WTO: 2012 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.

DS406: US — Measures Affecting the Production and Sale of Clove Cigarettes — Report of the Appellate Body and Report of the Panel

Indonesia welcomed the adoption of the reports (WT/DS406/AB/R and WT/DS406/R) and looked forward to working with the United States to implement the recommendations. 

The US welcomed the panel finding that its measure was consistent with Article 2.2 of the Technical Barriers to Trade (TBT) Agreement. However, in light of the finding which acknowledged that the measure met a legitimate public health objective, the US found it difficult to understand the Appellate Body’s conclusion that the measure resulted in a breach of Article 2.1 of the TBT Agreement. 

In the US view, several aspects of the Appellate Body’s findings and analysis on Article 2.1 were problematic, especially the findings and analysis related to the regulatory distinction between clove and menthol cigarettes. While the Appellate Body had recognised that the panel failed to explain its reasons for rejecting the US regulatory approach, instead of overturning the panel’s findings, the Appellate Body engaged in its own analysis. By engaging in its own analysis, the Appellate Body reached conclusions that were not based on the panel’s findings or undisputed facts. The Appellate Body appeared to have placed itself in the position of the regulator and the US believed that the result of this dispute should be of serious concern to any member regulating for the benefit of public health. The US was also disappointed with the panel and Appellate Body’s findings that the challenged measure’s three-month interval between publication and entry into force was not reasonable and thus inconsistent with Article 2.12 of the TBT Agreement.

Norway said that the reports had clarified that regulatory concerns underlying a measure may be relevant to an analysis of the “likeness” criteria under Article III:4 of the General Agreement on Tariffs and Trade (GATT) 1994 as well as under Article 2.1 of the TBT Agreement only to the extent that they have an impact on the competitive relationship between and among the products concerned. Norway also welcomed the fact that the Appellate Body conclusions were not intended to prevent members from implementing policies to fulfil legitimate objectives as long as such measures were taken consistently with WTO obligations.

DS285: US — Measures Affecting the Cross Border Supply of Gambling and Betting Services 

This item was on the agenda at the request of Antigua and Barbuda. The delegation was unable to attend the meeting, but a statement on its behalf was read out by Dominica concerning the implementation of the recommendations and rulings in this case. In the statement, Antigua and Barbuda said that the US was not in compliance with the ruling of the panel, the Appellate Body and the Dispute Settlement Understanding (DSU) Article 21.5 compliance panel pertaining to this dispute initiated in 2004.

In Antigua and Barbuda’s view, the US continued to criminally prosecute Antiguan-based remote gaming service providers for providing services to consumers in the US. Despite the effort of Antigua and Barbuda to negotiate a settlement with the US, the US never presented a plan nor worked towards a compromise. It was thus time, according to Antigua and Barbuda, for the US to do what it asks of others — to observe its international obligations in good faith and with due consideration for the rights and legal status of Antigua and Barbuda. Antigua and Barbuda informed the DSB that it had formally notified the US of its desire to seek recourse to the good offices of the DG in finding a mediated solution to this dispute. Antigua and Barbuda requested that this matter remain under the DSB’s surveillance and that the US should provide monthly status reports pursuant to Article 21.6 of the DSU.

St Lucia, speaking on behalf of the Organization of Eastern Caribbean States (OECS) strongly supported Antigua and Barbuda’s statement and underscored that all members must respect their commitments.

The US said that it accepted the results of the dispute settlement process and was responding to the panel and Appellate Body findings by invoking the established, multilateral procedures for modification of a member’s General Agreement on Trade in Services (GATS) schedule of concessions. In May 2007, the US initiated the modification procedure, provided for under GATS Article XXI (Modification of Schedules), so as to reflect the original US intention to exclude gambling from the scope of US commitments. The US entered into discussions with those members notifying that their interests could be affected by the modification. The US offered compensatory adjustments under which it would replace the gambling-related commitment with other commitments of equal or greater value.

According to the US, the discussions were successful with the sole exception of Antigua and Barbuda who maintained an objection to the modification in the US schedule. In the US view, the statement by Antigua and Barbuda did not reflect history or reality. The US said that it had met repeatedly with Antigua and Barbuda and had offered real and substantial benefits, based on specific requests made by Antigua and Barbuda. The US believed that an agreement was within grasp. With regard to Antigua and Barbuda’s suggestion that this matter be referred to mediation or good office, the US said that it would consider this. However, the US further emphasised that in light of the fact that the US and Antigua and Barbuda had previously come close to a resolution, a serious effort to re-engage in negotiations would be more productive than referring the matter to a third party. The US concluded by saying that the process under GATS Article XXI was the proper forum for further discussion of this matter. 

Jamaica urged both parties to make efforts to reach a mutually agreed solution.

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

As required by DSU rules, the US had already circulated on 12 April 2012 a written status report (WT/DS382/10/ADD.4) on its implementation of the findings in this case. At the meeting, the US informed the DSB of additional developments since then.

The US recalled  that the US Department of Commerce (USDOC) modification published on 14 February 2012 applied to all products from all members, including the products of Brazil covered in this dispute. In March 2012, the US International Trade Commission (ITC) made a determination to revoke the anti-dumping duty order in its five-year sunset review of the order on orange juice from Brazil. On 13 April 2012, the ITC published its formal determination in the sunset review. In accordance with that determination, on 20 April the USDOC issued a notice revoking the anti-dumping duty order on the products covered in this dispute. The revocation is effective as of 9 March 2011. As a result, imports of orange juice from Brazil entered on or after 9 March 2011 were not subject to anti-dumping duties, and all anti-dumping duty cash deposits on entries on or after that date would be refunded.

Brazil said that, while it acknowledged the US efforts to abandon “zeroing” in future reviews, it remained concerned that the US final rule does not address all the findings in this dispute. Brazil said that the new rule did not encompass the recalculation without “zeroing” of assessment rates applying to past entries that remain unliquidated at the end of the reasonable period of time. According to Brazil, in order to fully comply, the US had to not only abandon the use of “zeroing” in the future, but also stop collecting anti-dumping duties that were calculated with the use of that illegal methodology. Consequently, Brazil had concluded a sequencing agreement (WT/DS382/11) with the US to preserve its rights concerning future legal steps in this dispute.

Brazil concluded by saying that it would closely monitor the implementation of the final rule in the next months, and would consult with the US before the end of 2012, with a view to achieving a solution to this dispute.

 

Next meeting

The next meeting of the DSB is scheduled for 24 May 2012.

 

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