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WTO Dispute Settlement Bulletin

Monthly Bulletin: March 2002

Australia and WTO dispute settlement

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US Import Restrictions on Steel Imports

On 5 March 2002, the US Administration announced its intention
to impose import restrictions on steel imports. The announcement
followed an investigation, launched by the Administration in
June 2001, on the effect of imports on the US steel industry.
The investigation, undertaken by the United States International
Trade Commission (USITC), found that increased imports were
causing serious injury to the main sectors of the US steel
industry. The restrictions came into force on 20 March, and
will be in place for three years.

While the overwhelming majority of Australia's steel exports
to the US were covered by the USITC's findings on serious injury,
the restrictions imposed will impact less severely on Australian
exports, given the tariff-rate quota arrangements put in place
for slab steel and an exclusion that is to be granted for current
Australian exports of hot-rolled coil to a West Coast steel

Australia has responded to these measures by coordinating Government-industry
responses through a steel industry summit, taking action to
minimise the direct impact on our exports of steel to the US,
introducing updated import monitoring arrangements to address
the trade diversionary impact and continuing to participate
in high-level talks underway in the OECD to tackle over-capacity
and government intervention in the steel sector. Australia
also held consultations with the US on 21 March under the terms
of the WTO Safeguards Agreement and is continuing to assess
all options for future action in the WTO to protect Australia's

The steel industry summit held in Canberra on 19 March discussed
the impact of the US action. The Summit agreed on a number
of outcomes, including the establishment of a Ministerial Task
Force to consult on the response to US steel import restrictions.
The Task Force will meet for the first time on 5 April. The
Summit also agreed to establish a Steel Monitoring Committee
to monitor imports of steel and any diversion from other markets.
A copy of the meeting communique is attached to this bulletin.

A number of other countries have also undertaken consultations
with the US under the WTO Safeguards Agreement. The EC, Japan,
Korea, Switzerland and China have also requested WTO dispute
settlement consultations with the US on the US safeguard measures.

Australia as a Complainant (1)

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

The second oral hearing before the Panel was held on 12 March.
This enabled the Panel and the parties to explore further the
key legal and factual issues in this dispute. The eleven co-complainants
(including Australia) are arguing that the United States Continued
Dumping and Subsidy Offset Act of 2000
(the Byrd Amendment)
is inconsistent with US obligations under GATT 1994, the Anti-Dumping
Agreement and the Agreement on Subsidies and Countervailing
Measures. 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 Panel
is expected to release its final report on 10 July 2002. Copies
of Australia's submissions to the Byrd Amendment panel can
be found at:

Disputes involving Australia as a Third Party (7)

Chile: Price band system and safeguard measures relating to certain agricultural
products (WT/DS207)

No new developments. The Panel report is still not publicly
available but is expected soon.

European Communities (EC): Measures affecting meat and meat products (Hormones)

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. We understand that the
US and the EC are engaged in discussions on a compensation arrangement.
Australia has registered its expectation that any compensation
will be applied on a non-discriminatory basis.

Canada: Measures affecting the importation of milk and the exportation
of dairy products (WT/DS103 and WT/DS113)

Australia has lodged its third party submission to the second
Article 21.5 panel in this dispute. The panel will hold its
oral hearing on 23 April. The parties to this dispute the
US and New Zealand are arguing that, since the Appellate Body's
21.5 Report did not make any findings on the consistency of
Canada's new measures, they continue to believe that Canada's
implementation measures, introduced as a result of the DSB's
original recommendations and rulings, are inconsistent with
its WTO obligations. Australia, the EC and Argentina will participate
in the Panel's proceedings as third parties. The final report
is due by 22 May.

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

No new developments. The arbitration over the level of suspension
of obligations proposed by the EC following the US failure to
bring its measures into conformity within the reasonable period
of time remains suspended. The EC and the US continue to be
engaged in discussions on a compensation arrangement, which
it is understood would involve the US paying the EC US$1.1 million
per annum over three years pending implementation of the Panel's
findings. Australia has continued to register its expectation
that any compensation will be applied on a non-discriminatory

United States: Definitive safeguard measures on imports of circular welded
carbon quality line pipe from Korea (WT/DS202)

The Appellate Body and Panel Reports were adopted at the
8 March DSB meeting (see below). The Appellate Body had largely
found in favour of Korea's challenge to the February 2000 US
line pipe safeguard. It found that the safeguard exceeded the
extent of the remedy allowed under the Safeguards Agreement
as it was not tailored to the injury caused by imports alone.
It also found that elements of the US International Trade Commission
injury investigation that preceded the imposition of the safeguard
were inconsistent with the Safeguards Agreement. However, the
Appellate Body also reversed one Panel finding and upheld another
to find in favour of the US on certain aspects.

