US blocks Brazil's first-time request for compliance panel in “Cotton” case

DS267: United States – Subsidies on Upland Cotton   back to top

At its meeting on 1 September 2006, the DSB considered Brazil's first-time request (WT/DS267/30) for a compliance panel under DSU Article 21.5 in the “Cotton” case. In making the request, Brazil recalled that the DSB had adopted its rulings on 21 March 2005 and the reasonable period of time for implementation had been fixed to expire on 1 July 2005 and on 21 September 2005 as regards, respectively, the prohibited and the actionable subsidies found to be inconsistent with WTO Agreements. Brazil said that with respect to some DSB's recommendations and rulings, the US had not adopted any implementation measures at all, and that the measures it had adopted had fallen far short of compliance.

The US expressed regret over the decision by Brazil to request a compliance panel. The US said that it had fully implemented the DSB's recommendations and rulings by repealing the so-called “Step 2” programme which had been found by the DSB to be a prohibited subsidy and to have caused adverse effects during the period analysed by the Panel. In addition, the US had also ceased providing guarantees for two export credit guarantee programmes examined by the Panel. The single export credit programme which remained in operation had been completely overhauled. The fee structure had been changed and certain markets which had been designated as eligible markets had been eliminated. According to the US, these changes responded to key DSB findings about charging premiums that were “risk-based” and designed to cover long-term operating costs and losses of such programmes. The US stated that, in the face of these implementing measures, Brazil's complaint had no factual or legal basis. The US further stated that Brazil's request was defective, as the sequencing agreement (WT/DS267/22)reached between the parties only covered some of its claims. The US concluded by saying that a proposal by the US for an additional sequencing agreement had been refused by Brazil making it difficult for the US to accept the establishment of a compliance panel at the present meeting.

The DSB agreed to revert to this matter.

 

Surveillance of implementation of recommendations adopted by the DSB  back to top

DS176: “US – Section 211 Omnibus Appropriations Act of 1998” (WT/DS176/11/ADD.45)

The US said that several legislative proposals relating to Section 211 had been introduced in the current Congress and that the US Administration was committed to working with the Congress to implement the DSB's recommendations and rulings. Contrary to the assertions by some Members, the US had been second to none in the protection of intellectual property rights. The cancellation of the Havana Club Trademark had nothing to do with the DSB's recommendations and rulings in this case. The EC said that the continued non-implementation by the US of the DSB's recommendations and rulings was seriously undermining the authority of the TRIPS Agreement and the credibility of US commitment to its WTO obligations and duty to promptly comply with the DSB's recommendations and rulings. The US was compromising the interests of its industry at large in order to preserve legislation that benefited the interests of a few companies. The EC said that it was extremely disappointed and concerned by the recent decision of the US Administration not to grant the specific licence that would have allowed the renewal of the registration of the Havana Club mark. The renewal would not have given away or granted any rights, but would have preserved the status quo and allowed the US courts to determine in pending proceedings who was the legitimate owner of the mark. It was difficult to imagine how this was inconsistent with US policy. The EC urged the US to comply with its TRIPS obligations and to accept multilateral disciplines and the rule of law. Cuba said that the continued non-implementation of the DSB's recommendations and rulings by the US undermined the credibility of the dispute settlement system as a central element in guaranteeing security and predictability to the multilateral trading system. Cuba criticised the US for not granting the specific licence that would have allowed the renewal of the registration of the Havana Club mark. According to Cuba, it appeared that the US Administration was intent on clearing the way for Bacardi to use to use the mark illegally. Cuba urged the US to promptly bring its measures into conformity with its TRIPS obligations. Argentina, Bolivia, Brazil, China, India and Venezuela commented on the systemic importance of this case and urged the US to promptly bring its measures into conformity with the DSB's recommendations and rulings.

DS184: “US – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan” (WT/DS184/15/ADD.45)

The US said that the US Administration was supporting specific legislative amendments that would implement the DSB's recommendations and rulings with respect to the US antidumping statute. The US recalled that the DSB's recommendations and rulings relating to antidumping margins had already been addressed by the US in November 2002 and said that the US Administration would continue to work with Congress to enact legislation. Japan said that its delegation had taken note of the latest status report of the US, and that while Japan was encouraged by the assurances that the Administration was working with Congress to pass the amending bill (H.R. 2473), there had not been any demonstrable progress since the bill's introduction in Congress more than a year ago. Japan urged the US to redouble its efforts to implement the DSB's recommendations and rulings as soon as possible, as its continued non-implementation undermined the credibility of the dispute settlement system.

