THE ICFAI UNIVERSITY DEHRADUN

ICFAI LAW SCHOOL

INTERNATIONAL TRADE LAW ASSIGNMENT

A CASE STUDY ON THE CASE: THE EC BED LINEN CASE

SUBMITTED TO:

MR. ABHISHEK KUKRETI

ASST. PROFESSOR

ICFAI LAW SCHOOL

SUBMITTED BY:

ADITYA KUMAR

5TH YEAR BBALLB

SECTION A

16FLICDDN01006
 A CASE STUDY ON THE CASE: THE EC BED LINEN CASE

Short title: EC — Bed Linen

Complainant:India

Respondent: European Communities

Third Parties (original proceedings): Egypt; Japan; Korea, Republic of; United States

Agreements cited: (as cited in request for consultations) Art. 2, 2.2.2, 3, 3.1, 3.2, 3.4, 3.5,
4, 4.1, 5, 5.2, 5.3, 5.4, 5.8, 6, 12, 12.2.2, 15 Anti-dumping. Art. I, VI GATT 1994

Agreements cited: (as cited in panel request) Art. VI, I GATT 1994. Art. 2, 3, 4, 5, 15, 12
Anti-dumping

Consultation Requested by India

On 3 August 1998, India requested consultation with the EC on Council Act (EC) No.
2398/97 dated 28 November 1997 regarding the importation of cotton bedding from India.
India emphasized that the EC initiated a process to combat the dumping of bed linen products
from India by publishing the inauguration notice in September 1996. Interim anti-dumping
services were provided by EC Council Regulation No 1069/97 dated 12 June 1997 This was
followed by the provision of specific functions in accordance with the Regulation of EC
Council No. 2398/97 dated 28 November 1997.

• The disputes were as follows:

• The willingness to stand, initiate, discontinue to discard and injure and interpret the
results of EC officials is not in accordance with WTO law.
• The establishment of facts by EC authorities was inappropriate and that the EC's
assessment of facts was impartial and purposeful.
• The EC ignored India's special status as a developing country.
• There have been violations of Documents 2.2.2, 3.1, 3.2, 3.4, 3.5, 5.2, 5.3, 5.4, 5.8, 6,
12.2.2, and 15 of the Anti-Waste Agreement, and Articles I and VI of GATT 1994 .

In addition, on September 7, 1999, India requested the establishment of a forum. Later, at its
meeting on 22 September 1999, the DSB postponed the establishment of the council.
On 12 January 2000, India asked the Director-General to determine the composition of the
Panel. On 24 January 2000, the Panel was named. The panel report was distributed on 30
October 2000.

Panel Procedures and Physical Complaints

The panel concluded:

i. EC did not act in violation of its obligations under Articles 2.2, 2.2.2, 3.1, 3.4, 3.5, 5.3, 5.4,
and 12.2.2 of the AD Convention on:

• calculating the value of the benefit in creating a general value;

• consider all imports from India (as well as Egypt and Pakistan) as disposal in the
analysis of the damage caused by discarded exports;
• considering producer information including the domestic industry but not among the
sample producers in the analysis of the industry;
• Assessing the accuracy and adequacy of evidence prior to initiation;
• establishing industry support for the application; and
• Provide public notice of final determination.

ii. The Panel, however, also concluded that the EC operates in contravention of its obligations
under Articles 2.4.2, 3.4, and 15 of the AD Convention on:

• determining the availability of disposal marks on the basis of a method of

incorporation;
• failure to assess all relevant factors affecting the state of the domestic industry, and in
particular all the factors set out in Article 3.4;
• consider product details and not part of the domestic sector as defined by the
investigating authority in the analysis of the industry; and
• failure to evaluate the potential benefits of the solution before introducing anti-waste
activities.

On 1 December 2000, the EC informed the DSB of its intention to refer certain legal matters
contained in the Panel Report and the legal interpretation made by the Panel. The Appellate
Body distributed its report on 1 March 2001.

i. proposed the finding of the Panel that the practice of "extermination" in establishing the
"presence of discarded marks", as used by the EC in the anti-dumping investigation referred
to in this dispute, is not in line with Article 2.4.2 of the Convention on Disposal of Waste
Disposal;

ii. Alters the Panel's findings to:

• the method of calculating the costs of administration, sales and general costs and
profits provided in Article 2.2.2 (ii) of the Poultry Disposal Agreement may apply
where there are administrative, sales and general costs and only one exporter or
producer; and
• in calculating the amount of benefits under Section 2.2.2 (ii) of the Anti-Disposal of
Members' Disposal Agreement, a Member may exclude the sale of other foreign
suppliers or producers who are not engaged in the normal trading practice; and

iii. As a result, it concluded that the EC, in calculating the administrative, sales and general
costs and benefits in investigating the disposal problem in this dispute, acted in contravention
of Section 2.2.2 (ii) of the Waste Disposal Agreement.

The DSB approved the Appellate Body report and the Panel report, as prepared by the
Appellate Body report, on 12 March 2001.

Implementation of received reports

At the DSB meeting of 5 April 2001, the EC announced its intention to implement the DSB's
recommendations in this case and said it would take time to do so. India said the EC could
complete its operational process in a very short time. On 26 April 2001, the parties to the
dispute informed the DSB that they had agreed that the due date would be five months and
two days, that is, from 12 March 2001 to 14 August 2001.

The EC has amended its regulation that mandates direct action to prevent the importation of
cotton bed linen from Egypt, India and Pakistan and suspend its application in respect of
imported from India by the deadline of 14 August 2001. However, in India, at the 23rd
meeting August of DSB, made a statement in which he expressed the view that the new EC
Regulation does not bring EC law to fully comply with DSB recommendations.

