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An Overview of WT/DS141: EC—Anti-dumping Duties on Imports of Cotton-Type Bed Linen from India

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WTO Dispute Settlement at Twenty

Abstract

This chapter analyses the EC—Bed Linen dispute between the European Communities and India. The contextual background for this dispute relates to the issue of imposing anti-dumping duties targeting the textile industry of India. The role of the Dispute Settlement Body in this case was crucial in establishing that the WTO could uphold the rights of poorer nations in the context of trade defence. The chapter focuses on the legal interpretation of certain key principles under the AD Agreement, including the calculation of the “constructed value” based on data from “other producers or exporters”, and the consideration of sales at a loss when calculating administrative, selling and general costs under Article 2.2.2 of the AD Agreement. Perhaps, the most significant contribution of the proceeding concerned the prohibition of zeroing, more specifically ruling illegal the pernicious practice of resetting negative dumping margins as zeroes under Article 2.4.2 of the AD Agreement. The proceeding further analysed the meaning of exploring constructive remedies under Article 15 of the AD Agreement. The chapter further highlights the concerns regarding implementation of the reports in this case when the Dispute Settlement Body found that the European Communities had not complied with the original ruling despite enacting various regulations. In addition to the key legal findings, this chapter also provides practical lessons that can be learnt from India’s experiences, such as the time-consuming nature of WTO litigation, especially in the light of compliance proceedings.

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Notes

  1. 1.

    European Communities—Anti-dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141 (Hereinafter EC—Bed Linen).

  2. 2.

    Cotton Yarn from Brazil, Egypt, India, Thailand, and Turkey, Initiation: [1990] OJ C72/3; Termination for India: [1991] OJ L271/17.

  3. 3.

    Polyester Yarn (Man-Made Staple Fibres) from Korea, Taiwan, Indonesia, India, China and Turkey, Initiation: [1990] OJ C80/6; definitive duties: [1992] OJ L88/1.

  4. 4.

    Synthetic Fibres of Polyesters from Korea and India, Initiation: [1990] OJ C291/20; definitive duties: [1993] OJ L9/2.

  5. 5.

    Cotton Fabrics from China, India, Indonesia, Pakistan and Turkey, Initiation: [1994] OJ C17/3; termination: [1996] OJ L42/16.

  6. 6.

    Unbleached Cotton Fabrics from China, Egypt, India, Indonesia, Pakistan and Turkey, Initiation: [1996] OJ C50/3; no termination published.

  7. 7.

    Unbleached Cotton Fabrics from China, Egypt, India, Indonesia, Pakistan and Turkey. Initiation: [1997] OJ C210/12; no termination published (Hereinafter UCF-II).

  8. 8.

    Certain Synthetic Staple Fibre Fabrics from India, Indonesia, Pakistan and Thailand, Initiation: [1994] OJ C17/4; termination: [1996] OJ L42/18.

  9. 9.

    Polyester Yarn (PTY) from Indonesia, India and Thailand, Initiation: [1994] OJ C209/2; termination: [1996] OJ L289/14 (Hereinafter PTY-I).

  10. 10.

    Polyester Textured Filament Yarn (PTY) from India and Korea, Initiation: [1998] OJ C264/5; termination: [1999] OJ L149/60 (Hereinafter PTY-II).

  11. 11.

    Synthetic Fibre Ropes from India. Initiation: [1996] OJ C102/16; termination: [1997] OJ L166/8.

  12. 12.

    Certain Types of Bed Linen from India. Pakistan, Thailand and Turkey. Initiation: [1994] OJ C21/8; termination: [1996] OJ L171/27 (Hereinafter Bed Linen—I).

  13. 13.

    Cotton-Type Bed Linen from Egypt, India and Pakistan, Initiation: [1996] OJ C266/2; definitive duties [1997] OJ L332/1 (Hereinafter Bed Linen—II). More specifically, the EC initiated the anti-dumping proceeding on Friday 13 September 1996. Provisional anti-dumping duties were imposed by EC Council Regulation No. 1069/97 dated 12 June 1997. This was followed by the imposition of definitive duties by EC Council Regulation No. 2398/97 dated 28 November 1997.

  14. 14.

    PTY-II being the last of the second wave of cases in the nineties.

  15. 15.

    Request for Consultations from India on EC—Bed Linen, WT/DS141/1.

  16. 16.

    Duties up to 24.7 % had been imposed, inter alia by using an erroneous profit margin of 18.65 %, see Sect. 8.3.3.

