On April 7 2015 the World Trade Organisation (WTO) Appellate Body upheld the underlying WTO panel report in an appeal by Vietnam in a dispute concerning Section 129(c)(1) of the Uruguay Round Agreements Act.(1) The appellate body's decision suggests that mechanisms other than Section 129 of the Uruguay Round Agreements Act are available for respondents seeking implementation by the United States of WTO determinations arising from trade remedy (ie, anti-dumping, countervailing duty and safeguard) proceedings with respect to unliquidated entries of subject merchandise that entered the United States before the date specified by Section 129(c)(1). Companies in such situations should seek advice regarding methods to ensure that their affected entries of subject merchandise are not improperly liquidated by the US government.
Section 129 of the Uruguay Round Agreements Act addresses how the United States is to implement WTO determinations that find actions by the US International Trade Commission (ITC) and Department of Commerce in trade remedy proceedings to be inconsistent with the United States' WTO obligations. Section 129(c)(1), in particular, provides that a determination to implement under Section 129 "shall apply with respect to unliquidated entries of subject merchandise… that are entered, or withdrawn from warehouse, for consumption on or after" the date on which the Office of the US Trade Representative directs the implementation.(2)
Under WTO rules, a WTO member must implement an adverse WTO determination by the expiration of the 'reasonable period of time' provided for implementation, which may vary on a case-by-case basis. In the trade remedies context, the WTO Appellate Body has indicated that any action to assess or collect duties (ie, liquidate entries) after the expiry of the reasonable period of time must be WTO compliant, regardless of the date of import of the merchandise at issue.(3) That is, entries of subject merchandise that remain unliquidated as of the expiry of the reasonable period of time may not be liquidated at a WTO-inconsistent rate, even if those entries occurred before the expiry of the reasonable period of time.
A tension arises between Section 129(c)(1) of the Uruguay Round Agreements Act and the United States' WTO implementation obligations because Section 129(c)(1) does not provide a mechanism for the United States to implement an adverse WTO determination with respect to entries of subject merchandise that remain unliquidated as of the expiry of the reasonable period of time, but that occurred before the implementation date specified in Section 129(c)(1).
In US – Shrimp II (Viet Nam), Vietnam argued that Section 129(c)(1) of the Uruguay Round Agreements Act precluded the United States from implementing an adverse WTO determination with respect to these so-called 'prior unliquidated entries' and as such was inconsistent with the United States' obligations under various provisions of the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.(4) The Appellate Body rejected this argument, finding that although Section 129(c)(1) addresses implementation with respect to entries that take place after the implementation date, it does not preclude or exclude WTO-consistent implementation with respect to prior unliquidated entries.(5)
In reaching this conclusion, the Appellate Body considered the United States' explanation – that it can and has implemented adverse WTO determinations with respect to prior unliquidated entries using mechanisms other than Section 129 of the Uruguay Round Agreements Act – to be highly probative.(6) In this regard, the United States advanced several examples of alternate mechanisms for implementation with respect to prior unliquidated entries, including:
- modifications to agency regulations or practice under Section 123 of the Uruguay Round Agreements Act;
- new legislation or amendments to existing legislation by Congress;
- adoption of a WTO-consistent methodology by the US Department of Commerce in subsequent administrative reviews;
- settlement agreements; and
- judicial remand.
The existence of these alternate mechanisms to implement WTO decisions may come as a surprise, insofar as they either:
- have been rejected, as a matter of WTO law, as a basis to avoid a finding of 'as such' WTO inconsistency (in the case of the possible future amendment of governing legislation);
- cannot affect the entries of merchandise at issue (in the case of subsequent administrative reviews or modifications of regulations under Section 123 of the Uruguay Round Agreements Act); or
- have been resisted by the United States in domestic litigation (in the case of requests for judicial remand, which have been denied by the reviewing courts).
Nevertheless, now that the United States has acknowledged the existence of such alternate methods of implementation, respondents involved in US trade remedy proceedings with prior unliquidated entries should carefully consider options to ensure that such remedies remain available as their cases proceed through domestic litigation. Respondents should seek counsel to identify case-specific methods to maintain the unliquidated status of their entries of subject merchandise until such time as the Department of Commerce or the ITC has availed of an alternate mechanism to implement adverse WTO decisions.
For further information on this topic please contact Neil Ellis or Rajib Pal at Sidley Austin LLP by telephone (+1 202 736 8000) or email (email@example.com or firstname.lastname@example.org).The Sidley Ausin LLP website can be accessed at www.sidley.com.
(1) See WTO Appellate Body report, United States – Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS429/AB/R, circulated April 7 2015 (US – Shrimp II (Viet Nam)).
(2) 19 USC § 3538(c)(1)
(3) See, for example, WTO 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, circulated August 18 2009, paragraphs 168-169.
(4) These provisions require WTO members not to collect anti-dumping duties in excess of WTO-consistent margins of dumping.
(5) See WTO Appellate Body report, US – Shrimp II (Viet Nam), paragraphs 4.17-4.51.
(6) See WTO Appellate Body report, US – Shrimp II (Viet Nam), paragraphs 4.27-4.28, 4.42-4.43.
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