Statements by the United States at the August 31, 2009 WTO – DSB

Statements by the United States

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.81)

·           Mr. Chairman, the United States provided a status report in this dispute on August 20, 2009, in accordance with Article 21.6 of the DSU.

  • As noted in that status report, a number of 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.

[Second intervention:]

  • In response to the statements by some Members that this dispute raises concerns for the dispute settlement system, as indicated at prior DSB meetings, the United States does not believe that those concerns are well-founded.
  • First, the United States reiterates its intention to implement the DSB’s recommendations and rulings and makes monthly status reports to this end.  This shows a commitment to the dispute settlement system.
  • Second, the record of compliance for WTO Members generally, and for the United States in particular, is good.
  • Third, if the situation in this particular dispute were having systemic consequences, one would expect Members to be demonstrating less interest in bringing disputes to the WTO, but the facts do not bear this out.  In fact, since last summer, Members have filed 20 consultation requests, which would not seem to reflect a weakening in the confidence that Members have in the dispute settlement system.

1.         SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

B.        UNITED STATES – ANTI-DUMPING MEASURES ON CERTAIN HOT-ROLLED STEEL PRODUCTS FROM JAPAN:  STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.81)

·           The United States provided a status report in this dispute on August 20, 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.

1.         SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

C.        UNITED STATES – SECTION 110(5) OF THE US COPYRIGHT ACT:  STATUS REPORT BY THE UNITED STATES (WT/DS160/24/ADD.56)

  • The United States provided a status report in this dispute on August 20, 2009, in accordance with Article 21.6 of the DSU.
  • Last month, the EC Trade Commissioner and the U.S. Trade Representative met and announced that they had exchanged ideas on this dispute.
  • The U.S. Administration will continue to confer with the European Communities, and to work closely with the U.S. Congress, in order to reach a mutually satisfactory resolution of this matter.
  • 1.         SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

D.        EUROPEAN COMMUNITIES – MEASURES AFFECTING THE APPROVAL AND MARKETING OF BIOTECH PRODUCTS:  STATUS  REPORT BY THE EUROPEAN COMMUNITIES (WT/DS291/37/ADD.19 –WT/DS293/31/ADD.19)

  • The United States thanks the EC for its statement.
  • Regrettably, the EC has shown little if any progress in addressing the problems in the operation of its approval system for biotech products.
  • At past DSB meetings, the United States already has noted the large number of  biotech applications backed up in the EC approval system.  As a result of this backlog, the EC currently bans the import of maize and other important agricultural products produced in the United States.
  • In fact, the backlog in the EC approval system has grown substantially in the years since the DSB rulings.  The U.S. panel report listed 27 pending biotech applications.  That number has more than doubled.  Currently, more than 60 biotech applications are pending, and the possibility for meaningful market access for biotech products remains bleak.
  • The United States again urges the EC to take prompt steps to resolve these serious and ongoing problems in the operation of its biotech approval system.
  • 1.         SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

E.         EUROPEAN COMMUNITIES – REGIME FOR THE IMPORTATION, SALE AND DISTRIBUTION OF BANANAS:  SECOND RECOURSE TO ARTICLE 21.5 OF THE DSU BY ECUADOR:  STATUS REPORT BY THE EUROPEAN COMMUNITIES (WT/DS27/96/ADD.7)

  • Mr. Chairman, we thank the EC for its status report and statement.
  • The reasonable period of time for compliance in this dispute expired more than 10 years ago, on January 1, 1999.
  • While we take note of the EC’s efforts to reach agreement with interested parties to resolve the dispute, we also note that 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 call on the EC to resolve this dispute, and until then, we renew our request to the EC to provide a status report with respect to the U.S. dispute.
  • 1.         SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

G.        UNITED STATES – LAWS, REGULATIONS AND METHODOLOGY FOR CALCULATING DUMPING MARGINS (“ZEROING”):  STATUS REPORT BY THE UNITED STATES (WT/DS294/34)

  • Mr. Chairman, the United States provided a status report in this dispute on August 20, 2009, in accordance with Article 21.6 of the DSU.
  • As noted in that status report, the United States has already taken a number of steps to implement the DSB’s recommendations and rulings in this dispute.  With regard to the remaining issues, including those identified in the DSB recommendations and rulings, the United States is consulting with the EC in order to address those issues.

