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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 DS531: Canada — Measures Governing the Sale of Wine in Grocery Stores (second complaint)

The United States said regulations governing the sale of wine in grocery stores in the Canadian province of British Columbia (BC) appear to breach WTO rules by according less favorable treatment to imported wine.  The BC regulations exclude all imported wine from grocery store shelves, an important retail chain for wine sales in the province. These restrictions limit sales opportunities for US wine in Canada and provide a substantial competitive advantage for BC wines.  Consultations with Canada failed to resolve the dispute, the US said, prompting it to request the establishment of a panel to examine the matter.

Canada said it was disappointed with the US request.  While the two sides have not been able to resolve the matter through consultations, Canada said it welcomed an opportunity to continue the discussions.  As a result, Canada was not in a position to agree to the establishment of a panel.

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

 DS536: United States — Anti-Dumping Measures on Fish Fillets from Viet Nam

Viet Nam said consultations with the United States regarding its concerns with US anti-dumping duties on imported fish fillets from Viet Nam were held in Geneva on 1 March but failed to resolve the matter.  Each of the claims in the consultations had been subject to prior WTO dispute settlement and each had been resolved in a manner favorable to Viet Nam, it noted.  Despite multiple attempts to further engage the US, Viet Nam has not been successful, leaving it no choice but to request the establishment of a panel.

The United States said it regretted Viet Nam was seeking the establishment of a panel and that it believed the determinations identified by Viet Nam are fully consistent with WTO rules.  Thus, the US cannot agree to the establishment of the panel.

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

DS285: United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services

Antigua and Barbuda made a statement detailing the history of its dispute with the United States over US restrictions on Internet gambling.  Using the 2007 WTO arbitrator's finding of $21 million in annual impairment to Antigua's economy from the US restrictions, Antigua said it has lost $315 million, or more than a quarter of its annual gross domestic product, over the period since the arbitrator's decision. Despite Antigua's good-faith attempts to settle the matter,  and despite claims of “creative and generous settlement proposals” from the US side, the proposals were found unacceptable because none of them added up to even 1% of the damage done to Antigua's economy.  Antigua noted that it has not acted on the WTO's authorization to impose $21 million in suspended intellectual property rights concessions on the US, but that it was now losing hope; Antigua is now contemplating approaching the WTO Director-General under Dispute Settlement Understanding (DSU) provisions to seek a mediated solution to the dispute.  This appears to be the only way left for resolving this dispute, Antigua said.

The United States said it did not understand why Antigua and Barbuda placed this matter on the agenda of the DSB meeting; the US has invoked procedures under Article XXI of the General Agreement on Trade in Services (GATS) to modify its schedule of concessions and maintain a balance of benefits among WTO members, and as part of that process, has agreed with all but one WTO member (Antigua) on adequate compensation.  Instead of engaging, Antigua has made extreme demands, including requests for monetary payments, which are not part of the Article XXI process and not provided for under the DSU.  Nevertheless, the US said it expended substantial efforts to resolve the matter, including working for months on an agreement in 2008 which it thought had resulted in a deal but which Antigua subsequently repudiated.  The US also offered a broad range of useful suggestions for settling the dispute in 2013 which Antigua ultimately chose to walk away from, and most recently the current US administration formally communicated to Antigua that it was prepared for further discussions, for which it has received no response.

Barbados, Cuba, Jamaica, Venezuela and Dominica (for the Organization of Eastern Caribbean States) all made statements in support of Antigua and Barbuda.  Antigua said it was not aware of the new offer the US was referring to; the US said it communicated its willingness to discuss the matter further and that it was ready to engage.

DS479: Russia — Anti-Dumping Duties on Light Commercial Vehicles from Germany and Italy

Russia told WTO members that the anti-dumping measure at issue in its dispute with the EU had expired on 14 June, the deadline for Russia to comply with the ruling in DS479.  Thus, Russia has fully complied with the WTO ruling.

The European Union said it understood Russia had no intention to replace or renew the duties at issue and thanked Russia for its prompt compliance with the ruling.

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. 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.

Statement by the United States regarding the deadline for the Appellate Body to review appeals

The United States raised what it said was the repeated problem of the Appellate Body issuing rules beyond the mandated 90-day deadline fixed under Article 17.5 of the DSU. For too long, the Appellate Body has ignored the clear text of the DSU and for too long WTO members have failed to fulfill their responsibility to apply and administer the relevant rules, the US said. The US made the following six points: 

  • the DSU is designed to promote prompt settlement of disputes and mandates that appeals be completed in no more than 90 days, with no exceptions;
  • the Appellate Body in the past respected the 90-day deadline — of the 101 appeal rulings issued between 1996 and 2001, 87 were issued within 90 days while for the remainder the Appellate Body consulted with parties and obtained their consent to go beyond the deadline;
  • in 2011 the Appellate Body began ignoring the 90-day requirement, with some WTO members expressing significant concerns that parties were no longer being consulted about the delays and obtaining their consent;
  • since 2011 the Appellate Body has frequently and increasingly breached the 90-day deadline, with the average length of an appeal now 149 days and, since May 2014, 163 days. In addition, the Appellate Body no longer gives estimates for when it expects to issue its rulings;
  • the Appellate Body creates reasons for exceeding the 90-day limit rather than changing its behaviour to ensure compliance with the rule, such as refraining from issuing findings on matters which are not necessary to resolve a dispute; and
  • it is past time for WTO members to meet their responsibilities to administer the WTO rules-based system according to the rules, failing which the dispute settlement system will move further away from the principle of prompt settlement of disputes and further erode support for the system.  The consequence of the Appellate Body choosing to breach DSU rules and issue a report after the 90-day deadline would be that such a report no longer qualifies as an Appellate Body report for the purposes of the exceptional “negative consensus” adoption procedure under Article 17.14 of the DSU, the US added.

