The following statements were made by the U.S. Representative at the March 19 meeting of the WTO Dispute Settlement Body:

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

A. UNITED STATES - ANTI-DUMPING ACT OF 1916: STATUS REPORT BY THE UNITED STATES (WT/DS136/14/ADD.24 - WT/DS162/17/ADD.24)

· Madame Chairperson, before addressing U.S. implementation in specific disputes, I want to note that in his appearances this month before Congressional trade committees, Ambassador Zoellick reiterated the importance of implementing all DSB recommendations and rulings in WTO disputes, and urged Congress to work on necessary legislation to bring the United States into compliance with its obligations. The U.S. Administration will continue to work with Congress to achieve further progress in resolving all disputes.

· With respect to 1916 Act implementation, as noted in our March 8, 2004 status report, legislation repealing the 1916 Act is pending in both the U.S. Senate and the U.S. House of Representatives.

· On January 29, 2004, HR 1073, which would repeal the 1916 Act, was reported favorably out of the Committee on the Judiciary of the U.S. House of Representatives.

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

B. UNITED STATES - SECTION 211 OMNIBUS APPROPRIATIONS ACT OF 1998: STATUS REPORT BY THE UNITED STATES (WT/DS176/11/ADD.17)

· The United States provided a status report in this dispute on March 8, 2004, in accordance with Article 21.6 of the DSU.

· The United States Administration continues to work with the U.S. Congress with respect to appropriate statutory measures that would resolve this matter.

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

C. UNITED STATES - ANTI-DUMPING MEASURES ON CERTAIN HOT-ROLLED STEEL PRODUCTS FROM JAPAN: STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.17)

· The United States provided a status report in this dispute on March 8, 2004, in accordance with Article 21.6 of the DSU.

· The Administration continues to work with the U.S. Congress to address the recommendations and rulings of the DSB that were not addressed by November 23, 2002.

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

E. UNITED STATES - CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000: STATUS REPORT BY THE UNITED STATES (WT/DS217/16/ADD.2 - WT/DS234/24/ADD.2)

· The United States provided a status report in these disputes on March 8, 2004, in accordance with Article 21.6 of the DSU.

· As noted in the report, on June 19, 2003, legislation to bring the Continued Dumping and Subsidy Offset Act into conformity with U.S. WTO obligations was introduced in the U.S. Senate (S. 1299). In addition, on February 2, 2004, the U.S. Administration once again proposed repeal of this Act, in its budget proposal for fiscal year 2005.

· After our status report was submitted, on March 10, 2004, legislation repealing the CDSOA was introduced in the U.S. House of Representatives (H.R. 3933).

· The U.S. Administration is continuing to work with Congress to achieve further progress in resolving these disputes.

Item 2. UNITED STATES - FINAL COUNTERVAILING DUTY DETERMINATION WITH RESPECT TO CERTAIN SOFTWOOD LUMBER FROM CANADA

A. STATEMENT BY CANADA REGARDING THE IMPLEMENTATION BY THE UNITED STATES OF THE RECOMMENDATIONS AND RULINGS OF THE DSB

· As we stated at the February 17 DSB meeting, the United States was pleased by the results of this dispute. The panel and Appellate Body reports rejected, in all major respects, Canada's claims that the United States acted inconsistently with the WTO Subsidies Agreement and the GATT 1994 in finding that Canada had provided countervailable subsidies to its softwood lumber industry.

· We do acknowledge the finding that the United States should have investigated whether subsidies are passed from one company to another through the sale of logs, and the United States is currently examining approaches to implementing this finding.

· In that regard, on March 5, 2004, the United States informed the DSB by letter that it intends to implement the recommendations and rulings of the DSB in this dispute in a manner that respects U.S. WTO obligations, and that the United States has begun to evaluate options for doing so.

· The United States also informed the DSB that it will require a reasonable period of time to implement these recommendations and rulings.

· The United States looks forward to meeting with Canada in the near future in order to reach agreement on the reasonable period.

Item 3. UNITED STATES - LAWS, REGULATIONS AND METHODOLOGY FOR CALCULATING DUMPING MARGINS ("ZEROING")
A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN COMMUNITIES (WT/DS294/7/REV.1)

· Madame Chairperson, with respect to the substance of the EC's panel request, the United States will not repeat the points it made at the last meeting, other than to say that we disagree with the notion that the Antidumping Agreement requires that authorities offset calculated dumping margins with so-called "negative margins."

· With respect to the procedural issue raised by the EC's filing of a second panel request, the United States appreciates the fact that the EC in this request has corrected minor deficiencies in its initial request.

· Therefore, notwithstanding that the DSB is considering this new panel request for the first time, the United States does not oppose the establishment of a panel at this meeting.