2.         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 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 have acknowledged that the 2006 Deficit Reduction Act does not permit the distribution of duties collected on goods entered after October 1, 2007.
  • With respect to comments regarding further status reports 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, again, that the United States has taken all actions necessary to implement the DSB’s recommendations and rulings in these disputes.
  • Finally, with respect to Japan’s comments regarding it’s renewed retaliation measures, the United States will be reviewing carefully the measures taken by Japan.  As we have observed previously, the DSB only authorized the suspension of concessions or other obligations as provided in the Award of the Arbitrator.

4.         UNITED STATES – ANTI-DUMPING ADMINISTRATIVE REVIEWS AND OTHER MEASURES RELATED TO IMPORTS OF CERTAIN ORANGE JUICE FROM BRAZIL

A.        REQUEST FOR THE ESTABLISHMENT OF A PANEL BY BRAZIL (WT/DS382/4)

  • We are disappointed that Brazil has chosen to move forward with a panel request today.
  • We also have concerns with the way in which Brazil has framed its panel request.  For example, the request includes measures that were not in existence at the time of consultations and consequently could not have been, and were not, consulted upon.
  • The United States is not in a position to agree to the establishment of a panel today.

5.         UNITED STATES – MEASURES RELATING TO ZEROING AND SUNSET REVIEWS:  RECOURSE TO ARTICLE 21.5 OF THE DSU BY JAPAN

A.        REPORT OF THE APPELLATE BODY (WT/DS322/AB/RW) AND REPORT OF THE PANEL (WT/DS322/RW)

  • Mr. Chairman, the United States first wishes to thank the Panel, the Appellate Body, and the Secretariat staff assisting them for their work in this proceeding.
  • As an initial matter, with respect to the issue of “zeroing,” we recognize that the Appellate Body has addressed the consistency of zeroing in antidumping proceedings in a number of disputes.  The United States continues to take a different view of the commitments that Members negotiated, and did not negotiate, concerning the use of zeroing.
  • Nonetheless, the United States has publicly stated its intention to comply with the recommendations and rulings of the Dispute Settlement Body (“DSB”) in all of these disputes.  The United States would like Members to understand that we are working actively to implement these recommendations and rulings, including those made in other disputes for which the reasonable period of time (“RPT”) is still ongoing.
  • However, as we explained to the Appellate Body, this appeal was not about zeroing, but rather concerns what a Member with a retrospective antidumping system must do to come into compliance with the DSB’s recommendations and rulings with respect to individual administrative reviews.  This dispute also raises important procedural issues as to the scope of dispute settlement proceedings.  On both of these questions, the Appellate Body and the compliance panel misconstrued U.S. obligations and read requirements into the DSU that were not agreed by Members.
  • We are very concerned that the Appellate Body once again rejected the argument that implementation of the DSB’s recommendations and rulings with respect to administrative reviews should be determined by reference to the date of entry.[1] In doing so, the Appellate Body ignored the well-established principle that the Appellate Body itself has recognized in prior disputes – implementation in the WTO dispute settlement system is prospective in nature.[2]
  • The Appellate Body’s interpretation of compliance would have the United States reach back in time to redo determinations made with respect to entries that occurred many years before the end of the RPT, in some cases as long ago as six to seven years before the deadline for compliance.  And yet somehow the Appellate Body did not find this to be retroactive or otherwise contrary to the prospective nature of compliance.
  • We ask Members to reflect on the implications of the Appellate Body’s finding.  Members should be concerned with the systemic consequences that could flow from these findings.  For example, in future compliance proceedings, a similar approach could be taken with respect to border measures, such as ordinary tariffs, special agricultural safeguards, tariff preferences, and customs valuation.  Members never agreed to a dispute settlement system in which implementation is retrospective in nature and in which they could be required to take actions after the end of the RPT with respect to past entries of merchandise.  Only in subsequent disputes will all Members know more fully what consequences follow from the Appellate Body’s reasoning, but in the meantime we are left with questions and uncertainty.
  • In addition, the United States had referred to the Appellate Body’s analysis in US – Zeroing I (EC)(Article 21.5) (“EC I”).  There, the Appellate Body made a distinction between those measures that derived “mechanically” from the assessment of duties and those that did not.  The Appellate Body explicitly left open the question of whether liquidations that occurred after the RPT because they were delayed by judicial review could constitute a failure to comply.  Moreover, for three of the reviews at issue in this proceeding – identified as Reviews 4, 5 , and 6 – there were no post-RPT effects whatsoever that could serve as the basis for a finding of inconsistency.
  • We are troubled that the Appellate Body rejected the U.S. argument concerning post-RPT liquidations.[3] The Appellate Body’s findings reject the distinction the Appellate Body itself drew between mechanically and non-mechanically derived measures.
  • The Appellate Body’s findings with respect to Reviews 4, 5, and 6 are also cause for concern[4] and are at odds with the Appellate Body’s recent approach in EC I.[5] It is difficult to understand how a measure that has not been applied after the expiration of the RPT could form the basis for a finding that the measures are inconsistent as applied.
  • Lastly, we turn to a troublesome procedural finding by the Appellate Body, which has potential implications far beyond antidumping disputes.[6] The Appellate Body affirmed the compliance panel’s finding that a particular administrative review, Review 9, which was not in existence at the time of Japan’s panel request, was properly within the scope of the compliance proceeding.  The DSU, however, is clear – a measure not in existence at the time of a panel request cannot fall within the scope of a dispute settlement proceeding.
  • The Appellate Body viewed the fact that “we are dealing here with Article 21.5 proceedings” as a reason to depart from the text of the DSU.[7] It reached this conclusion without ever addressing U.S. arguments based on the language of Article 21.5 itself; in fact, these U.S. arguments do not even appear in the report.  For example, Article 21.5 only provides jurisdiction for a panel where there is a “disagreement” over a “measure taken to comply.”  We are at a loss to understand how a non-existent measure can be a measure “taken” to comply, or how a measure not in existence could serve as the basis for finding that there is a “disagreement” at the time of a panel request over the existence or consistency of that non-existent measure.
  • The Appellate Body also viewed the “prompt settlement” of disputes, in the sense of DSU Article 3.3, as justifying the inclusion of Review 9.[8] “Prompt settlement,” however laudable a goal, does not provide a basis for departing from the requirements of the DSU.  And the text of Article 3.3 actually supports the exclusion of future measures, since such non-existent measures cannot possibly be “impairing” any benefits at the time of panel request.
  • The Appellate Body made much of the fact that Review 9 was initiated and underway at the time of Japan’s panel request and that it was the most recent administrative review in a series of reviews.[9] The United States fails to see how this reasoning squares with recent Appellate Body findings where challenges to on-going proceedings at the time of a panel request were considered premature.[10] Nor does the United States understand how the Appellate Body is so confident that at the time of the panel request, the final results of Review 9 were so predictable that they should be included within the scope of the proceeding.  In fact, Japan had no way of knowing the final results of the review, as any number of circumstances could have affected that outcome.
  • The United States considers that all Members should share these concerns.  The Appellate Body is not empowered to fashion exceptions to the text of the DSU.  In the past, the Appellate Body has recognized the rule that “the measures included in a panel’s terms of reference must be measures that are in existence at the time of the establishment of the panel.”[11] Only where a subsequent measure is in essence the same measure as the one identified in the panel request has it been included in the scope of the panel proceeding.[12] That is not the case with separate and distinct administrative reviews.
  • The Appellate Body, apparently influenced by the circumstances surrounding this dispute, relied on an “objective” of the DSU to contradict its express terms.  This is not an appropriate approach to treaty interpretation, could raise serious concerns in any further negotiations, and should be of concern to all Members.
  • Thank you.

