New Panels Established to Review US Solar Cell
Duties, Indian Sugar Programmes
At a meeting of the Dispute Settlement Body (DSB) on 15 August,
WTO members agreed to a request from China for a dispute panel to review a US safeguard
measure on imports of crystalline silicon photovoltaic products. Members also agreed
to establish panels requested by Brazil, Australia and Guatemala to review India’s
support measures for the sugar sector.
China
submitted its second request for a panel to review a US safeguard measure on imports
of crystalline silicon photovoltaic cells (CSPV). China's first request was blocked
at a DSB meeting on 22 July.
China
said that it does not deny the right of WTO members to temporarily suspend concessions
and take safeguard measures on imports of CSPV but the United States failed to conform
to the most essential conditions that would justify the imposition of the safeguard.
China said it was confident the panel will also find the US did not respect many
of the procedural guarantees governing safeguard proceedings. These defects have
resulted in the imposition of safeguard measures that do not constitute relief limited
to what is necessary to “prevent or remedy serious injury and facilitate adjustment”
in accordance with the obligations under the WTO's Safeguards Agreement.
The United
States reiterated 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 competent US authority determined these conditions
were being met. The US added that it was ready to engage in the panel proceedings
and asked China to support opening the panel meetings to the public.
The DSB
agreed to the establishment of the panel. The European Union, Japan, India, Brazil,
the Philippines, Russia, Chinese Taipei, Canada and Malaysia reserved their third
party rights to participate in the proceedings.
Brazil,
Australia and Guatemala made their second requests for panels to determine whether
measures in India supporting the domestic sugar and sugarcane sector are compatible
with WTO rules. Their first requests were blocked by India at the DSB meeting on
22 July.
The three
countries reiterated their concerns that India's support exceeds the levels of domestic
support allowed to India under the WTO's Agriculture Agreement and that India was
granting prohibited export subsidies. They also reiterated concerns about the negative
impact this support was having on global market prices for sugar and their sugar
producers. The three asked that a single panel be established to review the claims
as the three complaints deal with essentially the same subject matter and were filed
at the same time.
Although
responding separately to the three complaints, India delivered the same reply: the Indian measures in question were not having
a trade-distorting effect on the global sugar market nor were they affecting the
economic interests of the complainants. India also reiterated that the measures
were consistent with its WTO obligations. The support is intended to provide for,
and avoid the over-exploitation of, 35 million vulnerable, resource-poor farmers
in the country. India said it could not agree to the establishment of a single panel
as the matters were distinct and separate.
Brazil,
Australia and Guatemala all expressed disappointment with India's refusal to agree
to a single panel to review their claims, noting the extra burden this would place
on the parties as well as the WTO Secretariat.
The DSB
agreed to the establishment of the three panels. The United States, the European
Union, Honduras, Russia, Costa Rica, Colombia, Japan, Thailand, Panama, Canada and
China all reserved their third party rights in the three proceedings. Australia,
Brazil and Guatemala also reserved third party rights in the proceedings of their
fellow complainants.
The European
Union presented its first request for a panel to rule on various measures concerning
the production, importation and marketing of pharmaceutical products in Turkey.
Turkish authorities have adopted measures to progressively achieve the localisation of production for a substantial part of the pharmaceutical
products consumed in Turkey. One measure requires foreign producers of pharmaceutical
products exporting to Turkey to move their production into Turkey in order for their
products to be eligible for the national reimbursement scheme, which covers the
vast majority of sales of medicines to patients.
Another
measure, said the EU, is an import ban on localized products, whereby the importation
of a pharmaceutical product that is localized is no longer permitted. Another is
the prioritization measure whereby priority is given to the review of applications
of domestic pharmaceutical products for inclusion in the list of products covered
by the reimbursement scheme, as well as with respect to any pricing and licensing
policies and processes, over the review of the applications of like imported products.
These measures are a clear violation of Turkey’s WTO obligation to treat foreign
companies on an equal footing with domestic ones, the EU said.
Turkey
said it deeply regretted the EU request for a panel. The request is premature as
Turkey is fully engaged with consultations with the EU on the matter and hopes to
continue those constructive discussions. The dispute involves Turkey's social security
system and Turkey's policies aimed at ensuring reliable and affordable access to
medicines for its people. Turkey's measures are fully consistent with its WTO obligations,
Turkey said, adding that matters concerning a member's healthcare and social security
policies should not be subject to WTO panel review. For these reasons, Turkey said
it was not in a position to agree to the EU's request for a panel.
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.
China
delivered a statement concerning the panel ruling, as amended by the Appellate Body,
in DS437. The Appellate Body issued its ruling on 16 July regarding
US compliance with an earlier WTO ruling on the matter.
China
said it was disappointed with various aspects of the ruling, particularly in regard
to the sweeping interpretation as to what can be considered a "public body"
for determining whether a subsidy exists. This analysis should be of grave concern
to all WTO members. Nevertheless, China said the ruling is sufficient to establish
that the US has acted unlawfully in the investigations at issue by countervailing
alleged input subsidies that do not exist. In regard to other aspects of the ruling
– on the US Commerce Department's use of non-Chinese benchmarks to determine adequate
remuneration and whether alleged subsidies were specific to certain Chinese producers
– the findings of the panel and Appellate Body will help address the Commerce Department's
abuses in these areas, China said.
China
said the US does not have a monopoly on dissatisfaction with Appellate Body reports,
but, unlike the US, China does not believe the Appellate Body exceeded its authority.
China called on the US to reform its countervailing duty practices and bring them
in line with the ruling.
The United
States replied with a detailed critique of the panel and Appellate Body findings
on the key issues at the centre of the dispute. In all
of these areas, the US referred to a dissenting opinion issued by one of the three
Appellate Body members which questioned the majority's findings on these issues.
The US
said it was deeply troubling that China was using the WTO dispute settlement system
to evade WTO subsidy disciplines. The continued and increasing role the Chinese
government takes in managing China's economy is a widely known fact, the US said,
and the idea that the US Commerce Department investigation was not sufficient to
meet the requirements of the WTO's Subsidies Agreement is incredible. The approach
taken in the Appellate Body's report calls into question the ability of members
to use WTO tools to counteract subsidies provided by a member such as China and
poses a very serious problem with grave implications for the global trading system,
the US declared.
The DSB
adopted the panel report as modified by the Appellate Body.
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 two members ends on 10 December. Mexico said 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. 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 once again responded that it was still not in a 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. It said the
Appellate Body's ruling in the compliance proceedings for DS437 was another egregious
example of the many concerns raised by the US. The US will continue to insist that
WTO rules be followed and will continue efforts and discussions to seek a solution
on these important issues, it said.
Sixteen
members took the floor to express growing concern over the impasse in the selection
process, which has now dragged on for more than two years. Several cited the increasing
urgency to find a solution - only 16 weeks are left until the Appellate Body will
be reduced 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. Malaysia
told members it was now supporting the joint proposal, bringing the number of co-sponsors
up to 115 WTO members.
The DSB
chair, Ambassador David Walker of New Zealand, reiterated that the matter urgently
requires meaningful engagement by all WTO members. Amb.
Walker noted that he reported to the General Council on 23 July regarding his informal
process to overcome the impasse and that his report to members is public. The chair
will be relying on feedback from the General Council chair and members in taking
forward the next phase of work, and his door remained open to delegations for further
discussions on the matter, he added.
The United
States 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", and DS471, "United
States — Certain Methodologies and their Application to Anti-Dumping Proceedings
Involving China".
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 DS477 and
DS478, "Indonesia
— Importation of Horticultural Products, Animals and Animal Products".