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DISPUTE SETTLEMENT: DISPUTE DS161

Korea — Measures Affecting Imports of Fresh, Chilled and Frozen Beef

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

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Summary of the dispute to date  back to top

The summary below was up-to-date at
See also: One-page summary of key findings of this dispute

Appellate Body and Panel Reports Adopted

Complaints by the United States and Australia.

On 1 February 1999, the US requested consultations with Korea in respect of a Korean regulatory scheme that allegedly discriminates against imported beef by inter alia, confining sales of imported beef to specialised stores (dual retail system), limiting the manner of its display, and otherwise constraining the opportunities for the sale of imported beef. The US alleged that Korea imposes a markup on sales of imported beef, limits import authority to certain so-called “super-groups” and the Livestock Producers Marketing Organization (“LPMO”), and provides domestic support to the cattle industry in Korea in amounts which cause Korea to exceed its aggregate measure of support as reflected in Korea’s schedule. The US contended that these restrictions apply only to imported beef, thereby denying national treatment to beef imports, and that the support to the domestic industry amounts to domestic subsidies that contravene the Agreement on Agriculture. The US alleged violations of Articles II, III, XI, and XVII of GATT 1994; Articles 3, 4, 6, and 7 of the Agreement on Agriculture; and Articles 1 and 3 of the Import Licensing Agreement.

On 13 April 1999, Australia requested consultations with Korea on the same basis as the US request.

On 15 April 1999, the US requested the establishment of a panel in respect of WT/DS161. At its meeting on 28 April 1999, the DSB deferred the establishment of a panel. Further to a second request to establish a panel by the US, the DSB established a panel at its meeting on 26 May 1999. Australia, Canada and New Zealand reserved their third-party rights. Further to Australia’s request to establish a panel in respect of WT/DS169, the DSB established a panel at its meeting on 26 July 1999. Canada, New Zealand and the US reserved their third-party rights. At the request of Korea, the DSB agreed that, pursuant to DSU Article 9.1, this complaint would be examined by the same panel established in respect of WT/DS161. On 4 August 1999, the Panel was composed. The report of the panel was circulated to Members on 31 July 2000. The panel found that:

• a number of the contested Korean measures benefited, by virtue of a Note in Korea’s Schedule of Concessions, from a transitional period until 1 January 2001, by which date they had to be eliminated or otherwise brought into conformity with the WTO Agreement.
   
• the requirement that the supply of beef from the LPMO’s wholesale market be limited to specialised imported beef stores and that those stores bear a special sign “Specialized Imported Beef Store” was in violation of Article III:4 of the GATT 1994, which violation could not be justified under Article XX(d) of the GATT 1994.
   
• the more stringent record-keeping requirements imposed on purchasers of imported beef were also inconsistent with Article III:4. Certain other regulations dealing with the importation and distribution of imported beef were likewise found to violate Article III:4.
   
• the LPMO’s lack of and delays in calling for tenders and its discharge practices between November 1997 and the end of May 1998 constituted import restrictions contrary to Article XI:1 of the GATT 1994 and Article 4.2 of the Agreement on Agriculture. Moreover, the LPMO’s calls for tenders that were made subject to distinctions between grass-fed and grain-fed cattle, constituted, in the view of the panel, a restriction inconsistent with Article XI:1. They also treated imports of beef from grass-fed cattle less favourably than provided for in Korea’s Schedule, which was in breach of Article II:1(a) of the GATT 1994.
   
• in addition, Korea’s domestic support for beef for 1997 and 1998 was not correctly calculated and exceeded the de minimis level, contrary to Article 6 of the Agreement on Agriculture, and was not included in Korea’s Current Total AMS, contrary to Article 7.2(a) of the Agreement on Agriculture.
   
• Korea’s total domestic support (Current Total AMS) for 1997 and 1998 exceeded Korea’s commitment levels, as specified in Section 1, Part IV of its Schedule, contrary to Article 3.2 of the Agreement on Agriculture.

On 11 September 2000, Korea notified its intention to appeal certain issues of law and legal interpretations developed by the panel. On 11 December 2000, the report of the Appellate Body was circulated. The Appellate Body reversed the Panel’s finding on recalculated amounts of Korea’s domestic support for beef in 1997 and 1998, as the Panel used, for these recalculations, a methodology inconsistent with Article 1(a)(ii) and Annex 3 of the Agreement on Agriculture; and reversed, therefore, the Panel’s following conclusions, based on these recalculated amounts:

• that Korea’s domestic support for beef in 1997 and 1998 exceeded the de minimis level contrary to Article 6 of the Agreement on Agriculture;
   
• that Korea’s failure to include Current AMS for beef in Korea’s Current Total AMS was contrary to Article 7.2(a) of that Agreement; and
   
• that Korea’s total domestic support for 1997 and 1998 exceeded Korea’s commitment levels contrary to Article 3.2 of the Agreement on Agriculture.

The Appellate Body was unable, in view of the insufficient factual findings made by the Panel, to complete the legal analysis of:

• whether Korea’s domestic support for beef exceeds the de minimis level contrary to Article 6 of the Agreement on Agriculture;
   
• whether the failure to include Current AMS for beef in Korea’s Current Total AMS was contrary to Article 7.2(a) of that Agreement; and
   
• whether Korea’s total domestic support for 1997 and 1998 exceeded Korea’s commitment levels contrary to Article 3.2 of the Agreement on Agriculture.

At its meeting of 10 January 2001, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.

Implementation Status of Adopted Reports

At the DSB meeting of 2 February 2001, Korea announced that it had already implemented some elements of the DSB’s recommendations and that in order to complete the process it would need a reasonable period of time. On 19 April 2001, the parties to the dispute notified the DSB that they had mutually agreed that the reasonable period of time shall be 8 months, and was thus to expire on 10 September 2001.

At the DSB meeting on 25 September 2001, Korea announced that it had implemented the DSB’s recommendation by the deadline, i.e. 10 September. The US indicated that it will continue to work with Korea to ensure that the replacement measures resulted in full market access for US beef.

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