Statement by the United States at the October 25, 2010 DSB Meeting

WTO-DSB1. 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.95)

• Mr. Chairman, the United States provided a status report in this dispute on October 14, 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 in January.

• The Committee on the Judiciary of the House of Representatives held a hearing on certain of these proposals on March 3, 2010. In addition, the U.S. Administration is working with Congress to implement the DSB’s recommendations and rulings.

B. UNITED STATES ANTI DUMPING MEASURES ON CERTAIN HOT ROLLED STEEL PRODUCTS FROM JAPAN: STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.95)

• The United States provided a status report in this dispute on October 14, 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.70)

• The United States provided a status report in this dispute on October 14, 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.33)

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

• For the reasons the United States has explained at prior meetings of the DSB, the United States continues to have substantial concerns with the operation of the EU’s regulatory system for biotech products.

• The United States takes note that at the September 2010 meeting of the DSB, the EU mentioned that four biotech products had received favorable safety opinions from the EU’s scientific food safety authority. These recent opinions included opinions from May 2010 on three varieties of biotech maize.

• The United States notes that these favorable opinions were issued over 5 months ago. The United States looks forward to the EU making timely decisions on the approval of these products in accordance with the EU’s scientific opinions.

E. UNITED STATES MEASURES RELATING TO ZEROING AND SUNSET REVIEWS: STATUS REPORT BY THE UNITED STATES (WT/DS322/36/ADD.13)

• Mr. Chairman, the United States provided a status report in this dispute on October 14, 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.

F. UNITED STATES CONTINUED EXISTENCE AND APPLICATION OF ZEROING METHODOLOGY: STATUS REPORT BY THE UNITED STATES (WT/DS350/18/ADD.10)

• Mr. Chairman, the United States provided a status report in this dispute on October 14, 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.

G. UNITED STATES LAWS, REGULATIONS AND METHODOLOGY FOR CALCULATING DUMPING MARGINS (“ZEROING”): STATUS REPORT BY THE UNITED STATES (WT/DS294/38/ADD.4)

• Mr. Chairman, the United States provided a status report in this dispute on October 14, 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, and the United States will continue to consult with interested parties with regard to the remaining issues.

• As Members are aware, the EU requested authorization from the DSB to suspend concessions or other obligations in this dispute, and the United States objected to the EU’s request. Therefore, pursuant to Article 22.6 of the DSU, the matter has been referred to arbitration.

• In response to a joint request of the United States and the EU, on September 8 the Arbitrator issued a communication stating that it has decided to suspend its work. The communication of the Arbitrator has been circulated to the DSB as document WT/DS294/39.

2. EUROPEAN COMMUNITIES AND ITS MEMBER STATES – TARIFF TREATMENT OF CERTAIN INFORMATION TECHNOLOGY PRODUCTS

A. IMPLEMENTATION OF THE RECOMMENDATIONS OF THE DSB

• We thank the European Union for its written notification of its intentions dated October 13, 2010, indicating that it intends to implement the DSB’s recommendations and rulings in this dispute, and for its statement today.

• Where, as here, there was no DSB meeting scheduled within 30 days of the meeting at which the DSB adopts its recommendations and rulings and the parties to the dispute agree, we believe it is helpful to all Members for the Member concerned to provide its statement of intentions in writing as this avoids having to schedule a DSB meeting just for this purpose.

• We look forward to further discussions with the EU on a reasonable period of time for its implementation, under Article 21.3(b) of the DSU.

• This point also recalls a phrase that we heard earlier in this meeting from the EU that, “immediate compliance with DSB recommendations and rulings is not an option but an obligation.” We trust that the EU will apply that sentiment to this item as well.

3. 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 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.

• 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 we have already explained at previous DSB meetings, 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.

5. UNITED STATES – CERTAIN MEASURES AFFECTING IMPORTS OF POULTRY FROM CHINA

A. REPORT OF THE PANEL (WT/DS392/R)

• Mr. Chairman, the United States is disappointed with the findings in the panel report in this dispute.

• The measure that was the subject of the dispute – Section 727 of a 2009 appropriations act – was a single sentence that restricted the funding of certain government activities during a specific and limited period of time. The measure was adopted in the context of an equivalence review – a process explicitly recognized in the SPS Agreement. In particular, the measure was adopted during an ongoing review of China’s request to have the United States agree that China’s SPS measures resulted in exports of poultry products from China that would meet the level of safety deemed appropriate by the United States.

