WTO Dispute Settlement Bulletin
Monthly Bulletin: December 2001
Australia and WTO dispute settlement
RESOLVING EXPORT ACCESS PROBLEMS THROUGH THE WTO SYSTEM
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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
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can contact WTO legal specialists in the Department on the following numbers:
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Australia as a Complainant (1)
United States: Continuing Dumping and Subsidy Offset Act of 2000 (Byrd
Amendment) (WT/DS217 and WT/DS234)
Submissions by the eleven co-complainants (including
Australia) on the United States (US) Continued Dumping and Subsidy Offset
Act of 2000 (the Byrd Amendment) were lodged on 6 December 2001.
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 co-complainants are arguing that the Act is, in several
respects, not in conformity with US obligations under GATT 1994, the
Anti-Dumping Agreement and the Agreement on Subsidies and Countervailing
Measures. An oral hearing has been scheduled for 5-6 February and the
Panel is expected to release its final report on 10 July 2002. A copy of
Australia's submission to the Byrd Amendment panel can be found at: http://188.8.131.52/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
No new developments. The Panel is expected to complete its work by
the end of March 2002.
European Communities (EC): Measures affecting meat and meat products
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.
Canada: Measures affecting the importation of milk and the exportation
of dairy products (WT/DS103 and WT/DS113)
The DSB adopted the Article 21.5 Appellate Body Report and the Panel
Report, as reversed by the Appellate Body, at its 18 December 2001 meeting.
In its report, the Appellate Body reversed certain findings by the Panel which
resulted in it also reversing the Panel's decision that Canada's revised
measures are export subsidies under the Agriculture Agreement. However,
the Appellate Body was unable to complete the analysis of the claims made by
New Zealand and the US due to an insufficient factual basis. As such,
the Appellate Body's findings do not amount to a finding that the measures
are WTO-consistent. A second implementation (Article 21.5) panel was
established at the 18 December DSB meeting at the request of the US and New
Zealand to re-examine Canada's implementation. Australia and the EC
reserved their third party rights.
United States: Section 110(5) Copyright Act (Homestyle exemption) (WT/DS160)
The US and EC have been engaged in discussions on a compensation package
following the Arbitrators' award of US$1.1 million per year as the level of
nullification and impairment of benefits to the EC resulting from the
WTO-inconsistent US measure. The reasonable period of time for US
implementation of the DSB's recommendations expired on 20 December 2001.
Australia has registered its expectation that any compensation will be
United States: Definitive safeguard measures on imports of circular welded
carbon quality line pipe from Korea (WT/DS202)
The US has appealed the Panel's finding that the US line pipe measure was
imposed inconsistently with certain provisions of GATT 1994 and the Safeguards
Agreement. Australia has made a third party submission. An oral
hearing has been scheduled for 15 January 2002 and the Appellate Body's
report is due by 15 February 2002.
United States: Tax Treatment for Foreign Sales Corporations (WT/DS108)
No new developments. The US has appealed the finding by the Article
21.5 compliance panel that its revised FSC scheme is inconsistent with US WTO
obligations (including that the scheme is a prohibited export subsidy).
The EC has also appealed certain issues of law and legal interpretation made
by the panel. The Appellate Body's report is due by 14 January 2002.
Canada: Export credits and loans guarantees for regional aircraft (WT/DS222)
The Panel has completed its work and is expected to release its report
publicly in late January 2002.
Disputes in which Australia has a policy or economic interest (4)
Japan: Measures affecting agricultural products (Varietal testing)
No new developments. Japan outlined its agreement with the US on a
mutually satisfactory solution at the 25 September 2001 DSB meeting. Australia
has registered its expectation that the outcome will be applied in a
non-discriminatory manner to the products of all WTO members.
EC: Regime for the Importation, Sale and Distribution of Bananas
The EC has reported that the Council Regulation giving effect to phase II
of its bilateral settlements with the US and Ecuador in this dispute would be
adopted on 19 December 2001, and enter into force on 1 January 2002. This follows the waivers granted to the EC for its new banana import regime at
the Doha Ministerial Conference in November 2001.
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 with standard terms of reference 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)
The Appellate Body released its report on 2 January 2002. It upheld
aspects of the EC appeal, finding that the U.S. law known as Section 211
(which prevents U.S. recognition of trademarks and other intellectual property
used in connection with confiscated property) is inconsistent with US national
treatment and most-favoured-nation obligations under the WTO TRIPS Agreement.
It also reversed the Panel's finding that trade names (company or business
names that are not registered as trademarks) are not covered under the TRIPS
Agreement, finding that WTO Members do have an obligation under this Agreement
to provide protection to trade names. In addition, the Appellate Body
upheld the one issue appealed by the US, overturning the Panel's finding
that Section 211 denied parties fair and equitable judicial procedures to
enforce trademark rights.
Meetings of the Dispute Settlement Body: December 2001
The DSB, consisting of all the Members of the WTO, met on 5 December, 10
December and 18 December 2001. The next regular DSB meeting will be held on 1
February 2002. Australia uses DSB meetings to monitor progress and to
register its views on disputes of interest. The agendas of the December DSB
meetings were as follows (any Australian interventions are indicated):
Special DSB Meeting 5 December 2001
1. Implementation of the Recommendations of the DSB
Argentina Definitive Anti-Dumping Measures on Imports of
Ceramic Floor Tiles from Italy (WT/DS189)
report by Argentina
Argentina informed the DSB that it will implement its recommendations
and that consultations with the EC on a reasonable period of time were
2. Panel Request
US Preliminary Determinations with respect to Certain Softwood
Lumber from Canada (WT/DS236) request for the establishment of a
Panel by Canada
A Panel was established to examine U.S. preliminary determinations
with respect to certain softwood lumber from Canada. The EC and
India reserved third party rights.
