Statements by the U.S. Representative
At the Meeting of the WTO Dispute Settlement Body (DSB)

Geneva
September 27, 2005

Item 1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

A. UNITED STATES – SECTION 211 OMNIBUS APPROPRIATIONS ACT OF 1998: STATUS REPORT BY THE UNITED STATES (WT/DS176/11/ADD.35)

· The United States provided a status report in this dispute on September 15, 2005, in accordance with Article 21.6 of the DSU.

· As noted in the report, several legislative proposals relating to section 211 that would implement the DSB’s recommendations and rulings in this dispute have been introduced in the current Congress, both in the U.S. Senate and the U.S. House of Representatives.

· The Administration is working with Congress to implement the DSB’s recommendations and rulings.

· In this connection, the United States has taken note of the EC’s statements at the last DSB meeting. The United States fails to understand how its commitment to implement the DSB recommendations and rulings in this dispute and its efforts to comply could undermine the “authority” of the TRIPS Agreement. To the contrary, these affirm Members’ commitments to the TRIPS Agreement.

B. UNITED STATES – ANTI-DUMPING MEASURES ON CERTAIN HOT-ROLLED STEEL PRODUCTS FROM JAPAN: STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.35)

· The United States provided a status report in this dispute on September 15, 2005, in accordance with Article 21.6 of the DSU.

· As of November 23, 2002, the U.S. authorities had addressed the DSB’s recommendations and rulings with respect to the calculation of antidumping margins in the hot-rolled steel antidumping duty investigation at issue in this dispute. Details are provided in the document numbered WT/DS184/15/ADD.3.

· The U.S. Administration continues to support specific legislative amendments that would implement the DSB’s recommendations and rulings with respect to the U.S. antidumping duty statute, and is working with the U.S. Congress to pass these amendments. In this connection, on May 19, 2005, legislation was introduced in the U.S. House of Representatives (H.R. 2473) that would implement the DSB’s recommendations and rulings with respect to the U.S. antidumping duty statute.

· On July 25, 2005, the House Committee on Ways and Means requested public comment by September 2, 2005, on whether to include H.R. 2473 in broader trade legislation regarding technical corrections and miscellaneous duty suspension. The Committee is now reviewing those comments. The U.S. Administration will continue to work with Congress to enact legislation to implement the DSB’s recommendations and rulings.

C. UNITED STATES – CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000: STATUS REPORT BY THE UNITED STATES (WT/DS217/16/ADD.20 – WT/DS234/24/ADD.20)

· The United States provided a status report on September 15, 2005, in accordance with Article 21.6 of the DSU.

· As noted there, the U.S. Administration proposed repeal of the CDSOA in its budget proposal for fiscal year 2006. In addition, legislation that would repeal the CDSOA has been introduced in the U.S. House of Representatives. The Committee on Ways and Means is now reviewing public comments on whether to include that legislation in a broader bill regarding technical corrections and miscellaneous duty suspension.

· On September 9, 2005, an amendment to appropriations legislation was filed in the U.S. Senate. The amendment would prohibit the distribution of CDSOA funds unless distribution of such funds would not be inconsistent with U.S. WTO obligations.

· The U.S. Administration will continue to work with the Congress to enact legislation, and to confer with the complaining parties in these disputes, in order to reach mutually satisfactory resolutions of these matters.

D. UNITED STATES – SECTION 110(5) OF THE US COPYRIGHT ACT: STATUS REPORT BY THE UNITED STATES (WT/DS160/24/ADD.10)

· The United States provided a status report in this dispute on September 15, 2005, in accordance with Article 21.6 of the DSU.

· As noted in the report, the U.S. Administration continues to work with the U.S. Congress and to confer with the European Communities, in order to reach a mutually satisfactory resolution of this matter.

· The United States has taken note of the EC’s statement at the last DSB meeting. There can be no question about the U.S. willingness to provide protection to intellectual property rights. The United States is second to none in providing strong protection for intellectual property rights. And given other items on the agenda today, the United States considers that the EC is hardly in a position to lecture other Members about agreements being one-way.

