The EC Bed Linen Dispute: India Challenges the EC’s Implementation of the WTO Antidumping Agreement

I believe this was the first piece of academic research I wrote while at the World Trade Institute in Berne. It was also the first of two papers I wrote on trade remedies, followed by my work on causation and non-attribution.

The subject was India’s challenge to the European Communities’ antidumping duties on cotton-type bed linen. What interested me was how a developing country could use WTO dispute settlement to challenge the methods of a powerful trading partner—and how much depended on the interpretation of apparently technical rules.

More than a dispute about bed linen

Behind the dispute lay questions about how investigating authorities calculated dumping margins, assessed injury to domestic producers and treated exporters from developing countries. These were decisions with direct commercial consequences for Indian producers seeking access to the European market.

My assessment was sharply critical of the Commission’s practices. I saw the case as an opportunity to subject those practices to closer scrutiny and to test whether the disciplines negotiated in the WTO Antidumping Agreement would constrain how national authorities used the instrument.

The calculations mattered

One of the most significant issues was “zeroing”: treating negative dumping margins as zero when combining comparisons, rather than allowing them to offset positive margins. That could inflate the overall dumping margin. The Appellate Body upheld the finding that the EC’s use of zeroing in this investigation was inconsistent with the agreement. The WTO’s account of the dispute records that ruling and the subsequent proceedings.

The paper examined a wider set of issues too, including the construction of normal value, the determination of injury, the evidence needed to initiate an investigation and the treatment of developing-country interests. In particular, I looked at the obligation to explore constructive remedies before imposing duties affecting a developing country’s essential interests.

An early lesson in trade litigation

I regarded the outcome as an important victory for India, while recognising that it left significant interpretative questions unresolved. Not every claim succeeded, and the scope of the appeal meant that some findings received no further examination.

Looking back, the paper records the beginning of my interest in the gap between negotiated trade rules and their application. The agreement provided the framework, but its practical meaning emerged through detailed investigations, contested calculations and lengthy litigation. This was an early attempt to understand what that process meant for the exporters whose livelihoods depended on the result.

The companion paper, Causal Link, Non Attribution and Contingent Protection in the WTO, took up a related question: how authorities should establish that imports had caused injury to a domestic industry.

Read the paper

The EC Bed Linen Dispute: India Challenges the EC’s Implementation of the WTO Antidumping Agreement, Simon Lacey. Written on 1 March 2001, posted on SSRN on 20 May 2008 and last revised on 30 December 2008.

Download the full paper (PDF) · View the paper on SSRN

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