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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The DSB additionally agreed to a request from the United States for a panel to examine Chinese measures which the US said discriminate against foreign intellectual property rights holders in China and an EU request for a panel to examine the Russian Federation's compliance with a WTO ruling concerning its import bans on live pigs and pork products from the EU.

DS544: United States — Certain Measures on Steel and Aluminium Products

DS548: United States — Certain Measures on Steel and Aluminium Products

DS550: United States — Certain Measures on Steel and Aluminium Products

DS551: United States — Certain Measures on Steel and Aluminium Products

DS552: United States — Certain Measures on Steel and Aluminium Products

DS554: United States — Certain Measures on Steel and Aluminium Products

DS564: United States — Certain Measures on Steel and Aluminium Products

China, the European Union, Canada, Mexico, Norway, Russia and Turkey submitted their second requests for panels to challenge the decision by the United States to impose an additional customs duty of 10% on imports of aluminium products and an additional customs duty of 25% on imports of certain steel products.  The first requests were blocked by the US at a DSB meeting on 29 October.

The seven members reiterated their belief that the US measures, allegedly taken for national security reasons, were, in their content and substance, safeguard measures taken to protect the US steel and aluminium industries from the economic effects of imports. The seven disagreed with US arguments that the US resort to the national security exception under Article XXI of the General Agreement on Tariffs and Trade (GATT) precluded WTO panels from examining the claims, arguing that while national security was a sensitive matter, panels were fully within their right to examine whether such claims are justified under the exception.  Several argued that resort to Article XXI by the US would frustrate the purpose of WTO dispute settlement and could render all WTO obligations effectively unenforceable.  The seven said that because the complaints involve the same US measures and essentially the same arguments, a single panel should be established to examine their claims.

The United States said the tariffs imposed under Section 232 of the US Trade Expansion Act were necessary for the protection of its essential security interests given the key role steel and aluminium plays in US national defence; these measures were therefore justified under Article XXI of the GATT and not subject to review by a WTO panel.  The US position on the national security exception has been consistent for 70 years and a position the EU and others supported in the past, most notably in 1982, when certain EU actions were examined before the GATT Council.  The US at the time supported the EU's argument that an Article XXI defence required neither notification, justification, nor approval.  If these members maintain their misguided requests for panels on the steel and aluminium tariffs, there is no finding a panel could make other than to note the US has invoked Article XXI, the US said.

With regards to the requests for a single panel to review all seven complaints against the US tariffs, the US said it did not agree and that the DSB must decide by consensus whether to accept such requests.

The DSB agreed to the establishment of the seven panels.  More than 20 WTO members reserved their third-party rights to participate in each of the respective proceedings.

DS547: United States — Certain Measures on Steel and Aluminium Products

DS556: United States — Certain Measures on Steel and Aluminium Products

India and Switzerland submitted their first requests for panels to rule on the US steel and aluminium tariffs.  The two argued that the US actions were in effect safeguard measures and that they were concerned the US was using national security as a justification for the tariffs. 

Switzerland said the tariffs will have a harmful effect on the multilateral trading system as a whole and in particular on global value chains.  India said it shared the view that the WTO system will be undermined if it fails to allow for review of another member's unilateral actions, and that Article XXI is an affirmative defence and therefore reviewable. Both India and Switzerland said consultations with the US on the matter had failed to resolve the dispute, prompting their requests for panels; they also asked that a single panel be established to rule on their claims and those of the other seven complainants.

The United States said it could not agree to the establishment of the two panels. The US said India and Switzerland were undermining the trading system by asking the WTO to do what it was never intended to do.  It is simply not the WTO's role, nor its competence, to review a sovereign nation's judgment of its essential security interests. The US said if the WTO were to undertake a review of a member's invocation of Article XXI, this would undermine the legitimacy of the WTO's dispute settlement system and even the viability of the WTO as a whole.

The DSB agreed to revert to the matter.

DS557: Canada — Additional Duties on Certain Products from the United States

DS558: China — Additional Duties on Certain Products from the United States

DS559: European Union — Additional Duties on Certain Products from the United States

DS560: Mexico — Additional Duties on Certain Products from the United States

The United States submitted its second request for four dispute panels to challenge increased duties imposed by Canada, China, the European Union and Mexico on certain US imports. The first US requests were blocked by the four at the DSB meeting on 29 October.

