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WTO Dispute Settlement Bulletin

Monthly Bulletin: April 2003

Australia and WTO dispute settlement

In this issue

Recent Developments

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

Australia has requested 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. The legislation being challenged by Australia does not apply
to the registration and protection of GIs for wines and spirits.

Australia's principal concerns are that the EC legislation may be
inconsistent with WTO rules prohibiting discriminatory treatment and may
not give proper protection to trademarks that may have a reference to a geographical
locality as part of the trademark. Australia is also concerned that
the legislation's registration requirements may be more restrictive
than necessary to give effect to GI protection.

Australia's request for consultations was lodged on 17 April 2003. The
EC has accepted Australia's request, but the actual date for the consultations
is still to be confirmed. Under Article 4.7 of the Dispute Settlement
Understanding, if Australia and the EC are unable to settle the dispute within
60 days of 17 April, Australia will have the right to request the establishment
of a panel.

The United States has also requested consultations with the EU on these
issues. Australia and the United States are co-operating in this WTO

United States: Subsidies on Upland Cotton (WT/DS267)

In its request for the establishment of a panel, Brazil invoked Annex V
to the SCM Agreement, which establishes procedures for developing information
in actionable subsidy cases. These procedures include the designation
by the DSB of a representative to facilitate information gathering from the
subsidising Member and/or third country market Members necessary to analyse
any adverse effects of a subsidy. Annex V procedures were previously
invoked in Indonesia –Autos but were not especially contentious
in that dispute.

In this dispute, however, the U.S. has objected to the designation of a
facilitator, in part because it argues that Brazil is not entitled to use
the Annex V procedures until it has been determined whether Brazil's
claim is precluded by Article 13 of the Agreement on Agriculture (the "peace

At the 15 April DSB meeting, the Chairman declined to re-convene discussion
of the agenda item on designation of the facilitator (suspended at the 31
March DSB meeting) because there was no agreement between the parties to
the dispute to do so.

Although the Chairman's ruling related to a procedural point concerning
the conduct of the meeting, it raises two issues of particular significance:

  • whether the requirement for DSB decisions to be taken by consensus (Article
    2.4 of the DSU) can be used to block a complaining party's rights
    under other provisions of the WTO Agreement; and
  • whether the peace clause can preclude the exercise of a complaining party's
    rights under other provisions of the WTO Agreement, even if those other
    provisions are not specifically encompassed by the peace clause.

European Communities: Export Subsidies on Sugar (WT/DS283)

Thailand held consultations with the European Communities with respect to
certain subsidies provided by the EC in the sugar sector.

The principal concerns of Thailand are that the EC sugar regime accords
imported sugar treatment less favourable than that accorded to domestic sugar
and provides for subsidies contingent upon use of domestic over imported
goods; that the EC accords export subsidies above its reduction commitment
specified in its Schedule of Concessions; and that sugar of an amount of
approximately 1.6 million tonnes per year benefits from export subsidies.

Thailand considers that these subsidies are inconsistent with the EC's
obligations under Article III:4 of the GATT 1994, Articles 3.1(a), 3.1(b)
and 3.2 of the Subsidies and Countervailing Measures Agreement and Articles
3.3, 8, 9.1 and 10.1 of the Agreement on Agriculture.

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. Decisions regarding next steps in the
case will be taken once this advice has been received.

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

On 23 April, the parties to the dispute lodged written submissions to the
arbitrator appointed under footnote 12 to Article 21.3(c) of the DSU to determine
the reasonable period of time for the U.S. to implement the dispute outcomes. The
arbitrator is expected to issue his award sometime in June.

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

See update under item in Recent Developments above.

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)

The EC requested consultations with Australia on the Australian quarantine
regime on 3 April 2003, both as such and as applied to certain specific cases. 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. Consultations will be held in Geneva on 8 May 2003. Canada,
Chile, India and the Philippines have requested to join the consultations. If
the dispute proceeds to the panel stage, Australia will vigorously defend
its quarantine system and any specific measures that may be challenged.

Disputes Involving Australia as a Third Party

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.

US: Subsidies on Upland Cotton (WT/DS267)

See update under item in Recent Developments above.

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. The rights of third parties form part of Australia's proposal
to the Doha round negotiations on the review of the Dispute Settlement Understanding

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

Canada, New Zealand and the United States have again agreed that the arbitration
proceedings under DSU Article 22.6 would remain suspended for a further period
until 9 May 2003 to permit further consultation. This is pursuant to
the agreement between the parties regarding procedures under DSU Articles
21 and 22.

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

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 29 January 2002 the Appellate Body report was adopted, finding that
the revised US Foreign Sales Corporations (FSC) scheme was WTO inconsistent.
In August 2002, the arbitrator ruled that the EU has right to apply countermeasures. On
25 April 2003 the EC requested authorization from the DSB to take appropriate
countermeasures and to suspend concessions pursuant to Article 4.10 of the
SCM Agreement and Article 22.7 of the DSU for an amount of US$ 4,043 million
per year in conformity with the decision of the arbitrator.

