US Retaliatory Duties on EU Goods

29 June 2009

We reported in May that there had been a provisional agreement between the EU and the US regarding the ongoing “Beef Dispute” (“Provisional Agreement in EU-US beef trade dispute”). However, there has been an interesting twist coming from the other side of the Atlantic.

 

In a decision made on the 16 June 2009 in the case of Gilda Industries v the United States, the US Court of International Trade ruled that the authority of the United States to assess and collect 100% retaliatory duties in connection with the EU/US beef dispute expired on July 29 2007.

 

Background to the dispute

The EC/US Beef Hormone dispute began in 1985 when the EC banned imports of certain meat deriving from animals that had been treated with certain growth hormones. The US took the matter to the World Trade Organisation’s (WTO) Dispute Settlement Body (DSB) and the DSB found that the EC ban was not based on proper scientific evidence and thus the EC was deemed to be violating its obligations under the WTO Agreement. When the EC refused to lift the ban, the DSB authorised the US to take retaliatory measures up to the level of impairment suffered by the US, which, in 1999 was determined to be $116.8 million annually.

The US subsequently drew up a “retaliation list” of certain products that were targeted with a 100% ad valorem duty and this is where the contemporary dispute arises.

 

The Facts of the present case

Gilda Industries imported toasted breads from Spain into the US. However, the US retaliation list included “Rusks, toasted bread and similar products.” On March 23 2009, the retaliation list was amended and the products listed above were removed. However, Gilda challenged the US authorities on the basis that an “automatic termination” provision in the legislation introducing the retaliatory list provided that if a retaliatory action had been in effect “for any four-year period”, representatives of the domestic industry benefitting from the action were required within the last sixty days of the four-year period to submit a formal application request for the continuation of the action; if no such request was received the retaliatory action ceased to exist at the close of the sixty day period.

Gilda had tried the same in 2003, but applications had been received by the domestic industry representatives and so the measures were extended to 2007. However, no such application had been made in 2007 thus leading to Gilda’s challenge.

The Judgement

The Court ruled that the retaliatory duty expired on 29 July 2007 as there had been no further application for continuation of the measure by domestic industry officials that had benefitted from the retaliation. The Court also directed that the duties paid by Gilda post 29 July 2007 were to be refunded in whole.

What does this mean?

Effectively this means that any importer that has paid retaliatory duties post 29 July 2007 may qualify for refunds if this judgement is upheld on appeal. However, each exporter must file an action in the US Court of International Trade. Due to statutory provisions exporters into the US may claim within two years of the date when the cause of action arose. Affected exporters are therefore advised to file an action before 29 July 2009 so that they will be able to claim the full refund of duties paid post 29 July 2007.

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