Australia and WTO dispute settlement
Monthly Bulletin: April 2002
Subscription / unsubscription information
RESOLVING EXPORT ACCESS PROBLEMS THROUGH THE WTO SYSTEM
If you have answered "yes" to those questions, the WTO Trade Law Branch of the Department of Foreign Affairs and Trade stands ready to assist in developing options for resolution of your access problems. Exporters can contact WTO legal specialists in the Department on the following numbers:
|
RECENT DEVELOPMENTS
|
WTO Dispute Settlement Training Seminar In Jakarta
Participants at the seminar heard how evidence of the possible
WTO-inconsistency of another WTO Member's measure could provide
useful leverage for developing countries in addressing bilateral
trade and market access problems. Moreover, wins in the WTO by
other countries can provide substantial benefits for developing
countries with similar export interests (for example, in agriculture
or textiles) given the WTO requirement that all measures be implemented
on a Most-Favoured-Nation basis (i.e. equal treatment must be accorded
to all trading partners that are WTO members). SPECIAL FEATURE With this issue, we introduce an occasional series looking at cases which have policy and/or systemic aspects of particular interest. Some excerpts from the Panel Report in United States – Sections 301-310 of the Trade Act of 1974 (WT/DS152, adopted 27 January 2000) are attached to this Bulletin. The European Communities claimed that sections 301-310 of the Trade Act of 1974 breached the United States' obligation under Article 23 of the Dispute Settlement Understanding (DSU) not to take unilateral action to resolve disputes concerning matters that were subject to WTO disciplines. The Panel's discussion of the relationship between WTO disciplines generally and the DSU in particular, and the provision of a secure and predictable multilateral trading system, includes some comments addressing the broad general relevance of the WTO system to individual businesses and companies. The Panel's discussion of the good faith interpretation requirement of the Vienna Convention on the Law of Treaties is also of interest. The full report is available through the WTO website at http://docsonline.wto.org/DDFDocuments/t/WT/DS/152R.DOC. |
Australia as a Complainant (1)
United States: Continuing Dumping and Subsidy Offset Act of 2000 (“Byrd Amendment”) (WT/DS217 and WT/DS234)
No new developments. The eleven co-complainants (including Australia) are arguing that the United States Continued Dumping and Subsidy Offset Act of 2000 (the “Byrd Amendment”) is inconsistent with US obligations under GATT 1994, the Anti-Dumping Agreement and the Agreement on Subsidies and Countervailing Measures. This Act requires US customs authorities to distribute anti-dumping and countervailing duties assessed on imports to US domestic parties that supported the original petition for anti-dumping or countervailing duties to be imposed. Two oral hearings have been held. The Panel is expected to release its final report on 10 July 2002. Copies of Australia's submissions to the “Byrd Amendment” panel can be found at: http://203.6.171.3/trade/negotiations/disputes/wto_disputes-US_AD.html
Disputes involving Australia as a Third Party (8)
Mexico – Measures Affecting Telecommunications Services (WT/DS204)
The US is arguing that Mexico has failed to implement its GATS commitments for the cross-border supply of basic telecommunications services. It alleges that certain measures largely embodied in Mexico's International Long Distance Rules breach Sections 1 and 2 of the basic telecommunications Reference Paper incorporated into Mexico's Schedule of Commitments, Section 5 of the GATS Annex on Telecommunications and GATS Article XVII. A Panel was established at the 17 April DSB Meeting. Australia, Canada, Cuba, the EC, Guatemala, Japan and Nicaragua have reserved their third party rights in this dispute.
Chile: Price band system and safeguard measures relating to certain agricultural products (WT/DS207)
No new developments. The Panel report is still not publicly available but is expected soon.
European Communities (EC): Measures affecting meat and meat products (Hormones) (WT/DS26)
No new developments. The EC is still facing WTO-authorised retaliation by the US and Canada because of its failure to implement within a reasonable period of time. We understand that the US and the EC are engaged in discussions on a compensation arrangement. Australia has registered its expectation that any compensation will be applied on a non-discriminatory basis.
