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DISPUTE SETTLEMENT: DISPUTE DS141

European Communities ³ Anti-Dumping Duties on Imports of Cotton-type Bed Linen from India
This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

Current status

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Compliance proceedings completed with finding(s) of non-compliance on 24 April 2003

See also: > One-page summary of key findings of this dispute > The basics: how disputes are settled in WTO > Computer based training on dispute settlement > Text of the Dispute Settlement Understanding Other disputes involving: > Textiles > Zeroing > India > European Union (formerly EC) > Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 > General Agreement on Tariffs and Trade 1994

Key facts
Short title:

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EC ³ Bed Linen India European Communities Egypt; Japan; Korea (Republic of); United States of America

Complainant: Respondent: Third Parties:

Agreements cited: Anti-dumping (Article VI of GATT (as cited in request for 1994): Art. 3, 3.1, 3.2, 3.4, 3.5, 4, consultations) 4.1, 5, 5.2, 5.3, 5.4, 5.8, 6, 2, 12, 12.2.2, 15, 2.2.2 GATT 1994: Art. I, VI Request for Consultations received: Panel Report circulated: 3 August 1998

30 October 2000

Appellate Body 1 March 2001 Report circulated: Article 21.5 Panel 29 November 2002 Report circulated: Article 21.5 8 April 2003 Appellate Body Report circulated:

Summary of the dispute to date

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The summary below was up-to-date at 24 February 2010 See also: One-page summary of key findings of this dispute

Consultations Complaint by India. On 3 August 1998, India requested consultations with the EC in respect of Council Regulation (EC) No 2398/97 of 28 November 1997 on imports of cotton-type bed-linen from India. India asserted that the EC initiated anti-dumping proceedings against imports of cotton- type bed-linen from India by publishing a notice of initiation in September 1996. Provisional anti-dumping duties were imposed by EC Council Regulation No 1069/97 of 12 June 1997. This was followed by the imposition of definitive duties in accordance with the above-mentioned EC Council Regulation No 2398/97 of 28 November 1997. India contended that: y the determination of standing, the initiation, the determination of dumping and injury as well as the explanations of the EC authorities· findings are inconsistent with WTO law. the EC authorities· establishment of the facts was not proper and that the EC·s evaluation of facts was not unbiased and objective. the EC has not taken into account the special situation of India as a developing country. there were violations of Articles 2.2.2, 3.1, 3.2, 3.4, 3.5, 5.2, 5.3, 5.4, 5.8, 6, 12.2.2, and 15 of the Anti-Dumping Agreement, and Articles I and VI of the GATT 1994.

y

y

y

On 7 September 1999, India requested the establishment of a panel. At its meeting on 22 September 1999, the DSB deferred the establishment of a panel.

Panel and Appellate Body proceedings Further to a second request to establish a panel by India, the DSB established a panel at its meeting on 27 October 1999. Egypt, Japan and the US reserved their third-party rights. On 12 January 2000, India requested the Director-General to determine the composition of the Panel. On 24 January 2000, the Panel was composed. The panel report was circulated on 30 October 2000. The panel concluded that: i. the EC did not act inconsistently with its obligations under Articles 2.2, 2.2.2, 3.1, 3.4, 3.5, 5.3, 5.4, and 12.2.2 of the AD Agreement in: y calculating the amount for profit in constructing normal value; considering all imports from India (and Egypt and

y

Pakistan) as dumped in the analysis of injury caused by dumped imports; y considering information for producers comprising the domestic industry but not among the sampled producers in analysing the state of the industry; examining the accuracy and adequacy of the evidence prior to initiation; establishing industry support for the application; and providing public notice of its final determination.

y

y y ii.

