Australia and WTO dispute settlement
Monthly Bulletin: March 2002
RESOLVING EXPORT ACCESS PROBLEMS THROUGH THE WTO SYSTEM
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US Import Restrictions on Steel Imports
On 5 March 2002, the US Administration announced its intention to impose import restrictions on steel imports. The announcement followed an investigation, launched by the Administration in June 2001, on the effect of imports on the US steel industry. The investigation, undertaken by the United States International Trade Commission (USITC), found that increased imports were causing serious injury to the main sectors of the US steel industry. The restrictions came into force on 20 March, and will be in place for three years.
While the overwhelming majority of Australia's steel exports to the US were covered by the USITC's findings on serious injury, the restrictions imposed will impact less severely on Australian exports, given the tariff-rate quota arrangements put in place for slab steel and an exclusion that is to be granted for current Australian exports of hot-rolled coil to a West Coast steel mill.
Australia has responded to these measures by coordinating Government-industry responses through a steel industry summit, taking action to minimise the direct impact on our exports of steel to the US, introducing updated import monitoring arrangements to address the trade diversionary impact and continuing to participate in high-level talks underway in the OECD to tackle over-capacity and government intervention in the steel sector. Australia also held consultations with the US on 21 March under the terms of the WTO Safeguards Agreement and is continuing to assess all options for future action in the WTO to protect Australia's interests.
The steel industry summit held in Canberra on 19 March discussed the impact of the US action. The Summit agreed on a number of outcomes, including the establishment of a Ministerial Task Force to consult on the response to US steel import restrictions. The Task Force will meet for the first time on 5 April. The Summit also agreed to establish a Steel Monitoring Committee to monitor imports of steel and any diversion from other markets. A copy of the meeting communique is attached to this bulletin.
A number of other countries have also undertaken consultations with the US under the WTO Safeguards Agreement. The EC, Japan, Korea, Switzerland and China have also requested WTO dispute settlement consultations with the US on the US safeguard measures.
Australia as a Complainant (1)
United States: Continuing Dumping and Subsidy Offset Act of 2000 (Byrd Amendment) (WT/DS217 and WT/DS234)
The second oral hearing before the Panel was held on 12 March. This enabled the Panel and the parties to explore further the key legal and factual issues in this dispute. 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. 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://22.214.171.124/trade/negotiations/disputes/wto_disputes-US_AD.html
Disputes involving Australia as a Third Party (7)
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)
Australia has lodged its third party submission to the second Article 21.5 panel in this dispute. The panel will hold its oral hearing on 23 April. The parties to this dispute the US and New Zealand are arguing that, since the Appellate Body's 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. Australia, the EC and Argentina will participate in the Panel's proceedings as third parties. 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. 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 (see below). The Appellate Body had largely found in favour of Korea's challenge to the February 2000 US line pipe safeguard. It found that the safeguard exceeded the extent of the remedy allowed under the Safeguards Agreement as it was not tailored to the injury caused by imports alone. It also found that elements of the US International Trade Commission injury investigation that preceded the imposition of the safeguard were inconsistent with the Safeguards Agreement. However, the Appellate Body also reversed one Panel finding and upheld another to find in favour of the US on certain aspects.
United States: Tax Treatment for Foreign Sales Corporations (WT/DS108)
No new developments. 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 arbitration procedure is expected to be concluded by the end of April. 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 (7)
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)
No new developments. The Panel and Appellate Body Reports were adopted at the 1 February DSB meeting and the US has said it will need a reasonable period of time to implement the DSB recommendations.
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)
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 has requested to be joined in the consultations. This dispute raises similar systemic issues for Australia as EC: Generalized System of Preferences (above).
Japan: Measures Affecting the Importation of Apples (WT/DS245)
The US has requested consultations with 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. Consultations have been scheduled for 18 April. The US choice of Article XXIII of GATT 1994 as the procedural avenue for its request precludes third party participations 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.
Meetings of the Dispute Settlement Body: March 2002
The DSB, consisting of all the Members of the WTO, met on 8 March 2002. The next regular DSB meeting will be held on 5 April 2002. Australia uses DSB meetings to monitor progress and to register its views on disputes of interest. The agenda of the March DSB meeting was as follows (any Australian interventions are indicated):
DSB Meeting 8 March 2002
1. Surveillance of Implementation of Recommendations adopted by the DSB
United States Section 110(5) of the US Copyright
The US said that it had been engaged in discussions with the EC to find a positive and mutually acceptable resolution of the dispute.
Australia registered again our concern about the delay in the US' implementation of the DSB recommendations and rulings in this dispute, and about the apparent discriminatory nature of the proposed compensation arrangements that we understood had been agreed between the US and the EC. We repeated our expectation that any compensation arrangement would 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 to reach a mutually satisfactory resolution to this dispute.
