Australia and WTO Dispute Settlement

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Monthly Bulletin: August 2001

RECENT DEVELOPMENTS

US to Implement WTO Findings on Lamb

Australia's Minister for Trade Mark Vaile has reached agreement with the United States (US) Administration on the implementation of the WTO findings on lamb, with the US agreeing to lift its tariff rate quota on lamb on 15 November 2001.  Access to the US lamb market will be unrestricted from that date.  Since 22 July 1999 access has been restricted by an in-quota tariff, currently 3%, and an above-quota tariff, currently 24%.  The quota had been set based on US import levels in 1998, with Australia and New Zealand together accounting for approximately 99% of US lamb imports.

The WTO Appellate Body found in May that this tariff rate quota was WTO inconsistent.  The US Administration has apparently obtained the agreement of US lamb producers to the removal of the tariff rate quota, in return for continuing to provide adjustment assistance worth over US$40 million to US domestic lamb producers until 2003.

Visit to Australia by Professor Weiler

Professor Joseph Weiler, Professor of Law at New York University, leading WTO trade law academic and panellist in two previous WTO disputes (Brazil Coconut and US Section 301) recently visited Australia.  Professor Weiler came to Australia as a guest of the Institute of Comparative and International Law to present the annual Sir Kenneth Bailey Memorial Lecture on 15 August at the University of Melbourne.

On 17 August, Professor Weiler also presented a public lunchtime seminar at the Department of Foreign Affairs and Trade on the topical issue of WTO and national sovereignty.  Professor Weiler's seminar was entitled Reconciling National Sovereignty and Regulatory Autonomy with the Discipline of Free Trade in the World Trade Organization Panel and Appellate Body Jurisprudence.  Drawing on recent WTO disputes and hypothetical scenarios, Professor Weiler examined the tensions between the costs and benefits of free trade regimes and national regulatory autonomy.  Professor Weiler's address will shortly be available on DFAT's webpage at http://www.dfat.gov.au/trade/negotiations/wto_disputes.html

New Procedure

Readers may be interested to note the use of a new procedure in United States: Section 110(5) Copyright Act ("Homestyle"exemption) (WT/DS160).  This is the first dispute in which recourse has been made to Article 25 of the Dispute Settlement Understanding to establish the level of compensation.  The procedures agreed between the parties are largely modelled on Article 22 arbitration procedures and practice.  The process will essentially involve an assessment of compensation against a legally determined retaliatory level, and is due to be completed by 5 October 2001.

RESOLVING EXPORT ACCESS PROBLEMS THROUGH THE WTO SYSTEM

If you have answered "yes" to those questions, the Department of Foreign Affairs and Trade stands ready to examine and discuss options for resolution of your access problems.  Exporters can contact WTO legal specialists in the Department on the following numbers:

Australia as a Complainant (3)

Korea:  Measures affecting imports of fresh, chilled and frozen beef (WT/DS169 and WT/DS161)

Australia, the US and Korea have agreed on a reasonable period of time for Korea to implement the recommendations of the DSB, expiring on 10 September 2001. Consultations are continuing between the parties on Korea's implementation measures.  Korea has announced that it will abide by the WTO findings including the abolition of the retail arrangements that restrict the sale of imported beef.  Korea has set in train the regulatory processes for complying with the 10 September deadline.

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

On 31 August, Australia, New Zealand and the US agreed a settlement of this dispute, under which the US will lift its tariff rate quota on lamb on 15 November 2001.  (See the report in Recent Developments above).  This followed agreement by Australia and New Zealand on 14 August not to invoke WTO arbitration of what the reasonable time period for implementation should be in return for a formal agreement with the US that preserved Australia's and New Zealand's arbitration rights, including the conclusion of any arbitration process by 30 September if such a process had been initiated.