Canada: Measures affecting the importation of milk and the exportation of dairy products (WT/DS103 and WT/DS113)
The Article 21.5 panel held its meeting with the parties (US and New Zealand) and third parties (Australia, Argentina and the EC) on 22-23 April. In Australia's statement we addressed the application in this matter of the elements of Article 9.1(c) of the Agreement on Agriculture on export subsidies, including “payments” and “by virtue of governmental action”. The parties to this dispute are arguing that, since the Appellate Body's Article 21.5 Report did not make any findings on the consistency of Canada's new measures, they continue to believe that Canada's implementation measures, introduced as a result of the DSB's original recommendations and rulings, are inconsistent with its WTO obligations. The final report is due by 22 May.
United States: Section 110(5) Copyright Act (“Homestyle” exemption) (WT/DS160)
No new developments. The arbitration over the level of suspension of obligations proposed by the EC following the US failure to bring its measures into conformity within the reasonable period of time remains suspended (but can be reactivated at the request of either party). The EC and the US continue to be engaged in discussions on a compensation arrangement, which it is understood would involve the US paying the EC US$1.1 million per annum over three years pending implementation of the Panel's findings. Australia has continued to register its expectation that any compensation will be applied on a non-discriminatory basis.
United States: Definitive safeguard measures on imports of circular welded carbon quality line pipe from Korea (WT/DS202)
The Appellate Body and Panel Reports were adopted at the 8 March DSB meeting. The Appellate Body largely found in favour of Korea's challenge to the February 2000 US line pipe safeguard. The US has indicated that it will require a reasonable period of time to implement the DSB's rulings and recommendations in this dispute.
United States: Tax Treatment for “Foreign Sales Corporations” (WT/DS108)
Arbitration is continuing on the EC's USD 4 billion retaliation claim. The US has objected to the level claimed by the EC and has argued that the annual retaliation by the EC should not exceed USD 956 million. The arbitrators' report was due on 29 April, but is now expected to be issued on 17 June. Following the circulation of the arbitration report, the EC can seek DSB authorisation to proceed with the retaliatory action against the US specified in the arbitrator's award.
Canada: Export credits and loans guarantees for regional aircraft (WT/DS222)
No new developments. Canada and Brazil remain engaged in discussions on implementation.
Disputes in which Australia has a policy or economic interest (8)
Japan: Measures affecting agricultural products (“Varietal testing”) (WT/DS76)
No new developments. Japan reached an agreement with the US on a mutually satisfactory solution last September. Australia has registered its expectation that the outcome will be applied in a non-discriminatory manner to the products of all WTO members.
United States: Section 129(c)(1) of the Uruguay Round Agreements Act (WT/DS221)
No new developments. Canada is challenging the legality of a specific aspect of the US statute controlling the US implementation of DSB rulings. A panel was established at the 23 August 2001 DSB meeting, and was constituted on 30 October. Third party rights were reserved by the EC, India, Japan and Chile.
United States: Section 211 Omnibus Appropriations Act (WT/DS176)
The US and the EC have reached a mutual agreement on the reasonable period of time for the US to implement the recommendations and rulings of the DSB in this dispute. The Panel and Appellate Body Reports adopted at the 1 February DSB meeting found that portions of the US legislation were inconsistent with US obligations under the WTO Agreement. In the light of these findings, which call for legislative action by the US Congress, the US and the EC have agreed that the reasonable period of time will expire on 31 December 2002, or on the date on which the current session of the US Congress adjourns, whichever is later, and in no event later than 3 January 2003.
