U.S. Statement at the WTO Dispute Settlement Body Meeting
March 20, 2009
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.76)
• Mr. Chairman, the United States provided a status report in this dispute on March 9, 2009, in accordance with Article 21.6 of the DSU.
• As noted in that status report, legislative proposals that would implement the DSB’s recommendations and rulings in this dispute have been introduced in the current Congress, which convened in January.
• The U.S. Administration is working with Congress to implement the DSB’s recommendations and rulings.
• In response to the comments of some Members about the U.S. compliance record, the facts simply do not support those assertions. The record is clear: the United States has come into compliance, fully and promptly, in the vast majority of its disputes.
• As for the remaining few instances where our efforts to do so have not yet been entirely successful, the United States has been working actively towards compliance.
B. UNITED STATES ANTI DUMPING MEASURES ON CERTAIN HOT ROLLED STEEL PRODUCTS FROM JAPAN: STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.76)
• The United States provided a status report in this dispute on March 9, 2009, 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.
• With respect to the recommendations and rulings of the DSB that were not already addressed by the U.S. authorities by November 23, 2002, the U.S. Administration will work with the U.S. Congress with respect to appropriate statutory measures that would resolve this matter.
C. UNITED STATES SECTION 110(5) OF THE US COPYRIGHT ACT: STATUS REPORT BY THE UNITED STATES (WT/DS160/24/ADD.51)
• The United States provided a status report in this dispute on March 9, 2009, in accordance with Article 21.6 of the DSU.
• The U.S. Administration will work closely with the U.S. Congress and continue to confer with the European Communities, in order to reach a mutually satisfactory resolution of this matter.
D. EUROPEAN COMMUNITIES MEASURES AFFECTING THE APPROVAL AND MARKETING OF BIOTECH PRODUCTS: STATUS REPORT BY THE EUROPEAN COMMUNITIES (WT/DS291/37/ADD.14 WT/DS292/31/ADD.14 WT/DS293/31/ADD.14)
• The United States thanks the EC for its status report, and its statement today.
• As noted at prior meetings, the United States has serious concerns with the current operation of the system established by the EC for the purpose of reviewing and approving new biotech products. Ongoing delays in the EC system are causing substantial trade harm to U.S. producers.
• The EC’s backlog of approximately 50 pending biotech product applications is even greater than the backlog that existed at the beginning of the reasonable period of time for compliance in November 2006.
• We understand that the EC is asserting progress because it has recently approved one of the 50 pending applications.
• But the product that reportedly has been approved – rapeseed T-45 – only serves to exemplify the problems in the EC system. The application for T-45 was first submitted in February 1999 – more than ten years ago. By this time, the variety is obsolete and no longer marketed. Its only significance is the possible presence of negligible amounts of obsolete T-45 in shipments of currently-produced varieties of biotech rapeseed.
• If the EC’s actions in banning products until they reach obsolescence are tolerated, Members will never obtain the market access to which they are entitled under the WTO Agreement.
• We again urge the EC to take prompt action on the many pending applications for biotech products that are currently produced in the United States and other WTO Members.
• We thank the Dispute Settlement Body for its attention to this matter.
E. EUROPEAN COMMUNITIES REGIME FOR THE IMPORTATION, SALE AND DISTRIBUTION OF BANANAS: SECOND RECOURSE TO ARTICLE 21.5 BY ECUADOR: STATUS REPORT BY THE EUROPEAN COMMUNITIES (WT/DS27/96/ADD.2)
• Mr. Chairman, for the most part, we can refer delegations back to the statements that we made at the last two DSB meetings, but we would also like to stress a few points today.
• For the third time, the EC has filed a status report that mentions only the Ecuador proceeding. The EC has said that there is no longer a compliance issue with respect to the recommendations and rulings that the United States and the other complaining parties obtained because the measure at issue in the recent compliance proceedings has ceased to exist.
• The DSB has not adopted any panel or Appellate Body report finding that the EC is in compliance with its WTO obligations with respect to its bananas import regime.
• We have no specific information on how the EC is in compliance with its obligations under GATT Articles I and XIII, although the EC has made references to agreements negotiated or being negotiated with other WTO Members.
• This is information which we would expect to receive through the status reports in this dispute, but the EC’s status report contains no information on this topic.
• If the EC believes it is in compliance, we would greatly appreciate receiving this information so that we can see whether we can join in this belief.
• With respect to the GATT Article II inconsistency found in the most recent compliance proceeding brought by Ecuador, the EC, in its latest status report, continues to refer to “concluding promptly a comprehensive agreement on bananas that would establish, among other elements, the level of the new EC bound tariff duty.”
