On April 7, 2015, the Appellate Body of the World Trade Organization (WTO) upheld the underlying WTO panel report in an appeal by Viet Nam in a dispute concerning Section 129(c)(1) of the Uruguay Round Agreements Act (URAA).1 The Appellate Body’s decision suggests that mechanisms other than Section 129 of the URAA are available for respondents seeking implementation by the United States of WTO determinations arising from trade remedy (i.e., anti-dumping, countervailing duty and safeguard) proceedings with respect to unliquidated entries of subject merchandise that entered the United States prior to 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 U.S. government.
Section 129 of the URAA addresses how the United States is to implement WTO determinations that find actions by the U.S. International Trade Commission and U.S. 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under Section 129 “shall apply with respect to unliquidated entries of subject merchandise … that are entered, or withdrawn from warehouse, for consumption on or after” the date on which the U.S. Trade Representative directs the implementation (the implementation date).2
Under WTO rules, a WTO member must implement an adverse WTO determination by the expiration of the “reasonable period of time” (RPT) 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 (i.e., liquidate entries) after the expiry of the RPT must be WTO-compliant, regardless of the date of importation of the merchandise at issue.3 That is, entries of subject merchandise that remain unliquidated as of the expiry of the RPT may not be liquidated at a WTO-inconsistent rate, even if those entries occurred prior to the expiry of the RPT.
A tension arises between Section 129(c)(1) of the URAA 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 remained unliquidated as of the expiry of the RPT but that occurred prior to the “implementation date” specified in Section 129(c)(1).
In US – Shrimp II (Viet Nam), Viet Nam argued that Section 129(c)(1) of the URAA precluded the United States from implementing an adverse WTO determination with respect to these so-called “prior unliquidated entries,” and therefore was “as such” 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 (Anti-Dumping Agreement).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 URAA 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 URAA;
- New legislation or amendments to existing legislation by Congress;
- Adoption of a WTO-consistent methodology by the U.S. 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, inasmuch 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); or cannot affect the entries of merchandise at issue (in the case of subsequent administrative reviews or modifications of regulations under Section 123 of the URAA); 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 U.S. 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, therefore, 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 U.S. International Trade Commission have availed of an alternate mechanism to implement adverse WTO decisions.