Australia and WTO dispute settlement

Monthly Bulletin
February 2003

Resolving Export Access Problems through the WTO System

  • Are you an exporter or intending to export?
  • Do you export to one or more of the 145 markets that belong to the World Trade Organization?
  • Are you experiencing access problems in one or more of those markets?
  • Is the access problem caused by a regulation or directive of the importing government (at central, regional or local government level)?

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 (1)

United States: Continued Dumping and Subsidy Offset Act of 2000 (the "Byrd Amendment") (WT/DS217 and WT/DS234)

At a special meeting of the Dispute Settlement Body on 26 February 2003, the United States stated its intention to implement the Panel and Appellate Body findings in this dispute.  The United States also indicated that it would need a reasonable period of time to do so.  Australia's Statement at the Special DSB Meeting on 26 February 2003 is set out below.

Australia as a Complainant (2)

United States: Continued Dumping and Subsidy Offset Act of 2000 (the "Byrd Amendment") (WT/DS217 and WT/DS234)

See Recent Developments above.

European Communities: Export Subsidies on Sugar - Request for Consultations by Australia (WT/DS/265)

No new developments.  Australia and Brazil (WT/DS/266) held joint consultations with the European Communities in Geneva on 21-22 November over their sugar regime.  The consultations were attended by a record number of third parties (seventeen), mainly ACP (African, Caribbean and Pacific) countries and Canada, Colombia and India.  At the consultations the EC did not provide answers to many of Australia and Brazil's questions and subsequent communications have not proved fruitful.  Australia is seeking further information including economic data. Decisions regarding next steps in the case will be taken once this advice has been received.

Australia as a Respondent (2)

Australia: Certain Measures Affecting the Importation of Fresh Fruit and Vegetables (WT/DS/270)

No new developments.  On 18 October 2002 Philippines requested consultations with Australia regarding its quarantine measures for fresh fruit and vegetables (including bananas).  Consultations were held in Geneva on 15 November 2002.  Thailand and the EC participated as third parties.

Australia: Certain Measures Affecting the Importation of Fresh Pineapple Fruit (WT/DS/271)

No new developments.  On 18 October 2002, the Philippines also requested consultations with Australia regarding its quarantine measures for fresh pineapple fruit.  Consultations were held in Geneva on 15 November 2002.  Thailand and the EC participated as third parties.

Disputes Involving Australia as a Third Party (6)

Mexico: Measures Affecting Telecommunications Services (WT/DS204)

The Panel hearing was held on 18 December 2002.  The Panel is due to issue its final report in July. 

The US alleges 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, and section 5 of the GATS Annex on Telecommunications.

Australia, Brazil, Canada, Cuba, the EC, Guatemala, Honduras, India, Japan and Nicaragua reserved third party rights in this dispute. 

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 U.S and Canada because of its failure to implement within a reasonable period of time.  It was earlier reported that the U.S and the EC were engaged in discussions on a compensation arrangement.  Australia has registered its expectation that any compensation will be applied on a non-discriminatory basis.  The rights of third parties form part of Australia's proposal to the Doha round negotiations on the review of the Dispute Settlement Understanding (TN/DS/W/34).

Canada: Measures Affecting the Importation of Milk and the Exportation of Dairy Products (WT/DS103 and WT/DS113)

Canada, New Zealand and the United States have agreed that the arbitration proceedings under DSU Article 22.6 remain suspended for a further period until 10 April 2003 to permit further consultation.  This is pursuant to the agreement reached on 18 December 2001 between the parties regarding procedures under DSU Articles 21 and 22.

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

The US has stated it continues to work towards a mutually acceptable resolution.  Through arbitration under Article 25 of the DSU, the level of nullification or impairment of benefits to the EC, as a result of the operation of section 110(5)(B) of the US Copyright Act, has been assessed at US$1.1 million per year.

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

Following public consultations, the EC has issued member states with a revised draft list that could be subject to countermeasures, as a result of the ruling in FSC case.   On 29 January 2002 the Appellate Body report was adopted, finding that the revised US Foreign Sales Corporations (FSC) scheme was WTO inconsistent.  In August 2002, the arbitrator ruled that the EU has right to apply countermeasures to the value of US$4 billion. 

