WTO: 2011 NEWS ITEMS

DISPUTE SETTLEMENT

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NOTE:
This summary has been prepared by the WTO Secretariat’s Information and External 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.

Implementation  back to top

DS316: European Communities and Certain Member States — Measures Affecting Trade in Large Civil Aircraft

On 1 June 2011, the DSB adopted the Panel and Appellate Body reports (WT/DS316/R and WT/DS316/AB/R) which examined the EU’s subsidies to its civil aircraft industry. 

According to Article 21.3 of the Dispute Settlement Understanding (DSU), the EU has to inform the DSB, of its intentions to implement the rulings, within 30 days after the date of adoption of the reports.

The EU said that it intended to implement the DSB rulings in a manner that respected its WTO obligations, and within the time-limit set out in the Subsidy and Countervailing Measures (SCM) Agreement. The EU added that it had already begun to evaluate options for implementation.

The US welcomed the EU's statement and noted that Article 7.9 of the SCM Agreement provided a six-month period from the date of adoption of the reports for the EU to take appropriate steps and either to withdraw the subsidies or to remove their adverse effects. The US said that the six-month period would expire on 1 December 2011. The US added that withdrawing these enormous subsidies or removing their adverse effects would be economically very significant for the US and said it would monitor developments in the EU closely.

  

Adoption of report back to top

DS382: United States — Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice from Brazil

The Panel report (WT/DS382/R) was circulated to members on 25 March 2011 and was adopted by the DSB at today’s meeting.

Brazil, the US and the EU made statements on the report.

Brazil said that zeroing was not a new issue when it initiated the orange juice dispute (editor’s note: Brazil requested consultations with the US on 27 November 2008). According to Brazil, it was first held inconsistent in 2001 in the Bed Linen case (WT/DS141).

Brazil added that a decade had passed and zeroing had been challenged and condemned several times but the debate on its legality continued to drain valuable time and resources from members and from the WTO. Brazil said that this dispute was one of the fourteen that had been brought against the US by nine different WTO Members. Brazil concluded that it was confident the US would fully comply with DSB’s recommendations and announced that it had agreed with the US on a reasonable period of time (RPT) of nine months for implementation.

The US said that it continued to believe that Appellate Body reports on zeroing went beyond what the text of the agreement provided and what negotiators agreed to in the Uruguay Round. The US confirmed its agreement with Brazil about the RPT.

The EU welcomed the fact that the panel followed the guidance provided in numerous rulings of the Appellate Body on zeroing. However, the EU did not agree with the statement contained in the Panel report suggesting to “solve the zeroing controversy” in the rules negotiations. The EU considered that there was no “controversy” with regards to the issue whether the practice of zeroing was allowed under current WTO rules. The EU said that this issue was resolved a long time ago by the Appellate Body and many times confirmed since then.

    

Panel establishment back to top

DS421: Moldova — Measures Affecting the Importation and Internal Sale of Goods (Environmental Charge)

The DSB established a panel to examine the environmental charges imposed by Moldova on products imported from Ukraine.

Introducing its panel request for the second time (WT/DS421/4), Ukraine said that Moldova's law imposed a charge on import of products, the use of which contaminated the environment and that like domestic products were not subject to this charge. Ukraine added that this measure was in violation of the national treatment principle. Ukraine hoped the matter would be resolved at the consultation stage without recourse to a panel but said that Moldova had not afforded adequate opportunity for consultations. Ukraine stated that no WTO consistent solution was proposed by Moldova. Ukraine remained open to further contacts with Moldova and hoped the solution would be possible through the panel.

Moldova said it had continuously informed Ukraine on the measures undertaken by its government in order to settle the dispute on the environmental charge. Moldova said that the amendments to the national legislation in this field were now for examination and approval by the government. Moldova added that, on 31 May 2011, its Deputy Prime Minister and Minister of Economy sent to the Ukrainian Deputy Prime Minister a proposal to continue the consultations, expressing its will to work on a solution. Unfortunately, Moldova noted that it did not receive any reply or reaction from Ukraine.

Argentina, the EU and China reserved their third-party rights.

 

Panel requests  back to top

DS423: Ukraine — Taxes on Distilled spirits

Moldova requested for the first time the establishment of a panel (WT/DS423/4) to review taxes applied by Ukraine on imported spirits from Moldova. 

The DSB deferred the establishment of the panel following Ukraine’s objection.

Moldova said that Ukraine acted inconsistently with WTO rules by applying a lower tax rate on domestic distilled spirits, namely “Cognac”, than on certain other imported directly competitive or substitutable distilled spirits, so as to afford protection to the domestic production. Moldova said that it held consultations with Ukraine on 13 April 2011 which failed to settle the dispute. Moldova said it requested the establishment of a panel since no mutual solution was found and added that it remained open to further dialogue with Ukraine to reach a sustainable solution.

Ukraine said it was surprised that Moldova requested a panel as this occurred right after the first meeting of consultations. Ukraine stated that since the parties were at an early stage of consultations and had just started looking into substance, it could not find any logic or justification in Moldova's statement regarding the failure of consultations. Ukraine added that the panel request was premature and objected to its establishment.

The EU pointed out that it had some sensitivity with regards to the notion of “cognac”. The EU said it would prefer a reference to “so called cognac” or no reference to “cognac” at all. The EU said it may come back to this issue at a later stage.

DS412: Canada — Certain Measures Affecting the Renewable Energy Generation Sector

Japan requested for the first time the establishment of a panel (WT/DS412/4) to review measures applied by Canada in renewable energy sector.

The DSB deferred the establishment of the panel following Canada’s objection.

Japan said that this dispute was a clear case of domestic content requirements which were explicitly condemned in several provisions in the WTO agreement as an origin-based discrimination. Japan explained that the Canadian province of Ontario provided for guaranteed, long-term pricing for the output of renewable energy generation facilities that contained a defined percentage of domestic content. Japan said that renewable energy equipment produced in Japan was discriminated against in the market of the Canadian Province of Ontario simply because of their origin. Japan said that it challenged the Canadian measure not because it promoted renewable energy generation, but because it contained WTO-inconsistent domestic content requirements. Japan said that parties were unable to resolve their differences during consultations. Japan therefore requested the establishment of a panel to examine this matter.

Canada was disappointed that Japan decided to request the establishment of a panel. Canada said it was confident that its legislation was consistent with WTO rules. Canada held consultations with Japan on 25 October 2010 and said that its programme was established to increase the supply of renewable energy in the province of Ontario. Canada stated that despite its work with Ontario to find a solution to Japan's concerns, consultations had not yet concluded successfully. Canada said that it continued to enjoy a strong and constructive trade relationship with Japan and added that it was not in a position to agree to the establishment of a panel.

  

Next meeting  back to top

The next meeting of the DSB will be held on 20 July 2011.

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