EC: Generalized System of Preferences
(WT/DS242)
No new developments. Thailand has requested consultations with the EC under Article XXIII of GATT 1994 in respect of measures under the EC' Generalized System of Preferences (“GSP”) scheme. Consultations took place on 14 February. Thailand is claiming that, through its GSP scheme as implemented, the EC fails to carry out its obligations under Article I of GATT 1994 (Most-Favoured-Nation Treatment) and the Enabling Clause, as incorporated into GATT 1994. Thailand has also made a non-violation claim. This dispute raises a number of systemic issues of interest/concern to Australia, including jurisprudence on GSP graduation, the application of non-economic conditionality to the grant of GSP preferences and the potential for this issue to be divisive for developing countries.
EC: Conditions for the Granting of Tariff Preferences to Developing
Countries (WT/DS246)
No new developments. India has requested consultations with the EC on similar issues to Thailand's request above. India has cited Article I.1 of GATT 1994 (Most-Favoured-Nation Treatment) and the Enabling Clause as the legal basis for its concerns with regard to tariff preferences to selected countries under special arrangements for combating drug production and trafficking, and tariff preferences accorded under special incentive arrangements related to EC-determined standards on the protection of labour rights and the environment. Venezuela and Colombia have requested to be joined in the consultations but have no entitlement to be joined as India's request for consultations was made under Article XXIII GATT 1994. This dispute raises similar systemic issues for Australia as EC: Generalized System of Preferences (above).
Japan: Measures Affecting the Importation of Apples (WT/DS245)
Consultations were held on 18 April between the US and Japan over Japan's fire blight quarantine measures for imported apples. These measures include the prohibition of imported apples from orchards where fire blight is detected (or if it is detected within a 500 metre buffer zone), a requirement for three orchard inspections a year and post-harvest treatment of exported apples with chlorine. The US is claiming that these measures are inconsistent with Japan's obligations under Article XI of GATT 1994, several provisions of the SPS Agreement and Article 14 of the Agreement on Agriculture. The US has also made a non-violation claim. The US choice of Article XXIII of GATT 1994 as the procedural avenue for its request precludes third party participation in these consultations (but would not prevent third party participation in panel proceedings).
United States: Equalizing Excise Tax Imposed by Florida on Processed Orange and Grapefruit Products (WT/DS250)
Brazil has requested consultations with the US on the “Equalizing Excise Tax” imposed by the State of Florida on processed orange and grapefruit products produced from citrus fruit grown outside the US. Brazil is claiming that the exemption from this tax of products produced in whole or in part from citrus fruit grown within the US treats imported products less favourably than domestic products and is in violation of national treatment obligations under Article III.2 of GATT 1994. Brazil also makes other national treatment violation claims, including that the use of the proceeds of the tax to advertise and promote Florida grown citrus and citrus products with no promotion of imported citrus products violates Article III.4 and III.1 of GATT 1994.
US: Definitive Safeguard Measures on Imports of Certain Steel Products (WT/DS248, WT/DS249, WT/DS 251, WT/DS 252, WT/DS 253, WT/DS 254)
The EC, Japan, Korea, China, Switzerland and Norway held joint consultations with the US on 11-12 April concerning the definitive safeguard measures imposed by the US on imports of certain steel products. The US agreed to third party participation in the consultations by Canada, Mexico, New Zealand and Venezuela. The complainants argue that the definitive safeguard measures imposed by the US in the form of an increase in duties on imports of certain flat steel, hot-rolled bar, cold-finished bar, rebar, certain welded tubular products, carbon and alloy fittings, stainless steel bar, stainless steel rod, tin mill products and stainless steel wire and in the form of a tariff rate quota on imports of slabs (all effective as of 20 March 2002) are inconsistent with US obligations under the GATT 1994 and the Agreement on Safeguards.