Japan: Measures Affecting the Importation of Apples (WT/DS245)

The US complaint in this dispute centres on Japanese quarantine measures that 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 U.S. argues that these measures are inconsistent with Japan's obligations under Article XI of GATT 1994, the SPS Agreement and Article 14 of the Agreement on Agriculture.  The U.S has also claimed non-violation.  A Panel was established at the 3 June 2002 DSB meeting on request by U.S.  Australia reserved its third party rights.  Brazil, Taiwan, New Zealand and the EC also reserved third party rights.  The panel expects to issue its final report mid-year.

Disputes in which Australia has a Policy or Economic Interest (10)

US: Subsidies on Upland Cotton (WT/DS267)

Following consultations with the U.S. in December and January, Brazil requested on 6 February 2003 the establishment of a Panel.  The U.S. exercised its right to block this first panel request but under DSU rules a panel will be established at the second request. 

Brazil set out the basis of its panel request, describing the subsidies paid for the production, use and export of U.S. upland cotton and the adverse effect this has on Brazilian interest through lower world prices and excess U.S export market share.  It outlined how these subsidies had resulted in U.S. cost of production far exceeding world market prices.  Brazil claimed that these subsidies violated the Agreements on Agriculture and Subsidies and Countervailing Measures and the GATT 1994.

Brazil claims that the measures are inconsistent with the obligations of the United States under the following provisions: Articles 5(a) and (c), 6.3(b), (c) and (d), 3.1(a) and (b) and 3.2 of the Subsidies and Countervailing Measures Agreement; Articles 7.1, 8, 9.1 and 10.1 of the Agreement on Agriculture; and Articles III:4, Article XVI.1 and XVI.3 of GATT 1994.

Canada:  Measures Relating to Exports of Wheat (WT/DS/276)

The US has requested WTO dispute settlement consultations on Canadian Wheat Board (CWB) export and import practices.  Canada has rejected all requests, including by Australia, the EC, Japan and Mexico, for participation as third parties at the consultations phase of the dispute.  If the dispute moves beyond consultations to a formal WTO panel, the Government will need to consider Australia's participation at that time.

European Communities: Measure Affecting Imports of Wine (WT/DS263/1)

No new developments. On 4 September 2002, Argentina requested dispute settlement consultations with the EC in relation to the EC's requirements concerning wine acidification processes.  Argentina claims EC regulations and measures are inconsistent with Articles 2 and 12 of the Agreement on Technical Barriers to Trade; Articles I:1 and III:4 of the General Agreement on Tariffs and Trade (GATT 1994); and Article XVI.4 of the WTO Agreement.

Korea: Measures Affecting Trade In Commercial Vessels (WT/DS273)

On 21 October 2002, the EC requested dispute settlement consultations with Korea regarding Korean measures affecting trade in commercial vessels, including advance payment of refund guarantees, pre-shipment loans, corporate restructuring packages and tax concessions.  The EC claims the Korean measures are inconsistent with the Agreement on Subsidies and Countervailing Measures.

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

The Panel and Appellate Body Reports adopted at the 1 February DSB meeting found that portions of the U.S legislation were inconsistent with U.S obligations under the WTO Agreement.  In the light of these findings, which will require legislative action by the U.S Congress, the U.S and the EC have agreed that the reasonable period of time will expire on 30 June 2003.  The most recent Status Report lodged by the U.S notes that the United States Administration has held consultations with the U.S Congress concerning appropriate statutory measures and continues to work with the Congress on resolving the dispute.

EC: Generalized System of Preferences (WT/DS242)

Thailand has requested consultations with the EC under Article XXIII of GATT 1994 in respect of measures under the EC's Generalized System of Preferences ("GSP") scheme.  Consultations took place on 14 February 2002.  Thailand is claiming that, through its GSP scheme as implemented, the EC has failed 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 has the potential for this issue to be divisive for developing countries. 

