Statements by the United States at the April 24, 2012, DSB Meeting

Geneva,
April 24, 2012

– 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.113)

•           The United States provided a status report in this dispute on April 12, 2012, in accordance with Article 21.6 of the DSU.

•           Legislative proposals have been introduced in the current 112th U.S. 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.113)

•           The United States provided a status report in this dispute on April 12, 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.88)

•           The United States provided a status report in this dispute on April 12, 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.51)

•           The United States thanks the EU for its status report and for 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. The EU measures, including delays in approvals, have resulted in substantial restrictions on the importation of U.S. agricultural products.   The affected products include U.S. corn, corn gluten feed, and distillers dried grain from the current U.S. growing season.

•           The United States would also recall the DSB findings that EU member State bans on the corn variety Mon810 are inconsistent with the EU’s obligations under the SPS Agreement.[1]

•           In this regard, the United States notes its concern that in March 2012, France renewed its member State ban affecting this corn variety.   The ban was adopted despite that fact that Mon810 has been cultivated for 17 years around the world, and has long been approved in the European Union.

•           The United States urges the EU to fix the ongoing problems with its measures affecting the approval of biotech products.

[1]  Panel Report, European Communities – Measures Affecting the Approval and Marketing of Biotech
Products
, WT/DS291/R, adopted 21 November 2006, paras. 8.24, 8.28.

E.         CHINA – MEASURES AFFECTING TRADING RIGHTS AND DISTRIBUTION SERVICES FOR CERTAIN PUBLICATIONS AND AUDIOVISUAL ENTERTAINMENT PRODUCTS:  STATUS REPORT BY CHINA (WT/DS363/17/ADD.15)

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

•           As noted at the March meeting of the DSB, the United States and China have reached agreement on a Memorandum of Understanding regarding films for theatrical release. We look forward to the formal signing of the MOU soon.

•           In response to China’s statements in its status report, and again today, regarding products other than films for theatrical release, the United States notes that it continues to review China’s measures relating to reading materials, audio visual home entertainment products, and sound recordings to assess whether the steps taken by China in fact implement the DSB rulings and recommendations.

•           At this time, the United States is not in a position to conclude that China has fully implemented the recommendations and rulings in this dispute as China has claimed for

all areas other than for films for theatrical release.  The United States continues to review the steps that China has taken in those areas.

F.         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.4)

•           The United States provided a status report in this dispute on April 12, 2012.  The United States would like to highlight important developments covered in the status report, as well as to inform the DSB of additional developments that occurred after April 12.

•           On February 14, 2012, the U.S. Department of Commerce published a modification to its procedures in order to implement the DSB’s recommendations and rulings regarding the use of “zeroing” in antidumping reviews.  The modification applies to all products from all Members, including the products of Brazil covered in this dispute.

•           On April 3, 2012, Brazil and the United States entered into an agreement regarding procedures under Articles 21 and 22 of the Dispute Settlement Understanding.  The agreement, which has been circulated to Members in document WT/DS382/11, is designed to facilitate a final resolution of this dispute.

•           Last month, the U.S. International Trade Commission (ITC) had made a determination to revoke the antidumping duty order in its five-year “sunset” review of the order on orange juice from Brazil.

•           On April 13, 2012, the ITC published in the U.S. Federal Register its formal determination in the sunset review.

•           In accordance with the ITC determination, on April 20, 2012, the U.S. Department of Commerce issued a notice revoking the antidumping duty order on the products covered in this dispute.

•           The revocation of the order is effective as of March 9, 2011.  As a result of the revocation, imports of orange juice from Brazil entered on or after March 9, 2011 are not subject to antidumping duties.  All antidumping duty cash deposits on entries on or after that date will be refunded.

 

G.        UNITED STATES – DEFINITIVE ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA: STATUS REPORT BY THE UNITED STATES (WT/DS379/12/ADD.3)

•           The United States provided a status report in this dispute on April 12, 2012, in accordance with Article 21.6 of the DSU.

•           On April 6, 2012, the U.S. Department of Commerce (“Commerce”) issued to interested parties a preliminary determination with respect to certain issues in the countervailing duty investigation of certain new pneumatic off-the-road tires.

•           On April 9, 2012, Commerce issued to interested parties a preliminary determination

with respect to certain issues in the countervailing duty investigation of laminated woven sacks.

