US, Canada both get 10 months to implement rulings

by Chakravarthi Raghavan

Geneva, 28 Feb 2001 --   The United States has been given 10-months  time from the adoption of the ruling against it by the WTO, or  till 26 July 2001, to implement a recommendation that it change its 1916 anti-dumping law (violating the WTO agreement), which enables US private parties to initiate complaints in courts for levy of civil or criminal penalties against importers of ‘dumped’ products.

In a separate ruling, Canada was also given 10 months or till 12 August 2001 to change its law and provide a 20-year patent protection for all patents.

The arbitrator’s decision on the time period to implement the ruling, against the arcane, and hitherto seldom invoked 1916 US anti-dumping law, puts pressure on the Bush administration to initiate and get legislation through the new Congress within the time limit.

Though the same Republican party technically controls both houses of the Congress and the White House, given the propensity in the US to think that the rest of the world is out of line, and other governments and international accords must fall in line with US law and practice, this will prove a interesting test for a President and his USTR, who are both proclaiming themselves to be ‘free traders’ (and wanting to open up other people’s markets - a credo of mercantalist,  rather than free-trade theories)

The panel/Appellate Body ruling against the US law enabling such private litigation was adopted by the Dispute Settlement Body of the WTO on 26 September 2000. The WTO dispute against the US was raised by the European Union and Japan, as separate cases, and was heard by two separate panels, but by the same panellists, and then appealed to the Appellate Body.

The arbitrator’s award issued Wednesday set the ‘reasonable period of time’ for the US to implement the ruling at 10 months from the date of adoption or on 26 July 2001.

A member of the Appellate Body, Mr. S.Ganesan, was chosen by all sides to be the arbitrator to settle the ‘reasonable period of time’.

Before the arbitrator, the EC said the reasonable period of time should be 6 months and 10 days from the date of adoption; Japan said that the US should only be given 6 months, while the US wanted 15 months.

The US cited the complexities of its domestic legislative process, the rules of the House and the Senate about when a bill could be brought up for floor action, and the practices of the US Congress: The EC and Japan cited examples of how when it felt impelled, the administration and the Congress have acted more speedily.

The arbitrator’s ruling sets out the arguments of all sides, and gives his own rationale for the 10-month period given to the US to comply - taking account of a new US administration, the US legislative process practices, mandatory and otherwise, and the time normally taken for the legislative process and the flexibility shown and the speed with which the US Congress (House and Senate) have acted.

But in effect, the arbitrator split the difference between the two (6 and 15 months) and set 10 months, though giving some arguments about how he arrived at the 10-month time period.

The only benchmark of relevance, perhaps, is in the arbitrator citing Art.XVI:4 of the Marrakesh Agreement of the WTO requiring Members to ensure conformity of its laws, regulations and administrative procedures in line with the WTO obligations (and what is not mentioned by the arbitrator is that this should have been done by the US before the entry into force of the WTO), and the DSU requirement (Art.21) for prompt compliance.

In a separate case, relating to the ruling against Canada over the term of patent protection, in a case brought by the United States, Canada wanted 14 months and 2 days as ‘reasonable period of time’ to implement, since it would need an amendment of its patent law; the US said, being a parliamentary system, six months was sufficient.

The arbitrator, another Appellate Body member, Mr.Claus-Dieter Ehlermann, also set the time for implementation by Canada as 10 months, in effect again splitting the difference between the parties. He too, has set out the arguments of the parties, including that by Canada; that ‘democratic state’ legislative processes involve debate, while the US argued that domestic controversies and contentiousness of legislation for implementation was not relevant!

Ehlermann said, the points raised by Canada about democratic process and international treaty obligation are of great importance, but not necessary for him to set a reasonable period of time. Since the TRIPS agreement and its requirement of a 20-year patent period leaves no room for legislative discretion, legislative choices and divisiveness of debate in the Canadian Parliament could not be invoked for a 14-month time period. Ten months would suffice, the arbitrator said.

Both arbitrator’s said their rulings apply only to the particular cases, though both have cited or referred to citations before them of other arbitrators and other views on a reasonable period of time.

On a separate question that figured before the DSB Thursday, about the time to be given to third parties to notify their interest in participating before a panel, in regard to a compliance panel involving subsidy issues, the WTO secretariat produced a note which spoke of a GATT/WTO practice and making this a rule.

Perhaps, at some future point, a future secretariat would come about the practice of ‘splitting’ the difference in settling the reasonable period of  time. Welcome to the member-driven rules-based world trading system.-SUNS4847

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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