Item 3. UNITED STATES – COUNTERVAILING MEASURES CONCERNING CERTAIN PRODUCTS FROM THE EUROPEAN COMMUNITIES: RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE EUROPEAN COMMUNITIES

A. REPORT OF THE PANEL (WT/DS212/RW)

· Thank you, Mr. Chairman. At the outset, on behalf of the United States, I would like to express my delegation’s gratitude to the Panel and Secretariat for producing a report of very high caliber.

· By way of background, it is worth recalling that the United States implemented the original DSB recommendations and rulings by applying a new methodology for determining the continued countervailability of subsidies after full privatization of the subsidy recipient. In doing so, the United States took into account whether the privatization was at arm’s length and for fair market value. Of the twelve administrative determinations originally challenged by the EC, the EC challenged implementation with respect to only three. All involved sunset reviews concluding that subsidization was likely to continue or recur in the event of revocation of the countervailing duty order. The reviews involved French, UK and Spanish products.

· It is very significant that the Article 21.5 Panel found no breach with regard to the French case, in which the U.S. Department of Commerce found that certain shares in a French company were not privatized at arm’s length or for fair market value. The Panel’s finding recognizes that the United States applied a privatization methodology in response to the recommendations and rulings of the DSB that is consistent with the SCM Agreement. Although the United States does not necessarily agree with all of the reasoning in paragraph 7.283 of the Panel report, the United States is obviously very pleased with this result.

· The United States is also very pleased with the Panel’s finding that investigating authorities need not reconsider the likelihood of continuation or recurrence of injury merely because the recommendations and rulings of the DSB require reconsideration of the likelihood of continuation or recurrence of subsidization.

· With regard to the UK and Spanish reviews, the United States notes that it intends to modify its measures in response to the Article 21.5 panel findings that the United States should have applied its privatization analysis in these reviews. At the same time, however, we were surprised at these findings, since the United States had implemented by assuming that the privatizations at issue were at arm’s length and for fair market value, the most favorable outcome possible for respondents had the analysis actually been performed. The United States had instead made its sunset determination of likely continuation or recurrence of subsidization based on the existence of other subsidies which had not been challenged before the original WTO panel, and which therefore should not have been considered in the Article 21.5 proceeding.

· Similarly, concerning the UK case, the United States intends to modify its measure in response to the Panel finding that the U.S. authorities should have considered certain evidence that was presented to them for the first time during implementation of the DSB recommendations and rulings – even though that evidence could have been presented during the underlying sunset review. Here again, the United States considers that the Panel should have found otherwise. Interested parties should not be able to use domestic implementation proceedings to raise factual claims they chose not to raise in the original administrative proceedings and which were not the subject of the original WTO dispute.

· In sum, while the United States disagrees with certain aspects of the Article 21.5 panel report, the United States considers the report overall to be very positive and well-reasoned.

Item 4. EUROPEAN COMMUNITIES CUSTOMS CLASSIFICATION OF FROZEN BONELESS CHICKEN CUTS

A. REPORT OF THE APPELLATE BODY (WT/DS269/AB/R - WT/DS286/AB/R) AND REPORTS OF THE PANEL (WT/DS269/R; WT/DS286/R)

· Mr. Chairman, the United States participated in this proceeding because of the systemic importance of many of the issues relating to the proper interpretive approach to be applied in WTO dispute settlement.

· While the United States does not take a position on the substantive outcome of the dispute, we consider several aspects of the panel and appellate Body reports to be well-reasoned.

· For example, the United States considers that the panel and Appellate Body were correct in concluding that two measures that post-dated the panel requests were not within the panel’s terms of reference. The Appellate Body emphasized that previous disputes in which later amendments to a measure were included involved narrowly circumscribed “limited circumstances.”

