Australia and WTO dispute settlement

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Monthly Bulletin: December 2000

Update on Australian Involvement in Specific Disputes

Australia had two important market access wins in the WTO in December 2000.  Australia successfully prosecuted a complaint against US lamb meat safeguard measures, and the Appellate Body upheld an earlier complaint by Australia against Korea’s regime in regard to imported beef. In December we also reserved our third party rights in a new dispute concerning Chile’s measures affecting the import and transshipment of swordfish and in the next stage of the dispute between the United States and European Communities concerning the US Foreign Sales Corporations legislation.  Our involvement in several other complaints as an interested third party continues.  There are presently no complaints against Australia.

Australia as a Complainant

Korea:  Measures affecting imports of fresh, chilled and frozen beef (WT/DS169)

In July 2000, a WTO panel upheld a complaint by Australia and the United States that Korea’s measures on imported beef were contrary to WTO rules.  The measures included requirements that imported beef be sold separately from Korean beef; subsidies to beef producers; minimum wholesale pricing; limitations on which private sector operators can buy and sell imported beef and discriminatory labelling and record-keeping requirements. 

Korea challenged only two of these findings on appeal: retail sales requirements and subsidies.  The Appellate Body rejected Korea’s appeal on retail sales requirements and confirmed that Korea’s dual retail system for beef was inconsistent with Korea’s WTO obligations.  However, Korea was successful in persuading the Appellate Body to reverse the panel’s ruling that Korea had acted in violation of its domestic support commitments under the Agriculture Agreement.  The finding on subsidies, while disappointing, was not a key issue and does not overturn the important market access win for Australia.      

The panel and Appellate Body reports are scheduled for adoption by Members of the WTO in January 2001.  Australia will be looking for Korea to promptly bring its measures into compliance with WTO rules.

United States: Safeguard measure on imports of fresh, chilled and frozen lamb meat (WT/DS177 and WT/DS178)

The panel’s final report, released on 21 December 2000, found against the safeguard tariff measures imposed by the United States on Australian and New Zealand lamb exports.

On July 22 1999, the US imposed harsh restrictions on imports of lamb meat including: a 9% tariff on all imports up to an annual quota of 31,851 tonnes; a 40% tariff on above-quota imports; a progressive reduction of the in-quota tariff to 6% from July 2000, then 3% from July 2001; and a progressive reduction of the above-quota tariff to 32% in July 2000 and 24% in July 2001. Australia and New Zealand immediately challenged these measures in the WTO.  The panel has re-affirmed its interim findings that the tariffs imposed by the US on our lamb exports were unjustified and were inconsistent with WTO rules.

All parties have rights of appeal, otherwise the report will be adopted by 19 February 2001. 

Disputes involving Australia as a Third Party

Chile: Measures affecting the transit and importation of swordfish (WT/DS193)

A panel was established at the 12 December 2000 meeting of the Dispute Settlement Body to examine the EC’s complaint against Chile’s measures affecting the transit and importation of swordfish.  The EC asserts that its fishing vessels operating in the South East Pacific are not allowed under Chilean legislation to unload their swordfish in Chilean ports, either to land them for warehousing or to transship them onto other vessels.  The EC considers that, as a result, Chile makes transit through its ports impossible for swordfish.  The EC claims that these measures are inconsistent with the GATT 1994, in particular Articles V and XI. 

The parties both expressed interest in continuing with bilateral discussions to find a mutually agreed solution to the dispute, with Chile emphasising the need for a solution that protected the migrating fishery resource and promoted sustainable development.

Australia has reserved its third party rights, given our interest in the use of port state measures from both a fish conservation and a trade perspective.

EC:  Beef hormones (WT/DS26)

The EC is currently facing WTO authorized retaliation by the US and Canada because of its failure to implement.  Australia has formally registered its expectation that, consistent with its WTO rights, any settlement or compensation arrangements with Canada and the US will not discriminate against Australia's beef exports.

United States: Restrictions on shrimps (the “shrimp/turtle" case) (WT/DS58)

The United States has introduced measures that allow for the lifting of the import embargo against certain WTO members.  Australia has regained access for prawns for its northern and southern prawn fishing regions. The US has also been supportive in regional initiatives, including on the Indian Ocean and SE Asian Regional Agreement on Turtle Conservation, which is due to be signed early in 2001. However, the US has continued to maintain its import restrictions based upon a unilaterally determined environmental standard (TEDs use). Australia considers that cooperative approaches offer a more appropriate avenue for addressing turtle conservation issues and encourages all concerned countries to participate constructively in such efforts.

