GATT Article VI:5 states:
No product of the territory of any contracting party imported into the territory of any other
contracting party shall be subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidization.
In its first written submission in the DS379 dispute, the United States argued the following in relation to this provision:
397. ... by its terms, Article VI:5 applies only to the circumstance in which a Member conducting concurrent AD and CVD proceedings on the same product finds “the same situation of dumping or export subsidization.” Article VI:5 provides that the importing Member can impose either AD duties or CVDs, but not both, to address this same situation. In so providing, Article VI:5 appears to contemplate that, at least under some circumstances, an export subsidy may result in a lower price for an exported product than might otherwise be the case. Therefore, in such cases, Article VI:5 does not allow the importing Member to impose AD duties to address the portion of the dumping margin that is presumed to be attributable to a price differential that has been caused by an export subsidy and would be remedied by imposition of CVDs to offset the export subsidy.
398. The context of Article VI:5 confirms its limited application to export subsidization as distinct from other types of subsidization. Article VI:3 provides:
No countervailing duty shall be levied on any product of the territory of any contracting party imported into the territory of another contracting party in excess of an amount equal to the estimated bounty or subsidy determined to have been granted, directly or indirectly, on the manufacture, production or export of such product in the country of origin or exportation, including any special subsidy to the transportation of a particular product. The term “countervailing duty” shall be understood to mean a special duty levied for the purpose of offsetting any bounty or subsidy bestowed, directly, or indirectly, upon the manufacture, production or export of any merchandise. (Footnote omitted) (Emphasis added).
399. In defining the term “countervailing duty,” Article VI:3 states that CVDs offset subsidies granted in respect of the “manufacture, production or export” of a product. Similarly, Article VI:3 caps the amount of a CVD to the amount of the subsidy bestowed in respect of the “manufacture, production or export” of the product concerned. Thus, the language in Article VI:3 reveals that Members were aware that subsidies could be provided in respect of the manufacture, production, or export of a product, which confirms that the term “export subsidization” in Article VI:5 specifically refers to subsidies provided in respect of the exportation of a product and does not encompass subsidies provided in respect of the manufacture or production of a product.
So, in the U.S. view, dual remedies against dumping and subsidies are only prohibited where the subsidies in question are "export subsidies." For other kinds of subsidies, dual remedies are permitted.
This seemed like a strange result to me, so I went where I always go for questions about the meaning of the GATT text: John Jackson's World Trade and the Law of GATT. At page 412, he says:
Article VI:5 "prevents the imposition of both antidumping and countervailing duties to compensate for the same situation -- one or the other can be utilized but not both at the same time."
It's interesting that his description does not distinguish between export subsidies and other kinds of subsidies. And it may very well be that the drafters did not have this distinction in mind, and did not mean to carve out separate rules for export subsidies. Nevertheless, as a textual matter, I find the U.S. argument difficult to rebut.
I should mention that the underlying issue in the DS379 case is actually quite a bit more complex than this (relatively) simple interpretive issue. On a related note, the first issue of Trade, Law and Development is out, and one of the articles touches on these issues:
Fair's Fair: Why Congress Should Amend US Antidumping and Countervailing Duty Laws to Prevent "Double Remedies"
Dana L. WattsAbstract
This work examines the US Department of Commerce’s (DOC’s) new policy of applying countervailing duty (CVD) law to imports from nonmarket economies (NMEs). Since 2007, the DOC has applied countervailing duties to several imports from the People’s Republic of China. The DOC has long considered China a NME for the purposes of antidumping (AD) duties.
The legality of the DOC’s shift in policy under US law has not yet been directly tested in the US courts. The DOC’s current policy of applying both CVDs and AD duties to products from NMEs with no adjustments to the dumping margin is probably permissible under US law. The strongest argument for finding the policy illegal is that Congress did not intend, in enacting the relevant AD and CVD statutes, to allow the DOC to impose CVDs on NMEs. The stronger argument, however, is that it is unclear what Congress intended. Because the DOC’s interpretation is reasonable, it is a permissible interpretation of the statute.
After an analysis of the legality of the policy under US domestic law, this work seeks to assess the validity of the policy under WTO law. The analysis reveals that while the policy may be permissible under US law, it may violate WTO obligations of the US. China has already requested a panel hearing at the WTO to resolve the matter. The case will be heard in early July 2009. For the sake of fairness and to comply with international obligations, this work argues that the Congress should amend US countervailing duty law so that it simply levels the playing field for domestic producers rather than punishing exporters from NMEs.
