Dispute Settlement Body 21 March 2005

WTO dispute body adopts ruling on US cotton subsidies

The Dispute Settlement Body on 21 March 2005 adopted the Appellate Body and panel reports on the United States' subsidies on upland cotton. The complaint was brought by Brazil. At the same meeting, the DSB set up at the US' request a panel to examine selected European Communities customs matters. The DSB also established at Korea's request a panel to look at Japan's import quotas on laver.

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This summary has been prepared by the WTO Secretariats 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 Bodys meetings.

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Panels established  

These are cases that have completed the consultation phase, the first stage of a dispute. When consultations have failed, member governments are entitled to ask for a panel to be set up to examine the dispute. According to the rules, the respondent can reject the first request. At the second request, a panel is automatically established.

DS315: European Communities Selected customs matters

The US first requested a panel on this issue on 25 January 2005. At the US' second request, the DSB agreed to establish a panel and the following countries reserved their third-party rights: Brazil, China, Australia and Chinese Taipei.

The US explained that it was concerned with the non-uniform application of customs law in the EC. It was also concerned with the failure of the EC to maintain a forum for the prompt review and correction of administrative action relating to customs matters.

The EC argued that the US had failed to provide a single example of real and practical problems for US operators resulting from the application of EC customs measures. The EC said that the issue raised by the US regarded the distribution of competences in the administration of customs rules within the internal legal order of a WTO Member and went well beyond what WTO rules required.

DS323: Japan Import quotas on dried laver and seasoned laver

Korea first requested a panel on this issue on 17 February 2005. At Korea's second request, the DSB agreed to set up a panel and the following countries reserved their third-party rights: EC, China and US.

Korea said that Japan's highly restrictive import quotas on dried laver* and seasoned laver were inconsistent with its WTO obligations. Korea added that since bilateral consultations had failed, it had no other option but to pursue a panel procedure.

Japan said that its import quota system was fully consistent with the relevant WTO provisions and that it would make its case before a panel.

[*Laver is a seaweed.]


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Adoption of reports  

When a panel report comes out, it is either adopted by the Dispute Settlement Body or appealed by one or more parties to the dispute. When the Appellate Body report comes out, it is automatically adopted by the DSB unless there is consensus to reject it and becomes binding.

DS267: US Subsidies on upland cotton

The US first noted that negotiation, rather than litigation, was the most effective way to address distortions in agricultural trade. The US then expressed disappointment in the Panel and Appellate Body reports. It highlighted certain interpretations and approaches in these reports which, according to the US, should be of concern to Members no matter their view on the merits of Brazil's claims.

Brazil welcomed the adoption of the reports, noting that both found that various subsidies granted by the US on the production, use and exports of cotton were inconsistent with US obligations under the Agriculture and Subsidies WTO Agreements. Brazil made detailed comments on the following issues: the relationship between the Agreements on Agriculture and on Subsidies; the green box; the analysis in the context of serious prejudice claims; and the disciplines on export credit guarantees for agricultural exports.

Brazil expressed hope that the US would fully and timely comply with the DSB ruling.

The EC said that the panel and Appellate Body had not, in some instances, followed the legal interpretations which the EC considered to be correct. The EC mentioned the fact that the Appellate Body had not taken into account the EC's arguments on the general relationship between the export subsidy and domestic support provisions of the Agreement on Agriculture and the corresponding provisions of the Subsidies Agreement.
Argentina expressed satisfaction with the panel and Appellate Body conclusions.

Canada said that it was still studying the reports.

The DSB adopted the Appellate Body report and the panel report as modified by the Appellate Body report.


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After a ruling has been adopted, the DSB keeps under surveillance the implementation of the ruling until the issue is resolved.

DS217 & DS234: US Continued Dumping and Subsidy Offset Act of 2000 (Byrd Amendment)

The US announced that on 3 March 2005 legislation that would repeal the Byrd Amendment was introduced in the US House of Representatives.

The EC welcomed the introduction of this bill but recalled that in the last Congress two similar bills were not even discussed, let alone adopted.

Similarly, Canada, Japan, Brazil and Chile welcomed the new bill but urged the US to pass the legislation as soon as possible.

Other implementation cases

There are no new developments to report since the last DSB meeting on the following items:

DS176: US Section 211 Omnibus Appropriations Act of 1998

DS184: US Anti-dumping measures on certain hot-rolled steel products from Japan

DS160: United States Section 110(5) of the US Copyright Act.

DS204: Mexico Measures affecting telecommunications services.


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Next meeting  

The DSB will meet on 29 March to adopt the panel report on United States Countervailing duty investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea (DS296), unless it is appealed.

The next regular DSB meeting will be on 19 April 2005.

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