The EC said it intends to take countermeasures in the form of the suspension
of tariff concessions and related obligations under the GATT 1994 by imposing
an additional duty of up to 100 per cent ad valorem above bound custom duties
on specified US products (drawn from an indicative list circulated earlier).

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 DSB meeting on request by U.S. Australia,
Brazil, EC, New Zealand, and Taiwan have reserved third party rights. The
Panel is at the interim review stage and expects to issue its final report

Meetings of the Dispute Settlement Body:
April 2003

The Dispute Settlement Body (DSB) met on 15 April (General Meeting) and
24 April (Special DSB Meeting). The next regular DSB meeting is scheduled
for 19 May.

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

General DSB Meeting –15 April 2003

Item1: Implementation of recommendations adopted by the DSB - Status

United States: Section 110(5) of the US Copyright Act (WT/DS160/18/ADD.12)

The U.S. reported that it was making good progress with the U.S. Congress
on this issue with a view to concluding a mutually acceptable resolution
consistent with the WTO rules and that it hoped to notify the DSB soon
of additional information in this regard. The EC welcomed this statement
from the U.S. and said it looked forward to further progress.

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

The U.S. noted again that 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.

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 reminded the U.S. that it had just over two
months to implement by the extended reasonable period of time and restated
its non-acceptance of the U.S. position that there was no need to clarify
the status of Section 211 with respect to abandoned trademarks. The
U.S. repeated its request to the EC to provide information on U.S. Federal
Court decisions which have not applied this interpretation of Section 211. Cuba
again called for the repeal of Section 211 and associated itself with the
EC on the issue of abandoned trademarks.

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

The U.S reported that Ambassador Zoellick and Secretary of Commerce Evans
had written to Congress on 14 April 2003 supporting specific amendments
to the Tariff Act of 1930 to implement the DSB's recommendations
and rulings in this dispute. Japan reminded the U.S. that its agreement
to extend the reasonable period of time had been based on the U.S. passing
the necessary legislation for implementation in the first session of the
current Congress.

Item 2: First request for Panel establishment by Chile

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

Chile set out the basis for its panel request. It is claiming that
Uruguay's specific internal tax (IMESI) on certain specific consumer
goods (beverages, tobacco and cigarettes, automobiles, lubricants and fuels)
and its implementation is contrary to Articles 1 (MFN) and III (National
Treatment) of GATT 1994.

Uruguay exercised its right to prevent establishment of the Panel at the
first DSB consideration of the request.

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 set out the basis of its Panel request in some detail. It
is arguing that specific determinations in the sunset reviews of the anti-dumping
measure on OCTG from Argentina and certain aspects of U.S. laws, regulations,
policies and procedures relating to the administration of sunset reviews
in general are inconsistent with U.S. obligations under the Anti-Dumping
Agreement, GATT 1994 and Article XVI(4) of the WTO Agreement.

The U.S. exercised its right to prevent establishment of the Panel at
the first DSB consideration of the request.

Item 4: First request for Panel establishment by Canada

United States: Investigation of the International Trade Commission in
Softwood lumber from Canada (WT/DS277/2)

Canada has requested the establishment of another panel in the long-running
series of disputes against the U.S. on softwood lumber. The U.S.
exercised its right to prevent establishment of the Panel at the first
DSB consideration of the request.

Item 5: Adoption of proposed Panel report

Argentina: Definitive safeguard measure on imports of preserved peaches

Chile, as complainant, welcomed the Panel's finding that Argentina's
safeguard measure on preserved peaches was inconsistent with its obligations
under certain provisions of the Agreement on Safeguards and Article XIX:1(a)
of GATT 1994 and called on Argentina to implement the Panel's rulings
by ending the safeguard measure as quickly as possible. Argentina
said that despite some reservations on certain findings it had decided
not to appeal the Panel report. It undertook to report on its implementation
intentions within 30 days.

Item 6: Statement by Brazil regarding 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 expressed its frustration that the DSB had yet to designate a representative
to facilitate information gathering under the Annex V Procedures to the
SCM Agreement. The U.S. repeated its position that Brazil was not
entitled to use the Annex V SCM Procedures as the U.S. considered that
Brazil's claims were precluded by the Peace Clause. Brazil
restated its request that the matter be put to the DSB for decision. The
Chair said he would reflect further on the views expressed in order to
find a way forward.

Item 7: Proposed nomination for the indicative list of panellists

The nomination from Bolivia was approved without comment.

Chair's Statement

The Chair drew Members'attention to the recent communication from
the Appellate Body (WT/AB/WP/6) containing the final version of amendments
to the Working Procedures for Appellate Review concerning the participation
of third parties at the appellate stage. These amendments come into
effect on 1 May 2003.

Special DSB Meeting

24 April 2003

Item 1: Adoption of reports

EC: Cotton Bed Linen (WT/DS141)

The Article 21.5 Panel and Appellate Body reports in EC –Cotton
Bed Linen
were adopted.

Item 2: Adoption of report

EC: Anti-Dumping duties on malleable cast iron tube fittings from Brazil

This item was removed from the agenda as Brazil has appealed this report.

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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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Last Updated: 9 January 2013
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