A panel to examine the WTO consistency of the revised US measures was established on 23 October 2000.  Australia has reserved its third party rights.

Canada:   Dairy Assistance Measures (WT/DS103)

Canada has until 31 January 2001, as a result of consultations resulting in an extension of the implementation deadline by one month, to bring its dairy export arrangements (including measures at provincial level) into conformity with its WTO obligations.  The WTO consistency of some of Canada's proposed arrangements has been questioned by both complaining parties (the US and New Zealand).

United States: "Homestyle" Copyright Legislation (WT/DS160)

US measures which exempt restaurants and bars from music royalty requirements were found to be WTO inconsistent.  The EC has sought arbitration on the reasonable period of time the US should be accorded to bring its measures into conformity.  The outcome of the dispute protects the royalty rights of Australian musicians in the US.

United States: Safeguard measures on wheat gluten (WT/DS166)

A panel upheld an EC complaint that US safeguard action on imports of wheat gluten was WTO inconsistent. The US appealed the panel's findings on 26 September 2000.  In its report issued on 22 December 2000, the Appellate Body confirmed the WTO inconsistency of the US safeguard action. Australia was a third party.    

United States: Measures treating export restraints as subsidies (WT/DS194)

Canada has challenged US countervailing duty arrangements that treat a restraint on exports of a product as a subsidy to other products made using or incorporating the restricted product if the domestic price of the restricted product is affected by the restraint.  A panel was established on 11 September 2000. Australia has a systemic interest in issues in relation to the definition of a subsidy and to the nature of WTO obligations in relation to mandatory legislation.  Australia has reserved its third party rights.

United States: Definitive safeguard measures on imports of circular welded carbon quality line pipe from Korea (WT/DS202)

Korea has challenged safeguard measures imposed by the US on imports of circular welded carbon quality line pipe. A panel was established on 23 October 2000. Australia's involvement is based on a systemic interest in the operation of the Safeguards Agreement. Australia has reserved its third party rights.  

United States: Foreign Sales Corporations (FSC) taxation measures (WT/DS108)

The US FSC arrangements, which are available for exports to any destination, were found to be prohibited export subsidies.  An Article 21.5 compliance panel was established on 20 December 2000 to review the WTO consistency of the revised FSC scheme.  FSC subsidies affect Australia’s competitive trading opportunities in all markets.  Australia has reserved its third party rights.

Under previously agreed bilateral procedures, arbitration on the EC’s USD 4 billion retaliation request will be suspended until completion of the compliance review, which could taken 6 months or longer.      

United States: Continuing Dumping and Subsidy Offset Act of 2000 (WT/DS217) (Joint consultation request)

Australia joined with eight other Members in making a joint request on 21 December 2000 for dispute settlement consultations with the US over the US trade remedy legislation that, inter alia provides for dumping and subsidy offsets – the “Byrd” Amendment  (ie payments of duties collected to domestic parties supporting the original application). 

The consultations should be held within 30 days of the receipt of the request, and in the event consultations fail to settle the dispute within 60 days, consulting Members will be entitled to request the establishment of a panel to examine the matter. 

Disputes in which Australia has a Policy or Economic Interest

Japan:  Varietal testing of horticultural products (WT/DS76)

The United States and Japan continue to negotiate on replacement arrangements.  Australia has formally registered its WTO rights to replacement arrangements that do not discriminate against Australia's horticultural exports to Japan.  Australia reiterated its rights at the 12 December 2000 meeting of the Dispute Settlement Body.  

EC:  Bananas (WT/DS27)

The United States is currently applying WTO authorized retaliatory measures against EC exports following findings that the EC revised access arrangements applying to imports of bananas from the Caribbean and Latin America remained WTO inconsistent. The EC has decided to move to a transitional tariff quota regime on a "first-come, first-served basis" until 2006, followed by a tariff-only system. It will be up to each interested party to assess the WTO consistency of the proposed new arrangements. The new arrangements may have longer-term implications for a number of tariff quota arrangements, including country-allocated quotas.

