Australia and WTO dispute settlement

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Monthly Bulletin: January 2001

Australia as a Complainant

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

Last year the Appellate Body upheld an earlier complaint by Australia against Korea's regime in regard to imported beef. The panel and Appellate Body reports were adopted by Members of the WTO at a special meeting of the DSB on 10 January 2001. Australia's statement at this DSB meeting registered its expectation that the dual retail system would need to be removed and its readiness to engage in constructive dialogue with Korea on prompt implementation. The full text of Australia's statement is set out below.

At the next meeting of the DSB (1 February 2001) Korea is expected to confirm that it intends to comply with the DSB recommendations and rulings and that it requires a reasonable period of time to comply.

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. The US has filed an appeal.

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

On December 21 2000 Australia and eight other Members jointly requested dispute settlement consultations with the US over the US trade remedy legislation that, inter alia provides for dumping and subsidy offsets the Byrd Amendment. In January, three further Members (Canada, Argentina and Mexico) made requests to join the consultations. Consultations will be held in February 2001.

Disputes involving Australia as a Third Party

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

Following recent bilateral negotiations between the EC and Chile, the parties have reached a settlement to resolve this dispute and have agreed to suspend current WTO panel proceedings. A panel had been established in December.

EC: Beef hormones (WT/DS26)

No new developments since last update.

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

A panel to examine the WTO consistency of the revised US measures was established on 23 October 2000. The panel met with parties and third parties in sessions on 23 and 24 January 2001. Australia supported Malaysia's claim that the US had failed to comply with DSB recommendations and rulings to bring its inconsistent measure (the import prohibition on certain shrimp) into conformity with its WTO obligations.

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. Canada's recent status report affirms that it will be in full compliance by the conclusion of the reasonable period of time on 31 January 2001.

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

In an award issued on 15 January 2001, a WTO arbitrator has determined that the reasonable period of time for United States to implement the recommendations and rulings in the panel report on section 110(5) of the US Copyright Act is 12 months from the adoption of the report. This period will expire on 27 July 2001.

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

On 19 January 2001, the DSB adopted the Appellate Body report, and the panel report, as modified by the Appellate Body. Australia's statement to the meeting is set out below.

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

No new developments since last update.

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

No new developments since last update.

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

No new developments since last update.

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. On 19 January 2001, Japan presented it twelfth status report in which it advised that it expects that Japan and the US will reach a mutually satisfactory solution in the near future. Japan's implementation is listed on the agenda for the 1 February meeting of the DSB.

EC: Bananas (WT/DS27)

The latest EC status report confirms its intention to proceed with a rapid implementation of its first-come, first-served system described in the EC's report as the WTO-compatible new import regime. As with previous meetings, the EC's report is expected to draw the usual round of critical comments from interested members.

EC: Measures on asbestos (WT/DS135)

The Appellate Body is expected to report by 12 March 2001, as a result of the extension of the appeal timeframes.

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

The Appellate Body report and the panel report, as modified by the Appellate Body, were adopted by the DSB on 10 January 2001.

Brazil: Measures Affecting Patent Protection (WT/DS199)

On 8 January 2001 the US requested a panel in respect of a complaint concerning Brazil's patent system. Brazil exercised its right to prevent the establishment of a panel on the first occasion for DSB consideration of a request. The US has placed this item on the agenda for the 1 February DSB meeting. Brazil is not able to prevent the establishment of a panel at this meeting.    

United States: Section 129(C)(1) of the Uruguay Round Agreements Act (WT/DS221) (Consultation request)

On 17 January 2001 Canada requested consultations with the US concerning section 129(c)(1) of the Uruguay Round Agreements Act (URAA) and the Statement of Administrative Action accompanying the URAA. Canada considers that the US measures are inconsistent with obligations of the US under the Anti-Dumping and Subsidies and Countervailing Measures Agreements.   

European Communities: Tariff rate quota on corn gluten feed from the United States (WT/DS223) (Consultation request)

On 25 January 2001 the US requested consultations with the EC with respect to the application by the EC of a tariff rate quota (TRQ) on corn gluten feed imported from the US following the adoption of the Appellate Body report on wheat gluten (see above). The US considers that the imposition of the TRQ on corn gluten feed imported from the US is inconsistent with particular obligations under GATT 1994 and the Safeguards Agreement.

