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Dispute Settlement Body 16 February 2001
Dispute body adopts Argentina hides ruling, sets up panel in Brazil-Canada aircraft case

The WTO Dispute Settlement Body (DSB) on 16 February 2001 adopted the panel report in the case, “Argentina — measures affecting the export of bovine hides and the import of finished leather”. It also created a new panel to determine whether Brazil is complying with rulings in its dispute with Canada over aircraft subsidies.

Members discussed procedural issues raised by countries' requests to participate in consultations as third parties. And they elected a new chair person for the year.

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Disputes in the WTO
> Panel reports in case DS155
Appellate Body and panel reports in case DS46
Appellate Body and panel reports in case DS166


This summary has been prepared by the WTO Secretariat’s Information and Media 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.

Case DS155: Panel Reports on “Argentina — measures affecting the export of bovine hides and the import of finished leather”. Back to top
Case brought by the EU, with the US claiming third party rights

Argentina and the EU have not appealed this case, and so the panel report was adopted without modification. Argentina said it is already modifying its customs procedures in response to one of the rulings, which deals with keeping trade secrets confidential. Steps are also underway to change its tax requirements on imports, Argentina said.

In brief, this case concerns two separate measures:

1. A measure allegedly hindering exports of bovine hides. The EU argued that because representatives of the Argentine tanning industry participated in the customs inspection of exported bovine hides, this exercised pressure on exporters and thus restrained exports.

The Panel rejected these arguments. It ruled that the EU had failed to prove that the mere presence of tanning industry representatives hindered exports. The panel added that the EU had not shown that exports were in fact restrained.

The EU also objected to the fact that the tanning industry representatives had access to confidential business information. On this, the panel supported the EU. It said Argentina was unreasonable in allowing for the possibility that confidential business information could be revealed to tanning industry representatives.

2. Tax down payments (or “pre-payments”) on imported goods in general (despite the reference in the case's title to “finished leather”). The EU said these discriminated between imported and domestically produced goods. It said that because importers were required to deposit higher amounts to cover eventual tax payments than buyers of competing domestically produced goods, this imposed a higher interest burden on importers.

The panel supported the EU. It said the down payments did increase the tax burden in the form of interest payments and that this was greater for imports than for competing domestic products.

Case DS46: Brazil — Export financing programme for aircraft  Back to top
Canada's request for a panel to determine whether Brazil is complying with the rulings

This was the second request, and a panel was set up — if possible, it will be the original panel which first ruled on this case. The EU claimed third party rights, and other countries can do so in the next few days.

The panel has about 90 days to rule on whether Brazil's modified export subsidy programme now complies with WTO agreements (i.e. the third version of Programa de Financiamento às Exportaçoes, or PROEX, since the dispute arose). It will be the second time a panel has ruled on Brazil's compliance since the Dispute Settlement Body adopted the original panel and Appellate Body reports on 20 August 1999.

There was some discussion about whether the procedures that normally apply for setting up a panel also apply for panels set up (or reconvened) to rule on “compliance” (under Article 21.5 of the Dispute Settlement Understanding).

In particular, members exchanged views on whether some form of consultation is needed legally or morally before a request for a panel is tabled, and whether a member can block the creation of a panel, as is the case when a dispute is first heard.

Brazil and Canada also exchanged views on a number of issues that have been raised by this particular phase of the case.

In particular, Brazil complained about Canada's recent ban on beef imported from Brazil. Public opinion in Brazil is convinced that this is not about “mad cow disease” (BSE) but a disguised retaliation in the aircraft dispute, Brazil said. Brazil also cited some similar Canadian opinion expressed through the media.

Canada said the temporary ban, announced on 2 February 2001, was a coincidence and nothing to do with the aircraft dispute. It was intended to protect Canadian consumers and resulted from Brazil's failure to supply information to show that Brazil is free of BSE. Since the ban was announced the Brazilian authorities have been cooperating fully, Canada went on. An expert team including officials from Canada's NAFTA partners — the US and Mexico — is now in Brazil studying the situation. The final risk assessment will be made “expeditiously”, Canada said, and if Brazil meets the requirements, then the ban will be lifted.

Case DS166: Appellate Body and panel reports on “United States — Definitive safeguard measures on imports of wheat gluten from the European Communities” Back to top
Case brought by the EU, with Australia, Canada and New Zealand claiming third party rights

The US said it will implement the ruling and needs a “reasonable period of time” to do so.

The EU said the US can and should implement the ruling immediately by withdrawing the safeguard measure because safeguards are “extraordinary” measures taken against fair trade. The EU also said that its “rebalancing” measure (i.e. restrictions imposed on imports of corn or maize gluten under provisions of the Safeguards Agreement) will be lifted as soon as the US withdraws its safeguard restriction on wheat gluten.

Briefly, the ruling adopted by the DSB on 19 January 2001 is that the US's safeguard measure — a quantitative restriction imposed on 1 June 1998 on wheat gluten from the EU — is inconsistent with the WTO Safeguards Agreement. There are also a number of complicated legal issues discussed in both reports, involving interpretation of the Safeguards Agreement and whether the US correctly followed various procedures and took into account appropriate facts when it decided to impose the safeguard measure.

The DSB took note of the comments.

Other business: Argentina on the US rejecting third parties' requests for consultations
 Back to top

Argentina said the US had rejected, without giving any reason, its request for consultations as a country with third-party interests in Case DS217 - United States: Continued Dumping & Subsidy Offset Act of 2000 (unofficially known as the “Byrd amendment”). (The complaining countries are: Australia, Brazil, Chile, the EU, India, Indonesia, Japan, Korea and Thailand.)

This, Argentina said, conflicts with both the spirit and the letter of the Dispute Settlement Understanding (DSU), which requires countries to try to solve their disputes through consultations. Argentina was supported by Canada (which also asked to be a third party), India, Japan, Hong Kong China, Brazil and the EU.

Part of the discussion hinged on the question of whether the third-party countries have “substantial trade interest”.

The US said Article 4.11 of the DSU allows it to reject third-party requests for consultations without calling for an explanation. In this case, the rejected countries have not had the relevant measures applied to their exports, the US said, meaning they do not have a “substantial trade interest” (the phrase used in Art 4.11) in the consultations. The US maintained that "substantial trade interest" does not simply mean an interest in issues that have implications for the way the system operates.

Canada and other countries argued that the phrase includes an interest in the implications for the system, otherwise the term “substantial commercial interest” would have been used.

Because this was discussed in “other business”, there was no attempt to reach a decision on it.

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