EC: Conditions for the Granting of Tariff Preferences to Developing Countries (WT/DS246)

Following its March 2002 request for consultations, India's request for establishment of a panel was approved on 27 January 2003.  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.  This dispute raises systemic issues for Australia similar to those identified in EC: Generalized System of Preferences (above).

United States: Equalizing Excise Tax Imposed by Florida on Processed Orange and Grapefruit Products (WT/DS250)

No new developments.  On 1 October 2002, a panel was established regarding U.S measures on processed orange and grapefruit products.  Brazil claims that the exemption from this tax of products produced in whole or in part from citrus fruit grown within the U.S 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.

A U.S judicial decision recently overturned the way in which the excise was applied, ruling that it should be payable by all juices in Florida.  U.S States previously exempt from paying the tax are now objecting to paying a tax which is used exclusively to promote Florida juice.

US: Definitive Safeguard Measures on Imports of Certain Steel Products (WT/DS248, WT/DS249, WT/DS251, WT/DS252, WT/DS253, WT/DS254, WT/DS258, WT/DS259)

A panel was established to hear this matter on 29 July 2002.  The eight complainants (Brazil, China, the European Communities, Japan Korea, New Zealand, Norway and Switzerland ) argue that the definitive safeguard measures imposed by the U.S 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 U.S obligations under the GATT 1994 and the Agreement on Safeguards.

On 11 November 2002, Chinese Taipei made a separate request for dispute settlement consultations with the US regarding definitive safeguard measures on certain steel imports (WT/DS274).  The Panel hopes to complete its work by the end of April 2003.

Turkey: Import Ban on Pet Food from Hungary (WT/DS256)

Hungary has requested consultations with Turkey over its ban on the importation of pet food from any European country.  Turkey has claimed that the ban is necessary to protect it from BSE.  It is claimed the ban is inconsistent with Article XI of GATT 1994, Articles 2.2, 2.3, 5.1, 5.2, 5.6, 6.1, 6.2 and 7 and Annex B of the SPS Agreement and Article 14 of the Agreement on Agriculture.

Meetings of the Dispute Settlement Body: February 2003

The Dispute Settlement Body (DSB) met on 19 and 26 February.  The next regular DSB meeting is scheduled for 18 March.

Australia uses DSB meetings to monitor progress and to register its views on disputes of interest. The agendas of the February DSB meetings were as follows:

General DSB Meeting - 19 February 2003

       Implementation of Recommendations adopted by the DSB  - Status Reports

United States: Section 110(5) of the US Copyright Act (WT/DS160/18/ADD.12)

The U.S. again said it would continue to engage the U.S. Congress with a view to concluding a mutually acceptable resolution of this dispute consistent with WTO rules.  The EC reiterated its disappointment at the lack of U.S. action and again urged the U.S. to take rapid and concrete action to comply with the DSB recommendations.   

United States: Anti-Dumping Act of 1916 (WT/DS136/14/ADD.12, WT/DS162/17/AD.12)

The U.S. also undertook to work with the U.S. Congress to achieve further progress in resolving this dispute with the EC and Japan.  Japan again repeated concerns about the financial damage that court proceedings under the WTO inconsistent U.S. measure were causing Japanese companies and called for prompt implementation by the U.S.  As previously, the EC stressed the need for the U.S. both to repeal the 1916 Act and terminate pending court cases.   Each suggested that lack of U.S. implementation was affecting the credibility of the WTO Dispute Settlement System.  

United States: Section 211 Omnibus Appropriations Act of 1998 (WT/DS176/11/ADD.5)

The U.S. drew Members' attention to its most recent status report and restated its intention to work with the U.S. Congress to resolve this dispute.  The EC said that it hoped the U. S. would take advantage of the reasonable period of time granted in this dispute to ensure full implementation by the new deadline and reminded the U.S. of its request for clarification of the current legal status of abandoned trademarks under section 211.  Cuba again called for the repeal of Section 211 within the new reasonable period of time.

      

United States: Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan (WT/DS184/15/ADD.5)

The U.S reiterated its intention to continue to work with the US Congress toward resolving this dispute with Japan in a mutually satisfactory manner.  Japan again urged the U.S. to pass the necessary legislation for implementation as early as possible and repeated its comment that U.S continued non-compliance was affecting confidence in the dispute settlement system.

