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Info Service on WTO and Trade Issues (Jan21/11) Geneva, 26 Jan (Kanaga Raja) – A request for dispute panel establishment by Hong Kong, China over new origin marking requirements imposed by the United States on goods imported from Hong Kong, China was blocked by the United States at a meeting of the WTO Dispute Settlement Body (DSB) on 25 January. This was a first-time request and panel establishment will be automatic when the request comes up again at the DSB. Meanwhile, a request for panel establishment by the European Union over Indonesia’s export prohibition on nickel ore, as well as the domestic processing requirements on minerals, in particular nickel ore and iron ore, was blocked by Indonesia at the DSB meeting. This was also a first-time request and panel establishment will be automatic when the request comes up again at the DSB. In other actions, Korea has appealed the panel report in a dispute (DS553) raised by Japan over anti-dumping duties imposed by Korea on stainless steel bars from Japan. HONG KONG, CHINA DISPUTE AGAINST US In its communication to the DSB (WT/DS597/5) concerning its dispute with the United States, Hong Kong, China said that on 11 August 2020, the United States Customs and Border Protection (USCBP) published a notice that, after 25 September 2020, goods produced in Hong Kong must be marked to indicate that their origin is “China” for the purposes of the origin marking requirement set forth in Section 304 of the Tariff Act of 1930, 19 USC S 1304. By subsequent notice, the USCBP extended the date for compliance with this requirement to 10 November 2020. According to Hong Kong, China, Section 304 of the Tariff Act of 1930 requires articles of non-United States origin imported into the United States to be marked “in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article”. Prior to the imposition of the revised origin marking requirement as announced in the notice published on 11 August 2020, the United States has required, and therefore permitted, goods produced in Hong Kong, China to be marked to indicate that their origin is “Hong Kong”, it said. The United States’ prior treatment of goods of Hong Kong, China origin was consistent with the fact that the United States generally permits goods originating within the territory of other WTO Members, including separate customs territory Members, to be marked with the English name of that territory. According to Hong Kong, China, the USCBP published the notice on 11 August 2020 pursuant to the “Executive Order on Hong Kong Normalization” signed by the President of the United States Donald J. Trump on 14 July 2020. The Executive Order suspends the application of Section 201(a) of the United States-Hong Kong Policy Act of 1992, 22 USC S 5721(a), to a variety of United States statutes, including Section 304 of the Tariff Act of 1930. According to Hong Kong, China, under Section 201(a) of the United States-Hong Kong Policy Act of 1992, the laws of the United States apply to Hong Kong, China in the same manner as those laws applied to Hong Kong prior to the resumption of the exercise of sovereignty by the People’s Republic of China on 1 July 1997, unless the President of the United States determines and issues an Executive Order that Hong Kong, China “is not sufficiently autonomous to justify treatment under a particular law of the United States … different from that accorded the People’s Republic of China”. The suspension of Section 201(a) of the United States-Hong Kong Policy Act of 1992 as it applies to Section 304 of the Tariff Act of 1930 is the legal basis upon which the USCBP ordered that goods produced in Hong Kong “may no longer be marked to indicate “Hong Kong” as their origin, but must be marked to indicate “China”.” According to Hong Kong, China, the measures at issue include, but are not limited to: 1. Section 304 of the Tariff Act of 1930, 19 USC S 1304; 2. The USCBP regulations implementing Section 304, set forth in 19 CFR Part 134; 3. Title II of the United States-Hong Kong Policy Act of 1992, 22 USC SS 5721-5724; 4. The “Executive Order on Hong Kong Normalization” signed by the President of the United States Donald J. Trump on 14 July 2020; 5. The USCBP, “Country of Origin Marking of Products of Hong Kong”, 85 Fed. Reg. 48551 (11 August 2020). Hong Kong, China said the US measures listed in its panel request are inconsistent with the US obligations under the following provisions of the GATT 1994, the Agreement on Rules of Origin, and the Agreement on Technical Barriers to Trade: 1. Article I:1 of the GATT 1994, because in respect of the rules and formalities of importation pertaining to marks of origin, the United States does not extend to products of Hong Kong, China origin immediately and unconditionally the same advantages, favours, privileges, or immunities that the United States extends to like products originating in the territory of other countries; 2. Article IX:1 of the GATT 1994, because the United States does not accord to the products of Hong Kong, China treatment with regard to marking requirements no less favourable than the treatment that the United States accords to like products of other countries; 3. Article X:3(a) of the GATT 1994, because the United States does not administer its origin marking requirements in a uniform, impartial, and reasonable manner; 4. Article 2(c) of the Agreement on Rules of