1. 0 Dispute Resolution Case Study: China v. U.S. (A/D on Shrimp) (DS 422) (Panel 2012) October 7, 2015 ITRN 603 – Evan Setzer, Marin Sullivan, Gary Szabo, and Steve Woodward

2. 1 Briefing Outline  Complaint Overview  Panel and Appellate Body Proceedings  Panel’s Key Findings  Timing and Implementation  Summary of our Team’s Findings  Questions Source of information: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds422_e.htm

3. 2 Complaint Overview  On 28 February 2011, China requested consultations with US regarding anti- dumping measures on frozen warm water shrimp from China –China alleged that the US Department of Commerce's (“USDOC”) regarding zeroing calculations of dumping margins for subject imports is inconsistent with the US' obligations under the 1994 GATT 1994 and Anti-Dumping Articles Agreement.  On 11 March 2011, Japan requested to join the consultations  On 22 July 2011, China requested complementary consultations with the US regarding zeroing calculations practice by the USDOC for diamond sawblades and parts from China –China again alleged that the US Department of Commerce's (“USDOC”) regarding zeroing calculations of dumping margins for subject imports is inconsistent with the US' obligations under the 1994 GATT 1994 and Anti-Dumping Articles Agreement.  On 13 October 2011, China requested the establishment of a panel  On 13 October 2011, China and the United States informed the DSB of an Agreement on Procedures

4. 3 Panel and Appellate Body Proceedings  On 25 October 2011, the DSB established a panel –The European Union, Honduras, Japan, Korea, Thailand and Vietnam reserved their third party rights –Following the agreement of the parties, the panel was composed on 21 December 2011  On 8 June 2012, the panel report was circulated to Members

5. 4 Panel’s Key Findings  Before the panel, China restricted its claims to the alleged use, by the USDOC, of zeroing in the anti-dumping investigations at issue.  China's claims concerned: –(i) the use by the US Department of Commerce of the “zeroing” methodology in the calculation of certain dumping margins in these original investigations; and –(ii), the USDOC's reliance upon the same dumping margins, calculated with zeroing, in calculating the separate rate applied to exporters/producers not selected for individual examination but who had established that they act independently from the Chinese government in their export activities.

6. 5 Panel’s Key Findings (cont.)  The United States did not contest the factual assertions made by China regarding the USDOC's use of zeroing in the investigations at issue and the USDOC's reliance upon dumping margins calculated with zeroing to establish the separate rate  Nor did the United States contest the legal relevance, to the facts of the dispute, of the Appellate Body reports cited by China

7. 6 Panel’s Key Findings (cont.)  The Panel upheld China's claim concerning the USDOC's use of zeroing in the calculation of dumping margins for individually- examined exporters/producers –The Panel found that the “zeroing” methodology used by the USDOC in calculating the margins of dumping in the three anti-dumping investigations at issue was inconsistent with the Anti-Dumping Agreement, and therefore concluded that the United States had acted inconsistently with its obligations under this provision. –The Panel rejected China's claim concerning the separate rate, but noted that the calculation of the separate rate on the basis of individual margins calculated with zeroing necessarily incorporated the WTO-inconsistent zeroing methodology  At its meeting on 23 July 2012, the DSB adopted the panel report

8. 7 Timing and Implementation  On 27 July 2012, China and the United States informed the DSB that they had agreed that the reasonable period of time for the United States to implement the DSB recommendations and rulings shall be 8 months –Accordingly, the reasonable period of time expired on 23 March 2013  At the DSB meeting on 26 March 2013, the United States informed the DSB that it had implemented the DSB recommendations and rulings within the reasonable period of time.  China did not share the United States' view that it had fully implemented the DSB recommendations as it had failed to revoke the anti-dumping mechanisms

9. 8 Summary of our Team’s Findings  MEASURE AND PRODUCT AT ISSUE – –US anti-dumping measures covering two products from China: (i) certain frozen warm water shrimp; and (ii) diamond saw blades and parts  SUMMARY OF KEY PANEL FINDINGS – –The Panel upheld China’s claim that the use of zeroing in calculating the margins of dumping in the anti-dumping investigations at issue was inconsistent with GATT Articles and therefore concluded that the US had acted inconsistently with its obligations under this provision. –The Panel rejected China’s claim concerning the separate rate in the shrimp investigation. As the investigation concerned imports from a non-market economy, the USDOC assigned a “separate rate” to exporters that were able to demonstrate the absence of government control over their export activities; other exporters were assigned the rate for the People’s Republic of China-entity. In calculating the separate rate, the USDOC had averaged the dumping margins of the investigated companies, which were calculated with zeroing. China argued that the separate rate was also inconsistent with GATT Articles.

10. 9 Summary of our Team’s Findings (cont.)  SUMMARY OF KEY PANEL FINDINGS (cont.) – –The Panel considered that China “has not … satisfactorily explained how it could provide the legal basis for a finding of inconsistency with respect to the separate rate” and said that “the fact that margins of dumping are inconsistent with GATT Articles does not necessarily mean that a separate rate calculated on the basis of such margins is also, itself, inconsistent with that same provision”. –The Panel however agreed with the statement of the panel in US – Shrimp (Ecuador) that the calculation of the separate rate on the basis of individual margins calculated with zeroing “necessarily incorporates the WTO-inconsistent zeroing methodology”.  OTHER ISSUES – –Uncontested claims: Although the US did not contest China’s claims, the Panel considered that its responsibilities remained as set forth under DSU to make “an objective assessment of the matter before it”. Further, with respect to the burden of proof, the Panel held that even though the US did not contest the claims, China was nevertheless required to make a prima facie case of violation.

11. 10 QUESTIONS