Panel Established to Review Chinese Measures on Imports of Canadian Canola Seeds
· DS589: China — Measures Concerning the Importation of Canola Seed from Canada
· DS517: China — Tariff Rate Quotas for Certain Agricultural Products
· DS316: European Communities and Certain Member States — Measures affecting trade in large civil aircraft: Implementation of the recommendations adopted by the DSB
· Appellate Body appointments
· Other business
· Surveillance of implementation
At a meeting of the Dispute Settlement Body (DSB) on 26 July, WTO members agreed to the establishment of a panel at Canada’s request to examine measures in China affecting the import of canola seed from Canada. Members also considered a request from China for the establishment of a panel to review China’s compliance with a 2019 ruling regarding its administration of tariff rate quotas (TRQs) on certain agricultural products.
Canada submitted its second request for the establishment of a dispute panel to examine two sets of measures affecting the importation of canola seed from Canada, in response to alleged repeated detection of quarantine pests in shipments from the two Canadian companies. Canada's first request was blocked by China at the last DSB meeting on 28 June.
Canada reiterated that it was disappointed and concerned that sufficient scientific evidence to justify China’s canola measures had not been provided. Canada noted China is an important export market for Canadian canola seed, and China’s restrictive measures continue to have a serious, negative impact on Canadian producers. Canada said that in the absence of concrete steps from China to address its concerns, Canada is again requesting the establishment of a WTO panel. Canada said it remains open to continuing dialogue with China in a manner that will address its concerns and fully restore market access for Canadian canola seed in a timely fashion.
China said it regretted Canada's decision to submit a second request for a panel, saying it had constructively engaged with Canada on this matter and responded to Canada's request for information. China has intercepted diseases, insects and weeds from canola seed from Canada for a long time and its concerns remain. WTO rules allow members to take measures necessary to protect human, animal or plant life or health, and China's measures, adopted and implemented in a transparent and non-discriminatory manner, are in full compliance with WTO rules, China said.
The DSB agreed to the establishment of the panel. The United States, Chinese Taipei, Singapore, Russia, Japan, India, the European Union, Brazil, Norway and Australia reserved their third party rights to participate in the proceedings.
At the start of the DSB meeting, the United States noted it had submitted a request on 15 July for WTO authorization to impose retaliatory measures on Chinese imports in response to what the US said was China's failure to implement the 2019 WTO ruling in DS517. As China on 23 July contested the level of suspension of concessions proposed by the US, the matter is automatically referred to WTO arbitration, and the US request cannot be taken up at the DSB meeting, the US noted.
China said it wished to make clear that it objects to the level of suspension of concessions proposed by the US and disagrees with the US allegation that China has failed to bring its measures into compliance with its WTO obligations. China said any claims of alleged inconsistency must first be addressed through WTO compliance proceedings before the level of suspension of concessions can be assessed.
China also submitted its first request for the establishment of a dispute panel to determine whether China has complied with the 2019 ruling on its administration of TRQs for the import of wheat, rice and corn. China and the US originally agreed that China would have until 31 December 2019 to comply with the ruling. That deadline was extended by mutual agreement on seven different occasions, with the last deadline expiring on 29 June 2021.
China said it fully implemented the panel ruling by the original December 2019 deadline by adopting a series of compliance measures. The US said China did not comply with the WTO ruling but has failed to specify on what basis it considers China's implementation to fall short of full compliance. Article 21.5 of the WTO's Dispute Settlement Understanding (DSU) states that where there is disagreement regarding measures taken to comply with a WTO ruling, such disputes shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel.
Regrettably, the United States has instead chosen to pursue retaliation directly by filing a request under Article 22.2 of the DSU, China continued. The United States has further refused to engage with China on a sequencing agreement, as is customary practice in such a dispute. This has forced China to take the step of submitting a panel request to review its compliance efforts. China strongly believes the compliance panel will confirm China's full compliance. Meantime, to harmonize different ongoing proceedings in this dispute, the arbitrator under Article 22.6 should suspend its work pending the conclusion of the Article 21.5 proceedings, China said.
The United States said China continues to administer its wheat, rice and corn TRQs in a non-transparent and unpredictable manner. Not only is the public process by which China administers its TRQs non-transparent, but China also has refused US requests for additional information that would allow the United States to better understand how these TRQs have been administered in practice. Without such transparency, the United States and other WTO members are left without the basic information necessary to assess China’s compliance with fundamental WTO obligations.
For these reasons, the United States said it is not in a position to agree to the establishment of a compliance panel. The United States said it stands ready to work constructively with China to reach a resolution to this dispute, as it has done since adoption of the panel report.
On China's procedural claims, the United States said that nothing in the DSU supports the view that arbitration on a request for WTO authorization must be suspended while compliance panel proceedings are ongoing. Where no sequencing agreement has been reached, as in the present case, a complaining member must request authorization to retaliate within the timeframe specified in Article 22.6 of the DSU. Accordingly, in this proceeding, the United States has done so in a timely manner.
