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WTO: 2005 NEWS ITEMS

Dispute Settlement Body 17 February 2005

WTO dispute body establishes panels on US and Canada sanctions in ‘hormones’ dispute

The Dispute Settlement Body on 17 February 2005 set up two panels to examine, respectively, the United States' and Canada's continued sanctions against the European Communities' import ban on hormone-treated beef. At the same meeting, the DSB set up at the EC's request a panel to examine the US' compliance in the Foreign Sales Corporation case.

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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.


Requests for panel   back to top

These are cases that have completed the consultation phase, the first stage of a dispute. When consultations have failed, member governments are entitled to ask for a panel to be set up to examine the dispute. According to the rules, the respondent can reject the first request. At the second request, a panel is automatically established.
  

DS322: United States — Measures relating to zeroing and sunset reviews

Japan explained that this dispute was about the inconsistencies of the US' “zeroing” methodology used for calculating dumping margins. It was also about the incorporation by the US of the result of a calculation using “zeroing” in its anti-dumping procedures, Japan said.

Japan noted that previous panel and Appellate Body decisions had consistently held that such zeroing procedures conflicted with the WTO Anti-Dumping Agreement. Japan cited the cases of European Communities — Anti-dumping measures on imports of cotton-type bed-linen from India (DS141, brought by India) and United States — Final dumping determination on softwood lumber from Canada (DS264, brought by Canada).

Japan asked for the establishment of a panel.

The US said that it would vigorously defend its measures. The US did not accept the establishment of a panel.

The EC explained that following the findings in the “bed-linen” (DS141) dispute, the EC had ceased to use zeroing. The EC advised the US to do as it did.

Japan's first panel request was therefore blocked by the US.

  
DS323: Japan — Import quotas on dried laver and seasoned laver

Korea said that Japan had maintained extremely restrictive import quotas on dried laver* for more than 50 years. Korea added that these quotas were patently inconsistent with Japan's WTO obligations and requested that a panel be set up.

Japan answered that its import quota system on dried and seasoned laver was fully consistent with WTO Agreements and had been duly notified to the WTO.

Japan blocked Korea's first panel request.

[*Laver is a seaweed.]

  

Panels established   back to top

DS320: United States — Continued suspension of obligations in the EC — Hormones dispute

In its second panel request, the EC wondered how much time the US would need to review the studies and documents supporting the new EC Hormones Directive. The EC commented that the new Directive had already been in place for more than a year. The EC said it would respond to the US' request under the Sanitary and Phytosanitary Agreement for an explanation of the reasons for the new EC Hormones Directive.

The US said that it had requested this explanation on 13 December 2004 and complained about the EC's lack of response. The US had hoped that the EC would provide the scientific evidence and explanation behind its new measure before seeking a panel, the US said. The US added that the EC claims lacked merit and that a panel would agree.

The DSB agreed to establish a panel. The following members requested to be third parties: Australia, Canada, Mexico, Chinese Taipei and China.

The EC first requested a panel on 25 January 2005 but the United States blocked it.


DS321: Canada — Continued suspension of obligations in the EC — Hormones dispute

The EC said that it requested a panel for a second time because Canada continued to act against its WTO obligations.

Canada said that although the EC now considered itself to have complied, there was no multilateral confirmation of this. The EC's position that its unilateral determination and declaration of compliance overrode and annulled Canada's multilateral authorisation was legally untenable, Canada said.

The DSB agreed to establish a panel. The following members requested to be third parties: Australia, United States, Mexico, Chinese Taipei and China.

The EC first requested a panel on 25 January 2005 but Canada blocked it.

  

Implementation   back to top

After a ruling has been adopted, the DSB keeps under surveillance the implementation of the ruling until the issue is resolved.

DS217 & DS234: US — Continued Dumping and Subsidy Offset Act of 2000 (Byrd Amendment)

The US announced that on 7 February 2005 the US Administration had proposed repeal of the Byrd Amendment in its budget proposal for fiscal year 2006.

The EC welcomed this news but commented that the same proposal had been made last year and the year before and that there had been absolutely no action in the US Congress.

The EC recalled that the total amount distributed so far under the Byrd Amendment was more than US $1 billion and said that the President's Budget forecasted a distribution of US $1.6 billion starting on 1 October 2005.

The EC added that in the absence of immediate US action, it would have no other option than to exercise its retaliation rights.

Japan commented that there remained in US Congress proponents of the Byrd Amendment who believed that a WTO member should be able to use its levied anti-dumping or countervailing duty money to subsidize domestic industry.

Canada said that it had conducted an extensive public consultation process with Canadians on its retaliatory options and was currently assessing comments received.

  
Other implementation cases

There are no new developments to report since the last DSB meeting on the following items:

DS176: US — Section 211 Omnibus Appropriations Act of 1998

DS184: US — Anti-dumping measures on certain hot-rolled steel products from Japan

DS160: United States — Section 110(5) of the US Copyright Act.

DS204: Mexico — Measures affecting telecommunications services.

  

Compliance panel established   back to top

At the end of the period given to a government to comply with a ruling, the parties to the dispute sometimes disagree on whether that government is really complying. Any member government involved in the dispute can ask for the original panel to decide whether the ruling has been applied properly.


DS108: United States — Tax treatment for “foreign sales corporations”

The EC announced that it had suspended its countermeasures on US products following the repeal of the US Foreign Sales Corporation / Extraterritorial Income Exclusion Act 2003 (FSC/ETI). On 31 January 2005, the Council of Ministers adopted a measure, retroactive as from 1 January 2005, providing for the suspension of sanctions on all US products, the EC said.

The EC explained that the suspension did not only reflect a positive response to the US action but also its conviction that a WTO member should only determine another member's compliance through the appropriate WTO dispute procedures rather than unilaterally.

The EC added that its panel request did not eliminate its readiness to find ways with the US to solve the dispute.

The EC therefore asked for a panel to be set up under DSU Article 21.5 to rule on whether the US was now complying with the DSB’s rulings.

The US said that since the FSC/ETI tax benefits had been repealed as a result of the US American Jobs Creation Act of 2004, the EC was challenging what remained — the transition rules. The US said that the EC had never identified any particular commercial problems caused by these transition rules.

The DSB agreed to refer the matter raised by the EC to the original panel. Australia and China requested to be third parties.

The EC first requested a compliance panel on 25 January 2005 but the US blocked it.

  

Next meeting   back to top

The DSB will meet on 25 February to examine the case DS277 on United States — Investigation of the International Trade Commission in softwood lumber from Canada and on 28 February to look at the case DS322 United States — Measures relating to zeroing and sunset reviews.

The next regular DSB meeting will be on 21 March 2005.

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