Australia and WTO dispute settlement

Monthly Bulletin
May 2003

In this issue


Recent Developments

EC:  Measures affecting the approval and marketing of biotech products (WT/DS291, 292 and 293)

Australia is seeking to join, as third party, Argentina, Canada and the USA in their WTO challenge to the European Union’s moratorium on approvals for the import of genetically modified organisms (GMO).

The EU moratorium means that imports of GMOs are being prohibited or restricted without a scientific basis.  Australia’s trade interests and our interest in maintaining the role of the WTO in enforcing rules on science-based decision making are at stake.   The dispute is important to Australia and all agricultural exporters.  Eight other countries have so far indicated an intention to join the three complainants as third parties.  These include both developed and developing agricultural exporters such as Chile, Colombia, Mexico, New Zealand and Uruguay. 

Softwood lumber panel to be established

On May 7, 2003, the Dispute Settlement Body approved the establishment of a panel on the United States –Investigation of the International Trade Commission in Softwood Lumber from Canada.  In this dispute, Canada challenges a decision by the US International Trade Commission allowing the application of anti-dumping and countervailing duties on Canadian softwood lumber. Canada asserts that the US is in violation of Article 3.1 of the WTO Anti-Dumping Agreement and Article 15.1 of the Subsidies and Countervailing Measures Agreement, by failing to base its threat of injury determination on positive evidence and by failing to conduct an objective examination of both the volumes of dumped imports and the subsidised imports.  The EC and Japan reserved their rights to participate as third parties in the dispute. 

Australia as a Complainant

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. Australia, Brazil and Thailand are working together in developing claims for a possible panel. 

Thailand has also subsequently requested consultations with the EC respect to certain subsidies provided by the EC in the sugar sector.  They were held on 8 April 2003 (European Communities: Export Subsidies on Sugar (WT/DS283))

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

The oral hearing the arbitration under Article 21.3(c) of the DSU on the reasonable period of time (RPT) for the U.S. to implement the DSB’s rulings and recommendations in the U.S. –Continued Dumping and Subsidy Offset Act (“Byrd Amendment”) dispute was held in Geneva on 6-7 May.  The Arbitrator appointed for this proceeding was Appellate Body Member Taniguchi.  The U.S. and eight of the Co-complainants made oral statements underlining the key points made in their written submissions and rebutting arguments put forward by the other side.  The Arbitration Award will be issued no later than 13 June 2003. 

European Communities: Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs (WT/DS290/1)

On 27 May Australia held consultations with the European Communities concerning EC legislation covering the registration and protection of geographical indications (“GIs”) on products such as cheese, beer, processed meat and fruit.  Australia’s consultations were held jointly with consultations on the same legislation requested by the US.  Australia and the US sought, through questions, to clarify the operation of the EC legislation and an explanation of how the EC measure conformed with the WTO Agreement.  The EC provided some additional information about the relevant EU regulation.  

Australia as a Respondent

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.

Australia: Quarantine Regime for Imports (WT/DS287) 

Consultations between the EC and Australia on the Australian quarantine regime, both as such and as applied to certain specific cases, were held on 8 May 2003.  The EC considers that Australia’s quarantine system and its application to particular products (pigmeat and poultry meat) may be contrary to the Sanitary and Phytosanitary Agreement (SPS Agreement), and in particular, but not limited to, its Articles 2.2, 2.3, 3.3, 4.1, 5.1, 5.6 and, if applicable, 5.7, 8 and Annex C.  Canada, Chile, India and the Philippines joined the consultations as third parties. 

Disputes Involving Australia as a Third Party

EC:  Measures affecting the approval and marketing of biotech products (WT/DS291, 292 and 293)

See item in recent developments above.

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

In April, Australia reserved its third party rights in the dispute brought by the United States against Canadian Wheat Board measures relating to wheat exports and imported grain.  Chile, Chinese Taipei, the EC, Japan and Mexico have also reserved third party rights in this dispute.

A Panel was established at the request of the U.S. on 31 March.  The U.S. is claiming that the wheat sales practices of Canada and the Canadian Wheat Board are inconsistent with Article XVII of GATT 1994 on State-Trading Enterprises and that Canadian measures on the treatment of grain discriminated against imported grain inconsistently with Article III of GATT 1994 and Article 2 of the TRIMS Agreement.

