DISPUTE SETTLEMENT

Note

This summary has been prepared by the WTO Secretariat’s Information and External 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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DS316: European Communities — Measures Affecting Trade in Large Civil Aircraft

The European Union said it was requesting a panel regarding additional measures taken by the EU to comply with the WTO's most recent ruling regarding subsidies for the European aircraft manufacturer Airbus, which was adopted by the DSB on 28 May.  In a notification submitted to the DSB on 17 May, the EU informed the DSB that it had achieved full compliance with its WTO obligations and, more specifically, that the EU had withdrawn the remaining subsidies and /or taken appropriate steps to remove their adverse effects. The US disagreed with the EU's claim, and consultations held on 27 June failed to resolve differences between the two sides, prompting the EU to submit its request for a panel.  The EU told the DSB that, on the basis of a January 2012 procedural understanding with the United States, the panel should be established on first request.

The United States said the EU's decision to move forward with its request for yet another compliance panel in the 14 year-long dispute does a disservice to the WTO and its dispute settlement system.  The EU and its four member states still have not provided even the most basic information about alleged amendments made to certain launch aid contracts, the US said.  That they have avoided any such explanation or any attempt to resolve this dispute, and instead moved to a panel request, exposes the request as just one more step in EU efforts to drag out the proceedings instead of addressing the WTO inconsistencies.  In regards to the EU's reference to the 2012 procedural understanding, the US said the EU's assertion is so obviously misleading that it is hard to regard it as anything but an intentional and flagrant misrepresentation; the agreement explicitly refers to a US request for a compliance panel, not an EU request, and obviously does not apply to the present situation. Accordingly, the US said, it is not required, and is not accepting today, the establishment of a panel.

Canada noted the growing frequency of responding parties initiating compliance proceedings, which it said underscored the utility and appropriateness of this right. 

The DSB took note of the statements and agreed to revert to the matter.

DS478: Indonesia — Importation of Horticultural Products, Animals and Animal Products

The United States noted that on 2 August it requested authorization from the DSB to suspend concessions or other obligations with respect to Indonesia for its failure to comply with the WTO's ruling in DS478 and that the suspension would be fixed at an annual level based on a formula commensurate with the trade effects caused to the interests of the US.  Based on a preliminary analysis, the US provisionally estimates this level at approximately $350 million in 2017.  The US said it remains open to working with Indonesia to resolve US concerns, it said.  The US noted that Indonesia submitted to the chair of the DSB an objection to the level of suspension proposed by the US under Article 22.6 of the Dispute Settlement Understanding (DSU), thus automatically referring the matter to arbitration.

Indonesia noted that it had committed to implement the ruling and that it had agreed with the United States as well as New Zealand (which initiated a complaint on the same measures in DS477) to a 22 July deadline for compliance.  Prior to this date, Indonesia amended the relevant regulations by enacting four new regulations which it said addressed all inconsistent measures in the dispute in accordance with the WTO's findings. Indonesia said it was disappointed with the US request to suspend concessions and said it is generally accepted that where there is a disagreement over compliance, the matter should be resolved through recourse to WTO dispute proceedings.  Indonesia also called on the US to explore the need for a sequencing agreement akin to what Indonesia concluded with New Zealand on 10 August.  Indonesia said it objected to the US request for authorization to suspend concessions and said the proposed US level of suspended concessions is not equivalent to the alleged trade lost, given that the Indonesian measures in question have been brought into full conformity with its WTO obligations.

New Zealand said it shares the US view that Indonesia has not fully complied with the WTO ruling and noted that a critical principle of the WTO is prompt settlement of disputes.  New Zealand said bringing the measures into compliance required more than formal amendments, it also required removal of the measures in practice; it urged Indonesia to ensure full compliance and said it was ready to work with Indonesia and the US to achieve this result.

Canada said sequencing agreements help overcome the uncertainty that the text of the DSU creates and contributes to the effectiveness and predictability of the WTO dispute settlement system; it invited parties in this dispute to consider their procedural options.

The chair of the DSB, Ambassador Sunanta Kangvalkulkij of Thailand, said the DSB took note of the statements and that the matter raised by Indonesia had been referred to arbitration as required by Article 22.6 of the DSU.

Next meeting

The next regular meeting of the DSB will take place on 27 August.

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