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Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties

Key Facts
Short Title: US — Customs Bond Directive
Respondent: United States
Third Parties: Brazil; China; European Communities; Japan; Thailand;
Complaintant(s): India;
Dispute Number: DS345
Link to Dispute Site: http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds345_e.htm
Dispute Status: Concluded

Complaint by India.

On 6 June 2006, India requested consultations with the United States on the Amended Bond Directive and the enhanced bond requirement imposed by the United States on imports of frozen warmwater shrimp from India. India considers that the Amended Bond Directive as such and the enhanced bond requirement are inconsistent with:

* Articles 1, 7.1, 7.2, 7.4, 7.5, 9.2, 9.3, 9.3.1, 18.1 and 18.5 of the Anti-Dumping Agreement;

* Articles I, II, III, VI:2, VI:3 (including Note 1 Ad paragraphs 2 and 3 of Article VI), X, XI and XIII of the GATT 1994; and

* Articles 10, 17.4, 17.5, 19.3, 19.4, 32.1 and 32.5 of the SCM Agreement.

On 21 June 2006, Brazil, China and Thailand requested to join the consultations. The United States informed the DSB that they had accepted the requests of Brazil, China and Thailand to join the consultations.

On 13 October 2006, India requested the establishment of a panel. At its meeting on 26 October 2006, the DSB deferred the establishment of a panel. At its meeting on 21 November 2006, the DSB established a panel. Brazil, China, the European Communities, Japan and Thailand reserved their third party rights. On 19 January 2007, India requested the Director-General to compose the Panel. On 26 January 2007, the Director-General composed the Panel.

On 27 July 2007, the Chairman of the Panel informed the DSB that it would not be possible for the Panel to complete its work within six months of the date of composition, inter alia, due to the nature and scope of the dispute.

On 29 February 2008, the Panel report was circulated to Members. The Panel rejected India's claims that the laws, rules and regulations of the United States that authorize the imposition of the EBR and the instruments comprising the Amended CBD are inconsistent as such with the provisions of Articles 1, 7.1(iii), 7.2, 7.4, 9.1, 9.2, 9.3 (including 9.3.1), 18.1 and 18.4 of the Anti-Dumping Agreement; Articles 10, 17.1(c), 17.2, 17.4, 19.2, 19.3, 19.4 and 32.1 of the SCM Agreement; Articles VI:2 and VI:3 of the GATT 1994; and the Ad Note thereto.

The Panel upheld India's claims that: (i) the application of the EBR to subject shrimp from India is inconsistent with Articles 1 and 18.1 of the Anti-Dumping Agreement, and the Ad Note; that (ii) the application of the EBR to subject shrimp from India prior to the imposition of the anti-dumping order is inconsistent with Article 7.2 of the Anti-Dumping Agreement; and that (iii) the United States violated Article 18.5 of the Anti-Dumping Agreement and Article 32.6 of the SCM Agreement because it failed to notify the Amended CBD to the Anti-Dumping and SCM Committees.

The Panel rejected the United States' argument that the application of the EBR is justified under Article XX(d) of the GATT 1994.

The Panel declined to rule separately on India's claims that: (i) the application of the EBR to subject shrimp from India prior to the imposition of the anti-dumping order is inconsistent with Articles 7.1(iii), 7.4 and 7.5 of the Anti-Dumping Agreement; that (ii) the application of the EBR to subject shrimp from India is inconsistent with Articles I:1, II:1(a) and (b), X(3)(a), XI:1 and XIII of the GATT 1994; and that (iii) the laws, rules and regulations of the United States that authorize the imposition of the EBR and the instruments comprising the Amended CBD are inconsistent as such with Articles I:1, II:1(a) and (b), X(3)(a), XI:1 and XIII of the GATT 1994.

The Panel recommended that the United States bring its measures into conformity with its obligations under the Anti-Dumping Agreement and the GATT 1994.

On 17 April 2008, India notified its decision to request the Appellate Body to review certain issues of law covered in the Panel report and certain legal interpretations developed by the Panel. On 29 April 2008, the United States notified its decision to appeal to the Appellate Body certain issues of law covered in the Panel report and certain legal interpretations developed by the Panel. The Appellate Body examined this appeal with that of WT/DS343.

On 10 June 2008, the Chairman of the Appellate Body informed the DSB that it would not be able to provide its report within 60 days due to the time required for completion and translation of the report. The Appellate Body estimated that the report would be circulated no later than 16 July 2008.

On 16 July 2008, the Appellate Body report was circulated to Members.

The Appellate Body inter alia:

- upheld the Panel's finding that the additional security requirement resulting from the application of the EBR to subject shrimp is not "reasonable" within the meaning of the Ad Note;

- upheld the Panel's finding that the Amended CBD, by virtue of which the EBR is imposed, is not inconsistent "as such" with Articles 1 and 18.1 of the Anti-Dumping Agreement and Articles 10 and 32.1 of the SCM Agreement;

- upheld the Panel's finding that the Amended CBD, by virtue of which the EBR is imposed, is not inconsistent "as such" and "as applied" with Articles 9.1, 9.2, 9.3, and 9.3.1 of the Anti-Dumping Agreement and that it is not inconsistent "as such" with Articles 19.2, 19.3, and 19.4 of the SCM Agreement;

- found it unnecessary, for purposes of resolving this dispute, to make an additional finding on India's claims that the Amended CBD is "as such" inconsistent with Article 18.4 of the Anti-Dumping Agreement and Article 32.5 of the SCM Agreement;

- upheld the Panel's finding that the EBR, as applied to subject shrimp, is not "necessary" within the meaning of Article XX(d) of the GATT 1994; and, therefore, does not express a view on the question of whether a defence under Article XX(d) of the GATT 1994 was available to the United States.

Consequently, the Appellate Body upheld the Panel's conclusion that the application of the EBR to subject shrimp is inconsistent with Article 18.1 of the Anti-Dumping Agreement because it is inconsistent with the Ad Note to Article VI:2 and 3 of the GATT 1994.

The Appellate Body recommended that the DSB request the United States to bring its measure, found in this Report and in the Panel Report, US - Customs Bond Directive, as modified by this Report, to be inconsistent with the Anti-Dumping Agreement and the GATT 1994, into conformity with its obligations under those Agreements.

At its meeting on 1 August 2008, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.

Implementation Status of Adopted Reports

On 31 October 2008, the United States and India notified 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, expiring on 1 April 2009.

Panel Proceedings
Brief DateBrief Description
08/21/2007Comments of the United States on India's Answers to the Panel's Questions to the Parties in Connection with the Second Substantive Meeting (pdf)
08/14/2007Answers of the United States of America to the Panel's Questions to the Parties in Connection with the Second Substantive Meeting (pdf)
08/03/2007Answers of the United States of America to the Panel's Questions to the Parties in Connection with the Second Substantive Meeting (pdf)
07/24/2007Opening Statement of the United States of America at the Second Substantive Meeting of the Panel (pdf)
07/09/2007Executive Summary of the Second Written Submission of the United States (pdf)
06/29/2007Second Written Submission of the United States (pdf)
06/22/2007Answers of the United States to the Panel's Questions to the Parties in Connection with the First Substantive Meeting (pdf)
06/06/2007Opening Statement of the United States of America at the First Substantive Meeting of the Panel (pdf)
05/11/2007Executive Summary of the First Written Submission of the United States (pdf)
05/01/2007First Written Submission of the United States (pdf)
Appeal Proceedings
Brief DateBrief Description
05/20/2008Appellee Submission of the United States of America (pdf)
05/06/2008Other Appellant Submission of the United States of America (pdf)