The panel, however, also concluded that the EC acted inconsistently with its obligations under Articles 2.4.2, 3.4, and 15 of the AD Agreement in: y determining the existence of margins of dumping on the basis of a methodology incorporating the practice of zeroing; failing to evaluate all relevant factors having a bearing on the state of the domestic industry, and specifically all the factors set forth in Article 3.4; considering information for producers not part of the domestic industry as defined by the investigating authority in analysing the state of the industry; and failing to explore possibilities of constructive remedies before applying anti-dumping duties.

y

y

y

On 1 December 2000, the EC notified the DSB of its intention to appeal certain issues of law covered in the Panel Report and legal interpretations developed by the Panel. The Appellate Body circulated its report on 1 March 2001. The Appellate Body: i. upheld the finding of the Panel that the practice of ´zeroingµ when establishing ´the existence of margins of dumpingµ, as applied by the EC in the anti-dumping investigation at issue in this dispute, is inconsistent with Article 2.4.2 of the AntiDumping Agreement; reversed the findings of the Panel that: y the method for calculating amounts for administrative, selling and general costs and profits provided for in Article 2.2.2(ii) of the Anti-Dumping Agreement may be applied where there is data on administrative, selling and general costs and profits for only one other exporter or producer; and

ii.

y

in calculating the amount for profits under Article 2.2.2(ii) of the Anti-Dumping Agreement, a Member may exclude sales by other exporters or producers that are not made in the ordinary course of trade; and

iii.

as a consequence, concluded that the EC, in calculating amounts for administrative, selling and general costs and profits in the anti-dumping investigation at issue in this dispute, acted inconsistently with Article 2.2.2(ii) of the Anti-Dumping Agreement.

The DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report, on 12 March 2001.

Implementation of adopted reports At the DSB meeting of 5 April 2001, the EC announced its intention to implement the DSB·s recommendations in this case and said that it would need a reasonable period of time to do so. India said that the EC could complete its implementation process within a very short period of time. On 26 April 2001, the parties to the dispute notified the DSB that they had mutually agreed that the reasonable period of time shall be five months and two days, that is from 12 March 2001 until 14 August 2001. The EC amended its regulation imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan and suspending its application with regard to imports originating in India by the deadline of 14 August 2001. However, India, at the 23 August meeting of the DSB, made a statement whereby it expressed the view that the new EC Regulation did not bring the EC legislation into full compliance with the DSB·s recommendations. On 13 September 2001, India and the EC informed the DSB that they had reached an understanding regarding the procedures under Articles 21 and 22 of the DSU. This understanding foresees that if on the basis of the results of proceedings under Article 21.5 that might be initiated by India, India decides to initiate proceedings under Article 22, the EC would not assert that India is precluded from doing so because its request was made outside the 30 day time-period.

Compliance proceedings On 8 March 2002, India requested consultations under Article 21.5 of the DSU. On 4 April 2002, India requested the establishment of a compliance panel. In particular, India claimed that the EC had violated Articles 2, 3, 5.7, 6, 9, 12 and 15 of the Anti-Dumping Agreement.

Accordingly, India requested the Panel to conclude that: y The re-determination, as amended, and the subsequent actions as identified above, are inconsistent with the above provisions of the Anti-Dumping Agreement and GATT 1994; and By failing to withdraw the measures found to be inconsistent with the Anti-Dumping Agreement and to bring its measures into conformity with its obligations under the Anti-Dumping Agreement and GATT 1994, the EC has failed to comply with the DSB recommendations and rulings in this dispute.

y

At the DSB meeting on 17 April 2002, India informed the DSB that pursuant to an understanding reached between the EC and India, it was requesting the withdrawal of the item from the agenda in accordance with Rule 6 of the Rules of Procedure for WTO meetings. The DSB agreed to India·s request. On 7 May 2002, India again requested the establishment of a compliance panel. At the DSB meeting on 22 May 2002, it was agreed that, if possible, the matter would be referred to the original panel. Japan and the United States reserved their third party rights to participate in the proceedings. On 27 May 2002, Korea reserved its third party rights. On 25 June 2002, the compliance panel was composed. On 19 August 2002, the Chairman of the Panel informed the DSB that it expected to complete its work in November 2002. On 29 November 2002, the report was circulated to Members. The Panel concluded that the EC·s definitive anti-dumping measure on imports of bed linen from India, EC Regulation 1644/2001, is not inconsistent with the AD Agreement or the DSU and that, therefore, the EC had implemented the recommendation of the original Panel, the Appellate Body, and the DSB to bring its measure into conformity with its obligations under the AD Agreement. On 8 January 2003, India informed the DSB that it intended to appeal certain issues of law and legal interpretations developed by the Panel in its Report. On 6 March 2003, the Appellate Body informed the DSB that it was not able to circulate its report within the 60-day deadline and that it intended to do so no later than 8 April 2003. On 8 April 2003, the Appellate Body circulated its Report. The Appellate Body: y upheld the Panel·s finding that India·s claim under Article 3.5 was not properly before the Panel and, consequently, declined to rule on it, reversed the Panel·s finding that the EC did not act inconsistently with paragraphs 1 and 2 of Article 3 of the AntiDumping Agreement, declined to rule on the Panel·s finding that the EC applied the second alternative in the second sentence of Article 6.10 for limiting its examination in this investigation; and found that the Panel properly discharged its duties under Article

