Australia and WTO Dispute Settlement
Monthly Bulletin: March 2001
Included with this edition is a paper prepared by the WTO Trade Law Branch, WTO Dispute Settlement - Delivering Benefits to the Agriculture Sector, which summarises the benefits to the agriculture sector from the outcomes of WTO Panel and Appellate Body decisions either directly or indirectly addressing agriculture.
Australia as a Complainant
Korea: Measures affecting imports of fresh, chilled and frozen beef (WT/DS169)
In accordance with WTO procedures, Australia and the US continue to engage with Korea in consultations on a reasonable period of time for Korea to implement the recommendations of the DSB.
United States: Safeguard measure on imports of fresh, chilled and frozen lamb meat (WT/DS177 and WT/DS178)
On 22-23 March the Appellate Body Division held its oral hearing with the parties on the United States' appeal against the lamb meat panel findings and the cross appeals lodged by Australia and New Zealand. The hearing included questioning for all parties from the Appellate Body Members, covering all the issues on the table in considerable detail.
Established procedures require the Appellate Body to issue its report by 1 May 2001 (within 90 days of the initial notice of appeal).
United States: Continuing Dumping and Subsidy Offset Act of 2000 (WT/DS217) (Joint consultation request)
No new developments.
Disputes involving Australia as a Third Party
Chile: Price band system and safeguard measures relating to certain agricultural products (WT/DS207)
At the 12 March DSB Meeting a panel was established to consider Argentina's complaint against Chile's price band system and safeguard measures concerning certain agricultural products. Argentina considers that Chile's measures are inconsistent with its obligations under various agreements, including Article II of GATT, Article 4 of the Agreement on Agriculture and various provisions of the Safeguards Agreement.
In relation to the safeguard measures, Australia has a systemic interest in the operation of the Safeguard Agreement. Chile's use of a price band system, which involves keeping the price of sugar, vegetable oils, wheat and wheat flour level by applying an additional charge on top of the regular tariff, may cause it to breach its tariff commitments. While Australia does not have a direct commercial interest in this case, it has a strong systemic interest in the full implementation of agricultural market access concessions negotiated during the Uruguay Round. Australia has reserved its third party rights.
EC: Beef hormones (WT/DS26)
No new developments.
United States: Restrictions on shrimps (the "shrimp/turtle" case) (WT/DS58)
The Panel's report on the WTO consistency of the revised US measures, due on 23 March, has been postponed.
Canada: Measures affecting the importation of milk and the exportation of dairy products (WT/DS103 and WT/DS113)
On 1 March a single Article 21.5 compliance panel was established to examine US and New Zealand complaints regarding Canada's implementation measures relating to the exportation of dairy products. Australia has reserved its third party rights.
In relation to the US and New Zealand requests for authorisation from the DSB to suspend concessions in the amount of US$35 million, the DSB referred the matter to arbitration. In accordance with the terms of reference previously agreed between the parties, the parties will
request the arbitrator as soon as possible to suspend its work, pending the outcome of the Article 21.5 process.
United States: "Homestyle" Copyright Legislation (WT/DS160)
No new developments since last update. As noted in the January Monthly Bulletin, the reasonable period of time for the US 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, which expires on 27 July 2001.
United States: Safeguard measures on wheat gluten (WT/DS166)
On 20 March the EC requested that the reasonable period of time for implementation by the US of the DSB recommendations and rulings be determined by binding arbitration pursuant to Article 21.3 of the DSU. Under DSU procedures the arbitration should be completed by 19 April (ie within 90 days of adoption of the report). Under DSB arbitration practice, the reasonable period of time is the shortest period possible within the legal system of the member. Previous arbitrators have also noted that the withdrawal of the measure is the "preferred" method of implementation.