The DSB agreed to revert to the matter should a requesting member wish to do so.
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. For the item to be considered resolved and removed from DSB surveillance, the United States must stop fully transferring collected duties, the EU said.
The United States said it has taken all actions necessary to implement the ruling and that, once a member has said it has complied with a ruling, that member should no longer be required to submit status reports on implementation. The US said the EU was not asking other WTO members to submit status reports where these members have said they achieved compliance with the rulings in question, including one case where the EU was the complaining party.
The EU countered that the cases cited by the US were different from the CDSOA dispute, where the US was continuing to make disbursements of duties collected to US firms and where the WTO has authorized the EU and other members to impose retaliatory measures against the US for its non-compliance with the ruling.
The United States said it placed this item on the agenda of the DSB meeting to highlight that the EU has once again not provided WTO members with a status report concerning the dispute. It noted that on 15 June , the US and the EU reached an “Understanding on a cooperative framework for Large Civil Aircraft” which, among other things, suspends the retaliatory tariffs related to this dispute for five years, sets clear principles that any financing for the production or development of large civil aircraft will be on market terms, and commits the two sides to joint collaboration to address non-market practices in this sector. As part of this effort to enhance cooperation, the US intends to discuss its concerns relating to outstanding EU support measures with the EU bilaterally.
The US said it was therefore disappointed to again see the European Union inscribe the preceding agenda item for DS217, and call for a US status report, while not submitting an EU status report for DS316. The US said its position on status reports has been consistent across disputes: under Article 21.6 of the DSU, once a responding member announces to the DSB that it has complied, there is no further “progress” on which it can report, and therefore no further obligation to provide a status report.
The European Union said it welcomed the fact that the parties in this dispute have now reached an understanding on a cooperative framework for large civil aircraft, and that this has allowed the parties to suspend their respective retaliation measures for a period of five years. In the Airbus case, the EU notified a new set of compliance measures to the DSB which were subject to a compliance panel report. This was issued in December 2019 and was subsequently appealed by the EU on the grounds that significant aspects of the ruling cannot be regarded as legally correct and are very problematic from a systemic perspective.
Whether or not the matter is “resolved” is the very subject matter of this ongoing litigation, the EU said; thus, the EU considers that in these circumstances it is not required to submit an implementation status report to the DSB. The EU said it hopes that the understanding on a cooperative framework for large single aircraft will allow the parties to resolve their disagreements, including in relation to the provision of status reports to the DSB.
Mexico, speaking on behalf of 121 members, once again introduced the group's proposal to start the selection processes for filling vacancies on the Appellate Body. The extensive number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body that is seriously affecting the overall WTO dispute settlement system against the best interest of members, Mexico said for the group.
Twenty members took the floor to reiterate the importance of resolving the impasse over the appointment of new members as soon as possible and re-establishing a functioning Appellate Body and pledged their support to continue efforts to find a solution acceptable to all. Several members said addressing the current situation was a priority, and that the absence of a functioning Appellate Body not only undermines the right of all members but also undermines the functioning of the WTO.
The United States said it was not in a position to support the proposed decision. The US continues to have systemic concerns with the Appellate Body, which it has explained and raised over the past 16 years and across multiple administrations. The US said it believes that WTO members must undertake fundamental reform if the dispute settlement system is to remain viable and credible, and that the system can and should better support the WTO’s negotiating and monitoring functions. The US said it looked forward to further discussions with members on those concerns and to constructive engagement with members at the appropriate time.
For the 121 members, Mexico came back to say that the fact a member may have concerns about certain aspects of the functioning of the Appellate Body cannot serve as pretext to impair and disrupt the work of dispute settlement. There was no legal justification for the current blocking of the selection processes, which is causing concrete nullification and impairment of rights for many members, it said.
The chair of the DSB, Ambassador Didier Chambovey of Switzerland, noted that the matter is being dealt with by the chair of the General Council in preparation for the WTO's 12th Ministerial Conference later this year. Resolving the impasse is of great interest to all WTO members and a matter which also requires political engagement by all members.
In his role as facilitator, Ambassador George Mina of Australia reported to the DSB on his latest discussions with the Philippines and Thailand on efforts to overcome their differences in the dispute proceedings for DS371, “Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines”.
Ambassador Mina noted that on 31 March he reported that the talks were valuable in providing the parties with an opportunity to present their respective views on ways and means of resolving outstanding issues, and proposed continuation of the process until the end of July. Since then, the parties have continued to engage constructively with him in discussions, as well as directly with each other, and there is hope these mutually supportive processes will be able progressively lead the parties to build up elements of an agreement. However, additional time will be needed. Thus, the facilitator-assisted discussions will need to be extended beyond 31 July, he said.
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.”