· To give other examples, the United States appreciates the thoughtful approach of the Appellate Body on the questions of whether the EC’s classification practice in this dispute could by itself constitute “subsequent practice” for the purposes of an analysis of context, as set forth in Article 31(3)(b) of the Vienna Convention, and whether classification practice and other acts of Members might be relevant for a panel’s analysis in other ways, as supplementary means of interpretation under Article 32 of the Vienna Convention. Likewise, we appreciate the Appellate Body’s thoughtful recognition, in the context of discussing the relevance of domestic court judgments, of differences among Members’ domestic legal systems, and how these differences could affect conclusions drawn on the meaning and significance of such judgments. It is important that such Member-specific factors be taken into account in order to ensure accurate findings.

· While considering much of the analysis in this report helpful, we were troubled by some of the discussion concerning “object and purpose.” The panel considered it appropriate to examine the object and purpose of individual agreement provisions, and considered “security and predictability” as an object and purpose underlying the GATT and WTO. On the first of those two points, although the Appellate Body observed that the customary rules of interpretation reflected in Vienna Convention Article 31 contemplate an examination of the object and purpose of the agreement as a whole, and not that of individual provisions, it went on to suggest that a panel could examine the “object and purpose” of an individual provision if that inquiry were directed at assisting the panel “in determining the treaty’s object and purpose on the whole.”

· We have serious misgivings about any attempt to identify, a priori, the “object and purpose” of an isolated provision.

· We note first that the task of ascertaining the “object and purpose” of a treaty as a whole is not always an easy one. A treaty interpreter is not free to assign an “object and purpose” to a treaty unless there is some objective basis for it. It is even more difficult to talk about the “object and purpose” of an individual provision.

· The “purpose” of any treaty provision can be determined only by ascertaining what the provision means. In turn, ascertaining the meaning of a provision requires interpreting that provision; and, under customary international law (and therefore under DSU Article 3.2), that process of interpretation proceeds in accordance with the rules of interpretation reflected in Articles 31 and 32 of the Vienna Convention. However, it would appear to us that, under the approach suggested by the Appellate Body, a treaty interpreter could first identify some supposed “purpose” of a particular provision; then use that “purpose” to determine the object and purpose of the treaty as a whole; and then, as a final step, interpret the provision on the basis of that “object and purpose.” It is not clear how this approach could avoid simply being circular.

· This approach also would seem to leave open the possibility of adding to or diminishing rights and obligations under the covered agreement at issue. It should not be left to parties to a dispute (or to panels) to divine “purposes” of a provision, since a party is often simply using this as an invitation to re-write the provision. It is perhaps for this reason that the Appellate Body went on to express a note of warning against using this approach. And so, while we question the approach for the reasons just expressed, we can certainly agree with the Appellate Body when it “caution[s] against interpreting WTO law in the light of the purported ‘object and purpose’ of specific provisions, paragraphs or subparagraphs of the WTO agreements, or tariff headings in Schedules, in isolation from the object and purpose of the treaty on the whole.”

· We also are troubled by the panel and Appellate Body conclusion that “security and predictability” is an object and purpose underlying the WTO and the GATT 1994 that should be considered in interpreting a Member’s Schedule. Neither the panel nor the Appellate Body cited language in the text of the WTO or the GATT 1994 referring to this as an object and purpose of those agreements. Instead, the only authority cited in the reports are past Appellate Body reports. But the Appellate Body cannot create or assign an object or purpose that is not there.

· The only place where these words appear in the WTO Agreement is in DSU Article 3.2. There, it is explained that the dispute settlement system provides security and predictability to the multilateral trading system, not that “security and predictability” is an object and purpose. Further, Article 3.2 explains that “security and predictability” are provided through a proper interpretation of the covered agreements that does not add to or diminish Members’ rights and obligations. In other words, security and predictability are the result of faithfully clarifying the covered agreements, they are not the object and purpose of the covered agreements.

· Considering amorphous objects and purposes not found in the text of a covered agreement is a recipe for adding to or diminishing the rights and obligations actually found in that text; in other words, this is an approach that undermines security and predictability.

· Let me conclude by noting once again that our concerns with this aspect of the reports does not mean that we consider either the outcome incorrect, or that other aspects of the analysis are not proper and well-reasoned.

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