OTHER BUSINESS:

  • Mr. Chairman, the United States also would like to make a brief comment concerning the dispute, China – Measures Affecting Imports of Automobile Parts.
  • China’s reasonable period of time for compliance in this dispute was established over six months ago — on February 27, 2009, and, as mentioned, it expires tomorrow, September 1.
  • In these circumstances, it would have been very helpful to the United States, to our co-complainants the EC and Canada, and to the Dispute Settlement Body as a whole if China had provided a written status report on its implementation in advance of today’s meeting. We therefore join Canada and the EC in expressing regret that China has chosen not to do so.
  • The United States understands that China has very recently announced that its implementation of the DSB recommendations and rulings in these disputes will be effective by tomorrow. We look forward to reviewing China’s measures taken to comply.

[1] Appellate Body Report, paras. 159-69.

[2] US – Upland Cotton (Article 21.5) (AB), para. 243 n.494.

[3] Appellate Body Report, paras. 170-87.

[4] Appellate Body Report, paras. 190-95.

[5] US – Zeroing (EC) (I) (Article 21.5) (AB), paras. 310, 313 & n. 423.

[6] Appellate Body Report, paras. 107-30.

[7] Appellate Body Report, paras. 125-26.

[8] Appellate Body Report, paras. 122, 124, 127.

[9] Appellate Body Report, paras. 122, 127.

[10] US – Zeroing I (EC) (Article 21.5) (AB), paras. 374-75 (relying on US – Zeroing II (EC) (AB)).

[11] EC – Chicken Cuts (AB), para. 156.

[12] Chile – Price Band Systems (AB), para. 139.