Panel established

DS513: Morocco — Anti-Dumping Measures on Certain Hot-Rolled Steel from Turkey

For the second time, Turkey requested the establishment of a panel to examine its complaint. Turkey said the anti-dumping duties imposed by Morocco on the Turkish steel imports were WTO-inconsistent. Turkey said it had hoped the matter could have been resolved without recourse to a panel, but that it had to protect its rights under the Anti-Dumping Agreement.

Morocco said it regretted Turkey’s decision to request the establishment of a panel. Morocco remained willing to move forward with consultations in order to find a mutually acceptable solution to this dispute. In this regard Morocco had officially requested the continuation of consultations with Turkey, but did not receive a proposal in response. Morocco said it considered the duties in question to be in accordance with its domestic laws and with its WTO commitments, and that it was prepared to defend the consistency of its measures before a panel. 

The DSB agreed to establish a panel. China, Egypt, the European Union, India, Japan, Kazakhstan, Korea, the Russian Federation, Singapore and the United States reserved their third party rights to participate in the panel proceedings.

 

Other panel requests

DS510: United States — Certain Measures Relating to the Renewable Energy Sector

In requesting the establishment of a panel, India said the United States has maintained certain energy programmes which promote domestic content requirements through incentives. Consultations were held last November but had failed to resolve the issue, thus prompting the request for a panel.

India said that it was mindful of the need to develop domestic capacity to produce equipment for the generation of renewable energy and of the need for policy space to do so. However, members must also be mindful of their obligations under the WTO. India believed that 11 renewable energy programmes maintained by the US were inconsistent with WTO disciplines on non-discrimination and subsidies. Each of the programmes offered targeted subsidies to recipients who fulfilled certain local content requirements. Subsidies based on local content requirements had trade distortive effects and were prohibited under the WTO’s Agreement on Subsidies and Countervailing Measures, Article III of the General Agreement on Tariffs and Trade 1994 and Article 2.1 of the Agreement on Trade-Related Investment Measures.

The United States said it was disappointed with India’s panel request, saying the dispute had been launched for purely political reasons. Indian government officials were quoted as characterizing this dispute as having been motivated by the findings in DS456 — a case brought by the US — which had found domestic content requirements under India’s National Solar Mission to be WTO-inconsistent. Article 3.10 of the Dispute Settlement Understanding (DSU) requires that the use of the dispute mechanism be done in good faith, and complaints and counter-complaints in distinct matters should not be linked, the United States said.  India’s exports of renewable energy equipment to the US were not significant and the programmes identified had very little effect on commerce. The US thus regretted that India would seek to use limited WTO dispute settlement resources on such a matter and objected to the establishment of a panel.

The DSB therefore deferred the establishment of a panel.

DS512: Russia — Measures Concerning Traffic in Transit

Ukraine said that, since 1 January 2016, the Russian Federation had been imposing measures which required all international road and rail cargo transit from the territory of Ukraine to the territory of the Republic of Kazakhstan or the Kyrgyz Republic, through Russian territory, to be carried out exclusively from the territory of the Republic of Belarus. In addition, traffic in transit from the territory of Ukraine had to comply with additional restrictions such as identification means (seals) and registration cards for drivers. On 1 July 2016 Russia imposed a ban on the transit of a number of goods through its territory via the above-mentioned transit route. Russia also imposed other measures concerning traffic in transit from the territory of Ukraine, through Russian territory, to third countries.

Ukraine said all the measures had had detrimental economic consequences on Ukraine and were inconsistent with both the GATT 1994 and Russia’s WTO Accession Protocol. Consultations held on 10 November 2016 failed to settle the dispute, thus prompting the request for a panel.

The Russian Federation said it was disappointed with Ukraine’s decision to request the panel. During the consultations, Russia responded to the relevant questions and had provided necessary clarifications. Russia affirmed its continuing respect for WTO rules and its accession commitments. The DSU required that, before bringing a case, a member should exercise its judgment as to whether the action would be fruitful. Russia did not believe Ukraine’s actions met this criterion and thus objected to the establishment of the panel.

The European Union noted that it was a major user of the transit routes addressed in the panel request, particularly with regard to exports to Kazakhstan and the Kyrgyz Republic. The measures at issue also affected goods originating in third countries, including the EU. The EU said that it regretted to see that consultations between Russia and Ukraine had failed to settle the dispute and that the measures remained in place.

The DSB therefore deferred the establishment of a panel.

 

Other matters

DS461: Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear: recourse to Article 22.2 of the DSU by Panama

Panama recalled that both the panel and the Appellate Body had found certain measures maintained by Colombia to be WTO-inconsistent. The reasonable period of time for Colombia to implement the DSB’s rulings and recommendations had expired on 22 January 2017. On 2 November 2016, Colombia issued a decree which altered its customs and tariff regime for the imports of textiles, apparel and footwear. However, in Panama’s view, the decree had not brought Colombia into compliance with its WTO obligations. Consultations with Colombia had failed to resolve the dispute. Therefore, pursuant to Article 22.2 of the DSU, Panama requested DSB authorization to suspend the application of concessions to Colombia equivalent to US$ 210 million.

Panama said the level of suspension requested is equivalent to the level of nullification or impairment of benefits accruing to Panama, resulting from Colombia’s failure to bring its measure into conformity with WTO law. Pursuant to Article 22.3(c) of the DSU, Panama requested DSB authorization to suspend concessions under the GATT 1994, the General Agreement on Trade in Services and the Agreement on Trade-Related Aspects of Intellectual Property Rights as a suspension of concession purely on goods trade would affect sensitive sectors of the Panamanian economy which relied on Colombian goods imports.