• We once again remind the EC that it is required to reduce its bananas tariff as a dispute settlement compliance matter, independent of whatever other goals it wants to achieve in a much broader and distinct set of negotiations.
• The EC’s reasonable period of time for compliance expired a long time ago – in fact, more than 10 years ago.
• What is more, the commercial impact of the EC’s non-compliance over this very long period is undeniably large and damaging to a number of WTO Members.
• We look forward to receiving a comprehensive status report with a comprehensive explanation of how the EC intends to come into substantive compliance with its obligations, as well as a description of the progress it is making towards that end.
2. UNITED STATES CONTINUED EXISTENCE AND APPLICATION OF ZEROING METHODOLOGY
A. IMPLEMENTATION OF THE RECOMMENDATIONS OF THE DSB
• Mr. Chairman, on February 19, the DSB adopted the Panel and Appellate Body reports in the dispute United States – Continued Existence and Application of Zeroing Methodology. Members will recall that the United States is deeply troubled by the Appellate Body report in this dispute. We do not, however, seek to engage in a further discussion of those concerns today, which we expressed in our statement to the DSB on February 19.
• This morning, as provided in the first sentence of Article 21.3 of the DSU, the United States wishes to state that it intends to comply in this dispute with its WTO obligations and will be considering carefully how to do so.
• The United States will need a reasonable period of time.
3. UNITED STATES CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000: IMPLEMENTATION OF THE RECOMMENDATIONS ADOPTED BY THE DSB
A. STATEMENTS BY THE EUROPEAN COMMUNITIES AND JAPAN
• As the United States has already explained at previous DSB meetings, the President signed the Deficit Reduction Act into law on February 8, 2006. That Act includes a provision repealing the Continued Dumping and Subsidy Offset Act of 2000. Thus, the United States has taken all actions necessary to implement the DSB’s recommendations and rulings in these disputes.
• We recall, furthermore, that Members, including the EC and Japan, have acknowledged during previous DSB meetings that the 2006 Deficit Reduction Act does not permit the distribution of duties collected on goods entered after October 1, 2007.
• We therefore do not understand the purpose for which the EC and Japan have inscribed this item today.
• With respect to comments regarding further DSB surveillance in this matter, as we have already explained at previous DSB meetings, the United States fails to see what purpose would be served by further submission of status reports repeating the progress the United States made in the implementation of the DSB’s recommendations and rulings.
4. UNITED STATES MEASURES CONCERNING THE IMPORTATION, MARKETING AND SALE OF TUNA AND TUNA PRODUCTS
A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY MEXICO (WT/DS381/4)
• Mr. Chairman, the United States is disappointed that Mexico has chosen to move forward with a request for panel establishment.
• The United States considers its dolphin-safe labeling regime central to the protection of the dolphin population in the Eastern Tropical Pacific ocean.
• We are confident that, if this dispute were to proceed to a panel, the U.S. dolphin safe labeling measures that Mexico has challenged would be found to be consistent with U.S. WTO obligations.
• For all of these reasons, the United States strongly urges Mexico to reconsider its decision to pursue a panel in this dispute, and we are not in a position to agree to the establishment of a panel at this time.
5. UNITED STATES ANTI DUMPING MEASURES ON POLYETHYLENE RETAIL CARRIER BAGS FROM THAILAND
A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THAILAND (WT/DS383/2)
• Mr. Chairman, as noted by Thailand in its statement, the United States and Thailand have reached agreement on a procedural framework that should permit the resolution of this matter on an expedited basis. As my Thai colleague has also noted, we will be notifying it to the DSB shortly.
• Pursuant to that agreement, the United States does not object to the establishment of a panel at this time.
• We are pleased to note that the United States and Thailand have been working closely and constructively together with respect to this matter. We look forward to continuing that cooperation as we move forward in this proceeding.
6. CHINA MEASURES AFFECTING THE PROTECTION AND ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS
A. REPORT OF THE PANEL (WT/DS362/R)
• Mr. Chairman, we would like to begin by thanking the members of the Panel and the Secretariat staff assisting them for their hard work during this proceeding.
• The matters at issue in this dispute concern fundamental provisions in the TRIPS Agreement related to the protection and enforcement of intellectual property rights (IPR). The viability of the enforcement tools provided by the TRIPS Agreement is critical to the protection of intellectual property, and to thwarting the efforts of those who would infringe.
• As we have observed on other occasions, the United States has been concerned for some time that levels of counterfeiting and piracy in China remain unacceptably high. Although the scope of that concern extends beyond the specific measures at issue in this dispute, we brought this dispute because several aspects of China’s legal regime were contributing to the larger problem by hindering effective IPR protection and enforcement.