y

y

y

17.6 of the Anti-Dumping Agreement and Article 11 of the DSU and, therefore, upheld the Panel·s finding that the EC had information before it on the relevant economic factors listed in Article 3.4 of the Anti-Dumping Agreement when making its injury determination. The Appellate Body recommended that the DSB request the EC to bring its measure into conformity with the Anti-Dumping Agreement. At its meeting on 24 April 2003, the DSB adopted the Appellate Body Report and the Panel Report, as modified by the Appellate Body Report

2. India may move WTO as it seeks to resolve EU dispute
Mumbai: India may seek the setting up of a special panel within the World Trade Organization to resolve the dispute with the European Union (EU) over the seizure of generic drug exports. The commerce ministry is ready to push for this at the WTO in the next week after months-long consultations with the concerned authorities, said a ministry official familiar with the development. Commerce secretary Rahul Khullar said both sides are still talking and expect to resolve the issue. ³We are very clear that the consultation process is on. So far that has made good progress. And we are reasonably optimistic that that consultation process will lead to satisfactory resolution. Should it not, I reserve my right to take the matter to court (dispute settlement panel in the WTO),´ Khullar said. The official cited first, who doesn¶t want to be identified as he is not authorized to talk with the media, said no settlement had been reached in this matter as media reports suggested last week. ³We haven¶t withdrawn from the matter, and the stalemate continues on the issue,´ he said. Last week, there were reports in the media quoting India¶s commerce minister Anand Sharma that the country had settled the matter, pending for three years, after export consignments of generic drugs from India were detained at several transit ports in Europe, with the EU agreeing to amend its laws. Khullar refuted the reports in New Delhi on Monday. ³What the minister said was that his counterpart Gucht (EU trade commissioner Karel De Gucht) has given him an assurance that the matter will be resolved, where necessary changes will be effected in the regulations to prevent it to recur again,´ Khullar said. ³We have to believe that assurance is valid. In that context the minister said provided our grievance is addressed why should we need to take anybody to court (WTO dispute settlement panel).´ The minister¶s statement has been misreported, the official said. ³The way, unfortunately, it has been garbled in the media seems to present a situation as one in which we have decided to withdraw the consultation. We are making a categorical statement that this is not the case.´ The commerce ministry official cited in the first instance said since there were unconfirmed reports floating around in the media, the department has reorganized media coordination through a single channel on this particular matter. Additional secretary at the commerce ministry D.K. Mittal, authorized to talk on this issue, was not available for comment.

Since 2007, Indian drug exporters have been facing problems at various European ports as the customs authorities at these ports seized export consignments of generic drugs while they were in transit to Latin American and African markets. The Indian drug makers affected included Cipla Ltd, Dr Reddy¶s Laboratories Ltd, Ranbaxy Laboratories Ltd, Indoco Remedies Ltd, Lupin Ltd and Aurobindo Pharma Ltd. The consignments were seized on charges of patent law violation as some of the drugs were patented in the European markets. The trade-related intellectual property rights law under the initiative of WTO restricts entry of patented and trademark-protected articles to the respective markets where the IP law is in place, unless permitted by the rights holder. India, which has pointed out that drugs were meant for a destination where such patents don¶t hold sway, has raised the issue at several international forums as have industry lobby groups. ³We are presently in consultation with the EU on the seizure of drug consignments that took place last year,´ said Khullar. ³If indeed a solution can be devised and worked out in this consultation process, then that prevents parties from having a legal recourse.´ Asit Ranjan Mishra in New Delhi contributed to this story.

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