The World Trade Organization's dispute settlement resolution in United States--Anti-Dumping Act of 1916.

• Author: Beckington, Jeffrey S.
• Position: WTO case

1. INTRODUCTION AND BACKGROUND

   The evolving jurisprudence of the World Trade Organization (WTO) is a fascinating phenomenon still in its early stages. That it exists is testament to a recognition by the WTO's Member States that a substantial ceding of national sovereignty to the WTO is necessary, or at least advisable, in order to support an international mechanism designed to facilitate and maintain orderly trade in goods and services across national boundaries. This partial relinquishment of jurisdiction, however, understandably has been accompanied by certain misgivings and hedging by Member States individually and particularly by the United States.

   The boldness and tension underlying the political leap of faith involved here are evident in the structure and working of the WTO's dispute settlement system. Since its inception in 1947 the General Agreement on Tariffs and Trade (GATT) has provided for dispute settlement under Articles XXII and XXIII.(1) Experience with this system over almost five decades, however, revealed a number of structural flaws that eroded its utility and effectiveness. To one degree or another, these shortcomings reflected an unwillingness by the GATT's Contracting Parties more fully to empower the GATT as an international organization.

   By the time of the Uruguay Round, almost half a century removed from World War II, the situation had changed significantly. With global trade burgeoning, largely due to successive reductions in tariffs under the GATT's auspices, the Uruguay Round's negotiations in mid-April 1994 yielded an agreement establishing the WTO and a slew of far-reaching and detailed multilateral trade agreements to bolster open markets and curtail protectionism. To enforce and give vitality to this expanded legal regime, a Dispute Settlement Understanding (DSU) was crafted.(2)

   Building on and improving the GATT's system for settling disputes, the DSU exhibits a greater resolve than previously by the Member States to address dispositively conflicts arising from interpretation and implementation of the WTO's many new, substantive rules and requirements that entered into force for most of the world's countries on January 1, 1995. Thus, for example, the DSU includes strict time limits to move the process along; provides for review by an Appellate Body of panels' decisions on legal questions; replaces the ability of the losing party to block the GATT as a whole from adopting a panel's report with automatic adoption of reports by panels and the Appellate Body unless there is a consensus of the Member States against doing so; and sets guidelines for prevailing parties to retaliate in the event of either non-compliance with recommendations by a panel (or the Appellate Body) or of no mutually satisfactory resolution.(3)

   These features of the DSU have been instrumental in encouraging more frequent resort to dispute settlement under the WTO than was true under the GATT. In the abstract, the DSU gives promise of decisions carefully rendered and meaningfully carried out within a reasonable timeframe. On the other hand, whether this potential is realized depends to a considerable degree upon the soundness and integrity of the legal reasoning expressed in each decision reached under the DSU. Both to assist in this regard and to guard against poorly considered opinions adversely affecting the United States, the legislation executing the Uruguay Round's agreements as U.S. domestic law contains various provisions that call for Congress and the President to take a number of steps.(4) These provisions require, for example:

   (a) annual reports from the United States Trade Representative (USTR) to Congress on the status of completed and pending dispute settlement proceedings;(5)

   (b) consultations by USTR with the appropriate congressional committees (principally the House Ways & Means Committee and the Senate Finance Committee)(6) during dispute settlement and thereafter regarding implementation of a panel or the Appellate Body's recommendations;(7) and

   (c) five-year reports to Congress with USTR's analysis, inter alia, of the costs and benefits to the United States of participating in the WTO and the value of its continued participation in the WTO.(8)

   These requirements leave the impression that the United States intends to monitor closely whether it is realizing the expected benefit of its bargain with the WTO's other Member States--enforcement of U.S. rights under the Uruguay Round's agreements in return for U.S. assignment of what is essentially significant judicial authority to the WTO's Dispute Settlement Body (the Member States acting in plenum).