•           Commerce has provided an opportunity for interested parties to provide comments on those preliminary determinations and to provide rebuttal comments on any comments submitted by other interested parties.

•           The United States will continue to work on solutions to implement the DSB’s recommendations and rulings.

[Second intervention:]

•           In response to China’s comments, let me say that we are aware that the reasonable period of time to which China and the United States agreed will conclude tomorrow.  We are working to bring the relevant measures into conformity with the recommendations and rulings of the DSB as quickly as possible.

•           We have discussed this matter with China bilaterally and stand ready to continue that discussion in order to proceed forward cooperatively toward a final resolution of this dispute.

•           And, as China is well aware, we have explained to China the work that remains for Commerce to do in the implementation process, and we have laid out for China a schedule for completing that work.

•           Finally, in response to China’s comments that the U.S. status report shows a lack of “due respect” for the DSB’s recommendations and rulings, China’s assertion is not well-founded.  China presented its own status report earlier during this meeting, and the Unites States is sure that China considers that it takes its WTO responsibilities seriously.  Similarly, the United States takes its responsibilities in relation to this  dispute seriously.

 

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 some 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 previous DSB meetings that the 2006 Deficit Reduction Act does not permit the distribution of duties collected on goods entered after October 1, 2007, which is some four-and-a-half years ago.

•           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, the United States fails to see what purpose would be served by further submission of status reports in this dispute, or any other, repeating again that the United States or other Member has taken

all actions necessary to implement the DSB’s recommendations and rulings in these disputes.

•           Finally, with respect to the measures announced by the EU, the United States will be carefully reviewing these measures.  The United States recalls that the DSB only authorized the suspension of concessions as provided in the Award of the Arbitrator.

 

3.         UNITED STATES – MEASURES AFFECTING THE CROSS BORDER SUPPLY OF GAMBLING AND BETTING SERVICES

A.        STATEMENT BY ANTIGUA AND BARBUDA REGARDING THE IMPLEMENTATION OF THE RECOMMENDATIONS ADOPTED BY THE DSB

•           As I believe all Members are aware, this dispute involves the regulation of cross-border gambling.  Many Members, including the United States, view gambling as a significant issue of public morals and public order, involving the protection of children and other vulnerable individuals.  Most Members of this organization tightly regulate any gambling allowed within their borders.

•           Accordingly, most Members did not include any market access commitment for gambling in their schedules under the General Agreement on Trade in Services (GATS).

•           This was the U.S. understanding of its own GATS schedule.  Indeed, no Member ever raised the possibility that the U.S. GATS schedule covered cross-border gambling – until Antigua and Barbuda (“Antigua”) initiated this dispute approximately 10 years after the U.S. schedule was negotiated.

•           The Panel and Appellate Body ultimately found that the U.S. schedule must be construed as including a market access commitment for cross-border gambling.  However, the

Panel found that any commitment was unintentional, and the Appellate Body found the

U.S. schedule to be ambiguous in this regard.

•           As previously explained to the DSB, the United States accepts the results of the dispute settlement process.

•           And as the United States previously notified the DSB and the Council on Trade in Services,  the United States is responding to these findings by invoking the established, multilateral procedures for modification of a Member’s GATS schedule of concessions.

•           In particular, in May 2007, the United States initiated the modification procedure, provided under Article XXI of the GATS, so as to reflect the original U.S. intention to exclude gambling from the scope of U.S. commitments.

•           Pursuant to the GATS procedures, the United States entered into discussions with those Members notifying that their interests could be affected by the modification to the U.S. schedule.  The United States offered compensatory adjustments, under which the United States will replace the gambling-related commitment with other commitments of equal or greater value

•           With the sole exception of discussions with Antigua, these discussions were successful.

In particular, by early 2008, out of the entire membership of the WTO, only Antigua maintained an objection to the modification of the U.S. schedule.

•           Since that time, the United States has entered into negotiations with Antigua, with the goal of obtaining Antigua’s agreement to the modification of the U.S. GATS schedule. In that regard, the statement read by Dominica today on behalf of Antigua simply does not reflect history or reality.

•           The United States has devoted substantial resources to these settlement discussions and has met repeatedly with Antigua at all levels of government, from the ministerial level to the technical level.

•           The United States has offered real and substantial benefits, based on specific requests made by Antigua, that would make important contributions to the further development of the Antiguan economy.

