Statements by the United States at the January 19, 2010 DSB Meeting

WTO-DSBGeneva,
January 19, 2010

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.86)

• Mr. Chairman, the United States provided a status report in this dispute on January 7, 2010, in accordance with Article 21.6 of the DSU.

• As has been noted, a number of legislative proposals that would implement the DSB’s recommendations and rulings in this dispute were introduced in the First Session of the current (111th) Congress. The Second Session of the 111th Congress began earlier this month.

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

[Second intervention:]

• With respect to the statements by some Members that this dispute raises concerns for the dispute settlement system, Members know the U.S. position well that the United States does not believe that those concerns are well-founded. In the interest of time, the United States refers Members to its past statements on the matter, for example, WT/DSB/M/273 at paragraph 15.

B. UNITED STATES – ANTI-DUMPING MEASURES ON CERTAIN HOT-ROLLED STEEL PRODUCTS FROM JAPAN: STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.86)

• The United States provided a status report in this dispute on January 7, 2010, 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, 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.61)

• The United States provided a status report in this dispute on January 7, 2010, in accordance with Article 21.6 of the DSU.

• The U.S. Administration will continue to confer with the European Union, and to work closely with the U.S. Congress, 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 UNION (WT/DS291/37/ADD.24 – WT/DS293/31/ADD.24)

• The United States thanks the EU for its status report and its statement today.

• The United States recalls its concerns that approximately 60 biotech products are awaiting approval, which is more than double the number of applications pending at the time this dispute was initiated in 2003. The EU’s failure to move these products through its approval process has the effect of blocking trade in important agricultural products produced in the United States.

• As the United States has noted in prior DSB meetings, the EC approval system contains several steps. Although the United States has concerns about delays in all of these steps, at this meeting we would like to highlight our concerns regarding the delays at the second step of the EU process, after an application has been reviewed by a scientific authority.

• The second step involves the EU’s Standing Committee on the Food Chain and Animal Health. The Standing Committee is composed of EU member State representatives, and it normally meets on a monthly basis.

• If the risk assessment of the scientific authority is positive, the EU Commission must submit an approval measure to the Standing Committee within three months of the positive risk assessment. The Standing Committee must then vote on the proposed approval measure.

• The United States notes that the Standing Committee has not voted on a proposed biotech approval in over three months. Yet the EU’s approval pipeline contains a number of applications that have received positive risk assessments more than three months ago. One application, in fact, received a positive risk assessment in November 2007, but has yet to be voted on by the Standing Committee. The United States is concerned with this lack of activity by the Standing Committee.

• Moreover, the United States notes with concern that the EU is not holding a meeting of the Standing Committee in January, and that the first meeting of this year is not scheduled until next month. Clearly, if the EU chooses not to schedule the meetings provided for under its approval process, the EU cannot consider applications in a timely manner.

• The United States notes that the EU has selected a new Commission, and the EU has modified its organizational structure with regard to the operation of its biotech approval process.

• The United States is hopeful that these changes will finally result in a biotech approval system that can operate without endemic delays. The United States urges the EU to address these matters.

E. UNITED STATES – LAWS, REGULATIONS AND METHODOLOGY FOR CALCULATING DUMPING MARGINS (“ZEROING”): STATUS REPORT BY THE UNITED STATES (WT/DS294/34/ADD.5)

• Mr. Chairman, the United States provided a status report in this dispute on January 7, 2010, 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, the United States will continue to consult with interested parties.

F. UNITED STATES – MEASURES RELATING TO ZEROING AND SUNSET REVIEWS: STATUS REPORT BY THE UNITED STATES
(WT/DS322/36/ADD.4)

• Mr. Chairman, the United States provided a status report in this dispute on January 7, 2010, in accordance with Article 21.6 of the DSU.

• As noted in the status report, the United States has taken steps to implement the DSB’s recommendations and rulings in this dispute. With respect to the outstanding issues, the United States will continue to consult with interested parties in order to address those issues.

G. UNITED STATES – CONTINUED EXISTENCE AND APPLICATION OF ZEROING METHODOLOGY: STATUS REPORT BY THE UNITED STATES
(WT/DS350/18/ADD.1)

• Mr. Chairman, the United States provided a status report in this dispute on January 7, 2010, in accordance with Article 21.6 of the DSU.

• As noted in that status report, the United States has taken steps to implement the DSB’s recommendations and rulings in this dispute. With regard to the remaining issues, the United States will continue to consult with interested parties.

H. CHINA – MEASURES AFFECTING THE PROTECTION AND ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS: STATUS REPORT BY CHINA
(WT/DS362/14)

• The United States thanks China for its status report and its statement today.

• We look forward to China’s implementation of the recommendations and rulings of the DSB in connection with this matter by March 20, 2010, which is the expiration of reasonable period of time for China to comply in this dispute.

