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  • Gregorio Lentini and Simon Rollat

Compelled Towards Consistency: The Existence of De Facto Precedent in the WTO

In recent years, the U.S. began vetoing the appointment of WTO appellate adjudicators. Amongst other rationales, the U.S. justified its decision by claiming that the WTO tribunal had wrongfully treated past decisions as precedent.[1] All WTO members recognize the absence of de jure precedent: Japan — Taxes on Alcoholic Beverages confirmed that Panel reports “are not binding, except with respect to resolving the particular dispute between the parties to that dispute.”[2] Nevertheless, the WTO has engrained de facto precedent within its adjudicative system. To satisfy “legitimate expectations,”[3] adjudicators are compelled to consider past cases and maintain consistency when similar facts and legal questions arise.

Jurisprudence

A striking example of precedent can be located in a series of decisions about zeroing. When calculating anti-dumping duties, establishing the dumping margin is usually done “by getting the average of the differences between the export prices and the home market prices” of a given product.[4] Zeroing is the practice of putting “a value of zero on instances when the export price is higher than the home market price,”[5] which was a practice employed by the U.S.

In the early 1990s, the U.S. had imposed anti-dumping duties on Japan’s imports of corrosion-resistant carbon steel flat products.[6] Japan challenged the U.S.’ practice of zeroing when calculating the dumping margin.In US – Corrosion-Resistant Steel Sunset Review, the WTO’s highest adjudicative body, the Appellate Body (“AB”), ruled that the U.S.’ recourse to zeroing violated Articles 2.4 and 11.3 of the Anti-Dumping Agreement (“ADA”).[7]


Nonetheless, the U.S once again used zeroing in its sunset reviews of the anti-dumping duties it imposed on Argentina. Argentina thus brought the U.S. before the WTO on the same issue. In US – Oil Country Tubular Goods Sunset Reviews, the AB sided with Argentina and stated:


The Panel had before it exactly the same instrument that had been examined by the Appellate Body in US – Corrosion-Resistant Steel Sunset Review; thus, it was appropriate for the Panel … to rely on the Appellate Body’s conclusion in that case. Indeed, following the AppellateBody’s conclusions in earlier disputes is not only appropriate, but is what would be expected from panels, especially where the issues are the same.[8]


Finally, in 2006, the U.S.’ method of zeroing was yet again disputed before the WTO, this time by Mexico. The U.S. had continued to employ its zeroing methodology when calculating the dumping margin on Mexican imports of stainless steel sheet and strip in coils.[9] The AB sided with Mexico. In US – StainlessSteel (Mexico), the AB wrote that, even though the “Appellate Body reports are not binding … [that] does not mean that subsequent panels are free to disregard the legal interpretations and the ratio decidendi contained in previous AppellateBody reports.”[10] To reach its decision, the AB explicitly cited paragraph 188 of US – Oil Country Tubular Goods Sunset Reviews, which is reproduced in the previous paragraph, itself relying on US – Corrosion-Resistant Steel Sunset Review.[11]US – Stainless Steel (Mexico) thus confirms the existence of de facto precedent within the WTO.

Conclusion

While not officially binding, the normative weight borne by past decisions ultimately constrains future ones; therefore, as viewed in the chain of cases pertaining to zeroing, adjudicators do not depart from precedent when similar facts and legal questions arise.

[1] Yuka Fukunaga, “Chapter 10 Interpretative Authority of the Appellate Body: Replies to the Criticism by the United States” in Chang-fa Lo, Junji Nakagawa and Tsai-fang Chen, eds., The Appellate Body of the WTO and Its Reform, 1st ed (Singapore: Springer, 2020) 167 at 168. [2] Japan — Taxes on Alcoholic Beverages (Complaint by EC) (1996) WTO Doc WT/DS8/AB/R (Appellate Body Report), online:<docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/DS/8ABR.pdf&Open=True> 14 [Japan — Alcoholic Beverages II], cited in Zachary Flowers, “The Role of Precedent and Stare Decisis in the World Trade Organization's DisputeSettlement Body” (2019) 47:2 Intl J Leg Info 90 at 97. [3] Fukunaga, supra note 1 at 175, citing Japan — Alcoholic Beverages II, supra note 3 at 14. [4] WTO, Glossary (online: www.wto.org/english/thewto_e/glossary_e/zeroing_e.htm) sub verbo “zeroing”. [5] Ibid. [6] United States — Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan (Complaint by Japan) (2003), WTO Doc WT/DS244/AB/R (Appellate Body Report), online: <docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/DS/244ABR.pdf&Open=True> at para 2 [US — Corrosion- ResistantSteel Sunset Review]. [7] US — Corrosion-Resistant Steel Sunset Review, supra note 8 at para 212(b). [8] United States — Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina (Complaint by Argentina) (2004), WTO Doc WT/DS268/AB/R (AppellateBody Report), online: <docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/DS/268ABR.pdf&Open=True> 5 at para 188 [US — Oil Country TubularGoods Sunset Reviews]. [9] United States — Final Anti-Dumping Measures On Stainless Steel From Mexico (2006), WTO Doc WT/DS344/R (Panel Report) at para 2.2, online: <docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/DS/344R- 00.pdf&Open=True>. [10] United States — Final Anti-Dumping Measures on Stainless Steel from Mexico (Complaint by Mexico) (2008), WTO Doc WT/DS344/AB/R (Appellate Body Report), online: <docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/DS/344ABR.pdf&Open=True> at para 158 [US — Stainless Steel (Mexico)]. [11] Ibid at para 159.

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