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

No new developments. Arbitration is continuing on the EC's
USD 4 billion retaliation claim. The US has objected to the
level claimed by the EC and has argued that the annual retaliation
by the EC should not exceed USD 956 million. The arbitration
procedure is expected to be concluded by the end of April.
Following the circulation of the arbitration report, the EC
can seek DSB authorisation to proceed with the retaliatory action
against the US specified in the arbitrator's award.

Canada: Export credits and loans guarantees for regional aircraft (WT/DS222)

No new developments. Canada and Brazil remain engaged in discussions on

Disputes in which Australia has a policy or economic interest (7)

Japan: Measures affecting agricultural products (Varietal testing) (WT/DS76)

No new developments. Japan reached an agreement with the
US 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)

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 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)

No new developments. The Panel and Appellate Body Reports
were adopted at the 1 February DSB meeting and the US has said
it will need a reasonable period of time to implement the DSB

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' 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

EC: Conditions for the Granting of Tariff Preferences to Developing Countries

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.
Venezuela has requested to be joined in the consultations.
This dispute raises similar systemic issues for Australia as
EC: Generalized System of Preferences (above).

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

The US has requested consultations with Japan over Japan's fire blight quarantine
measures for imported apples. These measures 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 US is claiming
that these measures are inconsistent with Japan's obligations under Article
XI of GATT 1994, several provisions of the SPS Agreement and Article 14 of
the Agreement on Agriculture. The US has also made a non-violation claim.
Consultations have been scheduled for 18 April. The US choice of Article
XXIII of GATT 1994 as the procedural avenue for its request precludes third
party participations in these consultations (but would not prevent third party
participation in panel proceedings).

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

Brazil has requested consultations with the US on the Equalizing Excise Tax
imposed by the State of Florida on processed orange and grapefruit products
produced from citrus fruit grown outside the US. Brazil is claiming 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.

Meetings of the Dispute Settlement Body: March 2002

The DSB, consisting of all the Members of the WTO, met on 8 March 2002. The
next regular DSB meeting will be held on 5 April 2002. Australia uses DSB
meetings to monitor progress and to register its views on disputes of interest.
The agenda of the March DSB meeting was as follows (any Australian interventions
are indicated):

DSB Meeting 8 March 2002

1. Surveillance of Implementation of Recommendations adopted by the DSB

United States Section 110(5) of the US Copyright
- status report by the US

The US said that it had been engaged in discussions with the EC to find
a positive and mutually acceptable resolution of the dispute.

Australia registered again our concern about the delay in the US' implementation
of the DSB recommendations and rulings in this dispute, and about the
apparent discriminatory nature of the proposed compensation arrangements
that we understood had been agreed between the US and the EC. We repeated
our expectation that any compensation arrangement would be applied on
a non-discriminatory basis.

2. Surveillance of Implementation of Recommendations adopted by the DSB

United States Anti-Dumping Act of 1916 (WT/DS162)
- status report by the US

The US noted again its introduction into Congress of a bill to repeal
the 1916 Act and prevent entry of judgments pursuant to that Act and said
that it was continuing to work with the EC to reach a mutually satisfactory
resolution to this dispute.

3. Surveillance of Implementation of Recommendations adopted by the DSB

Argentina Measures Affecting the Export of Bovine
Hides and the Import of Finished Leathers
- agreement between the EC and Argentina concerning procedures under Articles
21 and 22 of the DSU

This agreement was reported to the DSB.

4. Implementation of the Recommendations of the DSB

Canada Export Credits and Loan Guarantees for Regional Aircraft

Canada indicated that it was continuing to work with Brazil to find a
solution to this dispute.

5. Panel Request

Mexico Measures Affecting Telecommunications Services

- request by the US for the establishment of a Panel.

Panel was not established as Mexico opposed the request. Panel request
deferred to the next DSB meeting.

6. Panel Request

Argentina Definitive Anti-Dumping Duties on Poultry
from Brazil (WT/DS241)

- request by Brazil for the establishment of a Panel.

Panel was not established as Argentina opposed the request. Panel request
deferred to the next DSB meeting.

7. Adoption of the Report of the Appellate Body and Report of the Panel

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

The Panel and Appellate Body reports were adopted.

