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WTO Dispute Settlement Bulletin

Monthly Bulletin: February 2003

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 145 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)

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

At a special meeting of the Dispute Settlement Body on 26 February 2003,
the United States stated its intention to implement the Panel and Appellate
Body findings in this dispute.� The United States also indicated that it
would need a reasonable period of time to do so.� Australia's Statement
at the Special DSB Meeting on 26 February 2003 is set out below.

Australia as a Complainant (2)

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

See Recent Developments above.

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.

Australia as a Respondent (2)

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.

Disputes Involving Australia as a Third Party (6)

Mexico: Measures Affecting Telecommunications Services (WT/DS204)

The Panel hearing was held on 18 December 2002.� The Panel is due to issue
its final report in July.�

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
(TN/DS/W/34).

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 agreed that the arbitration
proceedings under DSU Article 22.6 remain suspended for a further period
until 10 April 2003 to permit further consultation.� This is pursuant to
the agreement reached on 18 December 2001 between the parties regarding
procedures under DSU Articles 21 and 22.

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

Following public consultations, the EC has issued member states with a
revised draft list that could be subject to countermeasures, as a result
of the ruling in FSC case.�� 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 to the value of US$4 billion.�

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

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 reserved its third party
rights.� Brazil, Taiwan, New Zealand and the EC also reserved third party
rights.� The panel expects to issue its final report mid-year.

Disputes in which Australia has a Policy or Economic Interest (10)

US: Subsidies on Upland Cotton (WT/DS267)

Following consultations with the U.S. in December and January, Brazil
requested on 6 February 2003 the establishment of a Panel.� The U.S. exercised
its right to block this first panel request but under DSU rules a panel
will be established at the second request.�

Brazil set out the basis of its panel request, describing the subsidies
paid for the production, use and export of U.S. upland cotton and the adverse
effect this has on Brazilian interest through lower world prices and excess
U.S export market share.� It outlined how these subsidies had resulted
in U.S. cost of production far exceeding world market prices.� Brazil claimed
that these subsidies violated the Agreements on Agriculture and Subsidies
and Countervailing Measures and the GATT 1994.

Brazil claims that the measures are inconsistent with the obligations
of the United States under the following provisions: Articles 5(a) and
(c), 6.3(b), (c) and (d), 3.1(a) and (b) and 3.2 of the Subsidies and Countervailing
Measures Agreement; Articles 7.1, 8, 9.1 and 10.1 of the Agreement on Agriculture;
and Articles III:4, Article XVI.1 and XVI.3 of GATT 1994.

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

The US has requested WTO dispute settlement consultations on Canadian
Wheat Board (CWB) export and import practices.� Canada has rejected all
requests, including by Australia, the EC, Japan and Mexico, for participation
as third parties at the consultations phase of the dispute.� If the dispute
moves beyond consultations to a formal WTO panel, the Government will need
to consider Australia's participation at that time.

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

No new developments. 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 will require
legislative action by the U.S Congress, the U.S and the EC have agreed
that the reasonable period of time will expire on 30 June 2003.� The most
recent Status Report lodged by the U.S notes that the United States Administration
has held consultations with the U.S 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 2002.� 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 has 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's request for
establishment of a panel was approved on 27 January 2003.� 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 2002, a panel was established regarding
U.S 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 U.S 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 U.S 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).� The Panel hopes to complete its work
by the end of April 2003.

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.� It is claimed the ban is inconsistent
with 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.

Meetings of the Dispute Settlement Body: February 2003

The Dispute Settlement Body (DSB) met on 19 and 26 February.� The next
regular DSB meeting is scheduled for 18 March.

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

General DSB Meeting - 19 February 2003

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 said it would continue to engage the U.S. Congress with
a view to concluding a mutually acceptable resolution of this dispute
consistent with WTO rules.� The EC reiterated its disappointment at the
lack of U.S. action and again urged the U.S. to take rapid and concrete
action to comply with the DSB recommendations.���

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

The U.S. also undertook to work with the U.S. Congress to achieve further
progress in resolving this dispute with the EC and Japan.� Japan again
repeated concerns about the financial damage that court proceedings under
the WTO inconsistent U.S. measure were causing Japanese companies and
called for prompt implementation by the U.S.� As previously, the EC stressed
the need for the U.S. both to repeal the 1916 Act and terminate pending
court cases.�� Each suggested that lack of U.S. implementation was affecting
the credibility of the WTO Dispute Settlement System.��

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

The U.S. drew Members' attention to its most recent status report and
restated its intention to work with the U.S. Congress to resolve this
dispute.� The EC said that it hoped the U. S. would take advantage of
the reasonable period of time granted in this dispute to ensure full
implementation by the new deadline and reminded the U.S. of its request
for clarification of the current legal status of abandoned trademarks
under section 211.� Cuba again called for the repeal of Section 211 within
the new reasonable period of time.