•           At times, the parties have seemed on the verge of an agreement, and the United States believes that an agreement remains within our grasp.

•           With respect to Antigua’s suggestion that this matter be referred to mediation or good offices, the United States will consider this matter.  Our initial reaction, however, is that in light of the fact that the United States and Antigua have previously come very close to a resolution of this matter, a serious effort to re-engage in negotiations would be more productive than referring the matter to a third party.

•           In closing, the United States would note that it remains ready for further engagement with Antigua on a resolution of Antigua’s objections to completion of the GATS Article XXI process.  The United States believes that process is the proper forum for further discussion of this matter.

 

4.         UNITED STATES – MEASURES AFFECTING THE PRODUCTION AND SALE OF CLOVE CIGARETTES

A.        REPORT OF THE APPELLATE BODY (WT/DS406/AB/R) AND REPORT OF THE PANEL (WT/DS406/R)

•           The United States would like to begin by thanking the members of the Appellate Body, the Panel and the Secretariat assisting them for their work on this dispute.•           This dispute involved a U.S. public health measure designed to reduce smoking in the United States by removing from the market cigarettes that were uniquely appealing to young people.  Ninety-five percent of addicted smokers in the United States started smoking before they were 26 years old.  U.S. public health regulators recognized the tremendous benefit to the public health by preventing sweet and other unusually flavored cigarettes, such as fruit, candy and spice, from attracting new generations of smokers.

•           The U.S. ban on cigarettes with characterizing flavors other than tobacco or menthol targeted a specific type of cigarette – cigarettes that were smoked by a small fraction of the population and predominantly by young people.

•           The ban was not intended to completely remove from the market the cigarettes smoked regularly in the United States by tens of millions of  addicted adults – that is, tobacco and menthol cigarettes.  To be sure, tobacco and menthol cigarettes are a serious public health problem and the target of multiple regulatory efforts.  However, because of their

extensive use by adults, these cigarettes pose different public health challenges from the flavors banned by the measure at issue in this dispute.

•           The United States appreciates that the Panel rejected Indonesia’s claims under Articles

2.2, 2.5, 2.8, 2.9.3 and 12.3 of the TBT Agreement.  Importantly, the Panel found that the U.S. measure is consistent with Article 2.2 of the TBT Agreement because it is not “more trade-restrictive than necessary” to fulfill the legitimate objective of reducing youth smoking in the United States.

•           In particular, the Panel found that the measure reflects the overwhelming view of the scientific community that banning clove cigarettes would be beneficial for the public health.  A major reason is that the addition of cloves makes the cigarette more attractive to young, inexperienced smokers.  By banning clove and other “trainer” cigarettes from the market, the measure reduces the likelihood that young people will enter into a lifetime of nicotine addiction.

•           Notably, the DSB today is adopting these findings that a ban on clove cigarettes meets the requirements of Article 2.2 of the TBT Agreement and is thus no more trade restrictive than necessary to fulfill a legitimate public health objective.

•           Especially in light of these findings, which acknowledge that the U.S. measure meets a legitimate public health objective, the United States finds it very hard to understand the Appellate Body’s conclusion that the measure results in a breach of Article 2.1 of the TBT Agreement.

•           The United States does appreciate the very important recognition in the Appellate Body report that Members may draw legitimate regulatory distinctions between like products, even where there is a detriment to the competitive conditions for the group of like imported products compared to the group of like domestic products.  However, several aspects of the Appellate Body’s findings and analysis on Article 2.1 are problematic – most significantly the findings and analysis related to the regulatory distinction between clove and menthol cigarettes.

•           In the course of the dispute, the United States explained that from the perspective of public health regulation, there is a clear difference between a product, such as clove cigarettes, that is smoked in the United States experimentally by a small number of young people but relatively few adults, and a product such as menthol cigarettes, that is not only used by youth during initiation but also smoked regularly by tens of millions of addicted adults.  These very different situations raise different regulatory considerations, such as the burden on the U.S. public health system of banning a product with tens of millions of addicted users.  These differences thus warrant a different regulatory approach.

•           The Appellate Body recognized that the Panel failed to explain its reasons for rejecting the U.S. regulatory approach.  And in fact, due to the Panel’s flawed analysis, the Panel had made no findings on the relevant factual issues.  In these circumstances, the Appellate Body should have concluded by overturning the Panel’s conclusion.

