World Trade Organization

• Author: International Law Group

The first case (WT/DS/213) involves U.S. countervailing duties imposed on corrosion-resistant carbon steel flat products from Germany. According to WTO rules, a definitive countervailing duty (CVD) should end after five years unless a "sunset review" indicates that the expiration of the duty would likely lead to the continuation or recurrence of the subsidies. Negligible subsidies are presumed not to cause injury pursuant to the de minimis rule.

The Report of the Panel dated July 3, 2002, concludes, in particular, that: (1) U.S. CVD law and the implementing regulations are consistent with Article 21, paragraphs 1 and 3, and Article 10 of the WTO Agreement on Subsidies and Countervailing Measures (SCM) dealing with the application of evidentiary standards to the self- initiation of sunset reviews; (2) U.S. CVD law and its regulations are at war with Article 21.3 of the SCM Agreement as to the application of a 0.5 percent de minimis standard to sunset reviews, and therefore violate Article 32.5 of the SCM Agreement and also Article XVI:4 of the WTO Agreement; (3) U.S. CVD law and regulations and the statement of policy practices are consistent with Article 21.3 of the SCM Agreement with respect to the obligations to determine the likelihood of continuation or recurrence of subsidies in sunset reviews; and (4) by failing properly to assess the likelihood of the continuation or recurrence of subsidies in the sunset review on carbon steel, the U.S. contravened Article 21.3 of the SCM Agreement.

The second case (WT/DS212/R) involves steel products from the European Communities. Here, the U.S. had imposed countervailing duties in 12 instances against various European products that were state-owned and later privatized.

In particular, the Panel makes two key findings. The first is that six of the U.S. countervailing duty orders involving Italian and French steel products do not square with Articles 10, 14, 19.1 and 19.4 of the SCM Agreement. The reason is that the U.S. Department of Commerce failed to look into whether the newly privatized producers obtained any benefit from financial...