Item 5. OTHER BUSINESS
A. STATEMENT OF THE UNITED STATES ON THE AWARD OF THE ARBITRATOR IN UNITED STATES - ANTI-DUMPING ACT OF 1916 (WT/DS136/ARB)

· Madame Chairperson, I wish to say at the outset that the United States is pleased that the arbitrator correctly concluded that the EC has no current right to suspend concessions against the United States.
· I also want to make clear that the U.S. Administration remains committed to full compliance with U.S. WTO obligations in this dispute.
· Having said that, the recent award of the arbitrator in the Article 22.6 proceeding on the 1916 Act raises a number of significant issues concerning the operation of DSU Articles 22.6 and 22.7 which merit serious reflection.
· Madame Chairperson, we appreciate that the arbitrator strove for a balanced result in this award. However, Article 22.7 does not mandate a balanced result, but a balance between the level of suspension proposed and the level of nullification or impairment. And when the latter level is zero, the correct result is that the award must also equal zero. Arbitrators must apply the rules.
· Unfortunately, while correctly articulating a number of rules and principles governing Article 22.6 proceedings, the arbitrator in some instances applied those principles only up to a point.
· For example, the arbitrator correctly enunciated the important principle that, in determining the level of nullification or impairment, it is necessary to rely on "credible, factual, and verifiable information." Claims that are "too remote", "too speculative", or "not meaningfully quantified" are to be rejected. Nevertheless, the arbitrator then went on to conclude that final judgments under the 1916 Act "clearly nullify or impair" EC benefits, without analysis beyond the fact that the dollar figures are final, public and verifiable. Likewise, it concluded that public settlements can be used to measure nullification or impairment for the same reason.
· It is true that the arbitrator's analysis ensures that an examination of nullification or impairment begins from credible figures. Unfortunately, the arbitrator's analysis ends where it begins. There is no reason to assume, to speculate, that a 1916 Act judgement or settlement in itself nullifies or impairs any benefits. For example, what if the parent companies of both the plaintiff and the defendant are EC companies, or if both the plaintiff and defendant produce goods only in EC member States? How could the transfer of funds between these two companies be said to affect the trade of, or harm the economic interests of, the EC? The arbitrator's approach leaves these questions unaddressed, and simply assumes that the amount of judgements and settlements will equal the amount of nullification or impairment. We see no legal basis for making such a prediction, nor did the arbitrator offer any economic or other evidence that would justify such an assumption.
· The arbitrator also disregarded the fact that no specific judgements or settlements under the 1916 Act - not past, current, or certainly future - were within the terms of reference of the original dispute, nor were they the subject of DSB rulings. The arbitrator's task was to determine the level of nullification or impairment attributable to the breaches found with respect to the existence of the 1916 Act, not its applications.
· Another way in which the arbitrator correctly enunciated a principle then failed to apply it relates to limits on the level of nullification or impairment. The arbitrator correctly concluded that the EC's proposed suspension measure would in no way have limited the level of suspension, and was therefore not equivalent to the level of nullification or impairment. Nevertheless, the arbitrator then defined the level of nullification or impairment as a formula to be applied by the complaining party based on future events - in other words, it set no limit. Here, the arbitrator explicitly abdicated its responsibility to determine a fixed level of nullification or impairment, as every previous arbitrator understood the DSU to require. It is no excuse to argue that this level will vary from year to year, and therefore that the level of nullification or impairment should be expressed as a formula. That could be said of every previous arbitration, and every future arbitration.
· Of course, the arbitrator may have been led to this result because of its reluctance to conclude that, with no current judgements, public settlements or pending cases against EC companies, the level of nullification or impairment could only be zero. Here, the arbitrator applied very questionable logic, with very uncertain consequences for future disputes. It referred to the standard finding of the panel directed by DSU Article 3.8, that the WTO breach is considered prima facie to constitute a case of nullification or impairment. From that alone, the arbitrator concluded that the level "must be something greater than zero."
· The arbitrator stated that it is a contradiction to suggest otherwise. However, in drawing this conclusion, the arbitrator itself contradicted the arbitrator in Bananas. The Bananas arbitrator concluded that, with respect to trade in goods, the nullification or impairment of U.S. benefits in that dispute was equal to zero. And the 1916 Act arbitrator itself recognized together with the Bananas arbitrator that there is no more than a presumption that a breach constitutes nullification or impairment. That presumption can be rebutted, and in this case it was rebutted. Even by the arbitrator's own measurement, i.e., current judgements and public settlements, it found the current level of nullification or impairment to be zero.
· The arbitrator's finding on the significance of the standard report language on nullification or impairment could have unfortunate consequences, if it were read to suggest that one can only rebut the presumption of nullification or impairment during panel proceedings, and not in an Article 22.6 arbitration. The DSU draws no such limitation. Indeed, it has been well-understood that the purpose of panel proceedings is to establish whether there is an inconsistency with a WTO obligation. Only when there is an inconsistency is there a possible need to reach DSU Article 22, and a central purpose of Article 22.6 proceedings is to determine the level of nullification or impairment - even if that level is zero.
· Madame Chairperson, only one set of rules can govern Article 22.6 proceedings. We believe that Article 22 requires arbitrators to award a fixed, multilaterally determined level of nullification or impairment that is based on an analysis of the trade or economic effects of a measure. Every previous arbitrator has agreed that Article 22 requires this. Yet the 1916 Act arbitrator did not agree, concluding that a complaining party may decide, and change, the level of nullification or impairment well after completion of the arbitration, based upon its own evaluation of the criteria established by the arbitrator.
· This prospective, unpredictable approach to determining nullification or impairment is not going to contribute to the security and predictability of the trading system. It will create rather than resolve disputes - indeed, the arbitrator recognized this when it indicated several times in the award that the United States can initiate further dispute settlement proceedings should it disagree with the EC's applied levels of retaliation in the future. Moreover, it is important to recognize that if the arbitrator's reasoning is correct, every past arbitration is wrong, and every future arbitration should apply that reasoning. There is no basis for applying different standards in different disputes. Members should reflect on this fact. We hope they will conclude that the approach of the 1916 Act arbitrator should not be repeated.
· We would be happy to discuss further with Members these serious, systemic concerns.