The United States Department of Commerce (US DOC) imposed Countervailing Duty (CVD) on India’s exports of Hot Rolled Carbon Steel Flat Products. The measures continue to be in force and adversely impact the Indian exports. India challenged the determinations made by the US DOC in various investigations / reviews treating several programmes of India as subsidy whereas, these programmes do not confer any subsidy on the Indian exporters. Various provisions under challenge were that of US Tariff Act and the Code of Federal Regulations as being inconsistent with the provisions of WTO Subsidy Agreement (ASCM).

As both the parties could not resolve the issue bilaterally, the matter was taken up before the WTO Dispute Panel. The Panel Ruling has been circulated on 14 July, 2014. Panel has ruled that the imposition of CVD by the US is inconsistent with WTO law on subsidies.

One of the major Ruling in favour of India is that the Panel has held that the US law mandating cumulation of non-subsidized imports with subsidized imports while determining injury in a CVD investigation is inconsistent with WTO obligations. This Ruling potentially questions the validity of a number of other CVD proceedings conducted by the United States on products of Indian origin. The government is undertaking an evaluation all other products of Indian origin on which the US has applied the same provision to arrive at CVD. This provision has been in existence in the US for many years and India is the first country to successfully challenge this provision.

In addition to the above Ruling, the Panel has held that the US had no factual basis to hold that the grant of mining rights for iron ore and coal was a subsidy. The Panel has also held that the US should not have ignored market prices available in India while determining the amount of subsidies, if any. The Panel has also held that the United States was not correct in applying adverse facts standard in 73 out of 85 instances for imposition of penultimate duty.

The Panel could not consider some of India’s claims such as those relating to the methods of calculating the amount of subsidies and one relating to the application of adverse fact available. The Panel has also not accepted India`s claim that NMDC was not a “public body” within the meaning of WTO law, disregarding the previous ruling of the WTO Appellate Body in another WTO case.

The ruling is appealable before the WTO Appellate Body and the decision to appeal against the same is currently under active consideration, in light of the systemic concerns on some of India’s claims denied by the Panel.

Cumulation of non subsidized and subsidized imports ruled inconsistent with subsidy law, undermining certain US CVD practices. The WTO panel found that key elements of the US countervailing duty framework violated the Agreement on Subsidies and Countervailing Measures, specifically rejecting the US requirement to cumulate non subsidized and subsidized imports for injury determination; the panel also held that treating grants of mining rights as subsidies lacked factual basis, that Indian market prices should not have been ignored in subsidy calculations, and that extensive use of adverse facts available was unwarranted, while declining to accept certain Indian claims on subsidy quantification and public body status.