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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DS371: Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines

The Philippines said it regrets that, more than a decade after this dispute was initiated, Thailand had not taken the necessary steps to comply with the WTO rulings on the matter.  While Thailand has taken a number of positive steps to remove some of the inconsistent measures, Thailand has also introduced some new measures which are inconsistent with WTO rulings, said the Philippines.  These include new criminal charges against a Thai importer and its employees in respect of 272 entries of cigarettes that cleared Thai Customs between 28 July 2003 and 24 June 2006 as well as notices of assessment for underpayment of taxes and duties for more than $800 million on 1,052 entries imported in 2001-2003. 

The Philippines said it has been informed by Thai officials that the notices are to be revised and that this was a positive development but that it was necessary to request a panel. The Philippines noted that under a prior understanding between the two countries, Thailand would not object to the Philippines' request.

Thailand said it regretted the Philippines' request but that it would not object. It said the notices of assessment referred to in the Philippines' request for consultations have been withdrawn and thus will not form part of the panel's terms of references.

The DSB agreed to establish the panel.  Japan, the European Union, the United States, Australia, the Russian Federation, China, India, Singapore and Indonesia reserved their third-party rights.

The panel is the second compliance proceeding initiated by the Philippines in the dispute; a WTO panel is currently reviewing Thailand's compliance as part of separate proceedings initiated by the Philippines in 2016.

DS529:  Australia — Anti-Dumping Measures on A4 Copy Paper

Indonesia said it was submitting its first request for a panel after consultations with Australia held on 31 October 2017 failed to resolve their differences regarding the Australian duties on A4 copy paper. Indonesia said a number of substantive deficiencies exist in Australia's anti-dumping determination which appears to be inconsistent with the WTO's General Agreement on Tariffs and Trade (GATT) 1994 and the Anti-Dumping Agreement (ADA).

Australia said it was unfortunate that Indonesia was requesting a panel at this time, noting that Indonesia had yet to exhaust all the domestic review options available to it. Australia said it considered its investigation and subsequent imposition of dumping duties was entirely consistent with the ADA, and that it was not in a position to accept the establishment of a panel.

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

DS533: United States — Countervailing Measures on Softwood Lumber from Canada

Canada said in its first request for a panel that it considered the measures at issue  -  the US imposition of countervailing duties of up to 17.99% on imports of softwood lumber from Canada - were inconsistent with the US obligations under the Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the GATT 1994.

 The United States improperly initiated the investigation, incorrectly determined the existence and amount of benefit, improperly conducted the underlying investigation, improperly determined the duty rates, and improperly attributed to the production of softwood lumber certain alleged subsidies that were bestowed on the production of products not under investigation, Canada said. The duties imposed are having a negative effect on Canadian softwood lumber producers in various Canadian provinces. The two sides held consultations on 17 January, Canada noted, but were unable to resolve their differences.

The United States said it was disappointed with Canada's request and was not in a position to agree to the panel's establishment. The measures in question are fully consistent with US obligations under the WTO agreements; furthermore, Canada's panel request identifies a measure that did not exist at the time Canada requested consultations - namely the countervailing duty order on Canadian softwood lumber – and Canada cannot request the establishment of a panel to review a measure that did not exist at the time of its consultation request, and which necessarily was not the subject of consultations.

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

DS534: United States — Anti-Dumping Measures Applying Differential Pricing Methodology to Softwood Lumber from Canada

Canada said in its first request for a panel that it considered the US Commerce Department's application of the Differential Pricing Methodology in its investigation on alleged dumped imports of softwood lumber from Canada (now subject to dumping duties of up to 7.28%) is inconsistent with the ADA and the GATT 1994.

More specifically, Canada considers that the United States violated its obligations under these agreements by applying zeroing in its weighted average-to-transaction calculation methodology and, in applying this methodology, improperly aggregated random and unrelated price variations and failed to identify a pattern of export prices.  Combined with the countervailing duties, these anti-dumping duties represent a considerable hardship for Canadian softwood lumber producers and communities across Canada. The two sides held consultations on 17 January but were unable to resolve their differences, prompting Canada's request for the panel.

The United States said it was disappointed with Canada's decision to request a panel and was not in a position to agree to its establishment. The measures in question are fully consistent with US obligations under the WTO agreements, the United States said; furthermore, Canada's panel request identifies a measure that did not exist at the time Canada requested consultations  - namely the anti-dumping duty order on Canadian softwood lumber – and that a panel cannot review a measure which did not exist at the time consultations were requested, and which necessarily was not the subject of consultations. 

The United States also questioned Canada's reference to provisions under the WTO's Dispute Settlement Understanding setting out accelerated proceedings for disputes involving perishable goods (Article 4.9) and referring the matter to the "original panel" in cases where a complaint involves a measure already the subject of a panel proceeding (Article 10.4). Canada makes no attempt to explain why it considers this dispute to be a case of urgency under Article 4.9, the United States said, nor does it have a basis for relying on Article 10.4, since the dispute concerns a final determination issued last November and is clearly not a  measure already subject to a panel proceeding.

Korea took the floor to say that Canada would not have to ask for a panel in this case if the United States had already complied with the WTO's dispute ruling in DS464, "US — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea".  US implementation of the ruling would nullify Canada's need to pursue its case, Korea added.

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

Appellate Body matters

Mexico, speaking on behalf of 64 WTO members (including the 28 EU member states), 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. 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 for the group.

