Australia and WTO dispute settlement

MONTHLY BULLETIN: OCTOBER 2002

 

RESOLVING EXPORT ACCESS PROBLEMS
THROUGH THE WTO SYSTEM

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  • 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 (3)

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

On 21 October 2002 the EC requested consultations with the Republic of Korea regarding shipbuilding subsidies. The request was circulated to all other WTO Members on 24 October.

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). The request was circulated to all other WTO Members on 23 October. A date for these consultations has yet to be fixed.

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

On 18 October 2002 Philippines also requested consultations with Australia regarding its quarantine measures for fresh pineapple fruit. The request was circulated to all other WTO Members on 23 October. A date for these consultations has yet to be fixed.


Australia as a Complainant (2)

United States Continued Dumping and Subsidy Offset Act of 2000 (the "Byrd Amendment") (WT/DS217 and WT/DS204)

On 18 October 2002 the United States lodged its notification to appeal the panel report. The panel had found that the US measures were inconsistent with Articles 11.4 and 32.1 of the SCM Agreement, as well as Articles 5.4 and 18.1 of the Anti-Dumping Agreement. However, claims under Article 8.3 of the Anti-Dumping Agreement, Articles 5(b) and18.3 of the SCM Agreement and Article X:3(a) of GATT 1994 were not established.

The panel was established at the request of Australia, Brazil, Canada, Chile, the European Communities (EC), India, Indonesia, Japan, Korea, Mexico and Thailand.

Australia's submissions and statements to the panel, and the panel's report, are available at http://203.6.171.3/trade/negotiations/disputes/wto_disputes-US_AD.html

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

On Friday 27 October 2002, Australia and Brazil (WT/DS266) lodged separate requests for consultations with the EC over its sugar regime. The consultations will be held on 21-22 November 2002 in Geneva. Australia and Brazil are both arguing that the EC has exceeded its WTO export subsidies commitments. Australia and Brazil are also alleging that the EC has breached obligations in regard to National Treatment. The EC has accepted Australia's request to join Brazil's consultations. Requests were also made by 14 ACP countries to join the consultations and these have been accepted by the EC. The Minister for Trade, Mr Vaile, has issued a press release on Australia's request for consultations. This can be found at:

http://www.trademinister.gov.au/releases/2002/mvt115_02.html

The actions underway do not challenge the preferential sugar imports granted by the EC to ACP/India. Oxfam has come out in support of Australia and Brazil's cases, criticising the impact of the EC's policies on developing countries. Oxfam's press release can be found at www.oxfam.co.uk. Mr Vaile's press release on this issue can be found at: http://www.trademinister.gov.au/releases/2002/mvt125_02.html

A copy of Australia's request for consultations can be found by entering the document number (WT/DS265) in the search function on the WTO web-site, which can be found at http://docsonline.wto.org/gen_search.asp.


Disputes Involving Australia as a Third Party (9)

Mexico Measures Affecting Telecommunications Services (WT/DS204)

Australia's Third Party submission is due by 14 November. The US has alleged 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, Section 5 of the GATS Annex on Telecommunications and GATS Article XVII.

Australia, Brazil, Canada, Cuba, the EC, Guatemala, Honduras, India, Japan and Nicaragua are third parties to this dispute.

Chile: Price Brand System and Safeguard Measures Relating to Certain Agricultural Products (WT/DS207)

On 23 October 2002 the Dispute Settlement Body adopted the Appellate Body's report from 23 September. The Appellate Body , upheld the panel's 3 May 2002 finding that Chile's price band system (PBS) applying to certain agricultural products was inconsistent with Article 4.2 of the Agreement on Agriculture. The Appellate Body reversed the panel's finding that the duties resulting from the PBS were inconsistent with the second sentence of Art II: 1(b) of GATT 1994 on the basis that the panel had acted inconsistently with Art 11 of the DSU as it was "not part of the matters before the panel". Chile had thereby been denied due process of a fair right of response. The Appellate Body also decided it was not necessary to make a separate finding on whether the PBS also results in a violation of the first sentence of Art II: 1(b) of GATT 1994 in light of its finding of inconsistency with the Agricultural Agreement Art 4.2.

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 negotiation on the review of the Dispute Settlement Understanding (TN/DS/W/8).

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

On 23 September Canada filed its notice of appeal against the 26 July 2002 Article 21.5 Panel report, which upheld the joint U.S. NZ complaint against Canadian dairy export subsidies. Third party submissions are due on 18 October and the oral hearing is to be held on 31 October. The Appellate Body is scheduled to report on 23 December 2002.

On 26 July the Panel released its finding that, through its CEM scheme and the continued operation of Special Milk Class 5(d), Canada acted inconsistently with its obligations under Articles 3.3 and 8 of the Agreement on Agriculture, by providing export subsidies within the meaning of Article 9.1(c) in excess of its quantity commitment levels specified in its Schedule for exports of cheese and "other dairy products". Alternatively, the Panel found that the CEM scheme was inconsistent with Article 10.1 of the Agreement on Agriculture, and therefore that Canada acted inconsistently with its obligations under Article 8 of this Agreement.

