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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See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Communities.
On 17 March
1999, the EC requested consultations with the US in respect of definitive
safeguard measures imposed by the US on imports of wheat gluten from the
European Communities. The EC contended that by a Proclamation of 30 May
1998, and a Memorandum of the same date, by the US President, under which
the US imposed definitive safeguard measures in the form of a quantitative
limitation on imports of wheat gluten from the EC, effective as of 1 June
1998. The EC considered these measures to be in violation of Articles 2,
4, 5 and 12 of the Agreement on Safeguards; Article 4.2 of the Agreement
on Agriculture; and Articles I and XIX of GATT 1994.
On 3 June 1999, the EC requested the establishment of a
panel. At its meeting on 16 June 1999, the DSB deferred the establishment
of a panel.
Panel and Appellate Body proceedings
Further to a second request to establish a panel, the DSB
established a panel at its meeting on 26 July 1999. Australia, Canada and
New Zealand reserved their third-party rights. On 11 October 1999, the
Panel was composed. The report of the panel was circulated to Members on
31 July 2000. The panel found that:
- the United States had not acted inconsistently with
Articles 2.1 and 4 of the Safeguards Agreement or with Article XIX:1(a) of
the GATT 1994 in
- redacting certain confidential information from the
published USITC Report or
- determining the existence of imports in “increased
quantities” and serious injury.
- the definitive safeguard measure imposed by the US
on certain imports of wheat gluten based on the US investigation and
determination was inconsistent with Articles 2.1 and 4 of the Safeguards
Agreement in that
- the causation analysis applied by the USITC did not
ensure that injury caused by other factors was not attributed to imports
and
- imports from Canada (a NAFTA partner) were excluded
from the application of the measure after imports from all sources were
included in the investigation for the purposes of determining serious
injury caused by increased imports (following a separate inquiry
concerning whether imports from Canada accounted for a “substantial
share” of total imports and whether they “contributed
importantly” to the “serious injury” caused by total
imports).
- The panel further concluded that the US failed to
notify immediately the initiation of the investigation under Article
12.1(a) and the finding of serious injury under Article 12.1(b) of the
Safeguards Agreement.
- in notifying its decision to take the measure only
after the measure was implemented, the US did not make timely notification
under Article 12.1(c). For the same reason, the US violated the obligation
of Article 12.3 to provide adequate opportunity for prior consultations on
the measure.
- the US therefore also violated its obligation under
Article 8.1 of the Safeguards Agreement to endeavour to maintain a
substantially equivalent level of concessions and other obligations to
that existing under the GATT 1994 between it and the exporting Members
which would be affected by such measures, in accordance with Article 12.3
of the Safeguards Agreement.
On 26 September 2000, the US notified its decision to
appeal to the Appellate Body certain issues of law and legal
interpretation covered in the Panel Report and certain legal
interpretations developed by the Panel. The Appellate Body circulated its
report on 22 December 2000. The Appellate Body:
- upheld the Panel’s conclusion that the US had not acted
inconsistently with its obligations under Articles 4.2(a) and 4.2(b) of
the Safeguards Agreement, but, in so doing, reversed the Panel’s
interpretation of Article 4.2(a) of the Safeguards Agreement that the
competent authorities are required to evaluate only the “relevant
factors” listed in Article 4.2(a) of that Agreement as well as any
other “factors” which were clearly raised before the competent
authorities as relevant by the interested parties in the domestic
investigation;
- reversed the Panel’s interpretation of Article 4.2(b)
of the Safeguards Agreement that increased imports “alone”, “in and of themselves”, or
“per se”, must be
capable of causing “serious injury”, as well as the Panel’s
conclusions on the issue of causation;
- found, nonetheless, that the US had acted
inconsistently with its obligations under Article 4.2(b) of the Safeguards
Agreement;
- upheld the Panel’s finding that the US had acted
inconsistently with its obligations under Articles 2.1 and 4.2 of the
Safeguards Agreement;
- upheld the Panel’s findings that the US had acted
inconsistently with its obligations under Articles 12.1(a) and 12.1(b) of
the Safeguards Agreement;
- reversed the Panel’s finding that the US had acted
inconsistently with its obligations under Article 12.1(c) of the
Safeguards Agreement; found that the US had acted consistently with its
obligations under Article 12.1(c) of that Agreement to notify “immediately” its decision to apply a safeguard measure;
- upheld the Panel’s finding that the US had acted
inconsistently with its obligations under Article 12.3 of the Safeguards
Agreement, and, in consequence, upheld the Panel’s finding that the US had
acted inconsistently with its obligations under Article 8.1 of the
Safeguards Agreement;
- the Panel did not act inconsistently with Article 11 of
the DSU in concluding that the USITC had “considered industry
productivity as required by Article 4.2(a)” of the Safeguards
Agreement;
- the Panel did not act inconsistently in finding that
the USITC was not required to evaluate the overall relationship between
the protein content of wheat and the price of wheat gluten as a “relevant factor”, under Article 4.2(a) of the Safeguards
Agreement, during the post-1994 period of investigation; and,
- the Panel did not act inconsistently in declining to
draw “adverse” inferences from the refusal of the US to provide
certain allegedly confidential information requested from it by the Panel
under Article 13.1 of the DSU;
- the Panel acted inconsistently with Article 11 of the
DSU in finding that “the USITC Report provides an adequate, reasoned
and reasonable explanation with respect to ‘profits and losses’” and,
therefore, reversed this finding; and found no error in the Panel’s
exercise of judicial economy in not examining the claims of the EC under
Article XIX:1(a) of the GATT 1994, and also under Article 5 of the
Safeguards Agreement and Article I of the GATT 1994.
At its meeting of 19 January 2001, the DSB adopted the Appellate Body
report and the Panel report, as modified by the Appellate Body report.
Implementation of adopted reports
At the
DSB meeting of 16 February 2001, the US announced that it intended to
implement the recommendations and rulings contained in the panel and
Appellate Body reports. On 20 March 2001, the EC requested that the
reasonable period of time for implementation be determined by binding
arbitration pursuant to Article 21.3(c) DSU. On 10 April 2001, the parties
to the dispute notified the DSB that they had mutually agreed that the
reasonable period of time shall be four months and 14 days, that is from
19 January 2001 to 2 June 2001. |
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