The following were the main points made in Australia's statement:

  • Australia welcomed the adoption of these reports and expressed satisfaction
    that many of our concerns had been addressed.
  • Australia noted that this was not the first time that Australia had
    raised concerns about the WTO-inconsistency of US safeguards legislation
    and its application. The Line Pipe ruling is the third successive case
    of a US safeguard action being found to be inconsistent with WTO provisions.
    Despite these clear and unequivocal rulings we have not seen any evidence
    that the US has taken any action to correct the inconsistencies in the
    application of its safeguard laws.
  • Australia said that this problem was magnified and exacerbated by
    the recent decision taken by the US to impose safeguard measures on
    a wide range of steel products. This recent decision raises the same
    concerns about the US' approach to its obligations under the WTO Safeguards
    Agreement and GATT 1994.
  • Australia urged the US to take immediate action to correct the deficiencies
    in its safeguards law and its application.

Joint Media Release

The Minister for Trade, Mark Vaile, the Minister for Industry, Tourism and
Resources, Ian Macfarlane, and the Minister for Justice and Customs, Senator
Chris Ellison

Canberra 19 March 2002

Steel Industry Meeting - Communique

The Minister for Trade, Mark Vaile, the Minister for Industry,
Tourism and Resources, Ian Macfarlane, and the Minister for
Justice and Customs, Senator Chris Ellison, convened a meeting
of steel industry representatives in Canberra on 19 March to
discuss Australian responses to the US Administration decision
to impose safeguard restrictions on steel imports. Representatives
from BHP Steel, Smorgon Steel Group, OneSteel, and the Australian
Industry Group attended the meeting, along with representatives
from the Australian Council of Trade Unions, the Australian
Workers' Union and the Australian Manufacturing Workers' Union.

The meeting expressed its concern at the US decision to impose
restrictions on imports of steel products into the US market.

The participants agreed the decision was an inappropriate way
to deal with the problems of the US industry and it would have
a major effect on the global steel industry and on international
trade in steel products.

The participants noted the highly efficient nature of the Australian
steel sector and that the sector had undergone considerable
restructuring in the process of improving its international
competitiveness. The participants registered their disappointment
that, despite the fact that Australia was not part of the problem
facing the world steel sector, the Australian industry had also
been affected by the US decision to restrict imports.

The participants noted with satisfaction that Australia had
succeeded in preserving a substantial proportion of its exports
to the US, while reiterating their commitment to see the earliest
possible removal of all import restrictions. They praised
the efforts of those involved and expressed their appreciation
of the US Administration's responsiveness.

They noted, however, that the US restrictions would still have
a significant impact on the Australian steel sector, both directly
on exports as well as through trade diversion. There was
also concern at the possible impact on upstream product exports,
particularly if the US restrictions remained in place for an
extended period of time.

Participants discussed the possible impact of the US restrictions
on Australia and agreed on a range of actions at both Government
and industry levels - to address the challenges identified.

The agreed actions from the Summit are as follows:

  • Participants agreed that the Government should establish a Ministerial
    Task Force, to include Ministers, industry CEOs, the Australian Industry
    Group and the union, to consult on the response to US steel import restrictions
    and the impact of those restrictions
  • To assist the Task Force, participants also agreed to establish a Steel
    Monitoring Committee, including relevant government agencies, the companies,
    the Australian Industry Group and the union, to monitor imports of steel
    and any diversion from other markets
  • The participants agreed to cooperate closely in monitoring import trends
    with a view to being prepared to respond quickly to any possible disruption
    to the Australian market as a result of the US restrictions
  • Participants agreed on the need to be alert to the potential for dumped
    imports and to ensure Australian authorities were capable of addressing
    effectively any threat from dumped or subsidised imports
  • The Government indicated that it would preserve all options for action
    in the WTO in order to protect all of Australia's trade interests in the
    steel issue. As a first step, consultations would be held in coming
    days with the US under the WTO Safeguards Agreement. Further action
    in the WTO would be considered when those consultations were completed and
    the outcome known
  • The Government undertook to accord high priority to steel
    market access issues in the forthcoming Doha Round of WTO
    multilateral trade negotiations
  • The Government and industry reconfirmed Australia's support
    for efforts to address the problems facing the global steel
    industry, particularly the problems of over-capacity.
    Australia remained willing to participate constructively in
    the current OECD High-level group meetings on steel, with
    the US and other countries. Australia expressed its
    hope that other countries would also continue their participation
  • The Government undertook to work cooperatively with industry to identify
    new export opportunities and to successfully implement new export plans

The Government also repeated its resolve to press ahead with
efforts to negotiate a bilateral free trade agreement with the
US, as a means of dealing with such measures in the future and
progressively to liberalise trade and investment between the
two countries.

The participants also agreed to reconvene as required
to review the situation and discuss further action as necessary.

19 March 2002

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[2] This publication is
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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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