On 13 September 2001, India and the EC informed the DSB that they had reached an
understanding regarding the procedures under Article 21 and 22 of the DSU. This
understanding recognizes that if on the basis of the outcome of cases under Article 21.5 not
initiated by India, India decides to initiate proceedings under Article 22, the EC would not
say that India was barred from doing so because its application was made outside of -30.

Compliance procedures

On March 8, 2002, India requested consultation under Article 21.5 of DSU. On April 4, 2002,
India requested the establishment of a compliance team. In particular, India alleged that the
EC had violated Articles 2, 3, 5.7, 6, 9, 12 and 15 of the Anti-deregistration Agreement.

India, therefore, asked the Panel to conclude that:

• Re-determination, as amended, and the following actions as set out above, do not
comply with the above provisions of the Disposal Agreement and GATT 1994; and
• By failing to rescind measures found to be inconsistent with the Disposal Agreement
and aligning its measures with its obligations under the Disposal Agreement and
GATT 1994, the EC failed to comply with DSB's recommendations and decisions on
the dispute.

At the DSB meeting held on 17 April 2002, India informed the DSB that in accordance with
the agreement reached between the EC and India, it had requested that the item be removed
from the agenda in accordance with Rule 6 of the WTO Rules of Procedure for WTO
meetings. DSB has agreed to India's request.

On May 7, 2002, India again requested the establishment of a law enforcement team. At the
DSB meeting held on 22 May 2002, it was agreed that, if possible, the matter be referred to
the first panel. Japan and the United States have retained their rights to be part of these
processes. On May 27, 2002, Korea ratified the rights of third parties. On 25 June 2002, a
compliance panel was appointed. On 19 August 2002, the Chairperson of the Panel informed
the DSB that it was expected to complete its work by November 2002. On 29 November
2002, the report was distributed to Members. The Panel concluded that the explicit anti-
dumping mechanism for EC in the importation of linen goods from India, Regulation EC
1644/2001, is not in line with the AD or DSU Agreement and that, therefore, the EC has
implemented the recommendations of the first Panel, Appeal Body , and DSB to bring its
measure in line with its obligations under the AD agreement.

On 8 January 2003, India informed the DSB that it intended to refer to certain legal matters
and interpretations made by the Panel in its report. On March 6, 2003, Appellate Body
informed DSB that it had not been able to submit its report within the 60-day period and that
it intended to do so by no later than 8 April 2003. On April 8, 2003, Appellate Body
distributed the Report. Appeal Body:

• confirming the finding of the Panel that India's claim under Article 3.5 was unfounded
before the Panel and, as a result, refused to rule on it,
• revoke the Panel's finding that the EC has not acted in violation of Articles 1 and 2 of
Article 3 of the Convention on Disposal of Waste,
• refused to issue a decision on the Panel's discretion that the EC should use the second
option in the second paragraph of Article 6.10 to reduce its assessment in this
investigation; and
• found that the Panel has properly performed its functions under Article 17.6 of the
Disposal Agreement and Article 11 of DSU and, therefore, supports the finding of the
Panel that the EC has prior knowledge of the economic matters set out in Article 3.4
Anti-Agreement Disposal When deciding on its damage.

The Appellate Body recommended that DSB request the EC to make its measurements in line
with the Minerals Waste Agreement. At its meeting on April 24, 2003, the DSB approved the
Appellate Body Report and the Panel Report, as amended by the Appellate Body Report.
The Conclusion

The World Trade Organization's Appellate Body invalidated the European Union's findings
on the investigation into the dumping and dumping of garbage and found it in violation of the
WTO Anti-Dumping (AD) treaty, and issued a ruling in favor of India, in the EC's anti-
import practices of cotton fabrics from India.

In its decision, Appellate Body found fault with the EU Commission, the AD investigation
and measures such as:

1. The practice of zeroing; which means investigating the availability of discarded marks
- taking into account the limitations of good disposal marks in the products under
investigation, but ignoring cases where there is a negative march and a zero value
instead;
2. Calculates the costs and benefits of management (SG&A) using the method by which
the data used by one vendor or manufacturer is used to work for all others, and
3. Calculate the amount of profit by excluding sales from other exporters or
manufacturers that are not designed for a normal trading course; and
4. All kinds of bed linen products are used - bed sheets, duvet covers and pillow boxes,
stitched for sale either separately or in sets, and are made of cotton, pure or mixed
with man-made or flax fibers, and made white, dyed or printed - as a single product
competing with similar products in the domestic sector, for specific research
purposes, but using a variety of imported products to calculate the total export price
and standard and to measure, to obtain disposal.

As a final look at bed linen cases, the appellant body exposed the hypocrisy of the EC's
argument that bedclothes were one product, but different disposal limits had to be calculated
and used for zeroing, for different types of product.

Although there is a major way for importing countries to lobby for Anti-dumping agreement
tools to protect their domestic industry - WTO dispute resolution panels issue decisions,
magnitude of power exploitation and trade abuses in major developed countries, and long
before any assistance can be obtained by exporters such.
Bibliography

Articles Referred:

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds141_e.htm

https://www.academia.edu/30727646/The_Bed_Linen_Case_and_its_Aftermath._Some_Co
mments_on_the_European_Communitys_World_Trade_Organization_Enabling_Regulation

http://docs.manupatra.in/newsline/articles/Upload/87BD655B-FB54-4A0E-9368-
3AC14799E358.pdf

Websites Referred:

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds141_e.htm

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds141_e.htm#

Pdf’s referred:

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds141_e.htm

https://www.cuts-citee.org/pdf/TLB08-04.pdf

http://www.worldtradelaw.net/reports/wtopanels/ec-bedlinen(panel).pdf.download

http://docs.manupatra.in/newsline/articles/Upload/87BD655B-FB54-4A0E-9368-
3AC14799E358.pdf