2. UNITED STATES – CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000: IMPLEMENTATION OF THE RECOMMENDATIONS ADOPTED BY THE DSB

A. STATEMENTS BY THE EUROPEAN UNION AND JAPAN

• As the United States has already explained at many 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 that Members, including the EU and Japan, have acknowledged during some 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 EU and Japan have inscribed this item today.

• With respect to comments regarding further status reports in this matter, as the United States has taken all steps necessary to implement the DSB’s recommendations and rulings in these disputes we fail 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.

3. UNITED STATES – MEASURES AFFECTING IMPORTS OF CERTAIN PASSENGER VEHICLE AND LIGHT TRUCK TYRES FROM CHINA

A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY CHINA
(WT/DS399/2)

• Mr. Chairman, the United States is disappointed that China has chosen to move forward with its request for panel establishment a second time.

• We remain confident that our measure is consistent with our WTO obligations and, specifically, with the product-specific safeguard mechanism provided for in section 16 of China’s Protocol of Accession.

• The United States is not the first WTO Member to impose a product-specific safeguard on Chinese products, but it is the first China has challenged in the WTO for that reason. We find it regrettable that China, which has benefitted so greatly from its exports to the United States, would dispute this safeguard.

• We would like to briefly recall some facts from the investigation. In just four years, U.S. tire imports from China more than tripled by volume, with the value of those imports rising to $1.8 billion. And in those same four years, U.S. production fell by more than 25 percent while 14 percent of U.S. workers in the industry lost their jobs. These facts alone show that China’s claims lack merit.

• This special safeguard mechanism was agreed to by all WTO Members and China as part of China’s accession to the WTO. When Members negotiated China’s WTO accession, we agreed to allow China to phase in some of its obligations. For example, China was allowed three years to reduce certain tariffs. In return for the flexibility to phase in obligations and, in recognition of the fact that China’s economy was, and is, in transition to a market economy, WTO Members negotiated the ability to use this temporary mechanism if Chinese imports surge.

• This mechanism was thus a key part of the bargain that permitted China to become a WTO Member. The United States rejects the notion that having recourse to this bargain through the proper application of the safeguard mechanism is unfair, unreasonable, or protectionist, as China asserted last month.

• We understand that a panel will be established today. We intend to defend our measures vigorously before that panel. We are confident that a panel will agree that the United States acted consistently with its WTO obligations when it imposed remedies to stop the harmful surge of Chinese tire imports.

4. PHILIPPINES – TAXES ON DISTILLED SPIRITS

A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN UNION
(WT/DS396/4)

• As we stated at the last DSB meeting, the United States has been closely following this issue.

• We, too, are concerned about the Philippine excise tax system and its effect on market access for our exports of distilled spirits.

• This is an issue that we have raised with the Philippines many times, but, regrettably, without result.

• Therefore, in light of our concerns, on Thursday, January 14, the United States filed a request for dispute settlement consultations.

• We urge the Philippines to address the concerns that have been raised, and hope that the Philippines takes action soon to level the playing field for imported and domestic spirits in the Philippine market.

5. CHINA – MEASURES AFFECTING TRADING RIGHTS AND DISTRIBUTION SERVICES FOR CERTAIN PUBLICATIONS AND AUDIOVISUAL ENTERTAINMENT PRODUCTS

A. REPORT OF THE APPELLATE BODY (WT/DS363/AB/R) AND REPORT OF THE PANEL
(WT/DS363/R AND CORR.1)

• Mr. Chairman, we would like to begin by thanking the members of the Panel, the Appellate Body, and the Secretariat staff assisting them for their hard work during this proceeding.

• The United States has been concerned for some time with China’s restrictions on trading rights, market access, and distributors for a wide range of copyright-intensive products, including reading materials, audiovisual home entertainment products such as DVDs, sound recordings, and theatrical films.

• We are pleased that the Panel found in favor of the United States on the vast majority of our claims, and that the Appellate Body upheld each of the Panel’s findings challenged by China. Many of the Panel and Appellate Body findings are of great importance and will provide useful guidance to Members. This morning, we would like to highlight three areas of particular interest.

• The first aspect involves China’s requirement that the relevant products be imported exclusively through a limited number of state-owned enterprises. The Panel found this requirement inconsistent with the trading rights commitments in China’s Accession Protocol. In so finding, the Panel confirmed that China’s trading rights commitments extend to foreign-invested enterprises and foreign individuals and enterprises, including those not invested or registered in China.

