. /.WORLD TRADE
ORGANIZATIONWT/DS213/1/Add.1
G/L/416/Add.1
G/SCM/D38/1/Add.1
8 February 2001
(01-0617)
Original:  English
UNITED STATES – COUNTERVAILING DUTIES ON CERTAIN
CORROSION-RESISTANT CARBON STEEL
FLAT PRODUCTS FROM GERMANY
Request for Further Consultations by the European Communities
Addendum
The following communication, dated 5 February 2001, from the Permanent Delegation of the
European Commission to the Permanent Mission of the United States and to the Chairman of the
Dispute Settlement Body, is circulated in accordance with Article 4.4 of the DSU.
_______________
The European Communities refer to its request for consultations on the above matter
contained in WTO Document WT/DS213/1, G/ L/416, G/SCM/D38/1 of 20 November 2000, and
hereby requests further consultations with the United States of America under Article 4 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes, Article XXII:1 of
GATT 1994 and Article 30 of the Agreement on Subsidies and Countervailing Measures
(SCM Agreement).
During the first round of consultations on this matter, held in Geneva on 8 December 2000, it
became apparent that certain aspects of the procedure followed by the US Department of Commerce(the DOC) with regard to the initiation of sunset revi ews, both as applied in the sunset review of the
measure in question
1 and in general by the DOC, appear to be  inconsistent with the obligations of the
United States under Articles 21.1, 21.3 and 32.5 of the SCM Agreement and Article XVI:4 of the
Agreement establishing the World Trade Organization.  The relevant provisions are contained in
Section 751 c) of the Tariff Act of 1930 and in  the implementing regulations issued by the DOC.2
Article 21.3 of the SCM Agreement states that sunset reviews may be initiated either on the
initiative of the investigating authority or upon a "duly substantiated request" made by or on behalf of
the domestic industry.  In accordance with its regulations3, the DOC (which is responsible for the
investigation of subsidy in such cases) initiates sunset reviews on its own initiative, without requiringa duly substantiated request from the domestic industry.  The regulations
4 provide only that a
"domestic interested party" must file a notice of intent to participate within 15 days of the initiation.
                                                     
1 Final results of full sunset review concerning imports of certain corrosion-resistant carbon steel flat
products (" corrosion resistant steel")  from Germany, dealt with under US case number C-428-817, carried out
by the US Department of Commerce (DOC) and published in the US Federal Register No. 65 FR 47407 of2 August 2000.
2 19 CFR Section 351
3 Section 351.218 (c)
4 Section 351.218 (d)WT/DS213/1/Add.1
G/L/416/Add.1
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Such a notice is required to contain only administrative information5.  All interested parties must file a
"substantive response" within 30 days of initiation.
The European Communities consider that the DOC is effectively by-passing its obligation to
initiate a sunset review on the basis of positive evidence.  Article 21.3 provides for the expiry of
countervailing duty measures after five years, unless a review establishes that the expiry of the duty
would be likely to lead to continuation or recurr ence of subsidization.  This creates a presumption
against the continuation of such measures.  It follows that, in order to justify the initiation of such a
review, the domestic industry (defined according to Article 16 of the SCM Agreement) must, in its
"duly substantiated request" provide positive evidence as to why subsidization is likely to continue orrecur.
Therefore, if an investigating authority chooses to initiate a review under Article 21.3 on its
own initiative, this can only be done on the basis of a similar level of positive evidence as is required
from the domestic industry. Any other interpretation of this provision would effectively make theinitiation of sunset reviews automatic, and change the burden of proof imposed by the provisions of
Article 21.3.
The European Communities consider that by self-initiating sunset reviews without positive
evidence, and by not requiring any such positive evidence from its domestic industry for initiation, theDOC is unreasonably shifting the burden of proof in sunset reviews to exporters and foreign
governments.  Although "domestic interested parties" are required to file "substantive responses"
within 30 days of initiation, this obligation is in parallel with "substantive responses" required from
exporters and foreign governments, who are in fact required to provide more information than
domestic parties
6.  In this way, DOC has put all respondents on the same footing and has removed the
appropriate threshold for initiation foreseen by Article 21.3.
In corrosion-resistant steel from Germany , the sunset review was initiated by DOC, on its
own initiative, on 1 September 1999.
We look forward to receiving your reply to this request and to fixing a mutually acceptable
date for the consultations.
__________
                                                     
5 Section 351.218 (d) (1) (ii).  "Content of Notice of Intent to Participate. Every notice of intent to
participate in a sunset review must include a statement expressing the domestic interested party's intent to
participate in the sunset review and the following information:  (A) The name, address, and phone number of thedomestic interested party (and its members, if applicable) that intends to participate in the sunset review and thestatutory basis (under section 771(9) of the Act) for interested party status;  (B) A statement indicating whetherthe domestic producer:  (1) Is related to a foreign producer or to a foreign exporter under section 771(4)(B) ofthe Act;  or (2) Is an importer of the subject merchandise or is related to such an importer under
section 771(4)(B) of the Act;  (C) The name, address, and phone number of legal counsel or other
representative, if any;  (D) The subject merchandise and country subject to the sunset review; and (E) Thecitation and date of publication in the Federal Register of the notice of initiation."
6 Section 351.218(d) (3)