Statements by the United States at the Meeting of the WTO Dispute Settlement Body
July 10, 2012
Statement during agenda adoption:
The United States would like to confirm the announcement just made by the Chairman that Canada, Mexico, and the United States have withdrawn item 2 from the proposed agenda through a letter earlier today. Canada, Mexico, and the United States would like to make statements under Other Business to explain the withdrawal of the item to Members.
1. CHINA – MEASURES RELATED TO THE EXPORTATION OF RARE EARTHS, TUNGSTEN AND MOLYBDENUM
A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE UNITED STATES (WT/DS431/6)
B. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN UNION (WT/DS432/6)
C. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY JAPAN (WT/DS433/6)
The United States is concerned about Chinese measures that restrain the exportation of certain raw materials – i.e., rare earths, tungsten, and molybdenum – that are critical to manufacturing industries in the United States and in other Members.
The export restraints at issue include export quotas, export duties, various restrictions on the right to export, as well as administrative requirements that limit exports of these materials from China by increasing the burdens and costs for exporting. These measures are similar to the policies that the United States, the European Union, and Mexico successfully challenged in the China – Raw Materials dispute.
And, as in that dispute, while we have seen assertions by China that the measures are intended to protect the environment, neither the history nor the design of the measures supports those assertions. Instead, the measures appear to be designed to tilt the playing field in favor of Chinese domestic industries purchasing these raw materials over their foreign competitors.
In fact, because of China’s position as a leading global producer of these materials, China’s export restraint measures give China the ability to affect significantly global supply and pricing. These measures can provide important advantages to China’s downstream producers, to the detriment of their counterparts in the United States and other Members. These measures also can create substantial pressure on foreign producers to move their operations, jobs, and technologies to China.
The materials at issue are key inputs in the production of a wide range of important products, such as hybrid car batteries, wind turbines, energy‑efficient lighting, steel, advanced electronics, automobiles, petroleum, and chemicals.
As described in more detail in the U.S. panel request, these restraints appear to be inconsistent with provisions of the GATT 1994 and China’s Protocol of Accession.
The United States has attempted to resolve our concerns through dialogue with China, and formal WTO consultations were held on April 25 and April 26 of this year. Unfortunately, these efforts failed to resolve the dispute.
Accordingly, the United States requests that the DSB establish a panel to examine the matter set out in our panel request with standard terms of reference.
A. STATEMENTS BY CANADA, MEXICO, AND THE UNITED STATES ON THE DRAFT DSB DECISION RELATING TO THE APPELLATE BODY REPORTS IN UNITED STATES – CERTAIN COUNTRY OF ORIGIN LABELLING (COOL) REQUIREMENTS
Mr. Chairman, the United States would like to address why we agreed that the second agenda item should not be taken up at this DSB meeting. The United States wishes to thank those delegations that participated in a series of discussions over the past week relating to the draft DSB decision put forward by Canada, Mexico, and the United States. While those discussions were very useful, unfortunately, there was not sufficient time to discuss fully the draft decision. Accordingly, the parties to the disputes decided to withdraw the draft DSB decision in order to permit those discussions to continue. For context, we would like to share with Members some information on the discussions held over the past week.
The issue we sought to address through the draft DSB decision is what should the DSB do when an Appellate Body report is circulated outside the 90-day time limit set out in Article 17.5 of the DSU. Mr. Chairman, we all value the WTO as a rules-based trading system. The language of Article 17.5 sets out a rule that does not contain any exception or mechanism for extension beyond 90 days: “In no case shall the proceedings exceed 90 days.” At the same time, however, Members have recognized in a number of appeals over the years that there will be some exceptional circumstances in which it is not possible or desirable that the report be issued within that time limit. The question then is what to do in those exceptional circumstances.
The draft DSB decision was a joint effort to respond to those circumstances by providing transparency to all DSB Members and have Members act to affirm their respect for the rule. That is, the draft DSB decision recognized the existence of the rule while providing a degree of flexibility by acting to deem the rule to be satisfied in the exceptional circumstances of this dispute. The draft DSB decision would therefore in our view strengthen our rules-based trading system.
As also noted in our discussions with delegates, the draft DSB decision would also confirm the view expressed by the Appellate Body itself. In its communication to the DSB Chair transmitting the reports for circulation, the Appellate Body stated: “The[ reports] will be circulated to Members of the World Trade Organization at 5.00 p.m. today, in accordance with paragraph 5 of Article 17 of the [DSU].” Now, this statement is not technically accurate but demonstrates that the Appellate Body deems the report to be in conformity with the requirements of Article 17.5. Through the draft DSB decision, the DSB would support the Appellate Body by similarly deeming the rule to have been met.
Nonetheless, our discussions over the past week revealed that additional discussions with Members would be helpful to explore the best approach for responding to the issues presented, and we are willing to accommodate the desire for further discussions in order to deepen our mutual understanding of these issues with a view to finding shared approaches.
A number of delegations also noted that the draft DSB decision deals with one issue – what to do when a report is circulated outside the 90-day time limit – but does not address the underlying issue: why are reports circulated outside that time limit and what could be done to assist in meeting that time limit? We agree that this is an important issue for Members to discuss. Finding potential solutions to this problem will require a better understanding of the facts and circumstances leading to delays.
There are clearly a number of issues that would require further investigation. Some issues may be more practical or procedural – the Chairperson of the Appellate Body has raised some ideas in her talk at the recent event to welcome a new Appellate Body member. Some issues may be legal in nature. For example, in a talk at the Graduate Institute (HEI), the Chairperson of the Appellate Body noted the proliferation of claims under Article 11 of the DSU and the time and resources needed to deal with those claims. We could consider the impact of these sorts of claims on the overall timeframe for appeals. And some issues may be more structural. For example, in relation to ideas to make Appellate Body members full‑time, it could be useful to consider what impact outside activities may have on the Appellate Body’s work. There are many more issues Members could explore and discuss.
Therefore, as suggested by a number of delegations in our conversations, it would be useful to discuss this underlying issue as well. Delegations may wish to start informally and then could consult with the DSB Chair to devise an appropriate process in search of information and potential solutions.
We believe that all Members share a strong interest in reinforcing and strengthening our rules-based multilateral trading system. Addressing these issues would contribute importantly to this end.
China – Measures Related to the Exportation of Various Raw Materials (WT/DS394; WT/DS395; WT/DS398).
WT/DS384/16; WT/DS386/15 (3 July 2012).