• We were pleased to see that, in critical respects, the Panel agreed with the U.S. concerns. The Panel’s findings also are of great systemic importance and will provide useful guidance to Members. This morning, we would like to highlight certain aspects that Members may find of particular interest.
• The first matter in this dispute concerns the denial of copyright protection under China’s Copyright Law to certain works of creative authorship that do not meet content review standards, including movies, music, books, and journals. China’s blanket denial of copyright protection deprives the affected copyright owners of vital enforcement tools to prevent unauthorized copies from being produced in China and either distributed there or exported to other markets.
• The United States is pleased by the Panel’s findings on this matter. First, the Panel found that the denial of protection to these works under China’s Copyright Law is impermissible under Article 9.1 of the TRIPS Agreement. That provision incorporates Article 5(1) of the Berne Convention for the Protection of Literary and Artistic Works, which specifies that copyright protection, including guaranteed exclusive rights, must be afforded to works that are entitled to such protection.
• The Panel also specifically recognized the troublesome commercial uncertainty for authors stemming from the prospect of copyright denial. In this regard, China’s statements during the proceeding that “copyright vests at the time a work is created” and that works unreviewed by the content authorities are not denied copyright protection under Chinese law provide new clarity and will be warmly welcomed by Members’ right holders seeking to offer legitimate copies or to enforce their rights against infringing copies of their copyrighted works in China.
• Second, the Panel found that China’s denial of protection to works that do not meet China’s content review standards is incompatible with Article 41.1 of the TRIPS Agreement because, for works denied protection, “enforcement procedures are not available so as to permit effective action” against infringement. This finding underscores the role of Article 41.1 in ensuring that Members’ enforcement tools truly allow effective action against IPR infringement.
• The second matter at issue in the dispute concerns China’s border measures for disposal of infringing goods. These measures include provisions for counterfeit goods to be publicly auctioned after only removing the infringing trademark. The Panel found that these disposal rules are inconsistent with Articles 46 and 59 of the TRIPS Agreement concerning release into the channels of commerce of trademark-infringing imports seized at the border.
• Indeed, as the Panel recognized, these WTO standards reflect an understanding that returning these goods to the marketplace with only the infringing mark removed could confuse consumers and harm the reputation of the legitimate product, facilitating – rather than deterring – further acts of infringement involving these goods.
• China’s border enforcement measures also permit its authorities to dispose of seized infringing goods by donating them to charitable organizations. In this connection, the United States was pleased to hear China’s statement during the proceedings that it imposes a legal responsibility on its Customs authorities to ensure that any goods donated under China’s disposal rules will not return to commerce or otherwise harm the right holder.
• With respect to the third matter before the Panel regarding China’s legal thresholds for criminal prosecution and conviction, we are pleased that the Panel correctly concluded that China’s criminal thresholds are so high as to exclude application of criminal procedures and penalties to some commercial activity and declined to endorse, as requested by China, the levels of China’s criminal thresholds.
• And we are also very pleased that the Panel found that the term “commercial scale” in Article 61 means that China cannot set its thresholds for prosecution of piracy and counterfeiting in a manner that ignores the realities of the commercial marketplace.
• Similarly, the Panel clarified that whether acts of counterfeiting or piracy are “on a commercial scale” will depend on a number of factors such as the product at issue – for instance, whether it is a designer watch, DVD, or a software title – and the particular market in which it is sold. The Panel also made clear that determining what constitutes “commercial scale” must take into account the impact of technological developments, such as digital technology and the Internet as well as the evolution of commercial marketing practices. In short, the Panel set forth an analytical approach that is in keeping with the dynamic nature of the marketplace, in particular in the digital environment, and should help Members avoid or resolve future disputes concerning obstacles to criminal enforcement against counterfeiting and piracy.
• We are disappointed, however, that the Panel found it would need more evidence to conclude that the commercial activity under China’s thresholds was “on a commercial scale.”
• In sum, Mr. Chairman, while we are disappointed with some aspects of the Panel’s findings, we are nonetheless pleased to request the adoption of the Panel report today. China has repeatedly affirmed its intention to act consistently with WTO rules and to respond swiftly to any findings of non-compliance. In that spirit, and in light of the pressing problems of IPR infringement, we look forward to China moving promptly to implement the DSB’s recommendations to bring its measures into compliance upon adoption of this report.
• China has also repeatedly recognized the importance of continuing its work to fight the rampant piracy and counterfeiting in its markets and has taken active steps to improve IPR protection and enforcement. For example, we welcomed China’s move to drop its criminal copyright threshold from 1000 to 500 infringing copies. We therefore also look forward to China’s efforts going forward to substantially improve IPR protection and enforcement, and we look forward to our further engagement with China on these matters.