• The Panel, in a finding upheld by the Appellate Body, further confirmed that theatrical films, DVDs and sound recordings are goods subject to China’s trading rights commitments. As the Panel and Appellate Body correctly found, the goods relevant to the U.S. claim are integrated products consisting of a physical medium containing content, and thus within the scope of China’s trading rights commitments. The Appellate Body also properly rejected the assertion that these products are mere accessories to a series of services through which the physical goods are commercially exploited. Had this argument by China been accepted, it would have exempted the vast majority of goods from the WTO’s goods disciplines simply because those goods are used to provide a service. We applaud the findings of the Panel and Appellate Body on these issues.

• We are also gratified that both the Panel and the Appellate Body agreed with the United States that China’s trading rights restrictions are not justified by Article XX(a) of the GATT 1994.
The Panel and Appellate Body concluded that China’s restrictions are not necessary for China to accomplish its specific policy goals. We are very pleased with these findings and hope that China will bear them in mind as it moves forward with implementation.

• We do wish to note our concern, however, with one aspect of the Appellate Body’s discussion of the “necessity” analysis under Article XX(a). In particular, the Appellate Body refers to a panel’s examining an alternative that is “consistent (or less inconsistent)”1 with the covered agreements. The reference to “less inconsistent” is difficult to understand. In the first place, the parties and the Panel accepted that the alternative proposed by the United States was WTO-consistent (see, e.g., Panel Report, para. 7.907). Moreover, both parties’ submissions also referred to the discussion in the Appellate Body report on U.S. – Gambling of the need to examine “WTO-consistent alternative measures.” We have difficulty seeing any a basis under the WTO Agreement for ranking degrees of inconsistency with a Member’s WTO obligations, and consider the formulation found in the Gambling report to be the better approach.

• We also note that the Appellate Body found that Article XX(a) of the GATT 1994 can, in principle, be a defense to a trading rights claim under paragraph 5.1 of China’s Accession Protocol. We are somewhat surprised that the Appellate Body undertook an interpretation of paragraph 5.1, which was not addressed in the parties’ appellate submissions and which was, at most, the subject of a contingent appeal for which the contingency was never triggered. We also note that the Appellate Body’s discussion of this issue is not entirely clear – that discussion lists factors that “may” be relevant, and uses terminology not found in the Protocol whose precise meaning is not immediately apparent. Clearly there will need to be further discussion of these issues.

• Turning second to distribution services, the Panel also agreed with the United States on virtually all of our claims under the GATS. The United States especially welcomes the Panel’s finding, which was upheld by the Appellate Body, that China’s services commitments for sound recording distribution services include the electronic distribution of sound recordings. The Panel and Appellate Body findings confirm that a Member’s services commitments cover all means of supplying a service unless otherwise specified in the Member’s schedule. A contrary finding would have diminished significantly the value of services commitments in an ever-innovating world.

• Finally, let me turn to our claims under the GATT 1994. With respect to reading materials, we are pleased that the Panel found that certain critical restrictions on the distribution of imported reading materials inside China were inconsistent with the national treatment obligation of Article III:4 of the GATT 1994.

• In the context of the U.S. GATT claim related to theatrical films, the United States notes the Panel’s reliance on China’s statements that China does not limit distribution of imported theatrical films to two state-owned distributors. We very much welcome the assurances from China that imported films will be able to take advantage of the complete film distribution network available to Chinese films. We will of course be monitoring developments in China in this connection.

• With respect to sound recordings, however, we were disappointed that the Panel declined to find that China’s measures are inconsistent with Article III:4 of the GATT 1994. Those measures set up a legal regime in which imported sound recordings are subjected to a more onerous and lengthy content review process than their domestic counterparts. This regime presents precisely the type of product discrimination that the GATT’s national treatment obligation addresses.

• The U.S. panel request set forth a claim that the relevant Chinese measures were inconsistent with Article III:4 of the GATT 1994. However, the Panel found that the question of whether the measures affected the “use” of the imported products was outside of its terms of reference because the U.S. panel request did not include the word “use.” We have serious concerns about this finding. The Panel’s reasoning, contrary to what DSU Article 6.2 requires, would suggest that a complaining party must set forth its arguments in support of its claim in a panel request – rather than just setting forth its claims.

• Although the panel declined to find that China’s measures with respect to sound recordings were inconsistent with Article III:4 in part based on its narrow reading of the U.S. panel request, the Panel noted the measures’ inherent discrimination between imported and domestic products. Accordingly, as China considers reforms to its content review regime for sound recordings, we trust that China will keep the Panel’s understanding of these measures in mind and ensure that its regime avoids any discrimination.

• In sum, Mr. Chairman, while we do not agree with all aspects of the findings in the reports, we are nonetheless pleased to request the adoption of the Panel and Appellate Body reports 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 barriers to market access for the relevant products and distributors of those products, we look forward to China moving promptly to implement the DSB’s recommendations and rulings upon adoption of these reports.