December 1, 2020
On November 30, 2020, the World Trade Organization (WTO) released a panel report on the measure by the Republic of Korea (ROK) to extend the imposition of anti-dumping duties on stainless steel bars originating from Japan, an issue that has been examined by the WTO at the request of Japan. The report accepts Japan’s claim, presents a ruling that the ROK’s measure to extend imposition of anti-dumping duties on the product in question is inconsistent with the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the WTO Anti-Dumping Agreement) because of flaws in the determination that the expiration of the duties would be likely to lead to recurrence of material injury and flaws in the transparency of procedures. It thus recommends that the ROK should bring its measure into conformity with the WTO Anti-Dumping Agreement.
Outline
On July 30, 2004, the ROK started imposing anti-dumping duties on stainless steel bars originating from Japan (hereinafter referred to as the “anti-dumping measure”). After having decided to extend the anti-dumping measure twice, the ROK further decided on another extension of the measure for three more years (hereinafter referred to as the “extension measure”) based on the third sunset review conducted from June 2016 to June 2017.
Regarding the extension measure imposed by the ROK, Japan requested a bilateral consultation with the ROK under the WTO Agreement on June 18, 2018. Then, Japan requested the WTO to establish a panel under the WTO Agreement on September 13, 2018, and the WTO established the panel on October 29, 2018.
Japan has claimed the extension measure by the ROK to be inconsistent with the WTO Anti-Dumping Agreement because of flaws in the ROK’s determination that the expiration of the duties would be likely to lead to recurrence of material injury to the domestic industry and flaws in its review procedure.
Following this, the panel held meetings (oral hearings) in September and December 2019 and, on November 30, 2020, the WTO released a panel report. The report presents a ruling that the extension measure by the ROK is inconsistent with the WTO Anti-Dumping Agreement because of flaws in the ROK’s determination on likelihood of recurrence of material injury and flaws in transparency in the procedure, and it thus recommends the ROK to bring its measure into conformity with the WTO Anti-Dumping Agreement.
Details of the decision
The report recognizes that the ROK’s imposition of the extension measure is inconsistent with the WTO Anti-Dumping Agreement, and recommends that the ROK should bring the measure into conformity with the Agreement, showing a ruling as below:
- The extension measure is inconsistent with Article 11.3 of the WTO Anti-Dumping Agreement because of flaws in the ROK’s determination that the expiration of the duties imposed on the imported product in question originating from Japan would be likely to lead to recurrence of material injury to the domestic industry, based on the grounds that [i] the product in question is significantly higher in price than the product of the ROK and [ii] the ROK fails to appropriately consider the existence of the imported products originating from China and other countries in large volume at low price.
- The extension measure is inconsistent with Article 6.8 of the WTO Anti-Dumping Agreement based on the ground that the ROK rejected the information provided by Japanese producers without reasonable grounds when it determined the production capacity of Japanese producers.
- The extension measure is inconsistent with Article 6.5 of the WTO Anti-Dumping Agreement because of flaws in the handling of confidential information.
Future schedule
The parties of a dispute may appeal to the WTO Appellate Body within 60 days from the publication of the panel report. If no appeal is filed, the panel’s decision in the report will become the WTO’s final decision.
Japan will advance future procedures to seek an appropriate solution to this case in accordance with the WTO rules, and it expects the ROK to agree to adopt the report and swiftly lift the extension measure in accordance with the findings and recommendation in the report.
References
(1) Request for the establishment of a panel under the WTO Agreement, procedures taken by the panel, etc.
- Under the WTO Agreement, parties of a dispute are required to hold bilateral consultations regarding the measures in question prior to requesting establishment of a panel under the WTO Agreement. However, if bilateral consultations fail to settle the dispute within 60 days after the date of receipt of the request for consultations, the complaining party may request the establishment of a panel to the Dispute Settlement Body (DSB).
- Following the request for establishing a panel, a WTO panel (first instance), which is a quasi-judicial third-party organization, examines the measures in question and gives rulings regarding its consistency with the WTO Agreement. If any inconsistencies are confirmed, the panel recommends correction of the measures. Any party which is not satisfied with the panel rulings may appeal to the WTO Appellate Body (second instance).
(2) Suspending the functions of the WTO Appellate Body
The WTO Appellate Body is a standing body under the Dispute Settlement Body (DSB), which “shall hear appeals from panel cases” and “be composed of seven persons, three of whom shall serve on any one case” (Article 17, (1) of the Understanding on rules and procedures governing the settlement of disputes). However, since June 2017, no new member in place of the member who terminated his/her term has been selected, and since December 2019, this situation has been causing the Appellate Body to become unable to hear new appeals.
No procedures for pending cases which have been appealed to the Appellate Body will advance until the functions of the body are recovered.
(3) Stainless bar steel
Stainless steel bars are excellent in corrosive resistance, oxidation resistance and heat resistance, mainly molded into and used as bolts, nuts, valves for machine tools or industrial machinery, turbine blades and parts of automobile valves and shafts, etc.
(4) Anti-dumping duty
An anti-dumping duty is a customs duty imposed on a certain product by an importing country where it is demonstrated in the proper investigation procedure that the export price of the product is less than its selling price destined for consumption in the exporting country and the dumped imports are causing material injury to the competing industry in the importing country. The anti-dumping duty cannot exceed the difference between the export price of the product and the domestic selling price of the like product in the exporting country.
(5) Sunset review
Sunset review refers to a review conducted before the date of expiry of the imposition of anti-dumping duties on the product in question. In principle, the imposition of an anti-dumping duty must be terminated within five years since the start of the imposition, but as an exceptional rule, the imposition can be extended if the imposing country determines based on a sunset review that the expiration of the duty would be likely to lead to continuation or recurrence of dumping and injury.
(6) Background to and outline of the anti-dumping measure and the extension measure by the ROK
- On July 5, 2003, the ROK started an anti-dumping investigation against imports of stainless steel bars originating from Japan. Following this, on July 30, 2004, the ROK made a final determination that the dumped imports of stainless steel bars originating from Japan had caused material injury to the domestic industry, and, on the same date, it started imposing anti-dumping duties on the product in question.
- Following two extensions of the anti-dumping duties, the ROK determined another extension of the duties for three more years based on the third sunset review conducted from June 2016 to June 2017.
Note: As the ROK is currently undertaking the fourth sunset review, starting in January 2020, the extension measure will continue until the ROK decides whether or not another extension measure should be imposed on the product in question based on the fourth sunset review.
- As a result of the anti-dumping measure, including the extension measure, the ROK has been imposing anti-dumping duties of 15.39% on Japanese companies concerning their stainless steel bars exported from Japan to the ROK for 16 years from July 30, 2004. The total value of imposed duties until June 2017 is approximately 5.66 billion yen, and the three-year extension of the measure based on the third sunset review is estimated to have imposed the duties of 1.25 billion yen on the product in question by the end of 2019.
- Regarding the extension measure, Japan requested a bilateral consultation with the ROK under the WTO Agreement on June 18, 2018, and the parties held a bilateral consultation on August 13, 2018. Following this, Japan requested the DSB to establish a panel under the WTO Agreement on September 13, 2018. In response, the WTO established the panel on October 29, 2018, composed the panel on January 21, 2019, and released a panel report on November 30, 2020, after the panel held meetings (oral hearings) in September and December 2019.
(7) Japan’s export volume of the product in question to the ROK
The export volume of stainless steel bars from Japan to the ROK has decreased by approximately 60% from that in 2002 before starting the imposition of the anti-dumping duties by the ROK on the product in question, i.e., a decrease from 9,269 tons in 2002 to 3,791 tons in 2019.