EC:  Measures on asbestos (WT/DS135)

Canada complained against French bans on importation and sale of chrysotile asbestos.  The panel found that the measures were justified by GATT exceptions provisions which permit measures necessary for the protection of human life and health (Article XX (b) of GATT 1994.).  The panel engaged three Australian experts to advise panel members on scientific issues.  In its defence, the EC incorporated certain evidence from amicus submissions (submissions from NGOs) to the panel. Canada has appealed the findings. The Appellate Body is expected to report by 23 January 2001.

The Appellate Body has developed special working procedures for the handling of amicus submissions in the appeal.  Those procedures were debated at a special session of the WTO General Council on 22 November 2000.  Australia’s statement to the WTO General Council was set out in the November 2000 issue of this Monthly Bulletin.  

The outcome of this dispute may have implications for domestic measures applied or under consideration in regard to chrysotile asbestos. 

United States:  Import measures on certain products from the EC (WT/DS165)

The EC complaint was against some US retaliatory measures taken in the EC: Bananas case. Following the panel’s report, the EC appealed certain issues of law and legal interpretations.

The Appellate Body’s report, issued on 11 December 2000, concluded that the panel erred by stating the WTO consistency of a measure taken by a Member to comply with recommendations and rulings of the Dispute Settlement Body can be determined by arbitrators appointed under Article 22.6 of the Dispute Settlement Understanding.  The Appellate Body found that this issue was outside the panel’s terms of reference. The panel’s statements on this issue therefore have no legal effect.  The Appellate Body did, however, uphold the panel’s finding that the US acted inconsistently with the DSU when it did not request an Article 21.5 compliance panel to determine the WTO consistency of the revised EC banana import regime.

WTO Disputes involving industry assistance and trade remedies

In response to enquiries, we thought it useful to summarise some of the disputes which are before, or have been to, WTO panels (there are numerous disputes at the consultation stage), involving challenges to industry assistance programs and the imposition of various trade remedies.  Further information on particular matters can be obtained from the WTO Secretariat web site.

Argentina

Argentina: Definitive anti-dumping measures on imports of ceramic floor tiles from Italy (WT/DS189)

Argentina’s anti-dumping measures on imports of ceramic tiles from Italy have been challenged by the EC.  A panel was established on 17 November 2000. 

Argentina: Safeguard measures on imports of footwear (WT/DS121)

The EC complained against safeguard measures imposed by Argentina on imports of footwear. Panel and Appellate Body reports have been adopted by the Dispute Settlement Body.  The Appellate Body upheld the panel’s finding that Argentina’s measures were inconsistent with relevant Articles of the Agreement on Safeguards, but reversed certain other findings of the panel.

Argentina: Measures affecting imports of footwear (WT/DS164)

This dispute, brought by the US, is in respect of certain safeguard measures implemented by Argentina affecting imports of footwear.  A panel was established on 26 July 1999.

Argentina: Measures on the export of bovine hides and the import of finished leather (WT/DS155)

This complaint by the EC concerns measures taken by Argentina on the export of bovine hides and the import of finished leather.  In its report issued on 19 December 2000, the panel found for the EC on three of its four claims.  The parties may lodge an appeal at any time until 17 February 2001. 

Brazil

Brazil: Export  financing program for aircraft (WT/DS46)

Canada successfully challenged certain export subsidies under Brazil’s PROEX scheme to foreign purchasers of Brazil’s EMBRARER aircraft as prohibited export subsidies.  Further developments in this case have involved authorization from the DSB to suspend the application by Canada to Brazil of concessions.  At the 12 December 2000 meeting of the Dispute Settlement Body, Australia made a statement on this dispute, a summary of which is 
set out below.     

Canada

Canada: Certain measures affecting the automotive industry (WT/DS139 and WT/DS142)

Japan and the EC successfully challenged elements of the Auto Pact Agreement between the US and Canada.  Panel and Appellant Body reports have been adopted. Under arbitration pursuant to Article 21.3 of the Dispute Settlement Understanding it was determined that the reasonable period for Chile to implement the relevant recommendations and rulings of the Dispute Settlement Body would be 8 months. Therefore Canada has until 19 February 2001 to bring its measures into WTO consistency.   

