The World Trade Organisation (WTO) Dispute Panel ruling in the dispute DS436 related to Countervailing Duty (CVD) imposed on certain hot rolled carbon steel flat products originating from India has been circulated on 14 July, 2014. The Panel ruling is also available in the Public domain at www.wto.org. Panel has given a mixed ruling in this dispute.

In one of the major rulings in favour of India, the Panel has held that the United States (US) law mandating cumulation of non-subsidized imports with subsidized imports while determining injury in a CVD investigation, is inconsistent with WTO obligations under subsidies.

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 held that the US was not correct in applying “adverse facts available” standard in 73 out of 85 instances for imposition of penultimate duty.

However, 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 facts available. The Panel has also not accepted India`s claim that NMDC was not a “public body” within the meaning of WTO law.

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.

The Panel ruling on cumulation potentially questions the validity of a number of other CVD proceedings conducted by the US on products of Indian origin. Once the Appeal proceedings before the WTO is over and the Appellate Body (AB) upholds the Panel ruling in this matter, it would be useful for the government to undertake an evaluation of all other products of Indian origin on which the US has applied the same provision to arrive at CVD.

The information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in a written reply in Rajya Sabha today.

Cumulation rule in CVD investigations found inconsistent with WTO obligations, with wider implications for subsidy assessments. The WTO panel found the US practice of cumulating non-subsidized and subsidized imports in CVD injury determinations inconsistent with WTO obligations, held the US lacked factual basis to treat mining-rights grants as subsidies, criticized ignoring Indian market prices when measuring subsidies, and found most applications of adverse facts available improper; some India claims were not considered and NMDC was not found to be a non-public body, with the ruling subject to Appellate Body review and potential implications for other US CVD cases.