The United States said it looked forward to engaging with members on how to finally address this longstanding and still urgent problem.

The European Union, Brazil, Australia, New Zealand, the Philippines, Japan, Canada, Norway, Mexico, China, Russia, Uruguay, Guatemala and Thailand all intervened on the matter.  While many of those intervening expressed concerns about delays in Appellate Body rulings and the need to ensure prompt settlement of disputes, as well as transparency with the membership regarding the cause for delays, several said that they did not want this to come at the cost of quality. 

Many of those who intervened disagreed with the US contention that reports issued after the 90-day deadline and without the consent of parties could no longer be adopted on the basis of negative consensus. Some questioned US complaints about adherence to the 90-day rule when one of the biggest causes of the current delay in rulings was the US blockage of appointments for existing Appellate Body vacancies, noting that Article 17.2 imposes an obligation on members to fill vacancies as they arise.

One delegation noted that the sheer number of cases and the level of complexity of disputes was not foreseen at the time the 90-day rule was adopted and that, as a consequence, the deadline soon became unrealistic; another said members themselves were also responsible for the delays due to the multiple claims filed in their appeals and their failure to provide the Appellate Body secretariat with adequate personnel to handle the increased workload.

Appellate Body appointments

Once again Mexico, speaking on behalf of 66 WTO members (including the EU 28), 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.  The considerable number of members backing 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 interests of WTO members, Mexico said.

The United States again said it was not in a position to agree to the proposal. The systemic concerns identified by the US remain unaddressed, in particular the concerns that arise from Appellate Body decisions that purport to “deem” as an Appellate Body member someone whose term of office has expired and is thus no longer an Appellate Body member.  It is the DSB that has the authority to appoint an Appellate Body member and to decide when their term of office expires, and so it is up to the DSB to decide whether a person who is no longer an Appellate Body member can continue to serve on an appeal.  The US said it appreciated the willingness of members to engage on the issue and remains resolute that members need to resolve this issue as a priority, adding that a number of ideas have been mentioned in the context of informal discussions representing a diversity of views on possible solutions.

The European Union, Colombia (for the GRULAC group) Canada, Pakistan,  Hong Kong China, Russia, Venezuela, Switzerland, Thailand, Chinese Taipei, Singapore, Norway, Australia,  Brazil, Turkey, India, Korea, New Zealand, Japan, China, the Philippines, Guatemala and South Africa (for the African Group) all intervened. Most of the delegations referred to their previous statements on the matter.  In general, these delegations reiterated their concerns with the continued impasse regarding the appointment of new Appellate Body members and urged all members to show flexibility in order to resolve the deadlock as soon as possible.  Several mentioned the growing dangers the continued impasse poses not only to the dispute settlement system but the WTO as a whole, and that members had an obligation under the WTO rules to initiate the process; others reiterated that the US concerns and the appointment issue should be treated separately.

Statement by the chair regarding the possible appointment of one Appellate Body member

The DSB chair said that she was continuing consultations with members on whether Appellate Body member Shree Baboo Chekitan Servansing should be given a second term, and would report back at the next DSB meeting in July. Mr. Servansing, whose first term as Appellate Body member ends on 30 September, has informed the DSB chair of his interest in serving a second term.

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”, and  DS160, “United States — Section 110(5) of US Copyright Act”, while the European Union presented a status report with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products”.

The United States said the US Commerce Department issued a preliminary determination revising certain aspects of its original determination at issue in DS464, “United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea”, in particular its analysis underlying the countervailing duty determination as pertaining to certain tax credit programmes.   Commerce is now reviewing comments submitted on the preliminary determination before issuing its final determination, the US said.

Korea thanked the United States for its status report but said it had some concerns about the results of the preliminary determination which do not properly address the recommendations and rulings.  Korea also said it was deeply concerned that there was barely any development in the implementation efforts relating to the US anti-dumping measures until now, more than 20 months after the adoption of the panel and Appellate Body report.

Other business

Indonesia informed members that it had reached an agreement with the United States and New Zealand under which Indonesia would implement the WTO's ruling regarding its restrictions on imports of animal and horticultural products (DS477, DS478) by 22 July; for one of the measures at issue however  — a requirement whereby importation of horticultural products, animals and animal products depends upon Indonesia's determination of the sufficiency of domestic supply to satisfy domestic demand — Indonesia will have until 22 June 2019 to comply with the WTO's ruling.

The United States noted that the European Union had not provided a status report for DS316, “European Communities — Measures Affecting Trade in Large Civil Aircraft”. The EU noted that it recently initiated compliance proceedings on the matter and that it was thus not obliged to submit a status report.

Next meeting

The next regular meeting of the DSB will take place on 20 July.

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