Meetings of the Dispute Settlement Body: April 2002
The DSB, consisting of all the Members of the WTO, met on 5 April and 17 April 2002. The next regular DSB meeting will be held on 22 May 2002. Australia uses DSB meetings to monitor progress and to register its views on disputes of interest. The agendas of the April DSB meetings were as follows (any Australian interventions are indicated):
Special DSB Meeting – 5 April 2002
1. Implementation of Recommendations adopted by the DSB
|
United States – Definitive Safeguard Measures on Imports of Circular
Welded Carbon Quality Line Pipe from Korea (WT/DS202) The US confirmed its intention to implement the DSB's rulings and
recommendations, indicating that it would need a reasonable period
of time to do so. |
2. Adoption of the Report of the Panel
|
India – Measures Affecting the Automotive Sector (WT/DS146 and WT/DS175) The Panel report was adopted. (India's appeal had been withdrawn prior to the Appellate Body hearing). The two complaining parties (the EC and US) welcomed the panel report and urged India to take the necessary action to resolve outstanding WTO inconsistencies. India expressed systemic concerns with the Panel's approach in making its recommendations in the final part of the report because the Panel had looked at whether events that took place subsequent to the Panel's establishment might have affected the existence of any WTO inconsistencies identified in its report. |
DSB Meeting – 17 April 2002
1. Surveillance of Implementation of Recommendations adopted by the DSB
|
United States – Section 110(5) of the US Copyright Act
(WT/DS160) The US said that it continued to be engaged in discussions with the EC to find a positive and mutually acceptable resolution of the dispute.
The EC requested that the US include some informative elements about its progress toward compliance in its next status report.
Australia made the following points in our intervention:
· At a number of previous DSB meetings, we have registered our concern about the continued delay in U.S. implementation in this dispute, and raised concerns about the discriminatory nature of the proposed compensation arrangements reached between the U.S. and EC
· We take this opportunity to reiterate these concerns and to record, once again, our expectation that any compensation arrangement reached between the parties be applied on a non-discriminatory basis.
|
2. Surveillance of Implementation of Recommendations adopted by the DSB
|
United States – Anti-Dumping Act of 1916 (WT/DS162) The US noted again its introduction into Congress of a bill to repeal the 1916 Act and prevent entry of judgments pursuant to that Act and said that it was continuing to work with the EC and Japan to reach a mutually satisfactory resolution to this dispute.
The EC called for the bill to repeal the act and terminate pending cases to be adopted before the end of the period agreed for suspension of the arbitration in this dispute.
|
3. Panel Request
|
Mexico – Measures Affecting Telecommunications Services (WT/DS204) - request by the US for the establishment of a Panel.
A Panel was established. Third party rights in this dispute were reserved at the meeting by Canada, Cuba, the EC, Guatemala, Japan and Nicaragua. Australia also subsequently reserved its third party rights.
Australia made the following point in our intervention:
· we consider the issues that will be raised in this dispute to be of fundamental importance, both in the context of the GATS, and in relation to the telecommunications sector. |
4. Panel Request
|
Argentina – Definitive Anti-Dumping Duties on Poultry from Brazil (WT/DS241) - request by Brazil for the establishment of a Panel.
A Panel was established.
|
5. Panel Request
|
United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan (WT/DS244) - request by Japan for the establishment of a Panel.
Panel was not established as the US opposed the request. Panel request deferred to the next DSB meeting.
|
6. Request for Article 21.5 Panel
|
European Communities – Anti-Dumping Duties on Imports of Cotton-type Bed Linen from India (WT/DS141) - request by India for the establishment of an Article 21.5 implementation Panel.
India withdrew its panel request for the time being because of the EC's intention to oppose the request on the grounds that the mandatory 60 day consultation period had not expired.