Special DSB Meeting 10 December 2001
1. Panel Request
Romania Import Prohibition on Wheat and Wheat Flour (WT/DS240) request for the establishment of a Panel by Hungary
Panel was not established as Romania opposed the request. Panel
request deferred. (Hungary's request for the establishment of a
Panel was subsequently withdrawn).
DSB Meeting 18 December 2001
1. Surveillance of Implementation of Recommendations adopted by the DSB
EC Regime for the Importation, Sale and Distribution of
Bananas (WT/DS27) - status report by the EC
The EC welcomed the action taken at Doha on the EC's waiver
requests, noting that these waivers were essential prerequisites for the
implementation of phase II of the bilateral understandings with the U.S.
and Ecuador concerning the EC's implementation. The EC said that
the Council Regulation giving effect to phase II would be adopted on 19
December, and enter into force on 1 January 2002.
2. Surveillance of Implementation of Recommendations adopted by the DSB
Thailand - Anti-Dumping Duties on Angles, Shapes and Sections of
Iron or Non-Alloy Steel and H-Beams from Poland (WT/DS122)
- status report by Thailand
Thailand reported that its anti-dumping measure had been maintained
following a re-examination of injury and claimed that it had fully
implemented the DSB's recommendations and rulings. Poland was
unable to agree with Thailand's claims and has reserved its rights to
take additional DSU action under Article 21.5.
3. Surveillance of Implementation of Recommendations adopted by the DSB
United States Section 110(5) of the US Copyright Act
- status report by the U.S.
The US reported that it was involved in productive discussions with
the EC with a view to resolving the dispute. The reasonable period
of time for implementation expired on 20 December 2001. (See above
for further detail).
4. Surveillance of Implementation of Recommendations adopted by the DSB
United States Anti-Dumping Act of 1916 (WT/DS162)
- status report by the U.S.
The U.S. reported that the Administration was continuing to seek
passage of legislation by Congress that would bring its measure into
conformity with WTO obligations. The reasonable period of time for
implementation expired on 20 December 2001.
5. Panel Request
Argentina Definitive Safeguard Measure on Imports of Preserved
Peaches (WT/DS238) request for the establishment of a Panel by
Panel was not established as Argentina opposed the request.
Panel request deferred.
6. Report of the Appellate Body and Report of the Panel
Canada - Measures Affecting the Importation of Milk and the
Exportation of Dairy Products: Recourse to Article 21.5 of the DSU by
New Zealand and the U.S. (WT/DS103 and WT/DS113)
The DSB adopted the Appellate Body Report and the Panel Report, as
reversed by the Appellate Body.
Prior to adoption of the Reports, the US and New Zealand were
critical of the Appellate Body Report on substantive and procedural
The following were the main points made in Australia's statement:
- Australia has serious concerns with the conclusions reached by the
- Australia has both systemic and commercial interests in this case
in ensuring that the export subsidy commitments arising from the
Uruguay Round are fully implemented.
- Australia is of the view that the Agriculture Agreement
commitments in relation to domestic support and export subsidies are
assessed in terms of their trade- and production-distorting effects.
- The Appellate Body notes the potential for spill over
effects of domestic support to provide certain benefits to export
production. It also acknowledges that the domestic support and
export subsidy disciplines would be eroded if a WTO Member was
entitled to use domestic support, without limit, to provide support
for exports of agricultural products.
- Australia has concerns that in this dispute the Appellate Body
considered the appropriate benchmark or standard to determine the
existence of payments was the average total cost of
production. Its approach appears to require an examination
of payments against a benchmark based on the cost of making and
selling the product, but fails to take into account the existence or
effect of a subsidy on the cost of production.
- This approach ignores the fact that the administered price which
is subsidized by the Canadian Government has an effect on the cost
of production. The subsidy provided to domestic production
through administered prices may also have a cross-subsidisation
effect for product intended for export.
- The Appellate Body's reasoning appears to be at odds with its
previous examination on the existence of payments, namely that
where milk is sold at reduced rates (that is, at below
market-rates), payments' are, in effect, made to the
recipient of the portion of the price that is not charged.
- Notwithstanding our reservations about the rulings given by the
Appellate Body, and taking account of concerns expressed by others,
Australia would be prepared to join in a consensus in adopting the
reports in deference to the panel, and to the institutions of the
Appellate Body and the DSB.
7. Request for the establishment of a Panel
Canada - Measures Affecting the Importation of Milk and the
Exportation of Dairy Products: Second Recourse to Article 21.5 of the
DSU by New Zealand and the U.S. (WT/DS103 and WT/DS113)
A second Article 21.5 Panel was established at the request of the US
and New Zealand. Third party rights were reserved by Australia and
8. Review of the Dispute Settlement Understanding
Statement by the Chair
The Chair made a statement concerning the process of negotiations on
improvements and clarifications of the DSU, as mandated by the Doha
Ministerial Declaration. The DSB agreed to revert to this matter.
9. Proposed Nominations for the Indicative List of Governmental and
Non-Governmental Experts (WT/DSB/W/179)
The nominations were accepted.
10. Chairmanship of the DSB
Ambassador Bryn (Norway) was appointed as Chair of the DSB to serve
out the remainder of Ambassador Farrell's term (New Zealand). A
new Chair will be appointed early in the New Year.
11. Other Business
Turkey - Restrictions on Imports of Textile and Clothing Products
India raised some concerns about Turkey's implementation in this
dispute. Turkey said that it was about to take the necessary
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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.
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