Panels established to review Indian tech tariffs, Japanese export restrictions, EU palm oil measures

03/08/2020 12:00 - 34 total view

WTO members agreed on 29 July to the establishment of four new dispute panels to examine various trade complaints. At a meeting of the Dispute Settlement Body (DSB), two panels were established at the request of Japan and Chinese Taipei to examine India’s tariffs on high tech goods. Panels were also established to review a Korean complaint regarding Japan’s export licensing procedures for certain goods and Indonesia’s complaint concerning EU measures affecting palm oil and oil palm crop-based biofuels.

DS584: India — Tariff Treatment on Certain Goods

Japan submitted its second request for a panel regarding India's tariff treatment of certain information and communications technology (ICT) goods.  Japan’s first request was blocked at the DSB meeting on 29 June. Japan reiterated that India had raised customs duties on the products concerned in excess of its bound rates set out in its WTO schedule of commitments.  Japan asked that India agree to a single panel to review its complaint and those of Chinese Taipei and the European Union since they all relate to the same matter.

India said it was deeply disappointed with the request of Japan, and reiterated that Japan's complaint was essentially seeking to get India to take on commitments under the expanded Information Technology Agreement (ITA-II) which it never signed on to, and to take advantage of an error made by India when transposing its tariff lines to the updated Harmonized System (HS) of tariffs.   India also said it would not agree to the establishment of a single panel to review the complaints of Japan, Chinese Taipei and the EU since there were vast differences in the three complaints.

The EU, which secured the establishment of a panel on its complaint at the 29 June DSB meeting, said it supported the establishment of a single panel since all the complainants identify the same tariff treatment of the ICT goods and are all based on the same legal claims.

The DSB agreed to the establishment of a panel. The EU, Chinese Taipei, the United States, Turkey, the United Kingdom, Norway, Singapore, Thailand, Russia, Brazil, Korea, China, Canada and Indonesia all reserved their third party rights to participate in the proceedings.

DS588: India — Tariff Treatment on Certain Goods in the Information and Communications Technology Sector

Chinese Taipei submitted its second request for a panel regarding the tariff treatment India accords to certain ICT goods. 
Chinese Taipei’s first request was blocked at the DSB meeting on 29 June. As with the EU and Japan, Chinese Taipei said that India is applying tariffs on ITC goods lines in excess of the bound rate set out in its WTO schedule of commitments, as well as applying less favorable treatment to ICT products from Chinese Taipei. It joined the EU and Japan in calling for the establishment of a single panel to rule on the three claims in order to save on resources for all involved.
India said it was disappointed with the request from Chinese Taipei, which seeks to impose on India the elimination of tariffs on certain ICT goods which India never agreed to and take advantage of an error made by India when transposing its tariff lines to the updated HS system.  India reiterated that it could not agree to the establishment of a single panel to review the three complaints.

The EU and Chinese Taipei said they regretted India's refusal to agree to the establishment of a single panel.

The DSB agreed to the establishment of a panel. The EU, Japan, the United States, Turkey, the United Kingdom, Norway, Singapore, Thailand, Russia, Brazil, Korea, China, Canada and Indonesia all reserved their third party rights to participate in the proceedings.

DS590: Japan — Measures Related to the Exportation of Products and Technology to Korea

Korea presented its second request for the establishment of a dispute panel to rule on Japan's amended export licensing policies and procedures imposing certain additional requirements on exports of fluorinated polyimide, resist polymers, and hydrogen fluoride, as well as their related technologies, destined for Korea. Korea's first request was blocked at the DSB meeting on 29 June.  Korea reiterated that exports of the products in question were being seriously restricted because of Japan's amended export licensing requirements and that Korea considered these requirements to be in violation of WTO agreements covering trade in goods, services, trade-related investment measures and protection of intellectual property rights.
Japan said it was deeply disappointed with Korea's second request for a panel and said the measures in question were in line with international practices regarding export controls over dual-use items (those with civilian and military applications). 

Japan has and will continue to grant such licences for exports to Korea in line with the new requirements.  Korean companies have not suffered any damage as a result of the measures, yet Korea is challenging the fundamental premises underlying the internationally-established framework for non-proliferation of arms and sensitive military technologies, including weapons of mass destruction.  Japan views dialogue as the best way of resolving this matter rather than dispute settlement, it said.

The US said only Japan can judge what is necessary to protect its essential security interests and that since the erroneous panel findings in “Russia — Measures Concerning Traffic in Transit” (DS512), several WTO members have rushed to challenge national security measures. This surge in litigation poses serious risks to the WTO, threatening to enmesh the organization in national security matters it has wisely avoided for over 70 years.

The DSB agreed to the establishment of a panel.  The United States, the United Kingdom, Turkey, Chinese Taipei, Norway, Singapore, Ukraine, the EU, India, China, Brazil, Canada and Russia reserved their third party rights to participate in the proceedings.

