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> Disputes
in the WTO
> Appellate
Body and panel reports in case DS166
NOTE:
This summary has been prepared by the WTO
Secretariat’s Information and Media Relations
Division to help public understanding about developments
in WTO disputes. It is not a legal interpretation of the
issues, and it is not intended as a complete account of
the issues. These can be found in the reports themselves
and in the minutes of the Dispute Settlement Body’s
meetings.
|
Case
DS166: Appellate Body and panel reports
on “United States — definitive safeguard
measures on imports of wheat gluten from the European
Communities” Back
to top
Case
brought by the EU, with Australia, Canada and New Zealand
claiming third party rights
The
Dispute Settlement Body (DSB) adopted the Appellate Body
report and the panel report as modified by the Appellate
Body in this case.
The
ruling and discussion
Briefly,
the ruling adopted by the DSB is that the US’s
safeguard measure — a quantitative restriction
imposed on 1 June 1998 on wheat gluten from the EU —
is inconsistent with the WTO Safeguards Agreement. There
are also a number of complicated legal issues discussed
in both reports, involving interpretation of the
Safeguards Agreement and whether the US correctly
followed various procedures and took into account
appropriate facts when it decided to impose the safeguard
measure.
The
EU welcomed the ruling, and urged the US to repeal the
measure immediately
In
the meeting, a number of legal and procedural issues were
discussed. These included:
- How
to show cause and effect. The Appellate Body
reversed the panel’s finding on how
government authorities should demonstrate that a
surge in imports is the “genuine and
substantial” cause of injury or threat of
injury to domestic industry, particularly as in
this case there can be other causes apart from a
surge in imports. Some countries said this leaves
the situation unclear, providing investigating
authorities with too much room to manoeuvre. They
suggested the Appellate Body should clear this up
in future rulings. Some members said it should
only be up to the members, and not the panels or
Appellate Body to clarify what is required.
- How
to treat imports from a fellow-member of a
free-trade area. In their reports, the panel and
Appellate Body had said it was wrong (under Art.
2.1 of the Safeguards Agreement) for the US to
have included imports from all sources in the
investigation of injury, and then to exclude
imports from fellow-members of the North American
Free Trade Agreement (NAFTA) in the resulting
safeguard measure.
In the discussion in the DSB, some countries
welcomed this. The US, Canada and Mexico observed
that the Appellate Body did not say anything
about the overall principle of excluding
fellow-members of a free trade agreement from a
safeguard investigation and the resulting
measure.
- Whether
panels should apply “judicial economy”.
One of the panel’s rulings, which the
Appellate Body agreed with, was to exercise
“judicial economy”, in other words once
the US had been found to violate WTO agreements
in certain significant ways, there was no need to
continue to examine whether other complaints were
also valid.
A number of countries complained that this left
some grey areas unclarified.
The
proposed retaliation
The
US expressed concern that — based on the Appellate
Body report — the EU had already announced that it
would shortly impose a retaliatory restriction on imports
of corn gluten feed from the US under Article 8.2 of the
Safeguards Agreement.
The
US said it believed that the EU’s action would not
be consistent with that article. Even though the EU had
notified the Goods Council of its intention to suspend
concessions (i.e. retaliate) on US corn gluten, the EU
had failed to ensure that the Goods Council did not
disapprove of the suspension as required by the article,
the US said.
The
EU said it has the right to restrict imports of US corn
gluten immediately, now that the US measure is has been
found to violate the agreement.
Since
it had notified the proposed restriction in July 1998 to
the Goods Council and since the US had not raised any
objection, therefore the Goods Council had not
disapproved and therefore the restriction would be legal,
the EU said
| Background:
Action under Article 8.2 of the Safeguards
Agreement is separate from sanctions imposed
under the Dispute Settlement Understanding. The
Safeguards Agreement speaks of ensuring that
“a substantially equivalent level of
concessions and other obligations” is
maintained when one country takes safeguard
action against imports from other countries. Normally,
after a safeguard action has been taken (which
means that part of a negotiated deal on access to
the market has been reduced or withdrawn
temporarily) the two sides should negotiate a way
of maintaining the original balance struck in the
deal. If they cannot reach agreement, the
countries whose exports are reduced by the
safeguard action, can announce reciprocal action
as compensation provided certain procedures are
followed.
The
reciprocal action normally has to be delayed for
three years, unless, for example, the original
safeguard is found to violate the Safeguard
Agreement. However, this action cannot be taken
if the Goods Council disapproves it.
On
29 July 1998 the EU notified the WTO Goods
Council that it was preparing to restrict corn
(maize) gluten imports from the US.
|
Case
DS199: Brazil — measures affecting patent protection
Back
to top
US
request for a panel to be established
TBrazil
objected to the panel’s establishment. Since this
was the first request in this case, the request was
rejected because it did not receive the necessary
consensus support.
In
this case, the US complains about provisions of
Brazil’s 1996 industrial property law (Law No. 9,279
of 14 May 1996; effective May 1997) and other related
measures. These, the US says, require “local
working”, i.e. local production, of the patented
invention as a condition for enjoying exclusive patent
rights. Imported patented inventions would not enjoy
these rights, the US says, and therefore the measure
discriminates against US owners of patents registered in
Brazil when the products are imported into Brazil and not
locally produced there.
More
specifically, according to the US complaint, “a
patent shall be subject to compulsory licensing if the
subject matter of the patent is not ‘worked’ in
the territory of Brazil. Specifically, a compulsory
license shall be granted on a patent if the patented
product is not manufactured in Brazil or if the patented
process is not used in Brazil. In addition, if a patent
owner chooses to exploit the patent through importation
rather than ‘local working,’ then Article 68
[of the Brazilian law] will allow others to import either
the patented product or the product obtained from the
patented process.”
The
US started proceedings on 30 May 2000 by calling for
consultations, as is required under the WTO Dispute
Settlement Understanding. On 16 June 2000, the EU asked
to join consultations on this case because it has a
substantial trade interest in it.
In
the meeting, Brazil said it totally disagrees with the US
view and expressed confidence that its law conforms with
the WTO intellectual property (TRIPS) agreement.
|
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