Indian Sugar Subsidies in WTO Panel
· US Safeguard on
Solar Cells also Covered
At a meeting of the Dispute Settlement Body (DSB) on 22 July,
WTO members considered a request from China for a dispute panel to review a US safeguard
measure on imports of crystalline silicon photovoltaic products. Members also considered
three separate requests from Brazil, Australia and Guatemala for panels to review
India’s support measures for the sugar sector.
China
submitted its first request for a panel to review a US safeguard measure on imports
of crystalline silicon photovoltaic cells. China noted that the measure, which took
effect in January 2018, is in the form of a tariff rate quota imposed for a period
of four years, with unchanging in-quota quantities and annual reductions in the
rates of duty applicable to goods entered in excess of those quantities in the second,
third and fourth years. The duty rate for the first year was set at 30%.
China
said the measure violates the core principles of the WTO disciplining the proper
use of safeguard measures. The United States failed to provide a reasoned and adequate
explanation of any of the essential conditions justifying the imposition of a safeguard,
it said. This is not the first challenge against US safeguard measures, China noted,
with several prior challenges resulting in the US measures being found WTO-inconsistent
and Korea initiating similar proceedings against the US solar cells safeguard last
year. Consultations were held on 22 October 2018 with a view to reaching a mutually
satisfactory solution, China noted, but the talks failed to resolve the dispute,
prompting China to submit its request for the panel.
The United
States said that WTO rules allow a member to temporarily suspend concessions in
order to take a safeguard action when a product is being imported into its territory
in such increased quantities and under such conditions as to cause serious injury
or threat of serious injury to the member's domestic industry. The US has exercised
this right with respect to crystalline silicon photovoltaic products and imposed
a safeguard. The US process was open and transparent, and fully in accordance with
both US domestic safeguard law and WTO obligations. In addition, China's request
for a panel improperly includes a claim not raised in its request for consultations.
For these reasons, the US said, it is not in a position to agree to the establishment
of a panel.
The DSB
agreed to revert to the matter.
Australia,
Brazil and Guatemala presented their first requests for the establishment of panels
to determine whether measures in India supporting the domestic sugar and sugarcane
sector are compatible with WTO rules. The three initiated separate
dispute complaints challenging India’s domestic support that includes a system of
administered prices for sugarcane, a minimum selling price for sugar and the setting
of prices for sugar such as stockholding requirements and subsidies to maintain
buffer stocks as well as additional measures that provide financial assistance to
sugarcane producers, both at the federal and state levels. The three also
charge that India provides subsidies contingent on export through "Minimum
Indicative Export Quotas" (MIEQ) or other sugar export incentives.
Brazil,
Australia and Guatemala said that, as a result of the domestic support measures,
India is in violation of its obligations under the WTO’s Agreement on Agriculture
as the resulting sugar support exceeds India’s “de minimis”
level of 10% of the value of production, while the export subsidies are prohibited
subsidies under the Agreement on Subsidies and Countervailing Measures (SCM Agreement).
Australia
said the subsidies have led to a sharp jump in India's sugar production which has
contributed to significant oversupply on the global market, while Brazil said that
India's big increase in sugar allocated for its mandatory export quota has depreciated
the international price of sugar, harming Brazilian exporters. Guatemala also cited
harm to its sugar industry resulting from overproduction in India and a subsequent
fall in global sugar prices. Consultations between the three complainants and India
aimed at resolving the dispute were not successful, prompting each of the three
to request WTO dispute panels to rule on their complaints.
India
responded that its measures are aimed at preventing exploitation of over 35 million
vulnerable low-income, resource-poor farmers and enabling them to have a just and
equitable share in economic development, a goal that all WTO members solemnly took
upon themselves during the Uruguay Round and reaffirmed in the Doha Ministerial
Declaration. The measures identified by the three do not violate India's WTO obligations
and do not have any trade-distorting effect on the global sugar trade, nor do they
adversely affect the three's commercial interests, it said.
In fact,
India said, the measures have resulted in increasing the domestic price of sugar
within India, thereby making imports of sugar into India more lucrative and making
exports from India uneconomical. India said it was surprised by the decisions of
the three to request panels despite its offer to continue engagement to resolve
any issues and was not in a position to agree to any of the three panel requests.
The DSB
agreed to revert to the matter.
The European
Union reiterated its request that the United States cease transferring anti-dumping
and countervailing duties to the US domestic industry, arguing that every such disbursement
was a clear act of non-compliance with the rulings on this matter. Brazil and Canada
supported the EU statement, while the United States said it has taken all actions
necessary to implement the ruling.
The United
States said that once again the European Union has failed to provide a status report
to the DSB concerning dispute DS316. The European Union repeated that the matter
is subject to new compliance proceedings and thus there was no obligation on the
EU to submit a status report.
The United
States delivered a statement on the need for greater transparency in WTO dispute
settlement. For more than 20 years, the US has called on members to support the
WTO by bringing openness and accountability to its operations, it said, an issue
of systemic importance that is critical for the legitimacy of the WTO. To that end,
the US has formally offered to open every panel proceeding that it is party to and
invited every other member to agree to make this happen.