United States: Continuing Dumping and Subsidy Offset Act of 2000 (Byrd Amendment) (WT/DS217)

A panel with standard terms of reference was established at the 23 August 2001 DSB meeting.  Australia, Brazil, Chile, EC, India, Indonesia, Japan, Korea, and Thailand are the co-complainants.  Canada and Mexico made a first request for establishment of a panel at this DSB meeting on a similar complaint (WT/DS234).  The US exercised its right to prevent establishment of a panel and this request will be deferred to the next meeting when it is expected to be established.

Disputes involving Australia as a Third Party (10)

Chile: Price band system and safeguard measures relating to certain agricultural products (WT/DS207)

No new developments. The first substantive meeting of the parties is scheduled for 12-13 September 2001 with the final report scheduled to be publicly released on 21 February 2002.

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.

United States: Import prohibition of certain shrimp and shrimp products (the shrimp/turtle" case) (WT/DS58)

Malaysia has appealed the Article 21.5 (implementation) panel report circulated on 15 June 2001, which found that the revised US shrimp import measure was provisionally' consistent with Article XX of the GATT 1994. Australia lodged its third party written submission in this appeal on 17 August 2001 (available on DFAT's webpage at http://www.dfat.gov.au/ trade/negotiations/environment/us_shrimp.html).  The oral hearing will be held on 4 September and the Appellate Body's report is due by 21 October.

Canada: Measures affecting the importation of milk and the exportation of dairy products (WT/DS103 and WT/DS113)

No new developments.  The compliance panel circulated its report to WTO Members on 11 July 2001 and found in favour of the US and New Zealand by ruling that the revised Canadian measures amount to export subsidies and Canada had breached its quantity commitment levels for exports of cheese.  Canada has publicly announced its intention to appeal the report.

United States: Section 110(5) Copyright Act ("Homestyle"exemption) (WT/DS160)

The reasonable period of time for the US to implement the recommendations and rulings of the DSB on section 110(5) of the US Copyright Act has been extended to 31 December 2001 or until the current session of Congress adjourns, whichever is the earlier.  The US and the EC are engaged in negotiations on compensation and have jointly requested arbitration pursuant to Article 25 of the Dispute Settlement Understanding to determine the level of nullification and impairment of benefits to assist these negotiations (see the report in Recent Developments above).  The US and the EC decided to exclude other WTO members from this process.  Australia registered its expectation with the US that any arrangement between the US and EC on compensation should be consistent with the WTO agreements and not impair benefits to Australia.

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

The Panel's report was adopted at the 23 August 2001 DSB meeting.  The Panel found that an export restraint as defined in this dispute does not constitute a financial contribution within the meaning of Article 1.1(a) of the WTO Subsidies Agreement. It also found that US law does not require the imposition of countervailing duties against practices that are not subsidies and is therefore not inconsistent with the Subsidies Agreement.

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

No new developments.  The Chairman of the Panel has advised that the Panel expects to complete its work by early September 2001.

United States: Tax Treatment for Foreign Sales Corporations (WT/DS108)

The Article 21.5 compliance panel released its report on 20 August 2001.  The panel found that the revised US FSC scheme was inconsistent with US WTO obligations and that the US had therefore failed to implement the recommendations and rulings of the DSB.  The US has yet to decide whether it will appeal this panel report.

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

The second Article 21.5 Panel reported was adopted at the 23 August 2001 DSB meeting.  The Panel found that Brazil's export financing program (PROEX III) was not inconsistent, on its face, with the WTO Subsidies Agreement.

Canada: Export credits and loans guarantees for regional aircraft (WT/DS222)

No new developments. The first substantive meeting of the parties and third parties was held on 27-28 June 2001. The panel is scheduled to release its report publicly in October 2001.

Disputes in which Australia has a Policy or Economic Interest (7)

Japan:  Measures affecting agricultural products (Varietal testing) (WT/DS76)

No new developments.  Japan has advised that it would be able to notify the DSB soon of a mutually satisfactory solution found with the US. 