DS593: European Union — Certain Measures Concerning Palm Oil and Oil Palm Crop-based Biofuels

Indonesia submitted its second request for a panel to examine certain measures adopted by the European Union and EU member states affecting palm oil and oil palm crop-based biofuels. Indonesia's first request was blocked at the DSB meeting on 29 June.  Indonesia said the measures in question not only unfairly discriminated against palm oil but were inconsistent with provisions in the WTO's goods, subsidies and technical barriers to trade agreements.

The EU said it was confident it would prevail in the dispute and said it was ready to discuss reciprocal interim arrangements that would preserve the availability of appeal review in this and other disputes on the basis of
Article 25 of the WTO's Dispute Settlement Understanding (DSU).

Malaysia said it strongly believes the EU's measures constitute a simple prohibition on the use of palm oil in the production of biofuels, creates unnecessary obstacles to trade and is more trade restrictive than necessary. 

The DSB agreed to the establishment of a panel.  The United States, Malaysia, Norway, Turkey, Singapore, Thailand, Russia, Japan, Korea, India, Honduras, Guatemala, Costa Rica, Colombia, China, Canada, Brazil and Argentina reserved their third party rights to participate in the proceedings.

DS595: European Union — Safeguard Measures on Certain Steel Products

Turkey submitted its first request for the establishment of a panel to rule on provisional and definitive safeguard measures imposed by the European Union on imports of certain steel products, as well as the investigation that led to the imposition of those measures.

The definitive safeguard measures were imposed on 26 out of the 28 product categories examined and have since been reviewed several times, including recently through a regulation published on 30 June. As a result of those reviews, the safeguard measures are even more trade restrictive, Turkey said.  The EU did not make reasoned and adequate determinations regarding the products under investigation, which it failed to define in a consistent manner throughout the investigation. 

Turkey said the EU also failed to make reasoned and adequate determinations regarding the existence of unforeseen developments, the existence of an alleged threat of serious injury to the domestic EU industry, the causal relationship between the increased imports and the alleged threat of serious injury to the domestic industry, the exclusion of certain countries from the safeguard with whom the EU has free trade agreements, and the EU's reduced pace of liberalization of the definitive safeguard measures.  As a result, the measures are clearly inconsistent with WTO rules, Turkey said. Consultations with the EU regarding Turkey's claims took place on 29 April but failed to resolve the dispute, prompting Turkey's request for a panel.
The EU said it regrets the consultations with Turkey failed to resolve differences between the two and said it believes the safeguard is in line with WTO law.  For this reason, the EU said it opposes the establishment of a panel.
The DSB agreed to revert to the matter should a requesting member wish to do so.

DS511: China — Domestic Support for Agricultural Producers

The United States noted at the beginning of the meeting that China formally objected to the US request for authorization to suspend trade concessions against China due to China's non-compliance with the WTO ruling in DS511, as spelled out in a communication on 16 July.  In line with WTO rules, the matter has automatically been referred to arbitration and the US no longer proposed the matter be put on the DSB agenda for consideration.

China took note of the US request and said it disagreed with the US allegation that China has failed to bring its measures into compliance with its WTO obligations. Any disagreement on the consistency of its measures taken to comply with a WTO ruling must be resolved in compliance proceedings under Article 21.5 of the DSU, before any level of suspension of concessions can be assessed under Article 22 of the DSU, China added.  In these circumstances, China objects to the level of suspended concessions proposed by the United States.

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 rulings on this matter. Canada supported the EU statement, while the United States said it has taken all actions necessary to implement the ruling.

DS316: European Communities and Certain Member States — Measures Affecting Trade in Large Civil Aircraft: Implementations of the Recommendations Adopted by the DSB

The United States said that once again the European Union has failed to provide a status report to the DSB concerning dispute DS316. The European Union repeated that the matter is subject to new compliance proceedings and thus there was no obligation on the EU to submit a status report.

The US also noted the EU recently announced that France and Spain agreed with Airbus to amend the terms of two launch aid financing packages found to be WTO-inconsistent, and suggested this action now brought the EU into compliance with WTO rulings on subsidies for Airbus.  The EU however has not provided any details of these supposed amendments to the WTO or the US, nor has it addressed the remaining six WTO-inconsistent launch aid measures, the US said. 

Given the limited measures covered by the announcement, and the lack of any details on the supposed changes made, no one can take seriously that these changes actually address the full scope of the WTO-inconsistent subsidies and bring a resolution to this dispute, the US said.  This contrasts with US action in the EU's dispute case against Boeing (DS353), where the US withdrew the sole measure found to cause adverse effects  — the Washington State B&O tax rate reduction. The text of the measure is public, and its terms were notified to the WTO and the EU.  The US said it was regrettable that the EU continues to refuse to seriously address its massive, WTO-inconsistent subsidies and therefore appears to want this dispute to continue.