While
some WTO members have joined the US in supporting greater transparency in WTO dispute
settlement, most WTO members continue to insist on closed hearings and confidential
submissions, the United States said. By pushing to keep dispute settlement closed
and secret, these members deny other members, the public and the WTO itself of significant
benefits – enhancing members' understanding of the dispute settlement system and
promoting confidence in the professionalism and objectivity of its adjudicators.
The public has a legitimate interest in WTO dispute proceedings, the US added; acceptance
of the results of WTO rulings may be facilitated if those being asked to assist
in the task of implementation have confidence that the rulings are the result of
a fair and adequate process.
The United
States said there were no provisions under the WTO's Dispute Settlement Understanding
(DSU) that require non-transparent proceedings, that preclude
open meetings, that preclude members from making their submissions public and that
provide for confidentiality of "arguments" or "positions" of
a party". The US said it was long overdue for members to agree to open all
substantive dispute settlement meetings to observation by all members and the public,
and that each member should immediately take steps in each dispute it is involved
in to make its statements publicly observable and make its written submissions publicly
available.
Several
members thanked the United States for its initiative and said they supported improved
transparency in WTO dispute proceedings. Others said they were not convinced by
the US arguments and that WTO rules provided for confidentiality in WTO dispute
proceedings. Several said the most important priority for members was resolving
the deadlock over the appointment of new Appellate Body members, as there would
be no meetings to be opened to the public if the blockage continued.
Mexico,
speaking on behalf of 114 members, introduced once again the group's proposal to
start the selection processes for six vacancies in the Appellate Body – the four
existing vacancies plus the two vacancies that will emerge when the second terms
of Ujal Bhatia and Thomas Graham end on 10 December. Mexico
welcomed Qatar and the 38-strong African Group of WTO members as new co-sponsors.
The increasingly considerable number of members submitting the proposal reflects
a common concern over the current situation in the Appellate Body that is seriously
affecting its workings as well as the workings of the overall dispute settlement
system against the best interest of members, it said. WTO members have a responsibility
to safeguard and preserve the Appellate Body, the dispute settlement system and
the multilateral trading system, Mexico said.
The United
States responded that it was still not in the position to support the proposal and
that the systemic concerns that it previously identified remain unaddressed. For
more than 16 years, the US has been raising serious concerns with the Appellate
Body's overreaching and disregard for the rules set by WTO members. The US will
continue to insist that WTO rules be followed and will continue efforts and discussions
to seek a solution, it said.
Fifteen
members took the floor, on their own behalf or on behalf of groups of WTO members,
to express mounting concern over the impasse in the selection process. Several cited
the increasing urgency to find a solution - only 20 weeks are left until the Appellate
Body is down to one member - and the need for all members to play an active part
in the discussions on overcoming the impasse being facilitated by the DSB chair,
Ambassador David Walker of New Zealand. Several also reiterated that Article 17.2
of the DSU imposed an obligation on members to fill vacancies in the Appellate Body
as they arise, and that the selection process and the concerns regarding the Appellate
Body's actions should not be linked.
The United
States intervened for a second time to contest suggestions that it had failed to
participate in the discussions on how to overcome the blockage – no member has been
more engaged in these substantive issues than the US, it said. For the past year,
the US has outlined in detail at successive DSB meetings what its position is and
why the US believes the Appellate Body has strayed from the rules of the DSU. In
both discussions among small groups of members as well as under the informal process
under the General Council, US representatives have been there at every stage of
the process seeking to gain better understanding of members' views, it said. Last
month, the US sought to engage members on the fundamental issue of why the Appellate
Body has disregarded the clear rules set by members – members need to look deeper
into this issue, and without two-way engagement, it is difficult to see how the
US concerns can be addressed.
The DSB
chair reiterated that the matter urgently requires meaningful engagement by all
WTO members and that requirement becomes more urgent with each passing day. He noted
that he reported to the General Council on 7 May regarding his informal process
to overcome the impasse and that he held an informal open-ended meeting of members
on 18 July for transparency purposes. Amb. Walker added
that he will report back again to the General Council on 23 July.
The US
presented status reports with regard to DS184, "US
— Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan", DS160, "United
States — Section 110(5) of US Copyright Act", DS464, "United
States — Anti-Dumping and Countervailing Measures on Large Residential Washers from
Korea", DS471, "United
States — Certain Methodologies and their Application to Anti-Dumping Proceedings
Involving China" and DS488, "US
— Anti-Dumping Measures on Certain Oil Country Tubular Goods from Korea".
The European
Union presented a status report with regard to DS291, "EC
— Measures Affecting the Approval and Marketing of Biotech Products".
Indonesia
presented its status reports in DS484, "Indonesia
— Measures Concerning the Importation of Chicken Meat and Chicken Products",
and DS477 and
DS478, "Indonesia
— Importation of Horticultural Products, Animals and Animal Products".