DS316: European Communities — Measures Affecting Trade in Large Civil Aircraft

The European Union reiterated its request for a second compliance panel in DS316 after the United States blocked the first EU request at a DSB meeting on 15 August. The EU said it informed members on 17 May that it had achieved full compliance with the latest ruling adopted by the DSB on 28 May by either withdrawing the remaining subsidies in question or removing their adverse effects. It noted the US disagreed with the EU's assertion and re-initiated WTO arbitration proceedings regarding possible suspension of concessions. The EU said that since this was its second request, the compliance panel would be established in accordance with WTO rules.

The United States said it would not repeat the statement it made on 15 August when the EU submitted its first request, but said the EU was doing the WTO and its dispute settlement system a disservice by moving forward with its request. Instead of bringing yet another compliance proceeding in the largest dispute in WTO history, the EU should make the decision to actually comply with its WTO subsidy obligations and seek to resolve this dispute with the US, it said.

The DSB agreed to the establishment of the panel. Japan, Australia, Brazil, China, Russia and India reserved their third party rights to participate in the panel proceedings.

Separately, the United States once again noted that the European Union had not provided a status report to the DSB meeting on implementation of the ruling in DS316. The EU again said it recently initiated compliance proceedings on the matter and that it was thus not obliged to submit a status report.

DS537: Canada — Measures Governing the Sale of Wine

Australia submitted a first request for a panel in its complaint concerning measures maintained by the Canadian government and the Canadian provinces of British Columbia, Ontario, Quebec and Nova Scotia governing the sale of wine. On 12 January 2018, Australia requested consultations with Canada, but Australia said the consultations which took place on 1 March and subsequent informal technical discussions with Canada failed to resolve the matter, prompting Australia to submit its request for a panel.

Australia noted that a panel was established by the DSB in a similar complaint against the Canadian wine restrictions brought by the United States (DS531) and that it expected dispute procedures for multiple complaints will be applied.

Canada said it was not in a position to agree to Australia's request, declaring that it had serious concerns about deficiencies in Australia's initial request for consultations which were repeated in the request for a panel. Canada said it remained open to continued discussions with Australia aimed at resolving the matter.

The United States said it fully supported Australia's request for the establishment of a panel.

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

DS545: United States — Safeguard measure on imports of crystalline silicon photovoltaic products

DS546: United States — Safeguard measure on imports of large residential washers

Korea submitted its first requests for WTO panels regarding the safeguard measures imposed by the United States on imports of certain crystalline silicon photovoltaic products and large residential washers earlier this year. On 14 May 2018, Korea requested consultations with the United States regarding both safeguard actions and said it engaged in good faith talks with the US, with a view to finding mutually satisfactory solutions. Unfortunately, these consultations were not fruitful, prompting Korea to request the establishment of the two panels. 

The United States has failed to provide a reasoned and adequate explanation of any of the essential conditions that can justify the safeguards – such as a relevant increase in imports, serious injury to the relevant domestic industry, and a causal link between the two - Korea said.

The United States said WTO rules allow members to temporarily suspend concessions when a product is being imported into its territory in such increased quantities and under such conditions as to cause injury, or threat of serious injury, to the member's domestic industry. The US has exercised this right with regards to the two measures, which are based on the findings of an independent authority, the US International Trade Commission, which determined the imports were causing serious injury to domestic US producers of the two products. As a result, the US said it was not in a position to accept either of the Korean panel requests.

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

DS458, DS467: Australia — Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging

Australia noted the plain packaging dispute involved a record number of third parties which highlighted the significance of the public policy issues under challenge. The panel rejected all the claims that Australia's measures were inconsistent with WTO rules and confirmed that WTO rules do not inhibit the right of members to implement legitimate, non-discriminatory public health measures. 

The Australian plain packaging measures have been endorsed by leading public health experts and the World Health Organization, Australia noted. It regretted however that the dispute proceedings took six years to complete and said such delays raise important systemic issues for the entire WTO membership. Australia said it was also pleased that a number of WTO members have already implemented their own plain packaging measures and that others were taking steps to adopt such measures. 