   It is against this backdrop that in separate, but related actions the European Communities (EC) and Japan in mid-1998 and early 1999, respectively, requested formal consultations with the United States regarding Title VIII of the U.S. Revenue Act of 1916 (the 1916 Act),(9) pursuant to Article 4 of the DSU, Article XXII:1 of the GATT 1994, and Article 17.2 of the Agreement on Implementation of Article VI of the GATT 1994 (the Antidumping Agreement).(10) These consultations did not lead to a mutually satisfactory resolution. The formation of a three-person panel, comprised of the same individuals, followed in each case. The report of the panel in the EC's complaint was issued in United States--Anti-Dumping Act of 1916: Complaint by the European Communities, WT/DS136/R (Mar. 31, 2000) (EC Report),(11) while the report of the panel in Japan's complaint was issued in United States--Anti-Dumping Act of 1916: Complaint by Japan, WT/DS162/R (May 29, 2000) (Japan Report).(12) As the result of appeals by the United States, the EC, and Japan of certain similar legal questions, a single division of the WTO's Appellate Body was assigned to hear and decide the appeals from both panel reports and handed down its report in United States--Anti-Dumping Act of 1916, WT/DS136/AB/R and WT/DS162/AB/R (Aug. 28, 2000) (Appellate Body Report).(13)

   At the heart of their complaints both the EC and Japan contended that the 1916 Act per se and "as such"--apart from any application of its provisions in a given case--violated various obligations of the United States under the GATT 1994, chief among them being Article VI along with related sections of the WTO's Antidumping Agreement and Article III:4.(14) For the reasons specified below, the panel and Appellate Body in each dispute settlement proceeding agreed that the 1916 Act of the United States nullified or impaired benefits accruing to the other Member States under the WTO's agreements. In the final analysis, the Appellate Body recommended that the Dispute Settlement Body request the United States to bring the 1916 Act into conformity with its obligations under Article VI of the GATT 1994 and the Antidumping Agreement.(15) Notably, the panel in the Japanese challenge went so far as to suggest that one way in which the United States could do so would be to repeal the 1916 Act.(16) As logical as this observation is, its importance should not be lost or obscured.

   The invalidation under public international law of a U.S. federal statute over eighty years old is a significant event by any measure, especially because that pronouncement was made under the DSU and the WTO's auspices, not by a court of the United States. It is true, of course, as the SAA sets forth, that the DSU does not grant panels or the Appellate Body the jurisdiction to direct a Member State to amend its laws.(17) As a practical matter, however, this distinction loses at least some of its force in light of the fact that the DSU authorizes panels and the Appellate Body through the Dispute Settlement Body to judge and find a Member State's actions unlawful in the first place, thus necessitating consideration by an unsuccessful defending country of unpalatable responses. With so much at stake and the U.S. sensibilities over national sovereignty in play, it appears from their reports' deliberateness that the panel and Appellate Body evaluating the 1916 Act were at pains to inspire as much confidence as possible in their scholarship and balanced thoroughness and thereby in the fairness of the DSU's adjudicatory system.

2. THE PANEL REPORTS(18)

   1. Preliminary Issues Considered By the Panel

      In somewhat confusing fashion, for most of the last eighty years the United States has had two antidumping statutes, the 1916 Act and what originally was the Anti-Dumping Act of 1921,(19) now found in a much-expanded and revised form in Title VII of the Tariff Act of 1930.(20) The 1930 Act's antidumping law is administered by the U.S. Department of Commerce and the U.S. International Trade Commission, largely mirrors Article VI of the GATT 1994 and the WTO's Antidumping Agreement, and was not at issue in these cases. It is the 1930 Act that is the statutory basis for virtually all antidumping proceedings in the United States. On the other hand, the 1916 Act is less well known and less frequently employed, and its nature is open to dispute. Indeed, whether the 1916 Act is an antitrust law, as the United States urged in these dispute settlement proceedings, or an antidumping law subject to the discipline of Article VI of the GATT 1994 and the Antidumping Agreement, as the EC and Japan submitted, was the crux of the matter to be resolved. Understandably, therefore, the EC Report and the Japan Report devote considerable attention to the history and characteristics of the 1916 Act and, in the first instance, discuss the standards and methodological framework for that evaluation.

      Conscious of the "additional dimension" of the 1916 Act's longevity,(21) the panel in each case emphasized that objective assessment of the facts called for an analysis of the terms of the 1916 Act and then, even if the text of the statute were clear on its face, to look at its historical context, legislative history, and subsequent declarations of U.S. authorities so as to understand the 1916 Act as...