|
INTRODUCTION TO THE WTO DISPUTE SETTLEMENT SYSTEMPAPER FOR PRESENTATION TO HIGH-LEVEL SEMINAR: THE WTO LEGAL SYSTEM – MAKING IT WORK FOR INDONESIA, JAKARTA8 APRIL 2002 Paper presented by Joan Hird INTRODUCTIONThis paper is not intended to provide a full outline of the WTO dispute settlement system's rules and procedures, or an analysis of WTO jurisprudence. The WTO Secretariat publication “Trading into the Future” – provides a detailed summary of the relevant WTO rules and procedures. The full legal texts can be found in the WTO publication “The WTO Dispute Settlement Procedures”. A summary of all WTO disputes can be found on the WTO home page[3]. The paper concentrates on the role of dispute settlement in the multilateral trading system and the way that it can serve the interests of individual WTO members. The WTO dispute settlement system constitutes an equitable means of enforcing the multilateral trade treaty rights between 144 governments engaged in world trade. It is not based on relative economic or political power. It provides strong legal disincentives to unilateral actions by the more powerful trading countries and serves to prevent economic disputes from developing into political disputes. While the larger economic countries are among the most active users of the system, other WTO members – including many developing countries – have used the system to their advantage in successful challenges - including against the major developed countries. To date, 250 complaints have been initiated under the WTO dispute settlement system. Many of these complaints have been settled through consultations conducted within the framework of the system. There are probably very many more issues that have been settled informally, using the leverage of the compulsory, binding and enforceable nature of the system to encourage the other party to adjust its measures. It is recognised that the benefits of the system may be dependent on the capacity of an individual WTO member to utilise the system to its advantage. In Australia's experience, recourse to dispute settlement does not depend on unlimited funds. It does however require the development and retention of a core of skilled resources and – most importantly – partnership with private sector exporters. WHAT IS THE WTO DISPUTE SETTLEMENT SYSTEM?1. The WTO dispute settlement system has a central place in the multilateral trade system. The dispute settlement system has legal character and has treaty status. It is embodied in the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes, otherwise known as the “Dispute Settlement Understanding” or “DSU”[4] 2. The purpose of the WTO dispute settlement system is clearly expressed in the WTO treaty:
3. The Dispute Settlement Understanding applies to all the WTO covered Agreements, including the thirteen Multilateral Agreements on Trade in Goods, the General Agreement on Trade in Services, the Agreement on Trade-Related Aspects of Intellectual Property Rights and the two Plurilateral Trade Agreements. A WTO member may invoke the Dispute Settlement Understanding if it considers that any of its rights under one of more of those Agreements is being impaired by the actions of another WTO member. 4. The WTO dispute settlement system has four distinct attributes:
5. The system applies to those trade and trade-related actions of government signatories and of regional governments or other authorities within the territories of signatory governments that are covered by WTO rules. The system allows for joint or multiple complaints. Indonesia and Australia – along with a number of other WTO members - are currently joint complainants in a dispute with the United States[8]. 6. The dispute settlement system is structured in a way that encourages the mutually satisfactory resolution of disputes. The system effectively operates at seven levels:
7.As an alternative to the formal WTO-litigated processes of panels and appeals, the parties may agree on binding arbitration procedures, such as those provided for by Article 25 of the DSU. Such procedures generally involve a more rapid time-period for outcomes, but would exclude the right of appeal on questions of law. The time frame for outcomes from litigated disputes can range from 12 months to three years, taking into account appeal processes and implementation periods. 8.To date, the majority of disputes have resulted in WTO compliance within the reasonable period of time. The few exceptions involve non-implementation by the United States, the EC, Japan and Canada, which have given rise to negotiated compensation or WTO-authorized retaliation. In the case of Japan, short term compensation was negotiated pending legislative adjustments to its taxation regime for alcoholic beverages. In the case of the EC, WTO-authorised retaliation was applied in respect of continuing WTO-inconsistent measures applying to bananas and hormone-treated beef (the bananas regime has since been brought into WTO conformity, including through a WTO-authorized waiver). It is reported that the United States is providing monetary compensation to the EC for its failure to amend certain copyright legislation. The United States has withheld certain bilateral concessions to Canada in respect of Canada's measures on imported periodicals. 