Canada: Measures affecting the export of civilian aircraft (WT/DS70)

Brazil successfully challenged Canada’s Technology Partnership Canada (TPC) assistance to Canadian regional aircraft.  Canada was required to withdraw TPC assistance, and has since done so. 

Chile

Chile: Taxes on Alcoholic beverages (WT/DS87 and WT/DS110)

The EC successfully challenged Chile’s special tax on spirits, which allegedly imposed a higher tax on imported spirits than on Pisco, a locally brewed spirit.  Chile’s modified system was again challenged by the EC.  The panel found that Chile’s system for taxation of distilled alcoholic beverages was inconsistent with Article III:2 of GATT 1994.  The Appellate Body, in its report circulated on 13 December 1999, upheld the panel’s findings.  Under arbitration it was determined that the reasonable period for Chile to implement the relevant recommendations and rulings would be not more than 14 months and 9 days from the date of their adoption.  Therefore, Chile has until 21 March 2001 to bring its measures into WTO consistency.

European Communities

EC: Anti-dumping duties on imports of cotton-type bed-linen from India (WT/DS141)

India complained in respect of EC’s anti-dumping procedures on the imports of cotton-type bed-linen from India.  The panel’s report was issued on 30 October 2000.  The EC has appealed. 

Guatemala

Guatemala: Definitive anti-dumping measure regarding grey Portland cement from Mexico (WT/DS156)

Mexico complained against certain anti-dumping duties imposed by Guatemala on imports of grey Portland cement from Mexico.  The panel’s report has been adopted. 

India

India: Measures affecting the automotive sector (WT/DS146 and WT/DS175)

The EC and US have challenged certain measures affecting India’s automotive sector which, they contend, subject imports of complete automobiles and of certain parts and components to a system of non-automatic import licenses.  A panel was established on 17 November 2000.

Japan

Japan: Taxes on alcoholic beverages (WT/DS8)

EC, Canada and the US complained against Japan’s Liquor Tax Law which applied a higher tax rate on foreign spirits than on the local product (shochu), thereby affording protection to domestic production.  The panel, upheld by the Appellate Body, found that shochu and vodka are like products, and by taxing imported products in excess of domestic productions violated GATT 1994.  Japan was required to bring its taxation law into GATT compliance.  The period for implementation was set at 15 months from the date of adoption of reports, expiring on 1 February 1998.  Japan has presented modalities for implementation. 

Korea

Korea: Definitive safeguard measures on imports of certain dairy products (WT/DS98)

The EC complained against safeguard measures imposed by Korea on imports on certain dairy products.  Panel and Appellate Body reports have been adopted.  Korea has lifted the safeguard measure. 

Korea: Taxes on alcoholic beverages (WT/DS75 and WT/DS84)

The EC and the US complaint was against Korea’s Liquor Tax Law and Education Tax Law which accorded preferential tax treatment to soju, a traditional Korean alcoholic beverage, as compared with certain “western-style” alcoholic beverages.  The panel report, upheld by the Appellate Body, found that Korea’s legislation was not WTO consistent. Following arbitration, Korea was awarded 11 months and 2 weeks to implement, expiring on 31 January 2000.  At the Dispute Settlement Body meeting on 27 January 2000 Korea stated that it considered that it had fully implemented the DSB’s rulings and recommendations by amending its laws to impose flat rates of tax on all distilled alcoholic beverages on a non-discriminatory basis.  

Mexico

Mexico: Anti-dumping investigation of high-fructose corn syrup (WT/DS132)

  The US complained in respect of an anti-dumping investigation of high-fructose corn syrup conducted by Mexico.  The panel report has been adopted  At its meeting of 23 October 2000, at the request of the US, the DSB established an Article 21.5 compliance panel. 

Philippines

Philippines: Measures affecting trade and investment in the motor vehicle sector (WT/DS195)

The US has challenged the Philippines’ Motor Vehicle Development Program (MVDP).  The US claimed that the MVDP entitles motor vehicle manufacturers located in the Philippines who meet certain requirements to import parts and finished vehicles at preferential rates.  A panel was established on 17 November 2000.

Thailand

Thailand: Anti dumping duties on angles, shapes and section of iron or non-alloy steel (WT/DS122)

Poland complained in respect of anti-dumping duties imposed by Thailand on import of angles, shapes and section of iron or non-alloy steel.  On 23 October 2000 Thailand appealed certain issues of law covered in the panel report.

