In two separate disputes, India and Thailand challenged the EBR imposed by the US Customs and Border Protection Agency on exporters of shrimp products who were subject to anti-dumping duties on shrimp exports since February 1, 2005. The Appellate Body ruled that an earlier dispute settlement panel was correct in dismissing the EBR as imposed on shrimp exports from India and Thailand because it constituted "specific action against dumping". |
Such specific actions against dumping are inconsistent with the Anti-Dumping Agreement, the Appellate Body said.
The three-member bench of the Appellate Body pronounced 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".
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"The Appellate Body recommends 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 consistent with the Anti-Dumping Agreement and the GATT 1994, in conformity with its obligations under those Agreements," the three judges pronounced.
The United States' Customs and Border Protection Agency imposed the EBR on exporters subject to anti-dumping duties insisting that they (exporters) must maintain a minimum bond equivalent to the amount of the anti-dumping duty margin multiplied by the value of imports of targeted good in the preceding year.
Consequently, the EBR was treated as over and above the minimum requirement, which is fixed at 10 per cent of duties collected during the previous year. The Customs and Border Protection Agency is understood to have assessed an amount of US $629 million by the end of fiscal year 2006 under the EBR.
India and Thailand had challenged the EBR on the ground that it is inconsistent with WTO Anti-Dumping rules, especially Article 18.1 of Agreement, which prohibits WTO members from taking "specific action against dumping....except in accordance with the provisions of the GATT 1994."
The US maintained that the EBR is not a specific action against dumping and argued it is consistent with WTO rules.
But a WTO dispute settlement panel rejected the US' argument that the EBR is not a specific action, suggesting that Washington had failed to show that Anti-Dumping duty rates on shrimp were likely to increase, resulting in significant additional unsecured liability.
The US chose to challenge the panel's ruling on EBR before the Appellate Body over two months ago. The Appellate Body upheld the panel's conclusion against the EBR saying Washington violated the anti-dumping rules.