As delivered
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.111)
• The United States provided a status report in this dispute on February 9, 2012, in accordance with Article 21.6 of the DSU.
• Legislative proposals have been introduced in the current 112th Congress to implement the recommendations and rulings of the DSB.
• The U.S. Administration will continue to work on solutions 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.111)
• The United States provided a status report in this dispute on February 9, 2012, in accordance with Article 21.6 of the DSU.
• As of November 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.
• 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.86)
• The United States provided a status report in this dispute on February 9, 2012, 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.49)
• The United States thanks the EU for its status report and its statement today.
• As the United States has explained at past meetings of the DSB, the United States has substantial concerns regarding EU measures affecting the approval of biotech products.
• Delays in the consideration of approvals for biotech products have resulted in a lengthy backlog of pending applications, including many applications for products that have been approved by, and are in use in, major markets around the world.
• The United States takes note of the EU’s statement that the EU has recently approved certain varieties of biotech soybeans. While this development is welcome, a handful of approvals is not sufficient to address the backlog of pending applications and the resulting barriers to trade. For example, EU imports of U.S. maize and maize products are substantially restricted due to delays in approvals of biotech varieties of maize.
• The United States looks forward to EU actions to address the effects on trade resulting from the EU’s measures affecting the approval of biotech products.
E. UNITED STATES – MEASURES RELATING TO ZEROING AND SUNSET REVIEWS: STATUS REPORT BY THE UNITED STATES (WT/DS322/36/ADD.29)
• The United States is pleased to report to Members today that the United States and Japan have reached an agreement to resolve this dispute involving “zeroing.”
• Members will recall that in December 2010, the U.S. Department of Commerce announced a proposal to implement DSB recommendations and rulings regarding “zeroing” by, among other things, changing the calculation of weighted average dumping margins and assessment rates in certain antidumping proceedings.
• Today the United States can inform the DSB that the U.S. Department of Commerce has finalized that proposal, and that the final modification was published last Tuesday, February 14, 2012, in the U.S. Federal Register.1 The final modification applies to all reviews initiated after publication, as well as to ongoing reviews for which the preliminary determination is issued 60 days or more after publication.
• The final modification provides that the United States will calculate weighted average margins of dumping and antidumping duty assessment rates in a manner that provides offsets for non-dumped comparisons. The notice also modifies U.S. practice in five-year “sunset” reviews such that the Department of Commerce will not rely on weighted-average dumping margins that were calculated using a methodology found to be inconsistent with WTO rules.
• In connection with the final modification, on February 6, 2012, the United States and Japan signed a Memorandum of Understanding regarding this dispute, and we have circulated the Memorandum to the DSB in document WT/DS322/44. The Memorandum provides that the United States will take actions to meet Japan’s concerns, including by revising U.S. calculation methodologies through issuance of the final modification, and that Japan will withdraw its requests made pursuant to Article 22.2 of the DSU by August 6, 2012. At that time, the United States and Japan will submit a joint letter requesting the Arbitrator to notify the DSB that the issuance of an award is not necessary.
• Accordingly, and in response to a joint request of the parties, the Arbitrator has continued the suspension of its work through August 20, 2012. The communication of the Arbitrator has been circulated to the DSB in document WT/DS322/45.
[ 1 Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings; Final Modification, 77 FR 8101 (14 February 2012)]
• The United States has repeatedly explained that the Appellate Body – in making its findings on zeroing – adopted an unsupportable analysis, departed from the text of the Antidumping Agreement, and, therefore, exceeded its mandate. The United States has presented these explanations in submissions to panels and the Appellate Body, in statements at meetings of the DSB, and in detailed, written communications to the DSB. Rather than repeating these explanations at the meeting today, the United States would refer Members to its prior written communications to the DSB.2
• The United States would also emphasize that it will continue to press in ongoing WTO negotiations for affirmation that “zeroing” is consistent with WTO rules.
• The United States nonetheless welcomes the agreement to end this difficult and longstanding dispute with an important trading partner. The United States has also reached a similar agreement in relation to the disputes with the EU, which we will discuss under the next item on the agenda.
• Resolution of these disputes, notwithstanding our deep disagreement with the Appellate Body’s findings on “zeroing,” together with our determination to press for correction of these decisions through ongoing negotiations, demonstrate the commitment of the United States to strengthening the rules-based trading system.
