Canada - Measures Relating To Exports Of Wheat And Treatment Of Imported Grain, ( AB-2004-3)
Australia's Opening Oral Statement
Geneva 12 July, 2004
Mr Chairman, Members of the Division.
Australia welcomes the opportunity to make a short opening statement. I will address a key issue which appears to be critical in this appeal. Australia's views on the broader range of issues raised by the appellants are set out in our third participant submission lodged on 28 June.
Mr Chairman, clarification of t he proper interpretation of Article XVII:1 and, specifically, the relationship between subparagraph (a) and subparagraph (b) of this provision is of fundamental importance to the resolution of this dispute. It is also an issue of broader systemic importance to WTO Members.
The United States, in its arguments before the panel and repeated in its appellate submissions, has sought to secure an expansive interpretation of the obligations in Article XVII:1 related to the operations of State Trading Enterprises (STEs). In the United States' view, Article XVII:1 imposes obligations on WTO members which go well beyond a limited requirement to ensure STEs act in a manner consistent with the GATT's general principles of non-discriminatory treatment, by imposing wide ranging competition policy disciplines on STEs.
This expansive, but incorrect, view of the scope of Article XVII is littered throughout the US submission. It is perhaps most clearly seen in the US Appellee submission at paragraph 8 where the US contends that Article XVII:1 creates a "coherent regime designed to discipline STEs that might otherwise engage in trade-distorting conduct" and in the US Appellant submission at paragraphs 21 and 24 where the US alleges that "Article XVII protects all enterprises of other Members against serious obstacles to trade.." and that Article XVII's disciplines are a "means of preventing STEs from being operated so as to create serious obstacles to trade."
As indicated in our written submission, Australia does not agree with the expansive US interpretation of Article XVII. In Australia's view, Article XVII:1 does nothing more than provide for a limited extension of the general principles of non-discriminatory treatment in GATT 1994 to a limited class of governmental and non-governmental enterprises in respect of a limited set of transactions.
Article XVII is, in essence, an anti-circumvention provision, designed to ensure Members are not able to evade GATT non-discrimination principles on governmental measures through the creation and operation of STEs. It is not, and was never intended to be, a competition policy provision. The limited nature of the disciplines on STEs provided by Article XVII:1 is supported by the text of the provision, read in context taking account of the objects and purposes of the Agreement.
This is a position which the Panel apparently also shared, as indicated by its findings at paragraph 6.39 of the report. It is also a position which appears to be fully shared by Canada and China, and to a lesser extent by the EC. It is only the United States that is arguing for an expansive interpretation of Article XVII:1.
Mr Chairman, Australia considers it important for the scope of Article XVII:1 to be clarified in this appeal, and that the Appellate Body expressly address the relationship between subparagraphs (a) and (b). Australia's views on the proper interpretation are set out in paragraphs 19-33 of our written submission.
I would like to make clear that Australia is not suggesting here that the scope of GATT disciplines affecting the operations of STEs are limited, but only that the specific Article under consideration in this appeal, Article XVII:1, has a particular, and limited, purpose. As indicated by the panel in paragraphs 6.39 and 6.103, there are other provisions of GATT which apply to STEs and seek to limit the scope of obstacles to trade and adverse effects which may arise as a consequence of an STE's operations.
Given the various alternative interpretations expressed by other participants in this dispute, I would like to take this opportunity to set out in more detail Australia's position by describing the scope of the disciplines in Article XVII:1 and the relationship between the two key subparagraphs in that provision. In Australia's view:
- The fundamental obligation in Article XVII:1 is one of non-discriminatory treatment.
- This fundamental obligation, which is set out in subparagraph (a) of Article XVII:1, is imposed on a limited class of enterprises in respect of a limited set of transactions - those related to purchases or sales involving either imports or exports.
- This fundamental obligation is qualified - but not extended - by subparagraph (b) of Article XVII:1
- Subparagraphs (a) and (b) do not contain separate and distinct obligations.
- To violate Article XVII:1, an STE must act in a manner inconsistent with the general principles of non-discriminatory treatment set out in GATT 1994
- But not all discriminatory activity by STEs is prohibited - Article XVII:1 ONLY seeks to prevent discriminatory treatment by STES in relation to purchases or sales involving either imports and exports, and ONLY if such purchases or sales are NOT in accordance with commercial considerations OR if the enterprises of other Members are not afforded adequate opportunity to participate in such purchases or sales.
- Article XVII:1 does not control the operation of STEs in a general sense - it only intended to prevent STEs from acting in a non-discriminatory manner in relation to purchases or sales involving either imports or exports
- Article XVII:1 is NOT a competition policy provision - it is an anti-circumvention provision designed to maintain the integrity of GATT non-discrimination principles on governmental measures through a limited extension of those principles to STEs.
- An essential and necessary element of any violation of Article XVII:1 is a failure by an STE, in its purchases or sales involving either imports or exports, to act in a manner consistent with the general principles of non-discriminatory treatment
- It follows that there can not be a violation of Article XVII:1 without some form of discriminatory activity by an STE related to purchases or sales. This is true, even if an STE fails to act solely in accordance with commercial considerations OR if the enterprises of other Members are not afforded adequate opportunity to participate in purchases or sales.
In its written Appellee submission, the United States claims that Article XVII is a "coherent regime designed to discipline STEs." Australia would agree that Article XVII provides a "coherent regime" which discplines STEs but in Australia's view, Article XVII does not provide the sort of comprehensive competition policy regime that the US would like it to provide.
Article XVII is a carefully prescribed anti-circumvention provision which protects the value to WTO Members of general non-discriminatory treatment obligations under GATT 1994, and nothing more.
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