• The specific effect of the measure was to prohibit the U.S. Department of Agriculture from using funds – during a period of several months – to establish or implement a rule permitting import of poultry products from China. The measure was designed to provide time for a study of changes in China’s regulatory system and the development of a plan to guarantee the safety of imports from China.

• As the Panel found, Section 727 expired in 2009, and there is currently no restriction on the use of funds to finalize or implement a determination as to whether China’s SPS measures are equivalent to U.S. measures.

• Although the measure was an expired funding restriction with a narrow effect under U.S. law, the panel report in this dispute addressed the measure under multiple, disparate provisions of the WTO Agreement. These findings raise a number of significant questions that should be of interest and concern to many Members.

• First, issues regarding equivalence reviews are new to WTO dispute settlement, and are distinct from any previous dispute under the SPS Agreement.

• Article 4 of the SPS Agreement provides specific obligations when a Member claims that its measures are equivalent. Yet, China made no claim in this dispute under Article 4. Nor did the panel report recognize that Article 4 is important context to be used in determining whether other provisions of the SPS Agreement apply to issues involving an equivalence review. As a result, many of the panel report’s findings appear to be at odds with the inherent nature of any Member’s review of a claim of equivalence.

• For example, the panel report finds that Section 727 breached SPS Articles 2.3 and 5.5 because it found that Section 727’s differential treatment of Chinese poultry products resulted in discrimination. By its very nature, however, an equivalence examination treats products from different Members differently. Indeed, the whole premise of an equivalence review is to decide whether to allow the import of products from the territory of a single WTO Member because of that Member’s measures.

• The panel report’s findings regarding Article 8 and Annex C of the SPS Agreement raise similar questions. On their face, Article 8 and Annex C apply only to “control, inspection or approval procedures.” The examples in the SPS Agreement of those procedures are “procedures for sampling, testing and certification.” However, the panel report finds – without a textual basis – that equivalence reviews are covered by Article 8 and Annex C.

• In short, the relationship between equivalence reviews under Article 4 and other provisions of the SPS Agreement is a complex one. This relationship is of systemic importance to all WTO Members. The United States considers that the matter warranted a more careful analysis than it receives in this report.

• Second, the United States has systemic concerns with the report’s “like products” analysis under Article I of the GATT 1994. The panel report’s analysis effectively proceeds from the assumption that products produced by one WTO Member, and processed by that Member’s food safety system, must be presumed to be as safe as products produced by another Member and processed by that Member’s food safety system. There is no basis for such a presumption. Indeed, this approach would be contrary to the very purpose of an equivalence review.

• Third, the United States is concerned with the treatment the panel report provides the U.S. defense under Article XX (b) of the GATT 1994. The report does not include a systematic analysis of the U.S. arguments. Instead, the panel report finds that no measure that breaches Articles 2 and 5 of the SPS Agreement can be justified under Article XX(b).

• The United States believes that this conclusion is not correct. In fact, it has the legal relationship between Article XX of the GATT 1994 and the SPS Agreement backwards. The SPS Agreement contains obligations in addition to those in Article XX of the GATT 1994. The fact that a measure may not fully comply with those additional obligations is not sufficient, standing alone, to support a finding that the measure is not “necessary to protect human, animal, or plant life or health” under Article XX(b).

• With those concerns in mind, the United States notes its appreciation that the panel report exercises judicial economy with respect to China’s claim under Article 4.2 of the Agreement on Agriculture, and part of China’s claim under Article 5.5 of the SPS Agreement. In that context, the report explains the principles underlying the exercise of judicial economy, in particular that panels should only address those claims necessary to resolve the dispute. Applying that same approach to other issues may have avoided many of the systemic concerns raised today by the United States.

• In closing, the United States again notes that, as the Panel found, the measure at issue expired in 2009. The United States would also like to note that the U.S. Department of Agriculture is currently working with China on reviewing its equivalence application, and looks forward to working with China on this matter in a positive and productive manner.

• As the measure at issue in this dispute ceased to exist in 2009, the United States considers that measure has been withdrawn within the meaning of Article 3.7 of the DSU, and that this dispute has been resolved.

• Thank you Mr. Chairman for the opportunity to comment on this report.