Canada has requested that the Panel make preliminary rulings, and a hearing is scheduled for 6 June in Geneva.  Canada is arguing that the U.S. has not sufficiently specified its claim in the request for establishment of a panel in accordance with Article 6.2 of the DSU.  Canada is also asking the Panel to make a preliminary ruling establishing a procedure for the protection of proprietary or commercially sensitive information that may be submitted to the panel in the course of proceedings.

US: Subsidies on Upland Cotton (WT/DS267)

See item under Meetings of the DSB - General DSB Meeting on 19 May 2003 below.

Mexico: Measures Affecting Telecommunications Services (WT/DS204)

No new developments.  The Panel has not been able to complete its work in 6 months due to time needed for translation of documents and the complexity of the issues. The Panel now expects to complete its work in August 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. 

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

Members have been notified of mutually agreed solutions by Canada and the United States and by Canada and New Zealand.  Under the agreements, which are similar but in slightly different terms, Canada reports that it has eliminated its commercial export milk (CEM) program at provincial level as of 30 April 2003, that it won’t exceed its export subsidy reduction commitments for the marketing year 2002 for butter and skim milk powder but that it will for cheese and other milk products because of long term CEM contracts in place at the time of the Appellate Body Report, and that it will meet its commitment for all dairy products for 2003. 

As a result, the U.S. and NZ have withdrawn their retaliation requests and Canada has withdrawn its request for Article 22.6 arbitration. 

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

No new developments.  In April 2003 Congress passed legislation to compensate the EC for the US failure to comply with the WTO decision against US copyright law.  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)

On 7 May the WTO Dispute Settlement Body (DSB) authorised the EU to increase customs duties as a further step towards retaliatory sanctions against the US in the Foreign Sales Corporations (FSC) case. The EU had challenged the tax benefits through the FSC for major US exporting companies such as Boeing and Microsoft. A dispute settlement panel ruled the law illegal in 2001 and gave the EU the right to raise tariffs. The EU will now be able to impose countermeasures against the US, as it has the DSB authorisation and also has notified the full list of products on which such countermeasures can be levied. The US$4 billion retaliation figure is a record high in WTO dispute settlement.

Shortly after the DSB approval, EU Trade Commissioner Pascal Lamy was quoted as saying that the EU will "review the situation in the autumn," and if there is no sign that compliance is on the way at that time, it would start the legislative procedure for the adoption of countermeasures by 1 January 2004. The US said it is taking action to amend the FSC legislation.

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

No new developments.  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, Brazil, EC, New Zealand, and Taiwan have reserved third party rights.  The Panel expects to issue its final report mid-year.

Meetings of the Dispute Settlement Body: May 2003

The Dispute Settlement Body (DSB) met on 7 May (Special DSB Meeting) and 19 May (General Meeting).  The next regular DSB meeting is scheduled for 24 June.

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

Special DSB Meeting - 7 May 2003

Item 1:  Request for establishment of a panel    

US: Investigation of the International Trade Commission in Softwood Lumber from Canada (WT/DS277)

A Panel was established. See item under Recent Developments.     

Item 2:  Recourse by the EC to Article 4.10 of the SCM Agreement and Article 22.7 of the DSU

US: Tax Treatment for “Foreign Sales Corporations”   (WT/DS108)

The DSB granted authorization for the EC to take countermeasures against the U.S. as a result of ongoing U.S. non-implementation on FSC.  The U.S. stated that as it intended to comply on FSC it did not believe it would ever be necessary for the EC to exercise the authorization.  

General DSB Meeting –19 May 2003

Item1: 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 reported that good progress was being made with the U.S. Congress on this issue.  In a short statement the EC said it appreciated the efforts of the U.S. and hoped that progress would be made in the short term. 


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

The parties repeated their statements from previous DSB Meetings.  The U.S. noted again that legislation repealing the 1916 Act had been introduced into the U.S. House of Representatives on 4 March 2003.  The EC and Japan expressed their disappointment that the repealing Act would not terminate pending court action and stressed again that U.S. implementation must include such termination.  Japan also said that it was disappointed at the lack of a detailed explanation for the U.S. on how soon and how exactly it intended to implement the DSB’s recommendations and rulings.    