Origin, because in respect of products produced in Hong Kong, the United States requires the fulfilment of a certain condition not related to manufacturing or processing, as a pre-requisite for the determination of the country of origin; 5. Article 2(d) of the Agreement on Rules of Origin, because the United States discriminates between Hong Kong, China and other Members in respect of the rules of origin that it applies to imports; 6. Article 2(e) of the Agreement on Rules of Origin, because the United States does not administer its rules of origin in a consistent, uniform, impartial, and reasonable manner; 7. Article 2.1 of the Agreement on Technical Barriers to Trade, because the origin marking requirements that the United States applies to imports are technical regulations and, in respect of those technical regulations, the United States does not accord to products imported from Hong Kong treatment no less favourable than the treatment that it accords to like products originating in other countries. In addition, and as a consequence of the foregoing, the measures at issue appear to nullify or impair the benefits accruing to Hong Kong, China directly or indirectly under the cited agreements, it said. Hong Kong, China said that it had requested consultations with the Government of the United States on 30 October 2020. Consultations were held on 24 November 2020 with a view to reaching a mutually satisfactory solution, but failed to resolve the dispute. According to a Geneva trade official, Hong Kong, China said that the US measure, which took effect on 10 November, is discriminatory and fails to recognize that Hong Kong, China is a separate customs territory and a WTO member in its own right. Hong Kong, China pointed out that it has its own laws and a regulatory regime, including on safety standards and licensing requirements. An unnecessary burden is being imposed on enterprises from Hong Kong through the US actions, which are causing confusion and concern to consumers and the markets, it said. They are also undermining the investments made by businesses in Hong Kong in developing the Hong Kong brand. The application of rules of origin should in no means be used to obtain a political end, Hong Kong, China said. According to a Geneva trade official, the United States said that it was not in a position to agree to the panel request. Noting that a new US president was inaugurated on 20 January, the United States said that it is currently in transition to a new administration. Hong Kong, China said that it has looked at the circumstances pointed out by the US but still considered it necessary to proceed with its panel request. US BLOCKS APPELLATE BODY APPOINTMENTS Under a separate agenda item, the United States blocked a joint proposal by 121 WTO members calling for the start of the selection process to fill seven vacancies on the Appellate Body (AB). The US again said that it was not in a position to agree to the joint proposal, introduced by Mexico on behalf of 121 WTO Members, that called for the simultaneous launch of the selection process to fill the vacancies as soon as possible. According to a communication (WT/DSB/W/609/Rev.19) to the DSB, the proponents proposed that given the urgency and importance of filling the vacancies in the Appellate Body, in compliance with the DSU and so that it can carry on its functions properly, that, at its meeting, the DSB takes a decision with regard to the following: (1) to launch: (i) one selection process to replace Mr Ricardo Ramirez Hernandez, whose second four-year term of office expired on 30 June 2017, (ii) a second selection process to replace Mr. Hyun Chong Kim, who resigned from the Appellate Body as of 1 August 2017, (iii) a third selection process to replace Mr. Peter Van den Bossche, whose second four-year term of office expired on 11 December 2017, (iv) a fourth selection process to replace Mr. Shree Baboo Chekitan Servansing, whose four-year term of office expired on 30 September 2018, (v) a fifth selection process to replace Mr. Ujal Singh Bhatia, whose second four-year term of office expired on 10 December 2019, (vi) a sixth selection process to replace Mr. Thomas R. Graham, whose second four-year term of office expired on 10 December 2019, and (vii) a seventh selection process to replace Ms. Hong Zhao, whose first four-year term of office expired on 30 November 2020. (2) to establish a Selection Committee, consistent with the procedures set out in document WT/DSB/1 and with previous selection processes, composed of the Director-General and the Chairpersons of the General Council, the Goods Council, the Services Council, the TRIPS Council and the DSB, to be Chaired by the DSB Chair; (3) to set a deadline of a 30-day period after the date of its decision, for Members to submit nominations of candidates; and (4) to request the Selection Committee to carry out its work in order to make recommendations to the DSB within 60 days after the deadline for submitting nominations of candidates, so that the DSB can take a decision to appoint seven new Appellate Body members as soon as possible. According to a Geneva trade official, the United States said that it was not in a position to support the proposed decision. It said that as WTO members know, a new US president was inaugurated on 20 January, and the US is currently transitioning to a new administration.
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