WTO Arbitrator Issues Decision in Compliance Dispute on US CVD on Spanish Olives
The arbitrator in a World Trade Organization dispute between the U.S. and the EU on U.S. antidumping and countervailing duties covering Spanish ripe wolves issued a decision on Oct. 29.
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The arbitrator said that the level of nullification or impairment of benefits accruing to the EU as a result of the application of the Commerce Department's Section 771B in the CVD investigation on Spanish ripe olives is $13.64 million, adding that the EU can ask the Dispute Settlement Body to "suspend concessions or other obligations at a level" not exceeding $13.64 million per year.
This amount can be adjusted for inflation in 2024 and on a yearly basis every year after and to "reflect modifications to the duty rates," the decision said.
The arbitrator also found that, with regard to any future use of Section 711B, the EU can ask the DSB to "suspend concessions or other obligations at a level not to exceed an annual amount to be determined by applying the methodology set out in its Decision."
Through Section 771B, Commerce can presume that the entire benefit of a subsidy provided to a raw agricultural input producer passes to the downstream processed agricultural product producer.
In 2021, a WTO dispute panel found that Section 771B violated the General Agreement on Tariffs and Trade because it requires Commerce to presume the entire benefit of a subsidy provided to a raw agricultural input producer passes through to the downstream processed agricultural product based only on the consideration of the two factual circumstances described in the provision (see 2111190028).
Section 771B specifically says that (1) where demand for the prior stage product is substantially dependent on the latter stage product and (2) the processing adds only limited value to the raw commodity, subsidies given to either producers or processors of the product "shall" be deemed to be given to the manufacturer, producer or exporter of the product.
In 2024, another dispute panel said Commerce's attempt to revisit its CVD laws as they relate to subsidies on agricultural products also violated the GATT (see 2402210032).
After this second decision, the EU opened compliance proceedings at the WTO, which were referred to arbitration. The EU said it intended to suspend benefits at around $35 million, which may be adjusted for inflation. The bloc said this annual level of suspension is equivalent to the level of nullification or impairment of benefits accruing to it from the U.S.'s failure to bring the measures at stake into compliance.