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

The U.S. reiterated its intention to work with the U.S. Congress to resolve this dispute.  The EC commented that the U.S. status report showed no sign of concrete action toward implementation just over one month before the expiry of the revised deadline. The EC also restated that it could not accept the U.S. position that there was no need to clarify that Section 211 does not apply in cases of abandoned trademarks.  Cuba again called on the U.S. to implement before the deadline. 


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

The U.S reported that U.S. Administration was working to achieve the passage of the necessary legislative amendment to implement this dispute.  Japan noted in response that no bill had as yet been introduced to Congress and commented that persistent non-implementation by the U.S. was undermining the credibility of the WTO.   


Egypt: Definitive Anti-dumping Measures on steel rebar from Turkey (WT/DS1211)

Egypt reported that its investigating authority was working to implement the DSB’s recommendations and rulings in this dispute.  Turkey welcomed Egypt’s constructive approach.    

Item 2: First request for Panel establishment by Chile

Uruguay: Tax Treatment on Certain Products (WT/DS261/4)

Chile reported that since its first panel request Uruguay had made efforts to eliminate the tax discrimination at issue in this dispute, but as the result had been partial and limited it was making this second request for a panel to be established.  Uruguay challenged certain aspects of Chile’s panel request and maintained that its tax law was WTO compatible.  As this was Chile’s second Panel request, the DSB established a Panel.  The EC, Mexico and the U.S. reserved their third party rights. 

Item 3: First request for Panel establishment by Argentina  

US: Sunset reviews of Anti-Dumping measures on oil country tubular goods (OCTG) from Argentina (WT/DS/268/2)

Argentina countered U.S. criticism of its panel request made at the previous DSB meeting in some detail and maintained that its request was fully consistent with Article 6.2 of the DSU.  The U.S. said that it continued to believe that Argentina’s panel request failed to conform to the requirements of the DSU.  As this was Argentina’s second request, the DSB established a Panel.  Chinese Taipei, the EC, Japan, Korea and Mexico reserved third party rights. 

Item 4: Adoption of the report of the Panel 

Argentina: Definitive anti-dumping duties on poultry from Brazil (WT/DS)

The DSB adopted the report of this panel at the request of Brazil.  Brazil said that it was pleased that the Panel had confirmed most of Brazil’s claims and found that Argentina had acted in consistently with several provisions of the Anti-Dumping Act.  It noted that Argentina has already implemented the recommendations and rulings of the Panel report.  Argentina reported that it had been satisfied with the position taken by the Panel and that it believed it has already implemented the recommendations and rulings in full. The U.S., while commenting that the Panel report was on the whole a good document, was critical of the Panel statement that there were circumstances in which a panel could find that a member had failed to act in good faith, separate and beyond a finding of WTO inconsistency.  

Item 5:  U.S: Subsidies on Upland Cotton - Procedures for developing information under Annex V of the SCM Agreement 

United States –Subsidies on Upland Cotton: Statement by Brazil regarding Annex V of the SCM Agreement (WT/DS238/R)

Brazil noted that the 60 days for the information gathering procedures under Annex V of the SCM Agreement had elapsed without either the DSB designating a facilitator or the U.S. replying to its questions.  Some of these unanswered questions had been posed to the U.S. in its November 2002 consultations. 

Brazil noted with satisfaction that replies had been received from most of the third country markets to whom questions were addressed under the Procedures.  It said it would address the implications of the U.S. refusal to provide this information in the panel proceedings.  In response the U.S. repeated its position that Brazil was not entitled to use the Annex V SCM Procedures due to the applicability of the Peace Clause (Article 13 of the Agreement on Agriculture). 

The Panel will make a preliminary ruling on whether it is precluded from examining Brazil’s claims under the SCM Agreement in the absence of a prior conclusion that certain conditions of the Peace Clause remain unfulfilled.   

Other business

Argentina: Definitive safeguard measure on imports of preserved peaches (WT/DS238/R)

Argentina referred to its notification of its intention to implement the DSB’s recommendations and rulings in this dispute and its request for a reasonable period of time in which to do so.  Chile noted that Argentina’s notification was in accordance with DSU Article 21.3 and stated that in line with the observations of the Panel the only way for Argentina to comply was to end the safeguard measure.


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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.

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