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 action.

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 clause”).

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 (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 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) (WT/DS160)

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 mid-year.

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 Reports

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 (WT/DS238/R)

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 (WT/DS219)

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