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

No new developments. At the DSB meeting on 29 July, the U.S confirmed that in accordance with Article 21.6 of the DSU an additional status report in this dispute was provided on 18 July 2002 advising that the US Administration continues to engage the US Congress with a view to concluding a mutually acceptable resolution of the dispute.

The EC and US sought arbitration under Article 25 of the DSU to determine 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. The arbitrator assessed the level of nullification and impairment at US$1.1 million per year.

United States: Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea (WT/DS202)

No new developments. On 26 July, the WTO issued the arbitrator's report regarding the compliance period in this matter. It was not necessary for the arbitrator to issue an award in this arbitration given that the parties agreed that the reasonable period of time (RPT) for the U.S. to implement the recommendations and rulings of the DSB shall expire on 1 September 2002. The agreement on the RPT between the parties was circulated on 31 July.

The Appellate Body largely found in favour of Korea's challenge to the February 2000 U.S line pipe safeguard. Since the adoption of the Report, pursuant to Article 21.3(b) of the DSU, Korea and the U.S have conducted discussions to reach agreement on a "reasonable period of time" for U.S implementation of the DSB report.

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

No new developments. Following the 30 August 2002 ruling that the EU has the legal right to apply countermeasures to the value of US$4 billion, the EC released its draft list of products potentially subject to retaliation on 13 September. The list will be open for public consultation for two months.

The WTO ruled had ruled on 14 January 2002 against the US revised Foreign Sales Corporations (FSC) scheme. This follows an earlier WTO ruling which upheld the EU's complaint against the original scheme as providing prohibited export subsidies to US companies in the form of tax exemptions against US imports.

Canada: Export Credits and Loans Guarantees for Regional Aircraft (WT/DS222)

No new developments. Brazil has indicated its intention to seek WTO authorisation for countermeasures arising from disagreement about what was needed to complete implementation. Brazil commented that Canada had failed to implement DSB rulings to withdraw the subsidy within 90 days (which expired on 20 May 2002). At the DSB meeting on 24 June, Brazil made a retaliation request to take appropriate countermeasures in the amount of US$3.36 billion. Canada requested, and the DSB agreed, that Brazil's retaliation request be referred to arbitration under Article 22.6.

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

Australia's third party submission was submitted on 14 October. Australia's oral submission to the panel was made on 22 October. The panel timetable provides for the interim report to be issue on 3 February 2003 and the final report to be circulated on 4 April 2003. Australia's third party executive summary submission.

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.


Disputes in which Australia has a Policy or Economic Interest (11)

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

No new developments. Argentina has 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.

Japan: Measures Affecting Agricultural Products ("Varietal testing") (WT/DS76)

No new developments. Japan reached an agreement with the U.S 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)

The Panel report on section 129(C)(1) of the Uruguay Round Agreements Act was adopted at the DSB meeting of 30 August.

The Panel issued its report on 15 July 2002. The Panel found that Canada had failed to establish that the U.S. statute was inconsistent with provisions of the Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures, Article VI of GATT 1994 and the WTO Agreement, which Canada had claimed mandates a violation of these agreements. Canada argued that irrespective of whether duty assessments in anti-dumping and subsidy cases are approached differently under a prospective or retrospective duty assessment system, where a Member has agreed to implement an adverse DSB ruling, it must make all subsequent substantive duty determinations in accordance with that ruling following the expiration of the reasonable period of time.

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

No new developments. The U.S and the EC have reached a mutual agreement on the reasonable period of time for the U.S to implement the recommendations and rulings of the DSB in this dispute. 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 31 December 2002, or on the date on which the current session of the U.S Congress adjourns, whichever is later, and in no event later than 3 January 2003. The most recent Status Report lodged by the US notes that the United States Administration has held consultations with the US Congress concerning appropriate statutory measures and continues to work with the Congress on resolving the dispute.

The Section 211 law is aimed at preventing foreign companies from registering trademarks that were used in connection with property confiscated by Cuba without compensation.

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's 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)

No new developments. 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. This dispute raises similar systemic issues for Australia as EC: Generalized System of Preferences (above).

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

At the Dispute Settlement Body meeting on the 1 October a panel was established, following Brazil's second request, regarding US 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 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.

A US 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)

No new developments. 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.

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

No new developments. 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. Brazil has said that the pet food is not made from ruminants and is for cats and dogs, the ban is unscientific and inconsistent with the WTO. Specifically, 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.

Peru Certain Taxes on Agricultural Products (WT/DS255)

No new developments. Chile has sought consultations with Peru on Peruvian law 27.614 which Chile considers may be in breach of WTO National Treatment provisions. Chile has identified fresh fruit, vegetables, fish, milk, tea and other "natural" products as being affected by the tax treatment. The U.S requested intervention as a third party.