EC:  Regime for the Importation, Sale and Distribution of Bananas (WT/DS27)

No new developments.  The EC is continuing its efforts to obtain the two waivers it requires to implement its bilateral settlements with the United States and Ecuador in this dispute. 

Brazil:  Measures affecting patent protection  (WT/DS199)

The United States and Brazil notified to the DSB in July that a mutually satisfactory solution on the matter had been found.  The parties have agreed to have recourse to a new bilateral consultation mechanism should Brazil use Article 68 to grant a compulsory licence on a patent held by a US company. The withdrawal of the WTO dispute was expressed to be without prejudice to their different interpretations of the consistency of section 68 of Brazil's Industrial Property Law with Brazil's obligations under TRIPS.

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

A panel with standard terms of reference was established at the 23 August 2001 DSB meeting.  Third party rights were reserved by the EC, India, Japan and Chile.  Canada is challenging the legality of a specific aspect of the US statute controlling the US implementation of DSB rulings.

Canada: Patent Protection Term (WT/DS170)

No new developments.  Canada notified its compliance with its WTO TRIPS obligations at the 24 July 2001 DSB meeting after amendment of its Patents Act.

European Communities: Measures Affecting Soluble Coffee (WT/DS209)(Consultation request)

The EC and Brazil announced on 11 July that they had reached an agreement to solve their dispute over soluble coffee with the EC agreeing to provide greater access to its market to soluble coffee from Brazil.  The EC is expected to publish a directive on the settlement in September 2001.

United States Section 211 Omnibus Appropriations Act (WT/DS176)

In its report released on 6 August 2001 the panel found that WTO intellectual property rules do not cover trade names company or business names that are not registered as trademarks.  The EU has indicated that it will appeal this finding.  The panel ruled in favour of the EU's claim that a U.S. law known as Section 211, which prevents U.S. recognition of trademarks and other intellectual property used in connection with confiscated property, violates WTO rules. 

Meetings of the Dispute Settlement Body: July 2001

The DSB, consisting of all the Members of the WTO, met on 23 August 2001. The next regular DSB meeting will be held on 25 September 2001.  Australia uses DSB meetings to monitor progress and to register its views on disputes of interest. The agenda of the August DSB meeting was as follows (any Australian interventions are indicated):

DSB Meeting 23 August 2001

1. Panel Request

US Countervailing Measures concerning Certain EC Products (WT/DS212)

Panel request deferred until next DSB meeting.

2. Panel Request

US Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany (WT/DS213)

Panel request deferred until next DSB meeting.

3. Panel Request

US Definitive Safeguard Measures on Imports of Steel Wire Rod and Circular Welded Carbon Quality Line Pipe (WT/DS214)

Panel request deferred until next DSB meeting.

4. Panel Requests

US Continued Dumping and Subsidy Offset Act of 2000 (Byrd Amendment) (WT/DS217)

Panel was established at the request of Australia, Brazil, Chile, the EC, India, Indonesia, Japan, Korea and Thailand

US Continued Dumping and Subsidy Offset Act of 2000 (Byrd Amendment) (WT/DS234)

Panel request deferred until next DSB meeting.

5. Panel Request

US Section 129(c)(1) URAA  (WT/DS221)

Panel established at Canada's request.

6. Adoption of Panel Report

US Measures Treating Export Restraints As Subsidies (WT/DS194)

The report was adopted.

7. Adoption of Panel Report

Brazil - Export Financing Programme for Aircraft (Article 21.5) (WT/DS46)

The Article 21.5 Panel report was adopted.

8. Adoption of Panel and Appellate Body Reports

United States Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan (WT/DS184).

The reports were adopted.

9. Other Business

European Communities Anti-Dumping Duties on Imports of Cotton-Type Bed-Linen from India (WT/DS141)

India expressed the view that the EC had not achieved full implementation of the DSB rulings within the reasonable period of time, which was refuted by the EC.

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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.