9.WTO rules allow for third parties to intervene in disputes where a substantial interest has been identified. At the consultation stage, the right to intervene requires the agreement of the respondent party, but third party rights to intervene in panel and appeal processes are automatic. Participation as a third party does not lead to any rights of enforcement, but rather provides an opportunity to argue certain legal points. Third party participation may also provide useful experience in WTO legal processes, in regard to access to the submissions of parties, the drafting of third party submissions and representation at oral hearings during panel and appellate processes. DEVELOPING COUNTRY PARTICIPATION IN THE WTO DISPUTE SETTLEMENT10. To date, more than 20 developing WTO members have initiated challenges under the WTO dispute settlement system, including a number of WTO members in Latin America and from the broader Asia region. Brazil is the most prominent of the Latin American countries. In the Asian region, India has been the most prominent complainant. ASEAN countries are well represented: Thailand, Malaysia, the Philippines and Indonesia have all initiated complaints, with Thailand the most prominent ASEAN user of the system. 11. Many of those challenges have secured successful outcomes for developing country exporters, including in the areas of trade remedies (anti-dumping, countervailing and safeguards), tariffs, non-tariff measures, discriminatory treatment, subsidies, as well as in important sectors such as agriculture and textiles and covering commodities of export interest to Indonesia (eg coffee, rice, fish, gasoline, timber and tropical fruit). 12. Cooperation between developing countries - and between developed and developing countries – is evident from the range of joint or multiple complaints. These include complaints by the Philippines, Malaysia, Pakistan and Thailand against the United States shrimp import embargo[9], the complaints by a number of Latin American countries and the USA against the discriminatory EC banana import regime[10] and the complaints by developing countries in Asia and Latin America - together with a number of developed countries – against the United States “Byrd Amendment” arrangements.[11] 13. As a demonstration of the robust nature of the WTO system, several cases have involved disputes between developing countries, many of them between Latin American countries, but also including complaints by the Philippines against Brazil, India against Turkey and Thailand against Egypt. 14. More developing countries have been involved in the initiation
of complaints than in the defence of measures. Around twelve developing
WTO members have been subject to complaints, some of these involving
disputes between developing countries. In the Asia region, the disputes
include complaints against Pakistan (export restrictions), Korea
(on beef and alcoholic beverages) the Philippines (national treatment,
anti-dumping) India (import licensing, tariffs, assistance to the
auto sector, quantitative import restrictions, patents) and Indonesia
(assistance to the auto sector). ACCESS TO THE DISPUTE SETTLEMENT SYSTEM15. There is no in-principle barrier to recourse to the dispute settlement system. As noted in the preceding section, developing countries have been active in the system and have successfully challenged measures applied by the major developed members of the WTO. 16. WTO documentation – including all of the WTO panel and Appellate Body reports – is readily accessible and is available on-line from the WTO website. 17. At the same time, the capacity to access the system may depend on the domestic infrastructure of the individual WTO member, including:
18. The forgoing comments are based on experience as an Australian WTO practitioner. I look forward to gaining an Indonesian perspective on these issues. |
[2] This publication is intended to provide a general update and the information within it should not be relied on as complete or definitive.
[3] www.wto.org
[4] The Results of the Uruguay Round of Multilateral Trade Negotiations – The Legal Texts – WTO Secretariat ISBN 92-870-11214, available on -line at www.wto.org
[5] part Article 3.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
[6] Ibid part Article 3.3
[7] Ibid part Article 3.7
[8] United States – Continued Dumping and Subsidy Offset Act of 2000 (“Byrd Amendment”) – WT/DS 234
[9] WT/DS58
[10] WT/DS27
[11] WT/DS234
[12] For example, on-line access to the WTO dispute
documentation (ww.wto.org) and analyses of WTO disputes provided on www.ejil.org
and on www.jeanmonnetprogram.org
Subscription / unsubscription information
[1] To subscribe please send an email to wto.disputes@dfat.gov.au with "subscribe" in the subject line and your contact details in the body of the email. If you want to be removed from the mailing list please send an email to wto.disputes@dfat.gov.au with "unsubscribe" in the subject line.
[2] This publication is intended to provide a general update and the information within it should not be relied on as complete or definitive.
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.
This page last modified: Friday, 03 January 2003 12:31:45 PM
Local Date: Wednesday, 09 July 2008 01:19:45 PM