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)
The Article 21.5 compliance panel, established to review the WTO consistency of the revised US FSC scheme, has advised that it is unable to circulate its report within the time period required by Article 21.5. This is due largely to the complex nature of the case, the series of procedural steps preferred by both parties and the time needed for translation. The Panel expects to complete its work by July 2001.
Brazil: Export financing program for aircraft (WT/DS46)
The Article 21.5 compliance panel hearing established to examine the WTO consistency of Brazil's implementation measures relating to export finance programs for aircraft is scheduled for 4-5 April.
Canada: Export credits and loans guarantees for regional aircraft (WT/DS222)
A WTO panel was established on 12 March to examine Brazil's complaint against Canada's implementation measures relating to export credits and export financing for its regional aircraft industry. Australia has reserved its third party rights.
Disputes in which Australia has a Policy or Economic Interest
EC: Measures on asbestos (WT/DS135)
Canada challenged French bans on importation and sale of chrysotile asbestos. The Appellate Body reversed the Panel's finding that the ban was discriminatory on the basis that the carcinogenic qualities of asbestos should have been taken into account when assessing whether chrysotile fibres and non-asbestos fibres were "like products". The Appellate Body also agreed with the Panel's finding that the ban was justified by GATT exceptions provisions which permit measures necessary for the protection of human life and health.
The outcome is relevant to Australia's own consideration of a possible prohibition on the use of chrysotile asbestos. The National Occupational Health and Safety Commission is currently seeking public comment on a proposed prohibition to be implemented by the States and Territories (for further information see http://www.nohsc.gov.au/whatsnew_index.htm).
The Appellate Body developed special working procedures for the handling of NGO submissions in the appeal. In the event, the Appellate Body did not consider any of the 17 NGO submissions received as none of the submissions complied with the procedures.
Japan: Varietal testing of horticultural products (WT/DS76)
Japan's latest status report indicated that US and Japan have completed technical consultations regarding a "new methodology" on the eight products currently subject to import prohibition as a result of codling moth. At the 12 March DSB meeting Japan noted that the Japanese quarantine authorities were now working on domestic regulations to implement this new methodology. The new measure would be applied in conformity with Article 2.3 of the Agreement on the Application of Sanitary and Phytosanitary Measures. Japan would conduct scientific and technical bilateral consultations with any country requesting to import a relevant product into Japan. The necessary methodology would be established on the basis of those consultations. Recalling several members' request for details of the new methodology, Japan said that its quarantine authority would, on request, informally provide such information.
At high level officials talks between Australia and Japan in Japan (13-16 March), the issue of outcomes of the US/Japan varietal dispute on prospects for Tasmanian Jonagold apples was discussed.
EC: Bananas (WT/DS27)
The latest EC status report reports that the new European Council Regulation 216/2001 of 29 January provides for three tariff quotas open to all imports irrespective of origin and that imports from ACP countries will enter duty-free. It asserts that the EC is doing its utmost to ensure rapid implementation of the new "first-come, first-served" (FCFS) system.
The WTO consistency of the EC's proposed new regime is complicated by its reliance on the granting of a WTO waiver for the new ACP-EC Partnership Agreement. The request for such a waiver was made on 29 February 2000, but its examination within the WTO Council for Trade in Goods has been deadlocked because of the banana issue itself.
At the 12 March DSB meeting the EC said that it was examining a computerised system to implement the FCFS system and that the complexities of implementation necessitated extending the original 1 April implementation deadline to 1 July. In the meantime TRQs would be applied on a historical basis.
Brazil: Measures affecting patent protection (WT/DS199)
No new developments.
United States: Section 129(c)(1) of the Uruguay Round Agreements Act (WT/DS221) (Consultation request)
No new developments.
European Communities: Tariff rate quota on corn gluten feed from the United States (WT/DS223) (Consultation request)
No new developments.
Canada: Term of patent protection (WT/DS170)
On 28 February 2001 the arbitrator circulated his report on the reasonable period of time for implementation by Canada of the DSB's recommendations and rulings in relation to this matter. He decided that the reasonable period of time was 10 months and would thus expire on 12 August 2001.