United States

United States: Definitive safeguard measures on imports of circular welded carbon quality line pipe from Korea (WT/DS202)

As noted above, Korea has challenged safeguard measures imposed by the United States on imports of circular welded carbon quality line pipe.   A panel has been established.

United States: Measures treating export restraints as subsidies (WT/DS194)

As noted above, Canada has challenged US countervailing duty arrangements that can treat a restraint on exports of a product as a subsidy to other products made using or incorporating the restricted product if the domestic price of the restricted product is affected by the restraint.  A panel has been established. 

United States: Imposition of countervailing duties on certain hot-rolled lead and bismuth carbon steel products originating in the United Kingdom (WT/DS138)

The EC successfully challenged the imposition of countervailing duties on certain hot-rolled lead and bismuth carbon steel (leaded bars) from the UK.  A central issue in the dispute was the irrebuttable presumption in the US countervailing duty legislation that nonrecurring subsidies benefit merchandise produced by the recipient over time irrespective of any subsequent developments, such as the privatisation at fair market value of a government-owned enterprise that received a benefit.  The panel report, upheld by the Appellate Body, found that the US had not imposed countervailing duties consistently with the Agreement on Subsidies and Countervailing Measures.

United States: Anti-dumping duties on certain hot-rolled steel products from Japan (WT/DS184)

 Japan’s complaint concerns determinations of the US Department of Commerce and the US International Trade Commission on the anti-dumping of certain hot-rolled steel products from Japan.  A panel was established on 20 March 2000

United States: Anti-dumping measures on stainless steel plate in coils and stainless steel sheet and strip from Korea (WT/DS179)

Korea complained in respect of determinations of the US Department of Commerce on stainless steel plate in coils from Korea.  The panel issued its report on 22 December 2000, finding that the US acted inconsistently with several of its obligations under the Anti-Dumping Agreement.   The panel recommended that the Dispute Settlement Body request that the US brings its definitive anti-dumping duties on imports of stainless steel plate and sheet from Korea into conformity with the Anti-Dumping Agreement. 

United States: Definitive safeguard measures on imports of wheat gluten for the EC (WT/DS166)

As noted above, a panel upheld an EC complaint that US safeguard action on EC wheat gluten was WTO inconsistent.  Australia was a third party.  The US appealed the panel's findings on 26 September 2000.  In its report issued on 22 December 2000, the Appellate Body confirmed the WTO inconsistency of the US safeguard action.

United States: Anti–Dumping Act of 1916 (WT/DS136 and WT/DS162)

 The EC and Japan complained in respect of the US Anti-dumping Act of 1916.  The panel report, upheld by the Appellate Body, found that the Anti-Dumping Act provided for action against dumping outside the Anti-Dumping Agreement and so violated various WTO provisions. Binding arbitration has been commenced to determine the duration of the period required by the US for implementation.

United States: Tax treatment for “Foreign Sales Corporations” (WT/DS108)

The EC brought this complaint in respect of provisions establishing special tax treatment for “Foreign Sales Corporations”.  As noted above, an Article 21.5 compliance panel has been established to examine US implementation measures, and arbitration of the EC’s USD 4 billion retaliation request will be suspended until completion of the compliance review.  

United States: Measure affecting import of woven wool shirts and blouses from India (WT/DS33)

India complained against US measures relating to a transitional safeguard restraint imposed on woven wool shirts and blouses from India. The panel found that the safeguard measure imposed by  the United States violated the provisions of the Agreement on Clothing and Textiles.  The Appellate Body upheld the panel's decisions on those issues of law and legal interpretations that were appealed against.  The panel and Appellate Body reports were adopted by the DSB on 23 May 1997. The US announced that the measure was withdrawn at 22 November 1996.

United States: Standards for reformulated and conventional gasoline (WT/DS2 and WT/DS4)

Venezuela and Brazil complained that a U.S. gasoline regulation discriminated against their gasoline in violation of articles of GATT and the Agreement on Technical Barriers to Trade (TBT).  The report of the panel found the regulation to be inconsistent with GATT 1994 and not to benefit from an Article XX exception. The Appellate Body modified the panel report on the interpretation of GATT Article XX(g) exception, but concluded that Article XX(g) was not applicable in this case.  The US announced implementation of the recommendations as of 19 August 1997, at the end of the 15 month reasonable period of time.  