DS160: “US – Section 110(5) of the US Copyright Act” (WT/DS160/24/ADD.20)

The US said that the US Administration was working closely with Congress and conferring with the EC with a view to reaching a mutually satisfactory solution. The EC expressed regret at the lack of substantive progress in this case, recalled that the Panel Report was adopted by the DSB more than five years ago and said that the damage created by the failure of the US to comply with the DSB's recommendations and rulings went beyond the boundaries of this specific dispute and called into question the commitment of the US to the TRIPS Agreement. The EC urged the US to abide by its TRIPS commitments and bring its measures into conformity with the DSB's recommendations and rulings as soon as possible. The EC also requested the US to provide detailed information on the initiatives being pursued by Congress and the Administration to implement the DSB's recommendations and rulings. The EC recalled that it had reserved its right to reactivate its arbitration request at anytime, should there not be any substantive progress towards resolving this long-running dispute.

 

Statements by Honduras, Nicaragua and Panama concerning the implementation by the EC of the DSB's recommendations and rulings in the case “EC – Regime for the Importation, Sale and Distribution of Bananas” and related subsequent WTO proceedings  back to top

Honduras, Nicaragua and Panama expressed concern about the failure of the EC to find a solution that would be acceptable to all banana suppliers. They said that the new tariff rate had resulted in Latin American suppliers losing market share in the EC to ACP suppliers. The new tariff of €176 was therefore not neutral and was discriminatory and illegal. They said that although the EC had repeatedly stated that it was acutely aware of the importance of the banana industry to Latin American countries, it had failed to take any measures to safeguard their interests; rather, it had insisted that they wait for the results of its monitoring mechanism. They maintained that contrary to the protestations of the EC, this dispute was an implementation issue and should an acceptable solution not be found, they were prepared to take additional measures to protect their legitimate interests under the WTO Agreement.

The EC said that the it had taken careful note of the statements by Honduras, Nicaragua and Panama and was aware of the importance of the banana industry to Latin American countries, as well as for ACP countries and had always taken these interests into consideration. The EC said that it was open to addressing the concerns of Latin American suppliers and was in regular contact with interested WTO Members to discuss a range of issues, including the rebinding of the MFN tariff. The EC repudiated the claim by Latin American suppliers that they had lost market share in the EC following the implementation of the new regime. According to the EC, the new tariff had so far resulted in an increase in imports from both MFN and ACP suppliers as compared to 2005.

The US expressed concern about the new banana regime and urged the EC to work with the interested Members in order to find a mutually satisfactory solution as quickly as possible.

 

DS217: United States – Continued Dumping and Subsidy Offset Act of 2000: Implementation of the Recommendations Adopted by the DSB  back to top

Brazil, Canada, India, Indonesia, Japan, Thailand and the EC said that since the repeal of the CDSOA would become effective only in October 2007 and would not produce any effects before Fiscal Year 2010 starting on 1 October 2009, the US could not assert that it had fully implemented the DSB's recommendations and rulings, and should have therefore submitted a status report as mandated by the DSU. They noted that the transitional clause would allow duties collected before October 2007 to be disbursed in contravention of WTO rules. These delegations stated that the United States Customs and Border Protection had published in June a notice of its intention to distribute offset payments amounting to nearly $172 million for the fiscal year 2006 under the CDSOA, and that the continued insistence by the US that no further action was required on its part raised serious questions about its commitment to the dispute settlement system and particularly the obligation of Members to promptly implement the DSB's recommendations and rulings. They urged the US authorities to bring their measures into full compliance with the DSB's recommendations and rulings and in the interim provide status reports to the DSB. Japan said that to induce US compliance with the DSB's recommendations and rulings, Japan had decided as of 1 September 2006 to re-impose retaliatory measures in the form of an additional duty of 15 per cent on selected products from the United States (WT/DS217/50).

The US said that it had repealed the Deficit Reduction Act and as such had fully implemented the DSB's recommendations and rulings in this case. Given that the Act had been repealed, there would be no point in the US continuing to provide status reports.