At the 24 June DSB meeting, Peru exercised its right to block establishment of a Panel requested by Chile (However, a Panel would be automatically established at the second request). Although it was expected that Chile would request Panel establishment at the DSB meeting on 29 July this item was withdrawn by Chile prior to adoption of the Agenda for this meeting (see report on DSB meetings below).

European Communities - Trade Description of Sardines (WT/DS231)

In this dispute, Peru challenged an EC regulation which provided that only products prepared from fish of the species Sardina pilchardus (found mainly around the coasts of the Eastern North Atlantic, in the Mediterranean Sea and in the Black Sea) could be marketed as preserved "sardines". Peru claimed the measure was not based on the naming standard set out in a relevant Codex standard and was therefore inconsistent with Article 2.4 of the TBT Agreement.

This was the first case in which findings were made pursuant to the TBT Agreement. The Appellate Body upheld the Panel's findings that the EC Regulation was a "technical regulation" under the  TBT Agreement, that Article 2.4 of the  TBT Agreement  applied to measures that were adopted before 1 January 1995 but which have not "ceased to exist", and, that Article 2.4 of the  TBT Agreement  applied to existing technical regulations, including the EC Regulation. The Appellate Body also upheld the Panel's finding that Codex Stan 94 was a "relevant international standard" under Article 2.4 of the  TBT Agreement and that Codex Stan 94 was not used "as a basis for" the EC Regulation within the meaning of Article 2.4 of the  TBT Agreement.

The Appellate Body reversed the Panel's finding that , under the second part of Article 2.4 of the  TBT Agreement,  the burden of proof rests with the  European Communities to demonstrate that Codex Stan 94 is an "ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued" by the European Communities through the EC Regulation Instead, it was found that the burden of proof rests with Peru to demonstrate that Codex Stan 94 was an effective and appropriate means to fulfil those "legitimate objectives". In this dispute, Peru was found to have adduced sufficient evidence and legal arguments to satisfy this burden of proof.

As a separate procedural issue, the Appellate Body also found that the amicus brief submitted by a WTO member, which did not have third party status, was admissible.


Meeting of the Dispute Settlement Body: September 2002

Dispute Settlement Body (DSB) meetings were held on 1 October and 23 October. The next regular DSB meeting is scheduled for 1 November.

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

DSB Meeting 1 October 2002

Implementation Status Report

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

The U.S. confirmed that in accordance with Article 21.6 of the DSU an additional status report in this dispute was provided on 19 September 2002

 

United States: Anti-Dumping Act of 1916 (WT/DS136 and WT/DS162)

The U.S confirmed that in accordance with Article 21.6 of the DSU an additional status report in this dispute was provided on 19 September 2002. The U.S noted that the bills have been introduced which would repeal the 1916 Act and apply to all pending court cases.

 

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

The U.S confirmed that in accordance with Article 21.6 of the DSU a status report was provided on 19 September 2002. It was noted in the report that the reasonable period of time agreed by the US and the EC would expire on 31 December 2002.

 

United States: Anti-Dumping Measures on Hot Rolled Steel from Japan (WT/DS 184)

The U.S confirmed that in accordance with Article 21.6 of the DSU a status report was provided on 19 September 2002. It was noted in the report that the US Department of Commerce had proposed a change to the "at arm's length" test that is meant to implement the rulings of the DSB.

Panel Request

United States: Final Countervailing Duty Determination with respect to certain Softwood Lumber from Canada (WT/DS253)

Canada made its second request for the establishment of a panel. Canada claimed the US final countervailing duty determination violates the Agreement on Subsidies and Countervailing Measures and provisions for expedited and company-specific administrative reviews violated the Agreement on Subsidies and Countervailing Measures and GATT 1994.

 

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

Brazil made its second request for establishment of a panel. Brazil has claimed violation of various provisions of GATT 1994.

 

Egypt - Definitive anti-dumping measures on steel rebar from Turkey (WT/DS211)

The panel report was not appealed and accordingly adopted by the DSB. As recommended by the Panel, Egypt said it would bring its definitive anti-dumping measures on imports of steel rebar from Turkey into conformity with the relevant provisions of the AD Agreement

DSB Meeting 23 October 2002

Implementation Report

Egypt - Definitive anti-dumping measures on steel rebar from Turkey (WT/DS)

Egypt said it required a reasonable period of time for implementation. Turkey said that it hoped for early agreement on this matter.

Appellate Body Report Adopted

Chile- Price Brand System and Safeguard Measures Relating to Certain Agricultural Products (WT/DS207)

The Appellate Body report was adopted. Chile's price band system applying to certain agricultural products was found to be inconsistent with Article 4.2 of the Agreement on Agriculture.

 

European Communities Trade Description of Sardines (WT/DS231).

The DSB adopted the Appellate Body Report and the Panel Report as modified by the Appellate Body Report.

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.