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

The U.S reiterated its intention to continue to work with the US Congress
toward resolving this dispute with Japan in a mutually satisfactory manner.� Japan
again urged the U.S. to pass the necessary legislation for implementation
as early as possible and repeated its comment that U.S continued non-compliance
was affecting confidence in the dispute settlement system.

Request for Establishment of a Panel by Brazil

US: Subsidies on Upland Cotton (WT/DS267)

Brazil requested the establishment of a panel.� It set out the basis
of its panel request.� The measures that are the subject of this request
are prohibited and actionable subsidies, as well as legislation, regulations
and statutory instruments and amendments thereto providing such subsidies
(including export credit guarantees), grants, and any other assistance
to the U.S. producers, users and exporters of upland cotton.� Brazil
outlined how these subsidies had resulted in U.S. cost of production
far exceeding world market prices.� Brazil claimed that these subsidies
violated the Agreements on Agriculture and Subsidies and Countervailing
Measures and the GATT 1994.

The U.S. exercised its right to prevent the establishment of the Panel
at the first DSB consideration of the request.� It contended that its
cotton support programs were within its WTO obligations, and said it
would vigorously defend its cotton support programs in this dispute.

Argentina and India indicated that they had been involved in the consultations
on this dispute and would likely be third parties were a panel established
at the next DSB meeting.

Special DSB Meeting - 26 February 2003

Implementation of the Recommendations of the DSB

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

Nine of the co-complainants in the Byrd Amendment dispute made statements
at the 26 February Special DSB meeting on the need for the U.S. to fulfil
its DSU obligation to state its implementation intentions and on moving
to negotiate a reasonable period of time for its implementation.�� Australia's
statement is set out below.��

DISPUTE SETTLEMENT BODY - 26 FEBRUARY 2003

STATEMENT BY AUSTRALIA

ITEM 1 A: UNITED STATES - CONTINUING DUMPING AND SUBSIDY OFFSET ACT
OF 2000: STATEMENT OF INTENTIONS PURSUANT TO ARTICLE 21.3 OF THE DSU
IN RESPECT OF IMPLEMENTATION OF THE RECOMMENDATIONS AND RULINGS OF THE
DSB

  • THANK YOU MR CHAIRMAN.
  • UNDER ARTICLE 21.3 OF THE DSU, A MEMBER IS REQUIRED TO INFORM THE DSB - WITHIN
    30 DAYS OF THE ADOPTION OF PANEL AND APPELLATE BODY REPORTS - OF ITS
    INTENTIONS CONCERNING IMPLEMENTATION OF THE RECOMMENDATIONS AND RULINGS
    OF THOSE REPORTS.
  • AUSTRALIA, TOGETHER WITH THE OTHER CO-COMPLAINANTS, HAS REQUESTED THIS
    DSB MEETING TO GIVE THE UNITED STATES THE OPPORTUNITY TO COMPLY WITH
    THIS REQUIREMENT OF ARTICLE 21.3 IN THIS DISPUTE.
  • WE NOTE PUBLIC COMMENTS AND ACTIONS OF THE UNITED STATES INDICATE THAT
    THE UNITED STATES REQUIRES A REASONABLE PERIOD OF TIME IN WHICH TO IMPLEMENT
    THE RECOMMENDATIONS AND RULINGS OF THE DSB.� THESE COMMENTS AND ACTIONS
    INCLUDE:
    • ITS STATEMENT TO THE 27 JANUARY DSB MEETING, BEFORE THE REPORTS WERE
      ADOPTED, THAT IT INTENDS TO IMPLEMENT THE DSB RECOMMENDATIONS AND RULINGS,
      AND
    • THE U.S. ADMINISTRATION'S PLAN TO REPEAL THE BYRD AMENDMENT IN THE
      UNITED STATES BUDGET PROPOSAL FOR FISCAL YEAR 2004.
  • WE ARE WILLING TO NEGOTIATE SUCH A REASONABLE PERIOD OF TIME WITH THE
    UNITED STATES JOINTLY WITH THE OTHER CO-COMPLAINANTS.
  • AUSTRALIA RESERVES ITS RIGHTS UNDER THE DSU ACCRUING FROM THE ADOPTION
    BY THE DSB OF THE PANEL AND APPELLATE BODY REPORTS IN THIS DISPUTE.

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[2] This publication is intended to provide
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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.

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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