The European Union said that with each passing month, the gravity and urgency of the situation increases. WTO members have a shared responsibility to resolve this issue as soon as possible.

The United States once again said it was not in a position to agree to the proposal. It said members have still not addressed the issue of former Appellate Body members continuing to work on cases even though their terms have expired.  While some WTO members may be comfortable with the situation of former members continuing to act as though they are still members of the Appellate Body, this is not legal under the WTO's mutually agreed rules, the United States said.

The following delegations then took the floor:  Canada, Brazil, India, Pakistan, Korea, Australia, Colombia, Indonesia, China, Panama, Thailand, Norway, Hong Kong China, New Zealand, Switzerland, Peru, Venezuela, Chinese Taipei, Turkey, Singapore, Japan, and Mexico. In general, these delegations reiterated their concerns regarding the continued impasse over 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 dangers the continued impasse posed not only to the dispute settlement system but the WTO as a whole, while others reiterated that the US concerns and the appointment of Appellate Body members were issues that should be treated separately.

Outgoing DSB chair Junichi Ihara, Japan's ambassador to the WTO, said he regretted members were not able to reach agreement on launching the selection process and said the sense of crisis shared by many members today needs to be translated into concrete actions.

Surveillance of implementation

China said a reinvestigation was ongoing in order to comply with the WTO panel's findings in DS483, "China — Anti-Dumping Measures on Imports of Cellulose Pulp from Canada".  Canada said it expects that a negative injury finding prior to the 22 April deadline for implementation will resolve the dispute.

The United States said it continues to consult with interested parties on options for complying with the WTO ruling in DS464, "United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea".  Korea urged the United States to fully comply with the WTO ruling and said it was hard to understand why it takes more than 18 months just to consult on options to address the recommendations of the DSB. 

The United States said it continues to confer with the European Union and to work with Congress in order to reach a mutually satisfactory solution in DS160, "United States — Section 110(5) of US Copyright Act".  The European Union said it would like to resolve the case as soon as possible.  China said that, 17 years after the adoption of the panel report, the United States is the only WTO member that has failed to comply with a ruling under the TRIPS Agreement long after the deadline for compliance and that the United States fails to provide minimum standards of protection required by the agreement. The United States countered that China's criticisms are completely unfounded and that its intellectual property protection equals or surpasses that of any other member.

The United States presented its status reports with regard to DS184, “US — Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan”, while the European Union presented its status reports with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products”.

Other business

China said that on 22 March the United States published the report of its Section 301 investigation. China strongly opposes this unilateral action; Section 301 authorizes the United States to make unilateral determination of inconsistency of trade measures of other members and to take unilateral actions accordingly where the proceedings at the WTO have not been exhausted. The legality of such provisions was challenged by the European Union in DS152, "US — Sections 301–310 of the Trade Act 1974", where the panel found Section 301 was not inconsistent with Article 23 of the DSU only under certain circumstances, and that should the undertakings articulated by the United States at the time be removed or repudiated, the findings of conformity would no longer be warranted.

Eighteen years later, the United States is repudiating the commitment it once solemnly made, China said; this will have profound and negative implications. China is strongly against this action and calls on all members to safeguard the rules-based multilateral trading system.

The United States said it was ready to discuss the trade-distorting policies adopted by China that are the subject of the ongoing Section 301 investigation; it is these policies, and not responses by the United States or other members, that are a threat to the international trading system. The Section 301 report contains extensive evidence that China engages in four types of practices involving technology transfer: using foreign ownership restrictions to require or pressure technology transfer from US companies; forcing US companies seeking to license technologies to Chinese entities to do so on non-market-based terms favouring Chinese recipients; directing and unfairly facilitating the systematic investment in, and acquisition of, US companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property; and conducting and supporting unauthorized intrusions into, and theft from, the computer networks of US companies to access their sensitive commercial information and trade secrets. 

China's criticisms have no validity, the United States continued; the United States made no findings in the Section 301 investigation that China breached its WTO obligations. From the outset, the United States was clear that where an act, policy or practice appeared to involve WTO rules, the US would pursue the matter through WTO dispute settlement. In fact, one of the areas of investigation – involving technology licensing – appears to be amenable to WTO dispute settlement, and accordingly the United States initiated a WTO dispute on this issue. In contrast, the three other categories of measures covered in the US investigation do not appear to implicate specific WTO obligations, the United States said.

Pakistan echoed the concerns of China regarding Section 301 and said this action has a potential to spur a full-scale protectionist retaliation by other members of the WTO which will not only lead to dire consequences for developing countries but, more importantly, will weaken the entire edifice of the global trading system.

Japan said it shares the US view that stronger protection of intellectual property and its effective enforcement is important and shares the concerns about disclosure requirements for technological information and discriminatory licensing practices; this being said, Japan believes any trade measure must be consistent with WTO rules and it expects the United States would implement such measures in a manner consistent with the WTO Agreement.

Separately, Indonesia announced that it had reached an agreement with Brazil to implement the WTO's findings in DS484, "Indonesia — Measures Concerning the Importation of Chicken Meat and Chicken Products", by 22 July 2018.  Brazil said it looked forward to working with Indonesia on achieving implementation, after which it expected Brazilian chicken products will be able to access the Indonesian market.

Election of Chairperson

The DSB elected Thailand's Ambassador to the WTO, Ms Sunanta Kangvalkulkij, as the new DSB chair.

Next meeting

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

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