•           Instead, however, the Appellate Body engaged in its own analysis.  And in doing so, the Appellate Body rejected the U.S. explanation for the regulatory distinction without citing to a single fact on the record that supported its apparent view that the public health basis was not legitimate.[2]   The Appellate Body thus reached conclusions that were not  – as they should be in any dispute – based on Panel findings or undisputed facts.

•           Instead, the Appellate Body based its conclusion regarding this critical public health matter on speculation.  In particular, the Appellate Body stated that “it is not clear”  that the potential risks associated with banning menthol cigarettes “would materialize . . . insofar as regular cigarettes would remain in the market.”[3]   Thus, on the most critical public health rationale for drawing a distinction between clove and menthol cigarettes, the Appellate Body does not point to any facts on the record to support its dismissal of that distinction.  Indeed, all the Appellate Body can say is that “it is not clear” the risks would materialize.

 [2]  See Appellate Body Report, para. 225 (fifth through ninth sentences).

 [3]  See Appellate Body Report, para. 225.

 

•           We do not think that this is an adequate basis for finding a Member’s public health measure breaches its WTO obligations.  In essence, the Appellate Body is stating that it has a different approach than the U.S. regulators for weighing the potential risks and benefits from including additional types of cigarettes in the ban.

•           In adopting this approach, the Appellate Body appears to have placed itself in the position of the regulator.  But that is not the function of a panel or the Appellate Body, and they are not well suited for that role.  To return to the passage previously cited, the Appellate Body says “it is not clear” that the public health risks will arise “insofar as regular cigarettes would remain in the market” – but what factual or scientific basis is there to say that smokers addicted to menthol cigarettes would readily switch to regular cigarettes?  There is none in the Panel record.  And if the Appellate Body is wrong in that assumption, the consequences for public health would be severe.

•           It is the role of public health authorities – not only in the United States but worldwide – to engage in the complex process of managing products that are harmful, addictive, and widely used.  In doing so, public health authorities must consider the types of harms that may result from wide-reaching regulatory actions.  Thus, the Appellate Body erred in substituting its own judgment – instead of that of the regulator – with regard to whether additional regulations should be adopted in the face of potential harms.

•           As a result, the analysis applied in this dispute was insufficient to allow for the type of legitimate incremental regulation commonly applied to situations such as the one presented here.

•           The result in this dispute should be of grave concern to any Member regulating for the benefit of public health as, without the benefit of analysis based in any factual findings, it was decided that a public health regulation must be applied to additional types of products, despite the potential harms of an extended ban.

•           Finally, we are disappointed with the Panel and Appellate Body’s findings that the challenged measure’s three month interval between publication and entry into force is not “reasonable” and thus is inconsistent with Article 2.12 of the TBT Agreement.

•           First, the Appellate Body’s treatment of paragraph 5.2 of the 2001 Doha Ministerial

Decision undermines the Appellate Body’s own – and correct – finding that paragraph

5.2 was not an authoritative interpretation for purposes of Article IX:2 of the WTO Agreement.  Article IX:2 provides the exclusive mechanism for authoritative interpretations, and the carefully delineated procedural conditions established by Members in Article IX:2 are important safeguards for Members

•           However, by treating paragraph 5.2 of the Doha Decision as a “subsequent agreement” that establishes the meaning of the covered agreements, the Appellate Body report effectively eliminates the safeguards that Members have included in Article IX:2 of the WTO Agreement.   Furthermore, there appears to be nothing in the Appellate Body’s approach to limit such a “subsequent agreement” to one by the Ministerial Conference or the General Council.

•           Second, in its analysis of Article 2.12, the Appellate Body finds that all the complaining party needs to prove is that the interval period is less than six months, and that the burden of rebutting that element of the claim falls to the responding party.  The Appellate Body’s interpretation effectively reverses the burden of proof for Article 2.12 claims.  But, as Members generally recognize, it must be the complaining party’s burden to prove all the elements of its legal claim.  This should include that the complaining Member’s

producers could not have adapted to the requirements within the interval period actually allotted and that a period of not less than six months would be effective to fulfill the legitimate objective of the challenged measure.  The fact that Article 2.12 may have been designed “to provide a degree of certainty” does not alter this fundamental concept.

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