[2 Communication by the United States, United States – Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/16 (17 May 2006); Communication from the United States, United States – Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/18 (19 June 2006); Communication from the United States, United States – Measures Relating to Zeroing and Sunset Reviews, WT/DS322/16 (26 February 2007); Communication by the United States, United States – Final Antidumping Measures on Stainless Steel from Mexico, WT/DS344/11 (20 May 2008).
F. UNITED STATES – CONTINUED EXISTENCE AND APPLICATION OF ZEROING METHODOLOGY: STATUS REPORT BY THE UNITED STATES (WT/DS350/18/ADD.26)
• The United States is pleased to report to Members today that we have reached an agreement to resolve both of the ongoing disputes – DS350 and DS294 – involving “zeroing” for which the EU is a complaining party.
• Under the prior agenda item, the United States has discussed the final modification changing the calculation of weighted average dumping margins and assessment rates in certain antidumping proceedings that was adopted by the United States in order to respond to the DSB recommendations and rulings in this dispute.
• In connection with the final modification, on February 6, 2012, the United States and the European Commission agreed to a Memorandum regarding this dispute and dispute DS294. The Memorandum has been circulated to the DSB in document numbers WT/DS294/43 and WT/DS350/20. The Memorandum provides that the United States will take actions to address EU concerns, including by revising U.S. calculation methodologies through issuance of the final modification, and that the EU will withdraw its request in DS294 under Article 22.2 of the DSU and will take no further actions under the DSU with respect to DS350 or DS294.
• Despite the fundamental disagreement of the United States with the Appellate Body findings on “zeroing,” the United States welcomes the agreement to end this difficult and longstanding dispute.
G. UNITED STATES – LAWS, REGULATIONS AND METHODOLOGY FOR CALCULATING DUMPING MARGINS (“ZEROING”): STATUS REPORT BY THE UNITED STATES (WT/DS294/38/ADD.20)
• Under agenda item 1.E, the United States has discussed the final modification adopted by the United States in order to respond to the DSB’s recommendations and rulings in this dispute.
• And under the previous agenda item, the United States discussed the Memorandum with the European Commission regarding this dispute and dispute DS350. Under that Memorandum, following the completion of steps to be undertaken by the United States, the EU will withdraw its request under Article 22.2 of the DSU, and the United States and EU will submit a joint letter to the Arbitrator requesting notification to the DSB that the issuance of an award is not necessary. Until that time, the arbitration is to remain suspended.
• Accordingly, and in response to a joint request, the Arbitrator in this dispute has continued the suspension of its work through June 28, 2012. The communication of the Arbitrator has been circulated to the DSB in document WT/DS294/44.
• Again, despite the fundamental disagreement of the United States with the Appellate Body findings on “zeroing,” the United States welcomes the agreement to end this difficult and longstanding dispute.
• The United States notes that, under agenda item 1.A, certain Members expressed so- called “systemic” concerns relating to the situation of non-compliance in that dispute. The United States assumes that all those Members intervening under item 1.A feel equally strongly, and systemically, that the U.S. announcements under this item and the previous two items contribute to strengthening the WTO dispute settlement system.
H. CHINA – MEASURES AFFECTING TRADING RIGHTS AND DISTRIBUTION SERVICES FOR CERTAIN PUBLICATIONS AND AUDIOVISUAL ENTERTAINMENT PRODUCTS: STATUS REPORT BY CHINA (WT/DS363/17/ADD.13)
• The United States thanks China for its status report and its statement today.
• As Members may be aware, the United States and China have very recently reached agreement on a Memorandum of Understanding regarding films for theatrical release. We look forward to the formal signing of the MOU in the coming days.
• The United States continues to review China’s measures relating to reading materials, audio visual home entertainment products, and sound recordings in light of the DSB rulings and recommendations.
I. UNITED STATES – ANTI-DUMPING ADMINISTRATIVE REVIEWS AND OTHER MEASURES RELATED TO IMPORTS OF CERTAIN ORANGE JUICE FROM BRAZIL: STATUS REPORT BY THE UNITED STATES (WT/DS382/11/ADD.2)
• As discussed under agenda item 1.E, on February 14, 2012, the U.S. Department of Commerce published a modification to its procedures in order to implement DSB recommendations and rulings regarding the use of “zeroing” in antidumping reviews. The United States understands that this modification will address the findings in this dispute, as well as the “zeroing” disputes discussed in the prior agenda items.
• The United States is currently in the process of arranging discussions with the Government of Brazil regarding the final modification published on February 14. [Second intervention:]
• Brazil has made a number of detailed comments, and the United States looks forward to discussing those issues bilaterally with Brazil. At this point, however, the United States wishes to briefly clarify certain issues.