       Request for Establishment of a Panel by Brazil
US: Subsidies on Upland Cotton (WT/DS267)

Brazil requested the establishment of a panel.  It set out the basis of its panel request.  The measures that are the subject of this request are prohibited and actionable subsidies, as well as legislation, regulations and statutory instruments and amendments thereto providing such subsidies (including export credit guarantees), grants, and any other assistance to the U.S. producers, users and exporters of upland cotton.  Brazil outlined how these subsidies had resulted in U.S. cost of production far exceeding world market prices.  Brazil claimed that these subsidies violated the Agreements on Agriculture and Subsidies and Countervailing Measures and the GATT 1994.

The U.S. exercised its right to prevent the establishment of the Panel at the first DSB consideration of the request.  It contended that its cotton support programs were within its WTO obligations, and said it would vigorously defend its cotton support programs in this dispute.

Argentina and India indicated that they had been involved in the consultations on this dispute and would likely be third parties were a panel established at the next DSB meeting.

Special DSB Meeting - 26 February 2003

       Implementation of the Recommendations of the DSB
Continued Dumping and Subsidy Offset Act of 2000 (the "Byrd Amendment") (WT/DS217 and WT/DS234)

Nine of the co-complainants in the Byrd Amendment dispute made statements at the 26 February Special DSB meeting on the need for the U.S. to fulfil its DSU obligation to state its implementation intentions and on moving to negotiate a reasonable period of time for its implementation.   Australia's statement is set out below.  

      
DISPUTE SETTLEMENT BODY - 26 FEBRUARY 2003

STATEMENT BY AUSTRALIA

ITEM 1 A: UNITED STATES - CONTINUING DUMPING AND SUBSIDY OFFSET ACT OF 2000: STATEMENT OF INTENTIONS PURSUANT TO ARTICLE 21.3 OF THE DSU IN RESPECT OF IMPLEMENTATION OF THE RECOMMENDATIONS AND RULINGS OF THE DSB

  • THANK YOU MR CHAIRMAN.
  • UNDER ARTICLE 21.3 OF THE DSU, A MEMBER IS REQUIRED TO INFORM THE DSB - WITHIN 30 DAYS OF THE ADOPTION OF PANEL AND APPELLATE BODY REPORTS - OF ITS INTENTIONS CONCERNING IMPLEMENTATION OF THE RECOMMENDATIONS AND RULINGS OF THOSE REPORTS.
  • AUSTRALIA, TOGETHER WITH THE OTHER CO-COMPLAINANTS, HAS REQUESTED THIS DSB MEETING TO GIVE THE UNITED STATES THE OPPORTUNITY TO COMPLY WITH THIS REQUIREMENT OF ARTICLE 21.3 IN THIS DISPUTE.
  • WE NOTE PUBLIC COMMENTS AND ACTIONS OF THE UNITED STATES INDICATE THAT THE UNITED STATES REQUIRES A REASONABLE PERIOD OF TIME IN WHICH TO IMPLEMENT THE RECOMMENDATIONS AND RULINGS OF THE DSB.  THESE COMMENTS AND ACTIONS INCLUDE:
    • ITS STATEMENT TO THE 27 JANUARY DSB MEETING, BEFORE THE REPORTS WERE ADOPTED, THAT IT INTENDS TO IMPLEMENT THE DSB RECOMMENDATIONS AND RULINGS, AND
    • THE U.S. ADMINISTRATION'S PLAN TO REPEAL THE BYRD AMENDMENT IN THE UNITED STATES BUDGET PROPOSAL FOR FISCAL YEAR 2004.
  • WE ARE WILLING TO NEGOTIATE SUCH A REASONABLE PERIOD OF TIME WITH THE UNITED STATES JOINTLY WITH THE OTHER CO-COMPLAINANTS.
  • AUSTRALIA RESERVES ITS RIGHTS UNDER THE DSU ACCRUING FROM THE ADOPTION BY THE DSB OF THE PANEL AND APPELLATE BODY REPORTS IN THIS DISPUTE.

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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.