3. Surveillance of Implementation of Recommendations adopted by the DSB
Argentina Measures Affecting the Export of Bovine
Hides and the Import of Finished Leathers (WT/DS155)
This agreement was reported to the DSB.
4. Implementation of the Recommendations of the DSB
Canada Export Credits and Loan Guarantees for Regional Aircraft (WT/DS222)
Canada indicated that it was continuing to work with Brazil to find a solution to this dispute.
5. Panel Request
Mexico Measures Affecting Telecommunications Services (WT/DS204)
- request by the US for the establishment of a Panel.
Panel was not established as Mexico opposed the request. Panel request deferred to the next DSB meeting.
6. Panel Request
Argentina Definitive Anti-Dumping Duties on Poultry from Brazil (WT/DS241)
- request by Brazil for the establishment of a Panel.
Panel was not established as Argentina opposed the request. Panel request deferred to the next DSB meeting.
7. Adoption of the Report of the Appellate Body and Report of the Panel
United States Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea (WT/DS202)
The Panel and Appellate Body reports were adopted.
The following were the main points made in Australia's statement:
Joint Media Release
The Minister for Trade, Mark Vaile, the Minister for Industry, Tourism and Resources, Ian Macfarlane, and the Minister for Justice and Customs, Senator Chris Ellison
Canberra 19 March 2002
Steel Industry Meeting - Communique
The Minister for Trade, Mark Vaile, the Minister for Industry, Tourism and Resources, Ian Macfarlane, and the Minister for Justice and Customs, Senator Chris Ellison, convened a meeting of steel industry representatives in Canberra on 19 March to discuss Australian responses to the US Administration decision to impose safeguard restrictions on steel imports. Representatives from BHP Steel, Smorgon Steel Group, OneSteel, and the Australian Industry Group attended the meeting, along with representatives from the Australian Council of Trade Unions, the Australian Workers' Union and the Australian Manufacturing Workers' Union.
The meeting expressed its concern at the US decision to impose restrictions on imports of steel products into the US market.
The participants agreed the decision was an inappropriate way to deal with the problems of the US industry and it would have a major effect on the global steel industry and on international trade in steel products.
The participants noted the highly efficient nature of the Australian steel sector and that the sector had undergone considerable restructuring in the process of improving its international competitiveness. The participants registered their disappointment that, despite the fact that Australia was not part of the problem facing the world steel sector, the Australian industry had also been affected by the US decision to restrict imports.
The participants noted with satisfaction that Australia had succeeded in preserving a substantial proportion of its exports to the US, while reiterating their commitment to see the earliest possible removal of all import restrictions. They praised the efforts of those involved and expressed their appreciation of the US Administration's responsiveness.
They noted, however, that the US restrictions would still have a significant impact on the Australian steel sector, both directly on exports as well as through trade diversion. There was also concern at the possible impact on upstream product exports, particularly if the US restrictions remained in place for an extended period of time.
Participants discussed the possible impact of the US restrictions on Australia and agreed on a range of actions at both Government and industry levels - to address the challenges identified.
The agreed actions from the Summit are as follows:
- Participants agreed that the Government should establish a Ministerial Task Force, to include Ministers, industry CEOs, the Australian Industry Group and the union, to consult on the response to US steel import restrictions and the impact of those restrictions
- To assist the Task Force, participants also agreed to establish a Steel Monitoring Committee, including relevant government agencies, the companies, the Australian Industry Group and the union, to monitor imports of steel and any diversion from other markets
- The participants agreed to cooperate closely in monitoring import trends with a view to being prepared to respond quickly to any possible disruption to the Australian market as a result of the US restrictions
- Participants agreed on the need to be alert to the potential for dumped imports and to ensure Australian authorities were capable of addressing effectively any threat from dumped or subsidised imports
- The Government indicated that it would preserve all options for action in the WTO in order to protect all of Australia's trade interests in the steel issue. As a first step, consultations would be held in coming days with the US under the WTO Safeguards Agreement. Further action in the WTO would be considered when those consultations were completed and the outcome known
- The Government undertook to accord high priority to steel market access issues in the forthcoming Doha Round of WTO multilateral trade negotiations
- The Government and industry reconfirmed Australia's support for efforts to address the problems facing the global steel industry, particularly the problems of over-capacity. Australia remained willing to participate constructively in the current OECD High-level group meetings on steel, with the US and other countries. Australia expressed its hope that other countries would also continue their participation
- The Government undertook to work cooperatively with industry to identify new export opportunities and to successfully implement new export plans
The Government also repeated its resolve to press ahead with efforts to negotiate a bilateral free trade agreement with the US, as a means of dealing with such measures in the future and progressively to liberalise trade and investment between the two countries.
The participants also agreed to reconvene as required to review the situation and discuss further action as necessary.
19 March 2002
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 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.