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Countervailing Measures on Certain Hot-Rolled Carbon  Steel Flat Products from India Case- Analysis


The Countervailing Measures on Certain Hot-Rolled Carbon  Steel Flat Products from India Case (Hot Rolled Steel case) was a case filed by India against United States of America in connection with the imposition of countervailing duties on certain hot-rolled carbon steel flat products from India, wherein pursuant to petitions filed by large number of steel producers of USA, the U.S. International Trade Commission imposed countervailing duties beginning from 2001 and continued the same for the next 11 years applying 25 more measures and a sunset review. 

India’s arguments before the WTO Dispute Settlement Panel can be broadly against 2 issues i.e 1.) The relevant legislation of the USA; and 2.) Specific determinations leading to imposition of Countervailing Duties. India’s claim rested on the argument that the countervailing duties imposed by US were inconsistent with obligations stated within Agreement on Subsidies and Countervailing Measures, General Agreement on Tariffs and Trade 1994 and WTO Agreement. India also brought claims against certain provisions of the United States Tariff Act of 1930. India appealed to the panel to accept its prayer of two methods in which the US can rectify its mistakes and bring its actions in conformity with the three agreements mentioned above i.e 1.) Repeal or amend the provisions of the United States Tariff Act; and 2.) Withdrawal of countervailing duty by US. 

At this juncture, it is useful to understand the nature of the product involved in the case. Hot Rolled Steel is used as intermediate goods in the manufacturing of other final goods. The steel is heated to a high degree above its recrystallization temperature which enables it to be shaped into either flat sheets or long coils. They are usually treated with chemicals to enhance their strength and durability. It is widely used in manufacturing railway tracks and in construction industry. 

While the totality of India’s legal claims and challenges against the decision of US to enforce Countervailing Duties is considered as one of the most comprehensive case so far in the history of Dispute Settlement System of WTO, some of the most important issues put forth by India were with respect to: 

1.) Determination of term “public body” with respect to Article 1.1(a)(1) of the Agreement on Subsidies and Countervailing Measures.

2.) Whether Steel Development Fund (SDF) of India can be considered as “direct transfer of funds” within Article 1.1(a)(1)(i) of the Agreement on Subsidies and Countervailing Measures.

3.) Determination of Specificity under Article 2.1(c) and 2.4 of SCM agreement with respect to sale of Iron Ore by NMDC.

4.) Investigation of ‘New subsidy programs’ in annual administrative review with respect to Articles 11.1, 13.1, 21.1, 21.2, 22.1, 22.2 of Agreement on Subsidies and Countervailing Measures.

5.) Issue of ‘cross-cumulation’ with respect to Article 15 of SCM Agreement i.e cumulative assessment of the effects of subsidised imports with the effects of non-subsidised, but dumped imports.

6.) ‘Benchmarks’ used in calculating benefits under Section 351.511(a)(2)(i)-(iv) of the United States Code of Federal Regulation in connection with Article 14(d) of Agreement on Subsidies and Countervailing Measures.

7.)  Interpretation of Article 12.7 of the Agreement on Subsidies and Countervailing Measures with respect to the ‘facts available’ standard.

This paper will deal in depth with the issue related to the term “public body” under Article  1.1(a)(1) of the Agreement on Subsidies and Countervailing Measures. 

Issue concerning ‘Public Body’

While administering countervailing duties during 2004, 2006, 2007 and 2008, U.S Department of Commerce had adjudged that NMDC is a ‘public body’ within Article 1.1(a)(1) of the Agreement on Subsidies and Countervailing Measures and that it had provided subsidies to companies like Essar, ISPAT, JSW and Tata Steel in the form of iron ore sold for less than adequate remuneration. 

India’s Argument

India questioned U. S Department of Commerce’s treatment of NMDC as a ‘public body’. India argued that that U.S DOC based its decision solely and erroneously on the fact that 98% of NMDC’s shares are owned by the Indian government. 