Every sovereign has the right to take action it considers necessary for the protection of its essential security as enshrined in Article XXI, the US said; what is inconsistent with WTO rules is the unilateral retaliation against the US by various WTO members.  These members base their actions on the pretence that the US actions are safeguards; this is the height of hypocrisy, the US said. The US has not invoked WTO safeguard provisions for its actions, and because the US has not done so, other members cannot simply act as if these provisions should have been invoked to apply safeguard rules that are simply inapplicable.

Canada said it would vigorously defend its measures, which were taken in response to the "unwarranted" US steel and aluminum tariffs.  China expressed its disappointment with the US actions and said the US refused to hold consultations with China to discuss compensation under the WTO's Safeguards Agreement, thus giving it little choice but to introduce appropriate suspension measures.

The EU said that just because the US does not label its tariffs as safeguard measures does not mean it can be allowed to escape an appropriate response under the Safeguards Agreement. Mexico said it was exercising a right which was expressly permitted under the North American Free Trade Agreement (NAFTA).

The DSB agreed to the establishment of the four panels. Around 20 WTO members reserved their third-party rights to participate in each of the respective proceedings.

DS542: China — Certain Measures Concerning the Protection of Intellectual Property

The United States submitted its second request for a panel to examine certain Chinese measures pertaining to the protection of intellectual property rights. China has implemented policies that consistently seek to disadvantage foreign companies for the benefit of Chinese industry, the US said. This includes denying foreign patent holders, including US companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends and imposing mandatory adverse contract terms that discriminate against, and are less favorable for, imported foreign technology. These policies are in violation of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the US said, adding that the policies are causing an estimated $50 billion in annual harm to the US alone with the aggregate impact to all WTO members being much higher.

China said it was disappointed with the US second request. The so-called "forced technology transfer" alleged by the US is not within the request for consultations or panel and therefore not relevant to this dispute, China said. The US accusations on this point are meritless and founded on the deliberate misrepresentation of Chinese laws and practices. China said that it takes its WTO commitments seriously and would safeguard its legitimate interests in the proceedings. 

Japan noted that it is a major exporter of technology to China and has repeatedly raised concerns with the Chinese laws and practices identified by the US in its panel request, which impair the ability of foreign rights holders to protect their IP rights. The European Union said it shared the US concerns and welcomed the establishment of the panel, noting that it had requested its own consultations with China on these policies which discriminate against foreign firms and are contrary to China's WTO obligations.

The DSB agreed to the establishment of the panel. Japan, the EU, Switzerland, Norway, Russia, Singapore, Kazakhstan, Ukraine, Chinese Taipei and Turkey reserved their third-party rights to participate in the proceedings.

DS475: Russian Federation — Measures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union

The European Union submitted its second request for a compliance panel to examine whether measures taken by Russia to implement an earlier WTO dispute ruling regarding Russia’s import bans on live pigs and pork products from Lithuania, Poland, Latvia and Estonia as well as the EU-wide import ban on live pigs and certain pork products brought the original measures at issue into conformity with Russia’s WTO obligations. The EU said it has been waiting a long time for Russia to open its market to EU imports but that Russia was keeping its ban in place while claiming compliance.

The Russian Federation said it regretted the EU decision to request the panel a second time and that it had fully implemented the WTO ruling.

The DSB agreed to the establishment of the panel. Japan, Ukraine, Kazakhstan, India, China, the United States and Australia reserved their third-party rights to participate in the proceedings.

DS234: United States – Continued Dumping and Subsidy Offset Act of 2000

The European Union reiterated its request that the United States cease transferring anti-dumping and countervailing duties to the US domestic industry, arguing that every such disbursement was a clear act of non-compliance with the DSB's recommendations and rulings on the matter. Brazil and Canada thanked the EU for keeping the item on the agenda and called on the US to fully comply. The United States referred to its previous statement and said it had taken all action necessary to comply with the DSB's recommendations and rulings.

European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft: Implementations of the recommendations adopted by the DSB

The United States again said the European Union has not provided a status report concerning the dispute DS316, "EU — Measures Affecting Trade in Large Civil Aircraft". The EU has argued that Article 21.6 of the WTO's Dispute Settlement Understanding (DSU) requires that the issue of implementation remain on the DSB agenda until the issue is resolved and that where a member disagrees with another member's assertion that implementation of a ruling has been achieved, the issue remains unresolved for the purposes of Article 21.6. 

The stated EU position contradicts its actions in this dispute, the US said, where the EU has admitted that there remains a disagreement on compliance. Under the EU's own view, the EU should be providing a status report, yet it has failed to do so. The US urged the EU to provide the DSB for the first time any details on its alleged implementation efforts.

