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WTO Dispute Settlement Bulletin

Monthly Bulletin: December 2002

Australia and WTO dispute settlement

Resolving Export Access Problems through the WTO System

  • Are you an exporter or intending to export?
  • 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:

Recent Developments (1)

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

On 17 December the United States requested consultations with Canada regarding
the export of wheat by the Canadian Wheat Board and treatment accorded by
Canada to grain imported into Canada. The US claims Canada has granted exclusive
and special privileges to the Canadian Wheat Board and in doing so, has acted
inconsistently with Article III and XVII of GATT 1994.� Australia has requested
third party status in the consultations.

Australia as a Complainant (2)

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

The panel 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 United States appealed the report.� The Appellate
Body Report is expected to be released in Geneva in January 2003.

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

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

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.� Opening
Statements were made by the parties, all ACP participants and India.� Third
Party participation was made possible by a decision of Australia and Brazil
to follow a procedural path that allowed third countries to join the consultations
(as an alternative to a private meeting with the EC).� The EC did not exercise
its power to veto third party participation.� The ensuing discussion was
based on Australia and Brazil's lists of questions which had been passed
to the EC prior to the consultations.� These dealt with issues such as the
amount of quota and non-quota sugar produced and exported, the price received
for this sugar, how much had been paid in export refunds, the costs of production
and processing in EC countries and details of the EC's incorporated products
regime as it relates to sugar, including refunds paid on the export of such
products.� The basis of Australia and Brazil's cases are that the EC has
exceeded its WTO export subsidies commitments and has breached obligations
in regard to National Treatment.� The complaint does not involve access to
EC sugar markets.

ACP countries, two of which (Mauritius and Guyana) were represented at Ministerial
level, expressed their strong concern that the case would negatively effect
their preferential access to the EC market.� This access is guaranteed to
ACP countries under a special EC-ACP protocol.� India's access is also agreed
through a bilateral treaty.� Both Australia and Brazil provided assurances
to the ACP delegates that the case did not challenge their preferential access.� Australia
and Brazil also called on the EC to make an assurance that it would continue
to honour its commitments to ACP sugar exporters, which the EC refused to,
do.� Oxfam has supported Australia and Brazil's cases, criticising the impact
of the EC's policies on developing countries. Oxfam's press release can be
found at Oxfam's website. View Mr Vaile's press release EU Claims
on Sugar Challenge Wrong: Vaile.

At the consultations the EC did not provide answers to many of Australia
and Brazil's questions.� Australia is seeking further information and decisions
regarding next steps in the case will be taken once this advice has been
received.

Australia as a Respondent (2)

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).� 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)

On 18 October 2002 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.

Disputes Involving Australia as a Third Party (8)

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

See Recent Developments above.

Mexico � Measures Affecting Telecommunications Services (WT/DS204)

The Panel hearing was held on 18 December 2002.� Responses to questions
issued by the Panel are due on 15 January 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 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)

The report of the Appellate Body � Second Recourse to Article 21.5 Implementation
Report was circulated on 20 December 2002.

Following Canada's appeal on certain issues of law and legal interpretations
in the panel report, the Appellate Body reversed the Panel's application
of the burden of proof for Article 10.3 of the Agreement on Agriculture but
held this did not vitiate findings under Articles 3.3, 8, 9.1(c), and 10.1
of the Agreement on Agriculture.� The Appellate Body upheld the Panel's core
findings that Canada acted inconsistently with its obligations by providing
export subsidies listed in Article 9.1(c) of that Agreement in excess of
the quantity commitment levels specified in Canada's Schedule.� The Appellate
Body declined to rule on the Panel's alternative finding under Article 10.1
of the Agreement on Agriculture as it was moot and of no legal
effect.� The Appellate Body findings are relevant in Australia and Brazil's
sugar complaints.

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

The US has stated it continues to work towards a mutually acceptable resolution� 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: Definitive Safeguard Measures on Imports of Circular
Welded Carbon Quality Line Pipe from Korea (WT/DS202)

The WTO issued the arbitrator's report regarding the compliance period in
this matter on 26 July.� 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 of the
DSB shall expire on 1 September 2002.

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

On 29 January 2002, the Dispute Settlement Body adopted the Appellate Body
report. The revised US Foreign Sales Corporations (FSC) scheme was found
to be WTO inconsistent.� On 30 August the arbitrator ruled that the EU has
right to apply countermeasures to the value of US$4 billion.�

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

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.� The panel timetable provides for the final report to be circulated
on 4 April 2003.

Disputes in which Australia has a Policy or Economic Interest (8)

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

On 4 September 2002 Argentina 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.

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

On 21 October 2002 the EC requested dispute settlement consultations with
Korea regarding Korean measures affecting trade in commercial vessels, including
advance payment of refund guarantees, pre-shipment loans, corporate restructuring
packages and tax concessions.� The EC claims the Korean measures are inconsistent
with the Agreement on Subsidies and Countervailing Measures.

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

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 31 December 2002.� 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.

EC: Generalized System of Preferences (WT/DS242)

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 has failed 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)

Following its March 2002 request for consultations, India requested establishment
of a panel on 19 December.� 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
systemic issues for Australia similar to those identified in EC: Generalized
System of Preferences
(above).

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

No new developments.� On 1 October a panel was established 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)

A panel was established to hear this matter on 29 July 2002.� 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.

On 11 November 2002 Chinese Taipei made a separate request for dispute settlement
consultations with the US regarding definitive safeguard measures on certain
steel imports (WT/DS274).

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

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.

Negotiations on the Dispute Settlement Understanding (DSU Review)

At the Dispute Settlement Body Special Session on the DSU Review on 16-17
December members agreed to move from the current issues based discussion
to draft legal texts of issues for clarification or improvement.� Delegations
have been requested to submit draft text by 15 January, ahead of the next
scheduled session of the DSU Review, which will be held 28 � 30 January.

Meeting of the Dispute Settlement Body: December 2002

Dispute Settlement Body (DSB) meetings were held on 5 and 19 December.�� The
next regular DSB meeting is scheduled for 27 January.� A special session
of the DSB will be held on 8 December.

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

DSB Meeting � 5 December 2002

Request for Modification of Reasonable Period of Time

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

Japan agreed to the US request for another year to comply with the Appellate
Body report.

DSB Meeting � 19 December 2002

Implementation Status Report

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

The U.S. advised an additional status report was provided on 6 December
2002.� The Administration said it will engage the 2003 Congress

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

The U.S advised an additional status report in this dispute was provided
on 6 December 2002.� The U.S noted that the bills have been introduced
which would repeal the 1916 Act and apply to all pending court cases.� The
EC urged early repeal of the Act and termination of all cases under the
Act.

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 6 December 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 advised an additional status report was provided on 6 December
2002.� The US noted the reasonable period of time to comply with the ruling
had been extended by one year to 31 December 2003.

Request for Panel

United States � Preliminary Determinations with Respect to Softwood
Lumber from Canada (WT/DS264)

The US exercised its right to prevent establishment of a panel following
the first request for a panel by Canada.

European Communities � Conditions for the Granting of Tariff Preferences
to Developing Countries
(WT/DS246).

The EC exercised its right to prevent establishment of a panel following
the first request for a panel by India.

Adoption of Appellate Body Report

United States � Countervailing Duties on Certain Corrosion Resistant
Steel Products from Germany (WT/DS213)

The Appellate Body Report and the Panel Report as amended by the Appellate
Body Report were adopted.


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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
.

Last Updated: 9 January 2013
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