With regards to the appeals filed by Honduras and the Dominican Republic in their dispute cases against the plain packaging measures, Australia said it remained firmly committed to defending its legitimate public health measure in those proceedings.

Both Cuba and Indonesia criticized the panel findings, arguing that it would harm tobacco producers in each country. The plain packaging restrictions on intellectual property rights went well beyond what was necessary to address the issue of tobacco control. Cuba said that there was nothing from studies in Australia showing that such measures were successful in reducing smoking, and said the panel's analysis was not based on an objective assessment but was instead structured to justify conclusions decided in advance.

Indonesia said it believes the ruling will harm trade in other perfectly legal and legitimate products such as certain food and drinks; it noted calls to introduce measures similar to tobacco plain packaging to high-fat and high-sugar products. As a result of the panel’s decision, plain packaging requirements may now be applied to alcoholic beverages for religious or moral reasons. In short, Indonesia said, it fears the ruling signals the beginning of a slippery slope to fundamental disruption of global consumer markets.

Canada, Uruguay, New Zealand, Norway and the European Union all welcomed the panel's findings on the plain packaging measures.

The DSB adopted the panel rulings in the cases brought by Cuba and Indonesia against Australia's plain packaging requirements for tobacco products. 

DS490 and DS496: Indonesia — Safeguard on Certain Iron or Steel Products

Both Chinese Taipei and Viet Nam, the complainants in the case, welcomed the findings by the panel and the Appellate Body that Indonesia's application of a specific tariff on certain imports of iron and steel products was inconsistent with WTO rules, but questioned the findings that the measure at issue was not a safeguard as the two had asserted. 

Chinese Taipei said the conclusions on what constitutes a safeguard measure (the measure results in the suspension of a tariff obligation or withdraws/modifies a tariff concession, and such suspension, withdrawal or modification must be designed to prevent or remedy serious injury to domestic producers) adds a degree of uncertainty to the multilateral safeguard mechanism. Viet Nam also said the finding on the constituent element was of concern and could have implications regarding notification, consultations and gradual liberalization requirements for safeguard measures under the WTO's Safeguards Agreement.

Indonesia noted that the duties in question were only found to violate WTO rules because certain developing countries were exempted from the duties. Nevertheless, it respects the findings of the Appellate Body. Indonesia said it would seek to implement the ruling within a reasonable period of time.

The European Union, Australia, Mexico and Canada welcomed and supported the Appellate Body's findings.

The DSB adopted the Appellate Body panel reports in DS490 and DS496, and the panel reports as amended by the Appellate Body.

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.

Appellate Body matters

Statement by the United States concerning Article 17.6 of the Dispute Settlement Understanding (DSU)

The United States delivered a long statement regarding what it said was an important systemic issue with significant implications for the operation of the WTO's dispute settlement system – Article 17.6 of the DSU and the Appellate Body's review of panel findings of fact, including domestic law. Article 17.6 expressly limits appellate reviews to issues of law and legal interpretation covered in a panel's report; however, despite this clear and unambiguous language, the Appellate Body has consistently reviewed and even reversed panel fact-finding. It has done so under different legal standards it has had to invent, and reached conclusions that are not based on panel factual findings or undisputed facts, the US said. 

The Appellate Body's invention of an authority to review panel fact-finding has added complexity, duplication and delay to every WTO dispute proceeding, the United States said; in addition, the Appellate Body has compounded this error by asserting it can review panel findings concerning the meaning of a member's domestic law. In regards to the latter, the US cited 10 WTO dispute cases where WTO panels have disagreed with the Appellate Body and instead found that the meaning or operation of a member's domestic law is an issue of fact, not an issue of law; it also cited 15 instances where members have disagreed with the Appellate Body's assertion of authority to review a panel's factual findings on the meaning of a member's domestic law. Despite this, the Appellate Body has not reconsidered its view. 

The United States concluded by saying that regardless of whether or not a WTO member considers appellate review of facts desirable, that review is neither legal nor legitimate under agreed WTO rules.