• The change in methodology applies to all reviews initiated after publication of the final modification. In addition, the change will be applied in ongoing reviews for which the preliminary determination is issued 60 days or more after publication of the final modification.
• Brazil’s intervention appeared to suggest that the United States should go back in time and reopen previously completed reviews so as to refund duties on past entries.
• As we have noted in several previous DSB meetings, the United States is not aware of any other instances in which a Member has refunded duties in response to an adverse finding in a WTO dispute.
J. UNITED STATES – DEFINITIVE ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA: STATUS REPORT BY THE UNITED STATES (WT/DS379/12/ADD.1)
• The United States provided a status report in this dispute on February 9, 2012, in accordance with Article 21.6 of the DSU.
• The United States will continue to work on solutions to implement the DSB’s recommendations and rulings in this dispute.
2. PHILIPPINES – TAXES ON DISTILLED SPIRITS
A. IMPLEMENTATION OF THE RECOMMENDATIONS OF THE DSB
• The United States was pleased to receive the letter from the Philippines to the DSB on February 15 indicating that it intends to implement the recommendations and rulings of the DSB in this dispute, which were adopted on January 20.
• The Philippines has indicated that it will need a reasonable period of time for implementation. My delegation stands ready to discuss with the Philippines, together with the EU, what that period of time should be.
• The excise taxes at issue in this dispute have been a barrier to imported distilled spirits for decades. We hope that the DSB’s recommendations and rulings provide the impetus for the Philippines quickly to end the discrimination and open its markets.
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 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 EU and Japan have inscribed this item today.
• With respect to comments regarding further status reports, 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.
4. UNITED STATES – ANTI-DUMPING MEASURES ON CORROSION-RESISTANT CARBON STEEL FLAT PRODUCTS FROM KOREA
A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY KOREA (WT/DS420/5)
• As discussed under agenda item 1.E, on February 14, 2012, the U.S. Department of Commerce published a modification to its procedures in order to implement DSB recommendations and rulings regarding the use of “zeroing” in antidumping reviews.
This modification will address the matter covered in Korea’s panel request, as well as the
“zeroing” disputes discussed in the prior agenda items.
• Korea has circulated a procedural agreement reached last year between the United States and Korea. Pursuant to that agreement, the United States will not object to Korea’s first request for establishment of a panel.
• Nonetheless, the United States is concerned that just two days after the publication of the final modification, Korea elected to put this panel request on the DSB’s agenda.
• Now that the process of modifying U.S. methodologies to respond to DSB recommendations and rulings on “zeroing” has been completed, moving forward with this dispute serves no purpose.
• To the contrary, a Member that continues to litigate over a methodology that has been terminated is, in our view, not strengthening the dispute settlement system but instead is squandering both its own resources and the resources of the dispute settlement system.
7. CHINA – MEASURES RELATED TO THE EXPORTATION OF VARIOUS RAW MATERIALS
A. REPORT OF THE APPELLATE BODY (WT/DS394/AB/R) AND REPORT OF THE PANEL (WT/DS394/R AND CORR.1 AND ADD.1)
B. REPORT OF THE APPELLATE BODY (WT/DS395/AB/R) AND REPORT OF THE PANEL (WT/DS395/R AND CORR.1 AND ADD.1)
C. REPORT OF THE APPELLATE BODY (WT/DS398/AB/R) AND REPORT OF THE PANEL (WT/DS398/R AND CORR.1 AND ADD.1)
• The United States would like to begin by thanking the Panel, the Appellate Body and the Secretariat assisting them for their hard work on this important, economically significant dispute. We would also like to give credit to our co-complainants, the European Union and Mexico, for the excellent cooperation we have enjoyed throughout this dispute. That cooperation, as well as the active support of a number of third parties, has proved invaluable in confronting the pervasive WTO-inconsistent measures at issue in this dispute.
• China’s export restraints (such as export duties and quotas) on the industrial raw material inputs at issue in this dispute have created significant unfair advantages for Chinese users of these inputs over their foreign competitors. These Chinese export restraints also put economic pressure on foreign downstream producers to move their operations and their technologies to China.
• The United States repeatedly raised its concerns regarding these export restraints through bilateral and multilateral engagement, including in China’s annual Transitional Review Mechanism. We would have preferred to resolve our concerns through bilateral cooperation. However, when China proved unwilling to address our concerns and remove its export restraints, we did not hesitate to initiate this dispute.
