Australia and WTO dispute settlement

Monthly Bulletin
January 2003

Resolving Export Access through the WTO System

  • Are you an exporter or intending to export?
  • Do you export to one or more of the 144 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:

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Recent Developments (1)

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

The Appellate Body report considering the appeal by the United States against the findings of the WTO panel in this dispute was released on 16 January 2003. The dispute was initiated by Australia, Brazil, Canada, Chile, the European Communities (EC), India, Indonesia, Japan, Korea, Mexico and Thailand.

In relation to the panel's principal finding that the Byrd Amendment was inconsistent with Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), the Appellate Body:

The Appellate Body did, however, reverse the panel's finding that the Byrd Amendment is inconsistent with Article 5.4 of the Anti-Dumping Agreement and Article 11.4 of the SCM Agreement concerning "standing" requirements for the initiation of anti-dumping and countervailing investigations. The Appellate Body concluded that the text of those provisions did not support the panel's reasoning, as those provisions require no more than a formal examination of whether a sufficient number of domestic producers have expressed support for an application. The Appellate Body also rejected the panel's conclusion that the United States "may be regarded as not having acted in good faith", stating that it would be necessary to prove more than mere violation of a substantive treaty provision to support such a conclusion.

The Dispute Settlement Body adopted both the panel and Appellate Body reports on 27 January 2003.

Negotiations on the Dispute Settlement Understanding (DSU)

Australia continues to actively participate in the negotiations on the DSU which have intensified as they enter their second and final stage. Australia proposal has suggested the following improvements:

The Chair has scheduled monthly Dispute Settlement Special Sessions in the lead up to the deadline for conclusion of the negotiations in May 2003. These Special Sessions will be supplemented by informal "focus Group" meetings. The Chair is aiming to complete discussions on proposals and provide a draft Chair's legal text by the end of March.

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)

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)

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)

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 (8)

Mexico Measures Affecting Telecommunications Services (WT/DS204)

The Panel hearing was held on 18 December 2002. The Panel is due to issue its interim report on 5 May 2003.

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)

The report of the Appellate Body Second Recourse to Article 21.5 Implementation Report was circulated on 20 December 2002.

On 17 January 2003, the reports of the Panel and Appellate Body Second Recourse to Article 21.5 Implementation Report - were adopted by the DSB. Australia made an oral statement (See attached report on DSB meeting of 17 January) welcoming the findings and conclusions. Australia stressed the importance of full implementation of export subsidy commitments and highlighted the Appellate Body's comments in relation to the "spill over" effects of domestic support to benefit export production. Canada and the EC were critical of the Appellate Body report, arguing that the report blurred the distinction between domestic support measures and export subsidies. Canada, New Zealand and the United States have agreed to request that the arbitration proceedings under DSU Article 22.6 remain suspended until 7 February 2003. 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 (see DSB Meeting 27 January below).

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

On 29 January 2002, the Dispute Settlement Body adopted the Appellate Body report. The revised US Foreign Sales Corporations (FSC) scheme was found to be WTO inconsistent. On 30 August 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 Japanese quarantine measures complained of by the U.S. 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 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 timetable provides for the final report to be circulated in May 2003.

Disputes in which Australia has a Policy or Economic Interest (8)

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 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 call for 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 (see DSB Meeting 27 January below).

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 (see DSB Meeting 27 January below). 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).

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.

Meeting of the Dispute Settlement Body: January 2003

Dispute Settlement Body (DSB) met on 8, 17 and 27 January. The next regular DSB meeting is scheduled for 19 February.

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

DSB Meeting 8 January 2003

Panel Established

United States Preliminary Determinations with Respect to Softwood Lumber from Canada (WT/DS264)

A Panel was established at Canada's request, with the EC and India reserving third party rights.

Reports of the Appellate Body and Panel

United States Countervailing Duties on Certain Corrosion Resistant Steel Products from Germany (WT/DS213)

The Panel and Appellate Body reports were adopted.

DSB Meeting 17 January 2003

Implementation of the Recommendations of the DSB

United States: Countervailing Duties on Certain Corrosion Resistant Carbon Steel Flat Products from Germany (WT/DS213)

The US stated its intention to implement the DSB recommendations but said it needed a reasonable period of time in which to do so and invited the EC to enter into Article 21.3(B) DSU Consultations on reasonable period of time. The EC called on the U.S to implement the DSB rulings promptly.

Appellate Body Report

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

The Appellate Body and Panel reports in the second recourse to Article 21.5 in this dispute were adopted. Australia made an oral statement (attached). Canada, New Zealand and the United States have agreed to request that the arbitration proceedings under DSU Article 22.6 remain suspended until 7 February 2003. This is pursuant to the agreement reached on 18 December 2001 between the parties regarding procedures under DSU Articles 21 and 22.

DSB Meeting 27 January 2003

Implementation of the Recommendations of the DSB

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

The US referred to its most recent status report and indicated that it was continuing to work to conclude a positive and mutually acceptable resolution. The EC expressed disappointment at the lack of US action and urged the US to comply.

United States: Anti-Dumping Act of 1916 (WT/DS136/14/ADD.11)

The US referred to its additional status report in this case and said it was working to achieve progress in resolving this dispute with the EC and Japan. Japan expressed concerns about the damage the WTO inconsistent measure was having on its companies.

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

The U.S drew members' attention to its most recent status report and its agreement with the EC to extend the reasonable period of time for implementation until 30 June 2003. The EC said it considered a satisfactory settlement to this dispute was more important than strict adherence to the initial deadline. Cuba expressed disappointment at the lack of progress.

United States: Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan (WT/DS184/15/ADD.4)

The US referred to its most recent report it would continue to work to resolve this dispute in a mutually satisfactory manner. Japan expressed its regret at the U.S delay in implementing and said that U.S continued non-compliance was affecting confidence in the dispute settlement system.

United States: Countervailing Measures Concerning Certain Products from the EC

The U.S stated its intention to implement DSB rulings in this dispute but explained that it needed a reasonable period of time to do so. The EC indicated that it was ready to discuss the reasonable period of time but this should be short. Mexico expressed interest in the U.S bringing its measure into compliance as it had requested consultations with the U.S on its countervailing duties investigations methodology.

Request for Establishment of a Panel

Report of the Appellate Body and Panel

United States: Continued Dumping and Subsidy Offset Act of 2000 (The "Byrd Amendment") (WT/DS217/AB/R - WT/DS234/AB/R, WT/DS217/R WT/DS234/R

The Dispute Settlement Body adopted both the panel and Appellate Body reports (see New Developments above).

EC: Conditions for Granting of Tariff Preferences to Developing Countries (WT/DS246/4)

A Panel was established at India's request with thirteen members requesting third party status: Brazil, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, Honduras, Paraguay, Peru, Sri Lanka, Venezuela and the US.



DISPUTE SETTLEMENT BODY - 17 JANUARY 2003

STATEMENT BY AUSTRALIA

ITEM 2.A : CANADA - MEASURES AFFECTING THE IMPORTATION OF MILK AND THE EXPORTATION OF DAIRY PRODUCTS: SECOND RECOURSE TO ARTICLE 21.5 OF THE DSU BY NEW ZEALAND AND THE UNITED STATES



[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.

This publication is intended to provide a general update and the information within it should not be relied on as complete or definitive.