X hits on this document





7 / 130

WT/DS162/R/Add.1 Page 4


Japan asserts that the 1916 Act has a substantial negative impact on Japan-US trade.  One is the "chilling effect" on exports from Japan.  Even if the Wheeling-Pittsburgh case does not result in criminal or civil penalties, the potential threat and liability under the 1916 Act discourages defendants (in the present case Japanese trading firms) from importing products once litigation begins.  Litigation of this kind is protracted and costly.  Also, apart from fines and attorneys' costs, the potential of treble damage6 or criminal sanctions is very threatening.  The risk an importer bears if it continues to import is tremendous and prohibitive.  Thus, the greatest impact on trade of the 1916 Act, and litigation under it, is not necessarily the risk of a negative judicial judgement, but the significant deterrent of potential legal action and the possibility of very substantial civil and/or criminal liability.  


Japan argues that, to completely avoid the potential for paying treble damages, defendants are likely to cease any activity that possibly could be construed as violating the law.  Because the amount of treble damages a defendant faces in a 1916 Act claim depends on the amount of sales it makes, an importer named in litigation under the 1916 Act that continues to import goods increases its potential liability.  Given the punitive nature of the remedy in the 1916 Act, Japanese companies naturally have decreased shipments of steel into the United States.7


Japan contends that the chilling effect of the 1916 Act is magnified by the exceedingly lax pleading and proof requirements of the Act, which prevent the Japanese steel companies from assessing if they are engaged in an activity prohibited under the law.  Rather than estimate the threshold price that triggers liability (and face treble damages if they are incorrect), the companies chose to significantly decrease or stop their imports.


Japan recalls, second, that the three defendant Japanese trading firms8 have found the litigation process to be extraordinarily expensive, burdensome and otherwise disruptive to their businesses.  Indeed, the effect of this burden is so substantial that six non-Japanese defendants in this litigation conceded to out-of-court settlements with Wheeling-Pittsburgh.  Although the precise terms of the settlements are not publicly available, it is known that the defendants settled with the plaintiff, Wheeling-Pittsburgh, by agreeing, among other things, to:


buy a certain amount of steel from the plaintiff during 1999; and

6  Japan notes that the theory behind providing for treble damages in any law is to make the penalty for violating the law so severe that people will refrain from any activity that potentially could violate the law.  As the US Supreme Court has acknowledged, "[t]he very idea of treble damages reveals an intent to punish past, and to deter future unlawful conduct, not to ameliorate the liability of wrongdoers."  Japan refers to Texas Indus. v. Radcliff Materials, 451 U.S. 630, 639 (1981).

7 Japan states that, according to data provided by the companies, the total volume (in thousand MT) of exports from Japan to the United States of the three Japanese defendants declined as follows:

     April to September 1998:149/month (average)

                       October 1998:154

November 1998 (petition filed):39

                   December 1998:0.4

                       January 1999:0.7

                     February 1999:0.0                    

8 Japan notes that, on 20 November 1998, Wheeling-Pittsburgh Steel Corporation, a US company, filed a complaint under the 1916 Act against nine companies, including three Japanese trading firms, Mitsui & Co., Marubeni America Corp., and Itochu International Inc.  Japan is a major steel-producing country, and, in 1998, the US steel market was the largest export market for Japanese steel.  The Japan Iron and Steel Exporters Association and other exporters' associations requested the Japanese government to take appropriate action.  They are concerned not only with the Act's inconsistency with relevant WTO provisions, but also about the negative impact on trade in steel products, including "hot-rolled steel", and the possibility that the 1916 Act will remain a substantial barrier to Japan's steel exports to the United States.

Document info
Document views215
Page views215
Page last viewedMon Oct 24 12:39:59 UTC 2016