  17. 17.

    Fax from EU dated 11 October 1996.

  18. 18.

    As a percentage on turnover.

  19. 19.

    See India's First Written Submission, appended to the Panel Report as Annex 1-1.

  20. 20.

    See India's First Written Submission, appended to the Panel Report as Annex 1-1.

  21. 21.

    Second written submission by EC at paragraph 25. The EC pointed out at that stage that domestic sales of Standard Industries were 14 % of the total domestic sales in India, while those of Bombay Dyeing were 80 % of the total domestic sales in India.

  22. 22.

    The issue of use of data “not in the ordinary course of trade” is addressed in Sect. 8.3.2.

  23. 23.

    Panel Report on EC—Bed Linen at paragraph 6.70.

  24. 24.

    Appellate Body Report on EC—Bed Linen at paragraphs 74 and 76 (footnotes omitted, original emphasis).

  25. 25.

    Ibid, at paragraph 80 (original emphasis).

  26. 26.

    Ibid (original emphasis).

  27. 27.

    Ibid, at paragraph 81.

  28. 28.

    Ibid, at paragraph 83 (original emphasis).

  29. 29.

    In other words, for these latter models dumping had not occurred, as the export price exceeded the normal value.

  30. 30.

    Appellate Body Report on EC—Bed Linen, at paragraph 50 (original emphasis).

  31. 31.

    Panel Report on EC—Bed Linen, at paragraph 6.115.

  32. 32.

    Ibid, at paragraph 6.236.

  33. 33.

    GATT Panel Report on European Economic Community—Imposition of Anti-Dumping Duties on Imports of Cotton Yarn from Brazil, BISD 42S/17, at paragraphs 565–590.

  34. 34.

    Panel Report on EC—Bed Linen, at paragraph 6.237.

  35. 35.

    Ibid, at paragraph 6.238.

  36. 36.

    Ibid.

  37. 37.

    Ibid. (original emphasis).

  38. 38.

    See, for example, Chad P. Bown and Joost Pauwelyn, The Law, Economics and Politics of Retaliation in WTO Dispute Settlement (Cambridge University Press, Cambridge, 2010).

  39. 39.

    In fact, this is perhaps the last remaining Achilles heel in this well-oiled machine, something that may likely take time and effort for future rounds of trade negotiations to properly solve.

  40. 40.

    Agreement under Article 21.3(b) of the DSU on EC—Bed Linen, WT/DS141/10.

  41. 41.

    EC Council Regulation No.1644/2001 dated 7 August 2001 amending EC Council Regulation No. 2398/97 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 [2001] OJ L219/1 (Hereinafter Regulation 1644/2001).

  42. 42.

    EC Council Regulation No 160/2002 dated 28 January 2002 amending EC Council Regulation No. 2398/97 dated 28 November 1997 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan, and terminating the proceeding with regard to imports originating in Pakistan [2002] OJ L26/1.

  43. 43.

    Commission Notice dated 13 February 2002 concerning initiation of a partial interim review of the anti-dumping measures applicable to imports of cotton-type bed linen originating in India, [2002] OJ C39/17.

  44. 44.

    Commission Notice dated 14 March 2002 regarding the expiry of certain anti-dumping measures [2002] OJ C65/12.

  45. 45.

    These rates are based on the disclosure documents provided by the EC in July 2002. No changes were made following disclosure comments filed by the Indian exporters in the same month.

  46. 46.

    EC Council Regulation 696/2002 dated 22 April 2002 confirming the definitive anti-dumping duty imposed on imports of cotton-type bed linen originating in India by EC Regulation No. 2398/97, as amended and suspended by EC Council Regulation No. 1644/2001, [2002] OJ L109/3.

  47. 47.

    Appellate Body Report on EC—Bed Linen (Article 21.5), WT/DS141/AB/RW, at paragraph 132 (original emphasis).

  48. 48.

    Ibid.

  49. 49.

    Ibid. (original emphasis).

  50. 50.

    Ibid.

  51. 51.

    Ibid, at paragraph 133.

  52. 52.

    By comparison, as far as the duration is concerned, court cases in the EU nowadays take on average approximately 3 years for the General Court, and then may still face appeal, possibly doubling the duration of a court proceeding.

  53. 53.