Meetings of the Dispute Settlement Body: March 2001
The DSB, consisting of all the Members of the WTO, met on 1, 12 and 20 March 2001. The next regular DSB meeting will be held on 5 April 2001. Australia uses DSB meetings to monitor progress and to register its views on disputes of interest. The agendas of the March DSB meetings were as follows (any Australian interventions are indicated):
Special DSB Meeting - 1 March 2001
1. Statement by US on implementation of the recommendations and rulings of the DSB in US: Anti-dumping measures on stainless steel plates from Korea
2. Article 21.5 Panel requests by United States and New Zealand - Canada: Measures affecting the importation of milk and milk products
3. Article 22.2 Retaliation request by United States and New Zealand - Canada: Measures affecting the importation of milk and milk products
DSB Meeting - 12 March 2001
1. Surveillance of implementation of recommendations adopted by the DSB
Status report by the European Communities - European Communities: Regime for the importation, sale and distribution of bananas
Status report by Japan - Japan: Varietal testing of horticultural products
Australia thanked Japan for its status report and said that we expected to be able to secure the information on the new methodology on request.
Status report by India - India: Quantitative restrictions on imports of agricultural, textile and industrial products
Status report by Turkey - Turkey: Restrictions in imports of textile and clothing products
Status report by Chile - Chile: Taxes on alcoholic beverages
2. Implementation action
Argentina: Measures on the export of bovine hides and the import of finished leather
3. Panel request - Belgium: Administration of measures establishing customs duties for rice
4. Panel request - Chile: Price band system and safeguard measures
5. Panel request - Canada: Export Credits and loans guarantees for regional aircraft
6. Adoption of Panel and Appellate Body reports - EC: Cotton-type bed linen from India
7. Appointment of Appellate Body Members
8. Timing of notification of third party interest in panel proceedings
Australia participated in a discussion regarding the timing of third party interest in panel proceedings, including comments on the Secretariat's Note on this issue. The Note concludes that the DSB is in the process of "establishing a "binding" practice of the organisation to provide a 5 day timeframe for reserving third party rights in Article 21.5 compliance cases." A significant number of Members present registered their disagreement with the legal reasoning used in the Secretariat Note, which gave rise to serious systemic concerns. Australia's statement is repeated below:
We agree with many of the systemic issues raised by previous speakers (we spoke after Mexico, US, Nicaragua and Hong Kong, China).
We consider that the reasoning in the Secretariat's paper is legally incorrect and that the paper does not provide legal justification for a five day "binding" period for third party submissions in this instance.
It is a matter for the Members to determine an appropriate period, on the basis of what might be reasonable in the circumstances.
As to what is reasonable, a time period should reflect the need for Members to obtain clearance in capitals.
We are not convinced that an additional 5 days would be disruptive of Article 21.5 proceedings in regard to prohibited subsidies. It would be a relatively simple matter to extend the proceedings if DSU Article 8.3 were to apply to Article 21.5 panel composition.
Special DSB Meeting - 20 March 2001
Turkey: Restrictions in imports of textile and clothing products
A special formal meeting of the DSB was held on 20 March to take note of the agreement reached between Turkey and India under DSU Articles 21 and 22, following expiry of the agreed reasonable period of time for compliance by Turkey on 19 February 2001. The key elements of the agreement were the holding of consultations to discuss Turkey's compliance with the DSB recommendations, and, should India initiate an Article 21.5 compliance panel, the sequencing of that panel with any Article 22 proceedings (suspension of concessions). The session was followed by an informal session to consider the issue of Appellate Body remuneration.
Managing WTO Disputes: Institutional Arrangements
The WTO Trade Law Branch in the Trade Negotiations Division takes the lead role in prosecuting and defending Australia's interests 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 WTO 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 WTO 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.
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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.