Dispute Settlement Body 7 May 2003

EU granted permission to apply US$4 billion sanctions against US in Foreign Sales Corporation case but delays application

On 7 May 2003, the Dispute Settlement Body granted the European Union authorization to increase by the amount of US$4 billion its import tariffs on US goods.

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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.

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Panel request

DS277: United States — Investigation of the International Trade Commission in softwood lumber from Canada

Canada requested for the second time the establishment of a panel to examine the case.

The United States said that Canada's claim lacked merit because objective facts had shown the threat of material injury for US industry.

The panel was established and the following Members requested to be third parties: EC and Japan.


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Authorization to suspend concessions

DS108: United States — Tax treatment for “Foreign Sales Corporations”

The EC requested authorization from the DSB to take appropriate countermeasures (see WT/DS108/26) and to suspend concessions vis-à-vis the US for an amount of US$4.04 billion per year according to the arbitration report WT/DS108/ARB issued in August 2002. The EC added on a more positive note that obtaining the authorization did not mean that they would immediately resort to countermeasures. The EC said that they were still willing to give the US a short additional period to make the necessary legislative changes.

The United States analyzed at length the arbitration which set the amount of countermeasures at US$4.04 billion. The US said that the arbitration decision was seriously flawed and capricious. The United States, however, informed the DSB of its intention to comply with its obligations and said that they did not believe therefore that it would be necessary to ever exercise the DSB's authorization.


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Next meeting

 The next meeting of the DSB will take place on 19 May 2003.

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