• The Panel and the Appellate Body reports being adopted today sided with the United States and our co-complainants on the major issues in this dispute. The reports are significant for a number of reasons.
• First, the reports confirm that China’s imposition of export duties on these raw materials is not consistent with China’s WTO obligations. The reports further make clear that such duties may not be justified pursuant to the exceptions provided in Article XX of the GATT 1994. The United States welcomes these findings, which affirm a clear and critical commitment that China made to all WTO Members when acceding to the WTO.
• In addition to the products covered in this dispute, China currently maintains export duties on over 350 products. The United States looks forward to China’s elimination of these duties.
• Second, the reports also agreed with the U.S. position that China’s export quotas on the raw materials at issue are not justified under WTO rules as environmental protection measures under Article XX(b) of the GATT 1994; conservation measures under Article XX(g) of the GATT 1994; or as short supply measures under Article XI:2(a) of the GATT 1994.
• The reports make clear that any measures sought to be justified pursuant to Article XX(b) and XX(g) must be measures legitimately aimed at protecting health and the environment and conserving exhaustible natural resources, rather than measures aimed at providing economic advantages to domestic users of raw materials.
• In relation to Article XI:2(a), the reports confirm that this article is available to justify the temporary imposition of export restraints in cases of crisis. Importantly, the Panel rejected China’s approach that would have allowed Article XI:2(a) to exempt export restrictions in a much broader range of circumstances from the disciplines of Article XI:1.
• These reports are also significant for confirming that the DSU is effective and will provide complaining parties with findings and recommendations on measures maintained through legal instruments that may expire or recur in the course of a dispute. China had attempted to evade DSB recommendations – and therefore any implementation obligation – by arguing that the legal instruments maintaining its quotas and duties had expired after the panel was established. China’s argument would have permitted it to create a “moving target”, evading its obligations by withdrawing and later reintroducing its measures.
Both the panel and Appellate Body decisively rejected this approach.
• The United States does note two areas of concern with the Appellate Body report. First, the Appellate Body concluded that one part of the panel requests, covering a number of other types of Chinese export restraints, did not draw sufficiently “clear connections” for purposes of Article 6.2 of the DSU between legal instruments (that were set out in the requests) and claims (that were also set out in the requests). The United States believes this approach amounts to a new standard, which is not reflected in the text of the DSU, nor applied in prior reports or followed in other Members’ panel requests. Unfortunately, as a result of adopting and applying the new standard in this dispute, a number of potentially distortive trade problems identified in the panel report remain un-addressed.
• Finally, as for several appellate reports considered by the DSB in 2011, the United States wishes to draw the DSB’s attention to a procedural issue in relation to DSU Article 17.5. In the Appellate Body’s 60-day notice pursuant to Article 17.5, the Appellate Body provided an estimated circulation date of January 31, 2012, or, if I have counted correctly, 153 days after initiation of the appeal.3 However, contrary to past practice,4 the Appellate Body did not mention in its notification that the parties had agreed at the outset that the appeal would exceed 90 days. Further, the agreement by the parties was not reflected in the report of the Appellate Body, as has also been the practice of the Appellate Body in prior disputes.5
• In order to provide transparency to the DSB, the United States and China circulated their letter to the Appellate Body Division confirming that they would each deem a report in this proceeding, issued no later than January 31, to be an Appellate Body report pursuant to Article 17.5. While we welcome the cooperation of China in providing transparency to the DSB, we do not consider that it is desirable for the Appellate Body to provide less transparency for Members on the circumstances leading to consideration by the DSB of a report circulated outside the 90-day period. We continue to believe that Members should be provided with the level of transparency provided by the Appellate Body in all proceedings exceeding 90 days prior to 2011.
• Setting this issue of procedure to one side, in conclusion, the United States is extremely pleased to propose that the DSB adopt these important reports. All WTO Members are bound together through a global interdependence in the trade of raw materials. The policies of China, as reflected in the measures covered in this dispute, have caused massive distortions and harmful disruptions in supply chains throughout the global marketplace.
• We look forward to action by China to address its export restraints on the raw materials at issue in this dispute – and more broadly – to meet its WTO obligations in light of these reports.
3- WT/DS394/13 (8 December 2011).
4- See, e.g., Communication from the Appellate Body, US – Continued Suspension / Canada – Continued
Suspension, WT/DS320/14, WT/DS321/14 (24 July 2008).
5- See, e.g., Canada – Continued Suspension, WT/DS321/AB/R, at para. 29; EC – Export Subsidies on
Sugar, WT/DS265/AB/R, at para. 7.