The European Union said there was a difference between the position it has taken in the DS234 and DS316. In the former, the case has been adjudicated, no proceedings are pending and the EU disagrees with the US assertion that it has complied; thus the issue remains unresolved for the purposes of Article 21.6. In the DS316 case, the EU notified its compliance measures, the US disagreed that compliance had been achieved and a compliance panel has been established to rule on the matter. The matter is subject to litigation and the EU is concerned with a reading of Article 21.6 which would require a member to notify the status of implementation while litigation is ongoing.

Appellate Body appointments

Mexico, speaking on behalf of 71 WTO members, once again introduced a proposal calling for the establishment of a selection committee for the appointment of new Appellate Body members, the submission of candidates within 30 days and the issuance by the committee of recommendations within 60 days. Four vacancies now exist on the Appellate Body, which normally has seven members. The considerable number of members supporting the proposal reflects a common concern with the current situation in the Appellate Body that is seriously affecting its workings and the overall dispute settlement system against the best interest of its members, Mexico said.

The United States again said it could not agree to the proposal. As it explained in previous meetings, the US said the systemic concerns it has identified remain unaddressed, including "persistent overreach" by the Appellate Body in its rulings which have added obligations the US never agreed to. Another example is Rule 15 of the Working procedures for appellate review, which allow the Appellate Body to decide whether a member can continue working on assigned cases after his/her term as an Appellate Body member has ended, in disregard of WTO rules.  The US said it will continue its efforts and its discussions with WTO members and with the DSB chair to seek a solution.

Around 20 members made statements expressing growing concern with the continued failure to launch the selection process.  These delegations urged all members to show flexibility in order to resolve the deadlock as soon as possible.  Singapore noted that it has now been exactly one year since the group first issued its joint proposal calling for the launch of the selection process.  Mexico, again speaking for the 71 proponents, said the fact a member may have concerns about certain aspects of the functioning of the Appellate Body cannot serve to impair and disrupt the work of this body.  

Statement by China – right of a member to decide the composition of its delegation for consultations

China drew attention to what it said was the recent practice of the United States during dispute consultations in refusing to allow outside legal counsels in China's delegation on the grounds the consultations are inter-governmental and confidential.  

The practice of engaging legal counsels to assist with participation in WTO dispute settlement proceedings is a longstanding practice and facilitates the efficient resolution of disputes, China said.  Members have the right to determine their representation at all stages of a dispute, a right recognized by the Appellate Body.  China agrees with the US that consultations are to be kept confidential. However, this obligation applies irrespective of whether a member's delegation includes legal counsels. The US objections impair the rights of members and disadvantage developing countries, which do not have the resources to set up in-house departments to litigate WTO disputes as the US does. The ability to seek assistance from outside legal counsels at all stages of dispute settlement proceedings, including during consultations, is necessary to ensuring a level playing field, China said.

The United States said China was asserting a unilateral right to decide whether to allow non-government officials in a delegation and that such an assertion went against the idea of dispute consultations, which aims to bring the two sides together to discuss and resolve their dispute. 

The DSU does not contain the right asserted by China, and the Appellate Body's statement on the matter concerned oral hearings, not consultations. The US said parties in a dispute should discuss and work out a solution among themselves. 

Ten delegations took the floor to comment. They said that while confidentiality must be respected, concerns about confidentiality should not preclude any member from deciding on the composition of their delegation.  Several developing countries said that excluding outside legal counsel from delegations creates an unlevel playing field and deprives developing members the means to participate effectively in the dispute settlement system.

Surveillance of Implementation

The United States presented status reports with regard to DS184, "US — Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan",  DS160, "United States — Section 110(5) of US Copyright Act", DS464, "United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea", DS471, "United States — Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China" and DS488, "US — Anti-Dumping Measures on Certain Oil Country Tubular Goods from Korea".

The European Union presented status reports with regard to DS291, "EC — Measures Affecting the Approval and Marketing of Biotech Products" and disputes  DS473 and DS480,  "EU — Anti-Dumping Measures on Biodiesel".

Indonesia presented its status report in DS484, "Indonesia — Measures Concerning the Importation of Chicken Meat and Chicken Products".

Other business

Indonesia informed WTO members that it had reached an agreement with Chinese Taipei and Viet Nam under which it will implement the WTO rulings in DS490 and DS496,  "Indonesia — Safeguard on Certain Iron or Steel Products," by 27 March 2019.

Next meeting

The next regular meeting of the DSB is scheduled for 18 December.

More information on WTO dispute settlement is available here.

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