United States — Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom

Short title: US — Lead and Bismuth II

Complainant: European Communities

Respondent: United States

Third Parties: Brazil; Mexico

Request for Consultations received: 12 June 1998

Panel Report circulated: 23 December 1999

Appellate Body Report circulated: 10 May 2000
 

The summary below was up-to-date at  30 May 2008  

Appellate Body and Panel Reports Adopted

Complaint by the European Communities.

On 30 June 1998, the EC requested consultations with the US in respect of the alleged imposition of countervailing duties on certain hot-rolled lead and bismuth carbon steel (leaded bars) from the UK. The EC asserted that the US imposed countervailing duties of 1.69 per cent on United Engineering Steels Ltd (UES) for the review period 1 January 1994 to 31 December 1994, and of 2.4 per cent for the review period 1 January 1995 to 20 March 1995, on the basis of subsidies which had been granted to British Steel Corporation (BSC). The EC also contended that the US imposed countervailing duties on British Steel plc (BSplc) / British Steel Engineering Steels LTD (BSES) for the review period 1 January 1996 to 31 December 1996 on the basis of subsidies granted to BSC before its privatization in 1988. The EC alleged that these impositions of countervailing duties constitute a violation of Articles 1.1(b), 10, 14 and 19.4 of the Subsidies Agreement.

On 14 January 1999, the EC requested the establishment of a panel. At its meeting on 1 February 1999, the DSB deferred the establishment of a panel. Further to a second request to establish a panel by the EC, the DSB established a panel at its meeting on 17 February 1999. Brazil and Mexico reserved their third-party rights. On 16 March 1999, the Panel was composed. The report of the panel was circulated to Members on 23 December 1999. The panel found that by imposing countervailing duties on 1994, 1995 and 1996 imports of leaded bars produced by UES and BSES respectively, the US violated Article 10 of the Subsidies Agreement. In reaching this conclusion, the panel noted that the presumption of “benefit” flowing from untied, non-recurring “financial contributions” even after changes in ownership was rebutted in the circumstances surrounding the changes in ownership leading to the creation of UES and BSplc/BSES respectively, inter alia, because the change in ownership involved the payment of consideration for the productive assets etc. acquired by those entities from BSC. According to the panel, the US should therefore have examined whether the production of leaded bars by UES and BSplc/BSES respectively, and not BSC, was subsidised.

On 27 January 2000, the US notified its intention to appeal certain issues of law and legal interpretations developed by the panel. The report of the Appellate Body was circulated to Members on 10 May 2000. The Appellate Body upheld all of the findings of the panel that were appealed but on one point corrected the reasoning of the panel.
The DSB adopted the Appellate Body report and the panel report, as upheld by the Appellate Body report, on 7 June 2000.

Implementation Status of Adopted Reports

At the DSB meeting on 5 July 2000, the United States announced that it considered to have implemented the recommendations of the DSB with regard to the case concerning its countervailing duty order on certain hot-rolled lead and bismuth carbon steel products originating in the United Kingdom. As a follow-up to this case, the EC has filed a new complaint against the US continued application of countervailing duties based on the “change of ownership” methodology. For further information, see WT/DS212.