports ranged from 4.13 per cent to 25.76 per cent. The Panel also upheld Vietnam's claim that the US Department of Commerce's (DOC) use of zeroing to calculate the dumping margins of selected respondents in the second and third administrative reviews was as applied inconsistent with the Anti-Dumping Agreement and GATT 1994. The tariffs imposed on exporters from non-market economies such as Vietnam and China are often much higher than the normal level under the general calculation set by the WTO rule. The Panel upheld a claim by Vietnam that the US DOC had acted inconsistently with the Anti-Dumping Agreement by failing to apply to the Vietnam-wide

entity (a fictitious entity invented by the US DOC for "non-market" economies such as Vietnam) the all others rate applied to respondents not selected for individual examination. More importantly, the Panel ruled that the Anti-dumping Agreement did not allow the US DOC to apply the all others rate conditional on the fulfillment of certain requirements by the non-investigated exporters. The Panel found the US DOC's application of a facts-available rate to the Vietnam-wide entity in the second administrative review, and a rate that was in substance a facts-available rate in the third administrative review, were inconsistent with the Anti-Dumping Agreement. However, the Panel disagreed with Vietnam's claim the US had violated the Anti-Dumping Agreement with respect to the US DOC's decision to limit the number of respondents individually selected for full review, and rejected Vietnam's request to consider zeroing methodology used in the US DOC's successive proceedings (including the fourth, the fifth administrative reviews and sunset reviews) as "continued use of challenged practices", which is unfavorable to Vietnam as zeroing is still in effect in the results of the fourth, fifth and final reviews. According to WTO rules, the two parties have 60 days to appeal after the Panel releases its decision. "This is a significant victory for the Vietnamese shrimp industry as well as for Vietnamese exporters which might be subject to antidumping measures in the future," said Dinh Anh Tuyet, director of the IDVN Law Office in Hanoi. "For the shrimp industry, it opens an opportunity to get rid of the shrimp anti-dumping order because once the Panel's recommendations are implemented; the US must re-calculate anti-dumping duties which would be zero for all exporters for the second and third administrative reviews." The conclusion was not applied to the fourth and fifth administrative and sunset reviews. "Vietnam should have one more lawsuit for those reviews to get some or all local exporters to get rid of anti-dumping duties," Tuyet said. "If zeroing is to be excluded in the fourth administrative review, which may require an additional claim to the WTO, Vietnam's shrimp companies and industry will get a zero margin for three consecutive years, which would allow the revocation of the shrimp anti-dumping order under the US law and possibly lead to a no-dumping decision in the sunset review. In addition, the US DOC will have to recalculate duties for these reviews and, possibly refund duty deposits for importers." The Vietnam Association of Seafood Exporters and Producers (VASEP) said the WTO's conclusion would greatly help Vietnamese shrimp exporters to the US. VASEP reported that Vietnam had planned to earn US$2.1 billion from exports of shrimp in 2011. Last year, shrimp export revenues reached $2 billion with the US being Vietnam's second largest market after Japan.-VNS/VLLF