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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DS464 United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea

Korea told the DSB that despite having until 26 December 2017 to implement the ruling in DS464, the United States has not taken any substantial steps to bring the measures at issue into conformity with its WTO obligations, nor did it claim that it had implemented the ruling. In the absence of an agreement on sequencing or compensation, Korea, in order to preserve its rights under Article 22.2 of the Dispute Settlement Understanding (DSU), requests DSB authorization to suspend the application of certain tariff concessions and related obligations to the United States.

Korea noted that it was requesting authorization in respect to US non-compliance with both the "as applied" and "as such" findings of the WTO in the dispute.  As regards to the "as applied" violations, Korea requests authorization to retaliate at an annual amount of US$ 711 million; this amount will be modified annually to reflect the growth rate of the washing machine market in the US.  As regards to the "as such" violations, Korea also requests authorization to retaliate at an annual level based on a formula commensurate with the trade effects to be caused to the exports of Korea other than washing machines by US non-compliance with the "as such" findings.  Korea called on the US to step up its efforts to comply with the ruling.

The United States pointed out that, following Korea's request for authorization to retaliate on 11 January, the US objected on 19 January to the level of suspension proposed by Korea. The filing of such an objection automatically results in a referral to arbitration, pursuant to Article 22.6 of the DSU, the US said. The US said that no decision by the DSB was needed for this referral, but that, although unnecessary, the DSB may take note of this.

Several members intervened to comment on the content of Korea's request, the importance of complying with WTO rulings, and whether the DSB needed to take any action on the Korean request. The United States reiterated that, by virtue of its objection, no decision was required by the DSB on the matter.

The DSB chair, Ambassador Junichi Ihara (Japan), said the DSB took note of the statements and that the matter has been referred to arbitration.

DS491 United States — Anti-Dumping and Countervailing Measures on Certain Coated Paper from Indonesia

Indonesia considered that the panel in DS491 had fundamentally misunderstood the nature and purpose of Indonesia's forestry programmes, which led to several errant findings. Indonesia also believed that the panel's interpretation of Article 12.7 of the WTO's Agreement on Subsidies and Countervailing Measures (SCM Agreement) had resulted in the setting of standards that no responding party could ever satisfy, and incorrectly interpreted Article 2.1(c) of the SCM Agreement as permitting anything in writing to qualify as a subsidy programme, even if there was no evidence that it operated in such a manner.

Moreover, Indonesia considered the panel had failed to appreciate that the US International Trade Commission (USITC) improperly attributed injury from other factors to the targeted imports based on anecdotal statements of the domestic industry. Finally, Indonesia believed that the panel erred in finding the tie vote provision of the USITC decision-making procedure to be procedural rather than substantive. Indonesia said that, despite its disappointment with the panel's ruling, it would not be filing an appeal.

The United States said it appreciated the panel's thorough review while at the same time applying appropriate standards of review.  As a result, the panel rejected all of Indonesia's numerous claims.  The United States said it welcomed the panel's report and was pleased to support its adoption.

The DSB took note of the statements and adopted the panel report.

DS477 and DS478 Indonesia — Importation of Horticultural Products, Animals and Animal Products

Indonesia said it understands its obligation to fully implement the DSB's recommendations and rulings in DS477 and DS478. These disputes involve a long domestic process, raising many complexities and politically sensitive issues, it said. Indonesia said it is currently studying the various options as to how to implement the rulings and that it needs sufficient time for discussion with the complainants in order to reach an agreement on the reasonable period of time for implementation. At this stage, discussions with New Zealand and the United States are ongoing, and it hopes to reach an agreement shortly.

The United States said that, under Article 21.3 of the DSU, members must inform the DSB of their intentions regarding implementation. Indonesia's notification that it needs a reasonable period of time to comply did not indicate clearly its intentions on implementation, and the US asked Indonesia to clarify this issue.  New Zealand supported the US request for clarification and asked Indonesia to confirm it intends to comply with the ruling.

Indonesia took note of the concerns raised, said they have been conveyed to its capital, and that the delegation awaits a response.  The United States noted Indonesia was unable to confirm its intention to comply at this stage and said this has consequences, including the right of the respondent to request a reasonable period of time to comply and the right of the complainant to immediately request authorization to suspend concessions.  Asked by the United States to clarify whether or not it intends to comply with the ruling, Indonesia said it had no further instructions from capital.

The DSB took note of the statements made.

DS484 Indonesia — Measures Concerning the Importation of Chicken Meat and Chicken Products

Indonesia told the DSB it was impractical for it to comply immediately with the ruling in DS484 and that it needed sufficient time to discuss a reasonable period of time with Brazil in order to fully comply with its WTO obligations.  Indonesia is still discussing the reasonable period of time with Brazil, it added.

Brazil expressed hope that both parties can reach an agreement as to the reasonable period of time as soon as possible and that it understood that Indonesia's statement on 22 November 2017, when the panel report was adopted by the DSB, reflected its intention to comply. Brazil noted that the measures found to be inconsistent with WTO rules were adopted by Indonesia's executive branch, and can therefore be more easily altered; in addition, some legal instruments were revoked and replaced twice during the course of the panel proceeding, thus proving that adjustments can be made reasonably fast.