Meetings of the Dispute Settlement Body: January 2001

The DSB, consisting of all the members of the WTO, met twice in January in two special sessions on 10 and 19 January 2001. The next regular DSB meeting will be held on 1 February 2001. Australia uses DSB meetings to monitor progress and to register its views on disputes of interest. The agendas of the meetings were as follows (any Australian interventions are indicated):

Special DSB Meeting 10 January 2001
1.      Korea Measures affecting imports of fresh, chilled and frozen beef (WT/DS169)

Australia's statement follows:

Australia welcomes adoption of the reports and wishes to thank the Panel and Appellate Body, as well as the Secretariat, for its work.

Australia is pleased that a large range of measures which have discriminated against Australian beef in the Korean market will have to be eliminated or brought into WTO conformity.

There are two distinct elements to implementation: (1) the measures identified in Korea's schedule, which have benefited from a 7 year transitional period expiring on 1 January 2001; and (2) the dual retail system and certain requirements and practices of Korean beef regulatory authorities.

In regard to the measures benefiting from the 7 year transitional period, Australia is assessing the regulatory changes recently gazetted by Korea and requests early confirmation from Korea that it has repealed all relevant regulations relating to:

In regard to the other measures found to be inconsistent, Australia is satisfied that the Panel and Appellate Body recognised the discriminatory effect of dual retailing of imported beef. Australia has some reservations about the Appellate Body's reasoning that formal separation of imported and domestic products at the retail level may not necessarily give rise to an inconsistency with Article III of GATT 1994. However this reasoning cannot in any way provide scope for Korea to exclude imported beef from outlets in which domestic beef is sold to the Korean consumer.

Australia also welcomes the findings in regard to certain requirements and practices of Korean regulatory bodies.

In regard to domestic support levels, Australia notes that the Appellate Body has upheld the Panel findings that Korea's domestic support for beef in 1997 and 1998 was incorrectly calculated. The reasoning behind the findings should assist all WTO Members in the calculation of agricultural support and in undertaking the review of the implementation of commitments under Article 18 of the Agriculture Agreement.

The Panel and Appellate Body reports serve to clarify the key elements of calculating the level of domestic support subject to reduction commitments - for example, that the calculation of domestic support should be based on the production eligible to receive the applied administered price and not the actual quantity purchased. Australia believes that such an approach will ensure that the AMS on individual products will more accurately reflect the economic impact of support mechanisms.

The reports also clarify that, in circumstances where a product is not part of the base AMS calculation, the current AMS should be calculated in accordance with Annex 3 of the Agreement on Agriculture. The use of Annex 3 as the guiding methodology should lead to a more consistent approach by WTO Members to the calculation of domestic support.

Finally, Australia looks forward to receiving advice from Korea within the next 30 days of its intentions in respect of implementation, as provided for in Article 21.3 of the Dispute Settlement Understanding. Australia stands ready to engage in constructive discussions with Korea on prompt implementation.

2. United States - Import Measures on certain products from the European Communities(WT/DS165)
Special DSB Meeting 19 January 2001
1.                  United States Definitive safeguard measures on imports of wheat gluten from the European Communities (WT/DS166/R & WT/DS166/AB/R)                      

Australia's statement follows: 

Mr Chair, I shall restrict my comments today to a systemic issue arising from the Panel and Appellate Body reports on Wheat Gluten. 

Safeguard action is something that Members can only legitimately take in exceptional circumstances. The impact that safeguard measures have on trade is far reaching given that it applies to imports from all sources. Indeed, such action is far more disruptive than other trade remedies, i.e. anti-dumping and countervailing. 

It is essential that the rigour of the obligations set out in the Safeguards Agreement and Article XIX of GATT 1994 is maintained. Any weakening of those obligations would risk a break out on safeguards. 

My delegation was disappointed that the Panel's articulation of the approach to the determination of causation was not confirmed by the Appellate Body. This would have provided greater guidance and certainty to all Members about how to handle investigations. 

Of course the substantive obligation to demonstrate causation has not changed. However, further guidance on the issues will be required to ensure that competent authorities make proper findings on the existence of the causal link so that recourse to safeguard measures is limited strictly to the exceptional circumstances set out in the Safeguards Agreement and Article XIX. 

2.                  Brazil Measures affecting patent protection (WT/DS199)
Managing WTO Disputes: Institutional Arrangements

As advised in our earlier Bulletins, 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 Mechanism launched 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.