Meeting of the Dispute Settlement Body: 12 December 2000

The Dispute Settlement Body (DSB) consists of all the members of the WTO and meets each month in Geneva.  Australia uses the DSB meetings to monitor progress and to register its views on disputes of interest.

The agenda of the meeting of 12 December 2000 was as follows (any Australian interventions are indicated):

1.      Surveillance of implementation of recommendations adopted by the DSB:

European Communities
regime for the importation, sale and distribution of bananas: status report by the European Communities
Japan 

measures affecting agricultural products (varietal testing): status report by Japan

Australia again registered its interest in implementation on varietals and the need for any resolution to be consistent with DSU Article 3.  We have an interest in horticultural exports to Japan and have sought assurances from Japan that new measures for testing fruit products will not discriminate against Australian exports.

Canada
measures affecting the importation of milk and the exportation of dairy products: status report by Canada

Australia sought additional information from the parties on the new provincial dairy schemes.  Australia is continuing to monitor Canadian implementation carefully.

India
quantitative restrictions on imports of agricultural, textile and industrial products: status report by India

This dispute is between the US and India. Australia resolved its dispute with India on the same issues in March 1998.

Turkey
restrictions on imports of textile and clothing products: status report by Turkey
India 
measures affecting the automotive sector: Request for the establishment of a panel by the European Communities
Philippines
measures affecting trade and investment in the motor vehicle sector: Request for the establishment of a panel by the United States

2.      Implementation action

Guatemala
definitive anti-dumping measures on grey Portland cement from Mexico: Report of the Panel

3.      Statement by Brazil concerning implementation of DSB recommendations in Brazil-Export Financing (Aircraft Subsidies) 

4.      Panel request – Measures affecting the transit and importation of swordfish: Request for the establishment of a panel by the European communities

5.      Panel request: Measures affecting telecommunication services

6.      Recourse by Canada to DSU Article 22.7 and 4.10 of the SCM Agreement: Brazil

Brazil-Export Financing (Aircraft Subsidies)

We supported Japan’s intervention that it was not comfortable with Canada’s decision to request DSB authorisation based on its own unilateral determination of non-compliance.  We encouraged the parties to seek a pragmatic solution to this dispute, including as necessary through further recourse to expedited DSU proceedings.

Managing WTO Disputes: Institutional Arrangements

As advised in our first Bulletin, the Department has established the Trade Law Branch in the Trade Negotiations Division.  The Branch includes additional resources for Australia's participation in WTO disputes.  The Branch takes the lead role in initiating and defending Australia in WTO disputes.

Assistance to exporters and industry groups on WTO issues is provided through the WTO Disputes Investigation and Enforcement Mechanismlaunched by Mr Vaile in 1999.  Under the Mechanism, any Australian exporter can seek Government support and assistance in circumstances where other WTO Member governments may not be honouring their obligations under the WTO Agreements.  The Mechanism sets up a partnership between exporters and the Government to exercise Australia's WTO rights for the benefit of exporters, and Australia as a whole.  Assistance via the Mechanism is available to all actual or would-be exporters whether as individual entities or as industry associations, no matter the exporter's size or the product specialisation.  There is no pre-qualification level for access or any charge for use of the mechanism.  

The Trade Law Branch is also available to advise State and Territory Governments on the WTO aspects of State and Territory proposals or measures involving the use of trade or trade related actions.

Resources permitting, the Trade Law Branch will consider requests to address business, community and educational groups with an interest in the WTO generally, the rights and obligations of WTO membership, the WTO’s dispute settlement system and the WTO Disputes Investigation and Enforcement Mechanism. 

For more information or for assistance, contact us at wto.disputes@dfat.gov.au 

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The Monthly Bulletin is an overview of Australian involvement in WTO Dispute Settlement from the WTO Trade Law Branch of the Department of Foreign Affairs and Trade . It updates Australian involvement in specific WTO disputes and, more generally, in disputes in which Australia has a policy or economic interest. Also included are the agendas of meetings of the WTO Dispute Settlement Body (DSB), with specific reference to any Australian interventions.

For more information and copies of previous issues, visit Australia and WTO dispute settlement.

For more general information relating to the Doha Round of Trade negotiations, see the WTO Doha Round Bulletin.