6:31 AM Jun 13, 1995

PANEL RULING AGAINST EU ON ANTIDUMPING

Geneva 12 June (TWN) -- The Anti-dumping committee of the GATT 1947 on Monday put off action until atleast its next meeting over a panel ruling against the European Union on duties of 15.2 to 25.5 percent levied on imports of audio cassettes from Japan.

The dispute involves interpretations of the Tokyo Round antidumping code and actions under it. The Tokyo Round agreement is to remain in force side by side with the WTO agreements until end of 1995, while its dispute settlement mechanisms are to continue till end 1996 (to enable all pending disputes under that code to be disposed off)

The panel report was circulated to the committee on 29 April, and while Japan pressed for its adoption at Monday's meeting, the EU and a few others said more time was needed to study the implications.

The committee agreed in October 1992 to set up a panel over a Japanese complaint about the EC's investigation and determination of dumping margins and levy of the duty. But it took six months more before the terms of reference could agreed upon and the panel itself set up only in October 1993.

Japan had argued that the calculation methods used by the EC to determine the dumping margin was inconsistent with the code provisions (art 2) and there was an "asymmetry" in the EC methodology of constructing the export price because of the EC deducting the indirect selling expenses and profits of the importer associated with the sales activities while not deducting identical cost and profit elements in establishing the normal value. The EC calculations of the average dumping margin was also felt by Japan to be inconsistent with the agreement on the ground that the EC disregarded sales of Japanese cassettes above the normal value and had also failed to demonstrate that the Japanese exports had caused injury to the EC producers.

The panel did not find the EC averaging methodology to be inconsistent with the code provisions. The panel did not also accept the Japanese contention about material injury, noting that the cumulative effect of imports from Japan and Korea that the EC took into account was not inconsistent with the provisions.

On the "asymmetry" issue, the panel said that the EC by failing to make due allowance, on merits, for the differences in indirect selling expenses, and with respect to profits related to differences in functions of the seller in the domestic and export markets -- differences that could affect price comparisons -- had acted inconsistently with its obligations under Art 2:6 of the code.

The panel had recommended that the EC should be asked to reconsider its antidumping determination in this light. If this reconsideration resulted in a determination that the imported products were not dumped, the EC should revoke its duty and reimburse duties collected. If the reconsideration resulted in a determination of dumping, but to a lesser extent than the duties imposed, the excess duties should be reimbursed.

But this ruling of the panel about need to make due allowances on the profits was a majority ruling, with one panel member disagreeing.

In the GATT history, panel rulings are generally unanimous. The only earlier report with a dissenting view was in 1983 over the US complaint against the EU on subsidies for export of pasta products -- a ruling that the EC has blocked from adoption.