Colombia said it regretted Panama’s request. This matter was very serious to members, particularly as Panama continued with its request despite Colombia’s compliance with the recommendations and rulings of the DSB. Colombia said it had replaced the compound tariffs at issue with ad valorem tariffs which did not exceed Colombia’s bound tariff rates. Any disagreement between Colombia and Panama as to whether Colombia was now in compliance should be settled in terms of Article 21.5 of the DSU. A member was only able to suspend concessions, pursuant to the DSB’s authorizations, after having had extensive recourse to, and abided by, the rules and procedures of the DSU. Panama’s recourse to Article 22.2, instead of having requested the establishment of a panel under Article 21.5, ran counter to the principles governing dispute settlement procedures.

Colombia challenged the request submitted by Panama for authorization to suspend the application of concessions and requested the matter be referred to arbitration. Colombia also stated that it was fully prepared to enter into a sequencing agreement with Panama and invited Panama to enter into discussions to resolve this issue.

A number of members took the floor to state their views. Several members said that in situations of disagreement on compliance, members should only request the suspension of concessions after first having recourse to the procedures set out under Article 21.5. Reference was also made to the long-standing practice of adopting sequencing agreements — which allowed for a pragmatic solution to the issue — with Colombia and Panama encouraged to follow this practice.

Panama said the DSU did not establish a sequence for proceedings under Articles 21.5 and 22.2, but did clearly establish periods of time that needed to be respected for requesting authorization to suspend concessions. One delegation said it fully supported Panama’s right to have recourse to Article 22.2 and that nothing in the DSU required a sequencing agreement.

The DSB took note of the statements and that the matter raised by Colombia has been referred to arbitration, as required by Article 22.6 of the DSU.

DS461: Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear: recourse to Article 21.5 of the DSU by Colombia

Colombia said last July it had announced its intention to implement the recommendations and rulings of the DSB. On 2 November 2016, Colombia had issued a decree which had replaced the compound tariffs at issue with ad valorem tariffs which did not exceed Colombia’s bound tariff rates. Colombia was therefore in full compliance. Panama had requested authorization to suspend concessions without requesting the establishment of a panel under Article 21.5 of the DSU. Colombia thus found it necessary to have recourse to Article 21.5 to request the establishment of a compliance panel to determine if Colombia had complied with the DSB’s rulings and recommendations.

Panama said it could not accept the establishment of an Article 21.5 panel and urged Colombia to withdraw its request since it was premature and inappropriate. Article 21.5 required that the request be submitted in conformity with the proceedings outlined in the DSU provisions. One fundamental requirement was to hold consultations prior to a request for an Article 21.5 panel. Colombia had not requested consultations; rather, consultations had been requested by Panama to negotiate compensation under Article 22 of the DSU. Panama stood ready to reach a mutually agreed solution at any time in order to deal with this dispute.

Colombia countered that the text of Article 21.5 did not refer to consultations. Therefore it was not necessary for Colombia to seek such consultations.

Following Panama’s objections, the DSB deferred the establishment of the panel.

DS482: Canada — Anti-Dumping Measures on Imports of Certain Carbon Steel Welded Pipe from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu

Canada informed the DSB that it intended to implement the DSB recommendations in DS482 within the reasonable period of time (RTP). Canada also noted that it had reached an agreement with Chinese Taipei that the RPT would be 14 months and would expire on 25 March 2018. Chinese Taipei confirmed Canada’s statement and said it stood ready to work with Canada towards a prompt settlement of the dispute.

 

2017 Appellate Body selection process

The DSB Chair, Ambassador Xavier Carim (South Africa), recalled that at the 25 January DSB meeting he had reminded delegations that the second four-year term of Appellate Body member Mr Ricardo Ramírez Hernández would expire on 30 June 2017, and the second four-year term of Mr Peter Van den Bossche would expire on 11 December 2017. Pursuant to Article 17.2 of the DSU, they were not eligible for reappointment, and the DSB would have to initiate work to appoint two new Appellate Body members. At the January meeting, he also outlined two possible approaches to fill the upcoming vacancies. Following the meeting, the chair consulted with members on the alternative approaches he had mentioned.

Several delegations supported a single selection process to fill both positions at the same time, and to complete the process by the end of June. In their view, one selection process was more efficient and would take into account the fact that delegations would be deep in preparations for the WTO’s 11th Ministerial Conference in the second half of the year.

However, two delegations expressed a preference for undertaking two independent processes. One delegation suggested that, at this point, the DSB could initiate a first selection process to fill the vacancy that would expire in June 2017 and that more time should be given to decide on when to launch a second process to fill the second vacancy. It was however the chair’s understanding that those delegations supporting a single selection process would only agree to two independent processes if the work on both could be completed before the summer break. Since there was no agreement on this matter at this stage, the chair said it was his intention to continue to consult with delegations and seek to be in a position to submit, at the next regular DSB meeting, a proposal agreeable to all members on the procedural steps and timing for the Appellate Body appointments.

 

Statements on implementation

The EU, Brazil, Canada and China made statements regarding US implementation of DS217 and DS234, “US — Continued Dumping and Subsidy Offset Act of 2000”.

The United States made a statement regarding China’s implementation of DS413 “China — Certain Measures Affecting Electronic Payment Services”.

 

Surveillance of implementation

The United States presented its status reports with regard to DS184, “US — Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan” and DS160, “US — Section 110(5) of the US Copyright Act”.  The EU presented its status report with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products”.

 

Report on the dispute settlement workload

The Chair provided an update on the Appellate Body’s workload, on the number of disputes in the panel queue and at the panel composition stage, and matters referred to arbitration.

 

Next DSB meeting

The next meeting of the DSB will take place on 21 March 2017.