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Brief Fact Summary.
By using incorrect methodology for calculating margins of dumping, Mexico (P) argued that the United States (D) violated the Anti-Dumping Agreement and Article VI of GATT 1944. The Appellate Body’s prior holdings were not followed by the panel that convened for the complaint but instead, relied on panel reports that the Appellate Body had reversed.
Synopsis of Rule of Law.
A WTO panel must follow previously adopted Appellate Body reports which address the same issues in ruling on a dispute brought before such WTO panel.
Facts.
The complaint of Mexico (P) against the United States (D) was that the States (D) contravened the Anti-Dumping Agreement and Article VI of GATT 1994 by using incorrect methodology for calculation of margins of dumping. Similar complaints filed against the United States (D) by the European Community and Japan had been addressed by the Appellate Body of the WTO, but this was not followed by the panel that convened for Mexico’s (P) complaint but instead relied on panel reports that the Appellate body had reversed.
Issue.
Must a WTO panel follow previously adopted Appellate Body reports that address the same issues in ruling on a dispute before such WTO panel?
Held.
Yes. A WTO panel must follow previously adopted Appellate Body reports which address the same issues in ruling on a dispute brought before such WTO panel. Except with respect to resolving the particular dispute between the parties, the Appellate Body reports are not enforceable but subsequent panels in the future are not at liberty to discard the legal interpretations and reasoning contained in previous Appellate Body reports which have been adopted.
The error the panel made in its legal interpretations is corrected while its findings and conclusions that have been appealed are reversed. However, whether the panel failed to discharge its duties under Article 11 of the Dispute Settlement Understanding has not been determined by a ruling.
Discussion.
The act by which a manufacturer of a foreign country charges a price which is below its home market price or below its cost of production is called Dumping. Dumping is seen by the “free market†advocates has been beneficial for consumers and believe that actions to prevent it would have negative consequences. One of the most contentious issues in the World Trade Organization dispute settlement has been the use of “zeroing†in the context of calculating anti-dumping duties in domestic trade remedy proceedings and this gives an insight into why the panel deviated from prior rulings by the Appellate Body in this case.