 

DS282: Implementation of the DSB's recommendations and rulings in the case on “United States – Anti-Dumping Measures on Oil Country Tubular Goods (OCTG) from Mexico”   back to top

The US informed the DSB that it had implemented the DSB's recommendations and rulings by addressing the panel's finding that the original determination did not indicate whether certain information and argument had been considered by US authorities. The US Department of Commerce (USDOC) had issued a draft Section 129 Determination on 27 April 2006 after giving the respondent and domestic interested parties an opportunity to provide comments on the draft as well as to submit rebuttal comments. In addition, both parties had filed additional unsolicited factual information which the USDOC accepted and considered. It provided interested parties with a further opportunity to comment on all new factual information on the record. After conducting an extensive analysis of all the information and arguments presented, the USDOC issued a revised determination on 9 June. It came to the conclusion that there was a likelihood of continuation or recurrence of dumping had the anti-dumping duty order on OCTG from Mexico been revoked at the end of the original sunset period.

Mexico disputed the assertion by the US that the new section 129 determination of the USDOC had fully implemented the DSB's recommendations and rulings. Mexico said that the measure was hurting its exports and that there was no legal basis for maintaining it. Mexico said that it was consulting with the US with a view to reaching a mutually satisfactory settlement.

 

DS312: Korea – Anti-dumping duties on imports of certain paper from Indonesia  back to top

Indonesia expressed concern at Korea's implementation measures. Indonesia recalled that the reasonable period of time for compliance expired on 28 July 2006, and that Korea had notified its implementing measure on 27 July. Indonesia expressed disappointment with the approach taken by Korea on the procedural and substantive issues related to the implementing measures.

Indonesia concluded that Korea's continuing non-compliance left Indonesia no choice but to initiate Article 21.5 proceedings soon. Indonesia also hoped to obtain a better understanding of Korea's measures in consultations with Korea in the coming days.

Korea expressed regret that Indonesia was not satisfied with the implementing measures taken by Korea. It believed that Indonesia's position stemmed from a lack of understanding of the substance of Korea's implementation measures. Korea felt confident that all the instances of non-conformity identified in the panel report had now been corrected and that its measures imposing anti-dumping duties on imports of uncoated wood-free paper from Indonesia were now fully in compliance, both procedurally and substantively.

Korea recalled that both the parties had reached a bilateral understanding regarding procedures under Articles 21 and 22 (WT/DS312/7), according to which Indonesia had the right to request consultations. Korea urged Indonesia to review the compliance measures taken by Korea before it requested consultations.

 

DS264: Adoption by the DSB of the Appellate Body Report and the Panel Report as reversed by the Appellate Body Report in the case on “United States – Final Dumping Determination on Softwood Lumber from Canada: Recourse to Article 21.5 of the DSU by Canada”   back to top

Canada thanked the Panel and Appellate Body as well as the Secretariat for their hard work in this case and said that Canada was satisfied by the finding of Appellate Body that the use of “zeroing” in the transaction-to-transaction methodology was inconsistent with a Member's obligations under Articles 2.4.2 and 2.4 of the Anti-dumping Agreement (ADA). In clarifying the ADA, the Appellate Body held that “an investigating authority must consider the results of all of the comparisons and may not disregard the results of comparisons in which export prices [were] ... above normal values”. Canada was also satisfied by the ruling that the use of zeroing under the transaction-to-transaction methodology artificially inflated the magnitude of dumping and therefore did not meet the “fair comparison” requirement of Article 2.4, which called for calculations to be “impartial”, “even-handed” and “unbiased”. He referred to the bilateral agreement reached between Canada and the US on softwood lumber and said that it would result in the full revocation of anti-dumping and countervailing duty orders and offer stability and certainty for the Canadian softwood lumber industry. By clarifying members' obligations under the ADA, the WTO dispute settlement mechanism had functioned as a central element in bringing predictability and security to the trading relations between Canada and the US.

The US thanked the Panel and Appellate Body as well as the Secretariat for their hard work in this case and concurred with the view that the bilateral agreement reached between Canada and the US would settle the long standing differences between the two countries over softwood lumber trade.

A number of Members including Hong Kong (China), Japan, Korea, Thailand and the EC welcomed the clarifications provided by the Appellate Body and urged the US to promptly implement the DSB's recommendations and rulings in this case by eliminating zeroing in its anti-dumping calculations.

 

Next meeting back to top

The next regular DSB will be held on 28 September 2006.