Chile, Japan, Australia, Canada, Brazil, China, the Philippines, Mexico and the European Union took the floor to comment on the US statement. Most of these members said that the issue was complex but expressed their willingness to discuss the matter with the US; they also called on the US to outline workable solutions and a specific way forward. The EU said that, in its view, the Appellate Body has fully respected the relevant provisions of the DSU but that it was open to discussions on possible improvements in the dispute settlement system.

Appellate Body appointments

Once again Mexico, speaking on behalf of 67 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. As it explained in previous meetings, the US said the systemic concerns it has identified remain unaddressed, such as the concerns that an individual who is not currently an Appellate Body member continues to decide appeals. It is the DSB, not the Appellate Body, which has the authority to decide whether a person who is no longer an Appellate Body member can continue to serve on an appeal. The US said it will continue its efforts and its discussions with WTO members and with the DSB chair to seek a solution.

Argentina, Canada, Brazil, Thailand, China, Australia, Norway, Switzerland, Korea, Japan, Singapore, Chinese Taipei, Chile, India, Hong Kong China, New Zealand, Mexico, the European Union, Guatemala and Costa Rica (for the GRULAC group of Latin American/Caribbean countries) made statements on the matter. Once again, 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 posed 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, and several said the United States should put forward concrete proposals on how to resolve the problem.

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

The DSB chair, Ambassador Sunanta Kangvalkulkij of Thailand, noted that she had carried out further consultations with members on whether Appellate Body member Shree Baboo Chekitan Servansing should be given a second term as Appellate Body member. Mr Servansing's first term as Appellate Body member ends on 30 September. She reported that, on the basis of her consultations, she understood that there would not be a consensus to support Mr Servansing's reappointment. Given that her consultation process was now concluded, the chair said she would like to confer with all delegations on the way forward and said her door was open for any member who wanted to discuss the matter with her.

The United States said that, for more than 15 years, the US had been raising serious concerns with regard to the Appellate Body's disregard for the rules set by WTO members. Through persistent overreaching, the Appellate Body has been adding obligations that were never agreed to by the US and other WTO members. The US President's 2018 Trade Policy Agenda outlined several longstanding US concerns. The US has raised repeated concerns that appellate reports had gone far beyond the text setting out WTO rules in varied areas, such as subsidies, anti-dumping duties, anti-subsidy duties, standards and technical barriers to trade, and safeguards, restricting the ability of the US to regulate in the public interest or protect US workers and businesses against unfair trading practices.

The United States said that on procedural, systemic issues, for example, the Appellate Body has issued advisory opinions on issues not necessary to resolve a dispute, reviewed panel fact-finding despite appeals being limited to legal issues, asserted that panels must follow its reports although there is no system of precedent in the WTO, and continuously disregarded the 90-day mandatory deadline for the circulation of Appellate Body reports – all contrary to the WTO's agreed dispute settlement rules. For the last year, the US had been calling for WTO members to correct the situation where the Appellate Body acts as if it has the power to permit ex- Appellate Body members to continue to decide appeals even after their term of office – as set by the WTO members – has expired. This so-called "Rule 15" is another example of the Appellate Body's disregard for the WTO's rules.

The United States added that its concerns have not been addressed. When the Appellate Body abuses the authority it was given within the dispute settlement system, it undermines the legitimacy of the system and damages the interests of all WTO members who care about having the agreements respected, as they were negotiated and agreed. The US will continue to insist that WTO rules be followed by the dispute settlement system. In this circumstance, the US has determined that it is not prepared to support the reappointment of Mr Servansing for a second term. The US noted that its position is no reflection on any one individual but reflected the US principled concerns.

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," and DS464, "United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea," while the European Union presented status reports with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products” and DS480, "European Union — Anti-Dumping Measures on Biodiesel from Indonesia."

The United States said that it continued to consult with interested parties on options for implementing the WTO's ruling in DS471, United States — Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China. China noted that the deadline for the United States to comply with the ruling expired on 22 August and that it was very disappointed and deeply concerned about the lack of any apparent US measures to implement the ruling; it urged the US to comply with its WTO obligations and said it would reserve its right to take any further actions.

Next meeting

The next regular meeting of the DSB will take place on 26 September.