The European Union said it did not agree with the US assertion that it has fully implemented the rulings in the Boeing dispute.  While the EU is still examining the impact of the legislative action concerning the Washington State B&O tax, the rulings in that dispute cover a number of additional measures where it said the US remains non-compliant, including NASA and Department of Defence Research and Development measures and certain state and local measures, the EU said.

Statement by Qatar regarding the panel report in DS567, “Saudi Arabia — Measures concerning the Protection of Intellectual Property Rights”

Qatar made a statement calling on Saudi Arabia to remedy the matters the panel found fault with in the DS567 panel ruling.  As Saudi Arabia has filed an appeal, and with the Appellate Body currently unable to hear any appeals, this appeal “into the void” will in no way facilitate the prompt settlement of this dispute. 

Qatar called on Saudi Arabia to explore alternative ways to submit the appeal to a mutually-agreed adjudicator that is able to make binding decisions.  Doing so would demonstrate that Saudi Arabia genuinely seeks appellate review and is not in reality simply trying to delay the resolution of this dispute.  Qatar said it is confident that any such review would only result in further confirmation that Saudi Arabia has breached multiple obligations under the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), that such violations are not shielded by the security exception under the TRIPS Agreement, and that settlement of this dispute would require significant improvements in Saudi Arabia's protection of intellectual property rights.

Saudi Arabia underlined the current tense state of relations between Qatar and several WTO members and said the panel affirmed that the severance of all relations with Qatar was the ultimate state expression of the existence of an “emergency in international relations” as set out under the national security exception of the TRIPS Agreement, adding that this exception was justified where invoked by Saudi Arabia.  To be clear, Saudi Arabia has not claimed that violation of intellectual property rights should be justified under the security exception.  Therefore, the panel should not have ruled on whether the non-application of criminal procedures and penalties by Saudi Arabia had satisfied the requirements for justification under the security exception; this issue is currently under appeal. 

Saudi Arabia considers that its appeal of this issue is of particular systemic importance in the context of this and other pending disputes.  A WTO panel has no basis to ignore members' explicit definition of their scope of invocation of WTO security exceptions, it said.

The United States said national security matters are political in nature and were not matters appropriate for adjudication under WTO dispute rules.  Every WTO member has the authority to determine for itself those matters that it considers necessary for the protection of its essential security interests.  In this case the panel simply transposed the findings of the panel in DS512, which it said was a seriously flawed ruling.

The United Arab Emirates said it welcomed the panel's findings that an emergency in international relations exists within the Gulf region.

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

The chair of the DSB reported to members that consultations with the Philippines and Thailand were still ongoing with regards to resolving their differences in a dispute over the next steps in the DS371 proceedings.

Both the Philippines and Thailand made statements which reiterated the positions outlined at the last DSB meeting on 29 June.  The Philippines said it had presented constructive options to overcome the “void” caused by the inability of the Appellate Body to review Thailand's compliance with earlier rulings in the matter; Thailand has still not responded to the ideas contained in that written communication, but the Philippines said it understands Thailand is considering ideas on potential ways forward.

Thailand said circumstances have not changed and therefore its position has not changed — the dispute proceedings have not concluded and therefore there was no basis for the Philippines' request for the right to suspend concessions against Thailand for its alleged non-compliance with the ruling in DS371.  Resolving the Appellate Body appointment impasse was of the utmost urgence and Thailand said it remains open to bilateral dialogue with the Philippines on the issue.
Appellate Body appointments

Mexico, speaking on behalf of 121 WTO members, introduced once again the group's proposal to start the selection processes for six vacancies on the Appellate Body. 

The increasing considerable number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body that is seriously affecting its workings as well as the workings of the overall dispute settlement system against the best interest of members, Mexico said for the group.

The United States however said it was still not in a position to support the proposal to start the selection process because its systemic concerns regarding the Appellate Body remain unaddressed, including Appellate Body overreach, which has undermined and damaged the dispute settlement system. 

Referring to the multi-party interim appeal arbitration arrangement (MPIA) which 22 WTO members have endorsed, the United States said members should address the concerns outlined instead of redirecting their efforts towards arrangements that would perpetuate the worst practices of the Appellate Body.

Around 20 members took the floor to reiterate the importance of resolving the impasse over the appointment of new members as soon as possible and re-establishing a functioning Appellate Body.  Several called on the United States to put forward its own proposals for resolving the impasse and said members had an obligation under the DSU to fill vacancies as they arise. The EU said it was not clear on what basis the US could claim the MPIA perpetuates the worst practices of the Appellate Body since no award has yet to be issued under this new temporary mechanism.

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”, and DS471, “United States — Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China”.

The European Union presented a status report with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products”.

Indonesia presented its status reports in DS477 and DS478, “Indonesia — Importation of Horticultural Products, Animals and Animal Products”. 

Next meeting

The next meeting of the DSB will take place on 28 August.

Source: WTO