DSB adopts "automotive leather" report

The WTO Dispute Settlement Body (DSB), on 11 February, adopted a panel report (under Article 21.5 of the Dispute Settlement Understanding) which reviewed, at the US’ request, whether Australia had fully implemented an earlier ruling by the DSB in June 1999 which required Australia to withdraw subsidies to an automotive leather company. The report supported the US complaint that Australia had not implemented the ruling and concluded that, in order to do so, Australia must re-claim repayment in full of the prohibited subsidy.

The US and Hong Kong, China, welcomed the report. Australia criticized what it described as the panel's retroactive remedy, while Canada, Brazil, Japan, and Malaysia also expressed concern over the report. The EC said the report required further study and reflection.

The case was originally brought to the WTO by the US in June 1998. The US claimed that payments made by Australia to an Australian leather company were export subsidies prohibited under the Agreement on Subsidies and Countervailing Measures. The case went to a panel which supported the US’ claim and recommended that Australia withdraw the subsidies within 90 days of adoption of the panel report. Australia did not appeal the panel’s findings, and the report was adopted by the DSB on 16 June 1999. However, after the 90-days period had expired, the US claimed that the measures taken by Australia to comply with the rulings were not consistent with the subsidies agreement. The US requested that the original panel should examine Australia’s compliance under DSU Article 21.5.

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At the same DSB meeting, Argentina, Chile and Korea announced briefly that they intended to implement, respectively, the following reports: safeguards on footwear (document DS121); taxes on alcoholic beverages (DS87 & DS 110); and safeguards on dairy products (DS98). The EC was the original complainant in all these cases. To download these documents, please go to our documents on line section