India resorted to the Appellate Body judgment in US – Anti-Dumping and Countervailing Duties (China) case. The relevant parts of the judgment in the aforementioned case which India depended on are as follows:

a. The Appellate Body in the case observed that the concept of “public body”  shares certain attributes with the concept of “government”. A public body within the meaning of Article 1.1.(a)(1) of the SCM Agreement must be an entity that possesses, exercises or is vested with governmental authority.

b. The Appellate Body stated that the essence of ‘government’ is that it enjoys the effective power to “regulate, control, or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority.”

b. According to the Appellate Body, what matters is whether an entity is vested with authority to exercise governmental functions. Furthermore, Evidence that an entity is, in fact, exercising governmental functions may serve as evidence that it possesses or has been vested with governmental authority, particularly where such evidence points to a sustained and systematic practice.

c. The Appellate body stressed that the mere fact that a government is the majority shareholder of an entity does not demonstrate that the government exercises meaningful control over the conduct of that entity or that the government has bestowed it with governmental authority. 

Thus, based on the judgment in US – Anti-Dumping and Countervailing Duties (China) case, India argued that for an entity to be considered as a ‘public body’ within the meaning of Article 1.1(a)(1) of the Agreement on Subsidies and Countervailing Measures if it performs a governmental function, and has the powers and authority to perform that function. By  failing to examine whether NMDC has been vested with the power and authority to perform governmental functions or not, U.S DOC’s decision is inconsistent with Article 1.1(a)(1) of the SCM Agreement.

Argument of United States

United States questioned the rationale and logic adopted by Appellate Body while deciding the issue of interpretation of term ‘public body’ in the US – Anti-Dumping and Countervailing Duties (China) case by questioning as to why the interpretation of the term public body should be based on the issue of whether an entity performs governmental functions, or is vested with, and exercises, the authority to perform such functions. Instead, United States pointed out that the term should be interpreted according to the customary rules of treaty interpretation of public international law pursuant to Article 3.2 of the DSU which states that clarification of existing provisions of the various agreements must be in accordance with customary rules of interpretation of public international law which in this case would be Articles 31 and 32 of the Vienna Convention according to which, the term “public body” means an entity that is controlled by the government such that the government can use that entity’s resources as its own.

Furthermore, making an alternative argument, U.S DOC stated that its decision to regard NMDC as a ‘public body’ is consistent with the decision of the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) as it contended that NMDC has the authority to perform Indian government functions and also that U.S DOC was not lead merely by the presence of 98% government shareholding. United States contended that NMDC is under the administrative control of the Ministry of Steel & Mines of Government of India and that the ministry plays a vital role in appointment of the directors of the NMDC.

Finally, U.S DOC argued that in the aforementioned case, it was observed by the Appellate Body that “the legal order of the relevant Member may be a relevant consideration whether or not a specific entity is a public body.” and stated that as in India all mineral resources are owned by the government and as the government has final say in granting of mining leases and as it is a function of the government of India to arrange for the exploitation of public assets, the NMDC performs a government function in India.

Panel Findings

The Panel rejected India’s arguments and upheld U.S DOC’s determination. The following reasons were given:

1. The panel adopted the findings in US-Anti Dumping and Countervailing Duties (China) case and stated that the respective entity must be: a.) Vested with governmental authority; or b.) Have actually exercised such authority through the performance of governmental functions.

2. The panel further observed that in order to assess whether an entity possesses above characteristics or not, the core features of the entity and its relationship with the government must be evaluated”.

3. The panel stated that “governmental control of the entity is relevant if that control is ‘meaningful’.”

4. The Panel observed that “government involvement in the appointment of an entity’s directors is extremely relevant to the issue of whether that entity is meaningfully controlled by the government as such involvement indicates that the relationship between the government and that entity is closer than it would be if the government was a mere majority shareholder”. Government involvement in the appointment of an entity’s directors suggests that the links between the government and the entity are more substantive or meaningful in nature.

5. Panel observed that NMDC’s website stating that it is under the “administrative control” of Government of India suggesting that the relationship that prevails between NMDC and Indian government was very different from the relationship that would normally prevail between a private body and the government provides additional support for the argument that the entity is under the “meaningful control” of the government.

6. Thus, the Panel held that in NMDC’s case, government shareholding combined with other factors, indicate the government’s “meaningful control” of the entity.

Appellate Body Findings

The Appellate Body overruled the panel’s findings with regards to the definition of ‘public body’ and found it inconsistent with Article 1.1(a)(1) of the SCM agreement. The following reasons were given:

1. The Appellate Body held that while the Panel is right in observing that evidence of meaningful control of government and its conduct may serve in certain circumstances as evidence that the entity possesses governmental authority and exercises such authority in performance of governmental functions,  the Panel erred in construing the term ‘public body’ to mean any entity that is “meaningfully” controlled by the government. The Appellate Body observed that the Panel blurred the difference enunciated in Anti Dumping (China) case between existence of control by government over an entity and “meaningful control” on the other hand. ThePanel, in the opinion of the Appellate Body did not analyse the question of whether the government in fact exercised control over NMDC.