The DSB took note of the statements made.

DS217 and DS234 United States – Continued Dumping and Subsidy Offset Act of 2000

The European Union once again requested that the United States cease transferring anti-dumping and countervailing duties to the US domestic industry, arguing that every such disbursement is a clear act of non-compliance with the rulings in DS217 and DS234. The EU said it would continue to place this item on the DSB agenda until the US implemented the ruling.  Brazil and Canada supported the US statement.

The United States said it had taken all the measures necessary to comply with the rulings and that it failed to see the purpose of providing further status reports.

The DSB took note of the statements.

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 European Union presented its status reports with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products”. Canada presented its status report with regard to DS482, "Canada – Anti-dumping Measures on Imports of Certain Carbon Steel Welded Pipe from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu".

The United States said the US Commerce Department has initiated a determination under Section 129 of the Uruguay Round Agreements Act to address the DSB's recommendations relating to Commerce's countervailing duty investigation at issue in DS464, "US — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea", and has sought additional information from interested parties. It also noted Korea's request for retaliation in the dispute and its objection to the level of retaliation proposed by Korea. Korea noted the US has initiated some implementation measures and urged the US to ensure prompt compliance.

China stated its intention to bring itself into compliance with the findings in DS483, "China - Anti-Dumping Measures on Imports of Cellulose Pulp from Canada", by the end of the reasonable period of time, which expires on 22 April 2018. China stated that it has launched a reinvestigation, and that interested parties have the possibility to provide their comments.  Canada noted China's willingness to implement the rulings and expressed its expectation that China's review of the matter will be completed as soon as possible.

Appellate Body matters

The DSB chair presented, in his personal capacity, a report updating delegations on his consultations regarding Appellate Body matters, including the appointment of new members to fill the three vacancies on the Appellate Body. 

The chair stressed that in order to effectively address the matters, concrete ideas and viable solutions were needed.  He recalled that, at the last regular DSB meeting in November 2017, he took note of informal and exploratory discussions led by several delegations. The chair tried to reach out to hear views and ideas, and invited delegations to share their thoughts with him on how to approach these issues. 

The chair noted that Rule 15 of the Working Procedures for Appellate Review was first raised by the United States at a DSB meeting in August 2017, in relation to the selection process for Appellate Body members.  The chair saw a common understanding among many delegations for the need for a transitional arrangement such as the one provided for in Rule 15, but also a broad recognition that Rule 15 could be updated and improved.

The chair also noted many delegations had emphasized that, while addressing issues relating to Rule 15, the selection process for the appointment of Appellate Body members should be launched without delay. The chair thanked all the delegations that had participated in the consultations and resolved to continue his informal consultations with interested delegations.

Mexico then introduced a joint proposal to launch the selection processes for Appellate Body members, submitted on behalf of 58 sponsoring WTO members as well as Canada and the Dominican Republic, which expressed their intention to co-sponsor the proposal.  Speaking for the group, Mexico expressed growing concern that the current situation of the Appellate Body is seriously affecting its work and the overall functioning of the dispute settlement system, and that WTO members have a duty to fill the three Appellate Body vacancies.

The joint proposal calls for the submission of candidates by 22 February and for a Selection Committee to issue its recommendations as soon as possible. Mexico said the proponents were flexible regarding the deadlines but that the situation needed to be addressed on an urgent basis.

Around 20 members took the floor to comment.  The United States said it does not support the joint proposal, noting that one Appellate Body member continues to serve on an appeal seven months after his term expired while another whose term has expired is currently serving on five appeals, without any authorization from the DSB.  It is concerned with the latest Appellate Body communication deciding to authorize an Appellate Body member to continue serving on appeals. The United States considers there is broad recognition that Rule 15 does raise difficult legal questions, and that it will continue discussions on this issue with the chair and other delegations.

Most of the other WTO members who took the floor were sponsors of the joint proposal – Pakistan, China, Australia, Canada, Colombia, Brazil, Uruguay, Norway, Panama, Singapore, Switzerland, New Zealand, Chinese Taipei, Turkey and the European Union.   In general, they reiterated concerns about the continued impasse over the appointment of new Appellate Body members and the impact it could have on the WTO's dispute settlement system as well as the WTO as a whole.  They also said they were prepared to discuss concerns about Rule 15 and other procedural matters, but that there should be no linkage between these discussions and launching the selection process, which needed to begin as soon as possible. 

Non-sponsors Egypt and India expressed their support for starting the selection process and separating this process from any discussions on procedural issues.  Japan also expressed support for the joint proposal and said building trust amongst WTO members is the key to resolving this urgent matter.

The DSB took note of the statements.

Report on the dispute settlement workload

The chair provided members with an update on the WTO's dispute settlement workload.

Next meeting

The next regular meeting of the DSB is scheduled for 28 February 2018.

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