    This concerned a claim not discussed above, whereby India had challenged the amount of support on the side of the complainants. While India could not factually prove that the support was less than 25 % (original letters of support were only in the hands of the EU), the European Commission has since this case much improved its scrutiny for the support of a complaint.

References

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  • Certain synthetic staple fibre fabrics from India, Indonesia, Pakistan and Thailand. Initiation: [1994] OJ C17/4; termination: [1996] OJ L42/18.

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  • Certain types of bed linen from India. Pakistan, Thailand and Turkey. Initiation: [1994] OJ C21/8; termination: [1996] OJ L171/27.

    Google Scholar 

  • Commission Notice dated 13 February 2002, [2002] OJ C39/17.

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  • Commission Notice dated 14 March 2002, [2002] OJ C65/12.

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  • Cotton fabrics from China, India, Indonesia, Pakistan and Turkey. Initiation: [1994] OJ C17/3; termination: [1996] OJ L42/16.

    Google Scholar 

  • Cotton yarn from Brazil, Egypt, India, Thailand, and Turkey, Initiation: [1990] OJ C72/3; termination for India: [1991] OJ L271/17.

    Google Scholar 

  • Cotton-type bed linen from Egypt, India and Pakistan. Initiation: [1996] OJ C266/2; definitive duties [1997] OJ L332/1.

    Google Scholar 

  • EC Council Regulation 696/2002 dated 22 April 2002, [2002] OJ L109/3.

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  • EC Council Regulation No 160/2002 dated 28 January 2002, [2002] OJ L26/1.

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  • EC Council Regulation No. 1069/97 dated 12 June 1997.

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  • EC Council Regulation No.1644/2001 dated 7 August 2001, [2001] OJ L219/1.

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  • EC Council Regulation No. 2398/97 dated 28 November 1997.

    Google Scholar 

  • GATT Panel Report, European Economic Community—Imposition of anti-Dumping duties on imports of cotton yarn from Brazil, BISD 42S/17.

    Google Scholar 

  • Polyester textured filament yarn (PTY) from India and Korea. Initiation: [1998] OJ C264/5; termination: [1999] OJ L149/60.

    Google Scholar 

  • Polyester yarn (man-made staple fibres) from Korea, Taiwan, Indonesia, India, China and Turkey. Initiation: [1990] OJ C80/6; definitive duties: [1992] OJ L88/1.

    Google Scholar 

  • Polyester yarn (PTY) from Indonesia, India and Thailand. Initiation: [1994] OJ C209/2; termination: [1996] OJ L289/14.

    Google Scholar 

  • Panel Report, European Communities–Anti-dumping duties on imports of cotton-type bed linen from India, WT/DS141/R.

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  • Request for consultations from India, European Communities–Anti-dumping duties on imports of cotton-type bed linen from India, WT/DS141/1.

    Google Scholar 

  • Synthetic fibre ropes from India. Initiation: [1996] OJ C102/16; termination: [1997] OJ L166/8.

    Google Scholar 

  • Synthetic fibres of polyesters from Korea and India. Initiation: [1990] OJ C291/20; definitive duties: [1993] OJ L9/2.

    Google Scholar 

  • Unbleached cotton fabrics from China, Egypt, India, Indonesia, Pakistan and Turkey. Initiation: [1996] OJ C50/3.

    Google Scholar 

  • Unbleached cotton fabrics from China, Egypt, India, Indonesia, Pakistan and Turkey. Initiation: [1997] OJ C210/12.

    Google Scholar 

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Authors and Affiliations

  1. The Cotton Textiles Export Promotion Council, Mumbai, India

    Folkert Graafsma &  Siddhartha Rajagopal

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  1. Folkert Graafsma
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  2. Siddhartha Rajagopal
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Correspondence to Folkert Graafsma .

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Editors and Affiliations

  1. Centre for WTO Studies, Indian Institute of Foreign Trade, New Delhi, India

    Abhijit Das

  2. Jindal Global Law School, O.P Jindal Global University, Sonepat, Haryana, India

    James J. Nedumpara

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© 2016 Centre for WTO Studies (CWS), Indian Institute of Foreign Trade (IIFT), New Delhi

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Folkert Graafsma, Siddhartha Rajagopal (2016). An Overview of WT/DS141: EC—Anti-dumping Duties on Imports of Cotton-Type Bed Linen from India . In: Das, A., Nedumpara, J. (eds) WTO Dispute Settlement at Twenty. Springer, Singapore. https://doi.org/10.1007/978-981-10-0599-2_8

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