2. The nature and amount of analysis and evidence that is required to establish whether an entity possesses governmental authority or effectively exercises such authority in the performance of governmental functions is to be assessed on a case to case basis. The Appellate Body observed that the Panel’s assessment of government’s ownership of majority shares and its power to appoint directors and assessment of “administrative control” is merely evidence of “formal indicia of control”  and is insufficient evidence to prove that NMDC is a public body..

3. The Appellate Body stated that “it does not appear that the U.S DOC provided a reasoned and adequate explanation of the basis for its determination that NMDC is a public body within the meaning of Article 1.1(a)(1) of the SCM Agreement. The U.S DOC did not analyse whether NMDC is vested with or exercises governmental authority. Nor did the U.S DOC analyse evaluate the relationship between NMDC and Government of India within the Indian legal order.


The opinions of eminent jurists stands divided as the dispute is both hailed and criticised in equal measure.  The analysis of the case is as follows:

1.The Appellate Body did not properly clarify or explain the scope of the term “governmental functions”. In this regard, the author is of the opinion that as the jurisprudence on the term “governmental functions” is constantly undergoing evolution in different jurisdictions (including India), the Appellate Body should have given an  elaborate definition for the same to serve future cases.

2. It is a general opinion that the Appellate Body’s observations regarding characteristics for determining a ‘public body’ and the evidence required to sufficiently prove these characteristics. The author of this paper agrees with the statement as when it comes to complex entities like NMDC, it might not be possible to gather evidence to the degree which Appellate Body demands.  Governments will be able to misuse the ambiguity of the tem “governmental function” and the elaborate evidence required to create such stunningly disguised entities which can circumvent the SCM Agreement. 

3. The burden of the high degree of evidence might end up increasing the burden of disclosure and filing of documents and questionnaires on the parties. Author of this paper would like to add that the Appellate Body should clarify ‘how much’ evidence is required.

4. The judgment of the Appellate Body might substantially increases the burden on investigating authorities of respective countries when it comes to administering Countervailing Duties. The author of this paper agrees with the statement and would like to observe that while it will be comparatively easy for investigating authorities in developed and affluent countries to indulge in large scale investigation, authorities in LDC and poor countries who do not have access to the same amount of resources or facilities, might be handicapped.

In summation, India’s comprehensive arguments in Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India Case on all issues but especially with regards to the issue of determining ‘public body’ under Article  1.1(a)(1) of the Agreement on Subsidies and Countervailing Measures assisted the World Trade Organisation in explaining the term in a much more comprehensive manner than previous cases. The case not only resulted in a significant victory for India but also clarified several issues with respect to administering countervailing duties. India vigorously pursued the injustice meted out to it by United States by ensuring that the discussion is raised to a higher level with respect to all the issues concerned and it exhibited India’s will power to fight until the very end to ensure that India’s interests are protected. 

However, it must be noted that India has not yet crossed the finish line as U.S failed to abide by the verdict and did not amend its domestic regulations to comply with the Appellate Body verdict due to which India requested, pursuant to Article 21.5 of the DSU, the establishment of a compliance panel, proceedings are ongoing. 



1. Alan Spearot, Dukgeun Ahn ‘US- Countervailing measures on Certain Hot-Rolled Carbon  Steel Flat Products from India: To cumulate or not to cumulate products’ Seoul National University.


1. Abhijit Das, James Nedumpara ‘WTO Dispute Settlement at Twenty’, Springer.

The book contains perspectives of various experts who are associated with WTO and have worked on some of the most groundbreaking legal research in the field of International Trade Law. It examines various important cases, jurisprudential issues and policy issues. 

2. Joseph E. Pattinson ‘Antidumping and Countervailing Duty Laws’, Thomson West

3. Carole Murray, David Holloway and Daren Timson-Hunt, ‘The Law and Practice of International Trade’, Sweet and Maxwell. 


1. US–Anti-Dumping and Countervailing Duties (China): Appellate Body Report WT/DS379/AB/R.

2. Korea-Commercial Vessels case: WT/DS273/R, Para 7.50 concerning ‘public body’.