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TWN
Info Service on WTO and Trade Issues (May24/02) Geneva, 29 Apr (D. Ravi Kanth) — For the 75th time, the United States on 26 April blocked a request from 130 members for filling the vacancies at the World Trade Organization’s Appellate Body (AB), the highest adjudicating body under the WTO’s enforcement function, creating serious doubts whether the AB will be restored at all, said people familiar with the development. At a meeting of the WTO’s Dispute Settlement Body (DSB) on 26 April, Colombia, on behalf of the 130 members, called for starting the selection process to fill the vacancies on the Appellate Body on an expeditious framework. It argued that there is growing concern over the continued paralysis of the Appellate Body, which is seriously affecting the overall WTO dispute settlement system (DSS) against the best interest of the members. Significantly, Colombia said that the ongoing discussions on the reform of the DSS should not prevent the Appellate Body from continuing to operate fully, adding that members shall comply with their obligation under the Dispute Settlement Understanding (DSU) to fill the vacancies as they arise. While twenty-six members intervened to support the joint proposal tabled by Colombia on behalf of the 130 members, the US stuck to its six-year-old position that Washington does not support the proposed decision to commence the selection process for the appointment of Appellate Body members as its longstanding concerns with the WTO dispute settlement system remain unaddressed. China said that “like others, we reiterate our firm commitment to an independent, impartial two-tier dispute settlement system, which has not only facilitated prompt and fair resolution of disputes between members, but also provided security and predictability to the multilateral trading system.” As per the mandate of the WTO’s 13th ministerial conference (MC13) that concluded in Abu Dhabi on 2 March (WT/MIN(24)/37), ministers instructed WTO members to “accelerate discussions in an inclusive and transparent manner, build on the progress already made, and work on unresolved issues, including issues regarding appeal/ review and accessibility to achieve the objective by 2024 as we set forth at MC12.” However, the prospects for a fully functioning two-tier dispute settlement system, with a binding Appellate Body, hangs in the balance, as Washington appears to be in no mood to agree to a binding “appeal/review” mechanism by the end of 2024, said several people who asked not to be quoted. NEW FACILITATOR FOR DSS REFORM TALKS At the meeting, the outgoing chair of the DSB, Ambassador Petter Olberg of Norway, informed members that Ambassador Usha Dwarka-Canabady of Mauritius will oversee the DSS reform discussions as the new facilitator. Ambassador Canabady succeeded Mr Marco Molina, deputy trade envoy of Guatemala, the informal convenor of the DSS reform discussions. Despite being praised by the US and other industrialized countries for navigating the informal discussions, Mr Molina was removed by his government over his alleged “questionable conduct”, said a Guatemalan official at MC13, on the condition of anonymity. Several developing countries including India, Indonesia, and from Africa severely criticized Mr Molina for his alleged opaque and non-inclusive conduct of the negotiations, said people, who asked not to be quoted. Against this backdrop, it remains to be seen how Ambassador Canabady will conduct the formal negotiations, said people who asked not to be identified. Before this new assignment, Ambassador Canabady had acted as the facilitator for the multilateral e-commerce work program, on which trade ministers at MC13 agreed to maintain “the current practice of not imposing customs duties on electronic transmissions until the 14th Session of the Ministerial Conference or 31 March 2026, whichever is earlier. The moratorium and the Work Programme will expire on that date.” Nevertheless, the new facilitator has been tasked with complying with a strong transparency mandate that includes reporting at each regular meeting of the General Council, and to the DSB, as appropriate. She is required to present a work plan and the timetable for the process at the next General Council meeting in May, Ambassador Olberg told members, according to people present at the meeting. With the dispute settlement reform discussions being formalized, the rules of procedure for meetings of WTO bodies will apply to this process, including interpretation and virtual participation, which will also be available for capital-based officials, Ambassador Olberg informed members. Around three dozen members welcomed the decision, though, with varying levels of emphasis on how the process should be carried out. While some members like China called for “interest-based discussion(s)”, other members emphasized on fully transparent and inclusive discussions. Also at the DSB meeting, the rulings/recommendations of the dispute panels in several trade disputes came up for discussion. For example, in the dispute over certain measures imposed by the EU and certain Member states concerning palm oil and oil palm crop-based biofuels, Malaysia welcomed the panel’s findings against the EU’s allegedly questionable measures, wherein the panel upheld Malaysia’s position on important elements of the dispute. The panel found that certain EU provisions were inconsistent with the WTO’s most-favored-nation and national treatment principles. However, the EU maintained that the panel concurred with the EU’s second renewable energy directive aimed at achieving legitimate environmental objectives. The EU said the panel agreed that the legal framework of the directive is WTO-compatible, provided certain changes are made. Several countries including Brazil, the Russian Federation, Indonesia, the US, and Colombia intervened to comment on the panel’s findings. CHINA-AUSTRALIA DISPUTE In a major trade dispute concerning anti-dumping and countervailing duty measures imposed by Australia on certain Chinese products, China welcomed the panel’s findings on several aspects. China said the dispute involving AD (anti-dumping) duties “addressed measures and methodologies used by Australia’s Anti-Dumping Commission in anti-dumping and countervailing matters.” According to the panel’s findings, “the methodologies, and duties stemming from them, were inconsistent with Australia’s obligations under the WTO Agreement,” China said. Beijing highlighted two aspects of the panel’s findings. “First, the Panel ruled that costs from another country cannot replace country of origin costs in working out normal value under the Anti-dumping Agreement, and rejected Australia’s argument that actual costs incurred by the Chinese exporters concerned did not need to be used for normal value determination,” China said. The Panel, according to China, “noted that Australia’s methodology, over the many years it has been practised against Chinese exporters, has been “materially different” from what the Anti-Dumping Agreement requires. The Panel observed that no explanation was provided by Australia as to how the price at which a company that was not the Chinese exporter under consideration “in whatever WTO Member it may be located” could yield a referent for the actual cost of the Chinese exporter.” According to the panel, “Australia’s approach of increasing normal values for Chinese exporters in later procedures using a price index that was specifically chosen “because it [was] comprised of non-China import prices” only made the problem worse.” More importantly, “this is of systemic importance,” China said. China said the panel’s report “notes that Australia’s inconsistent conduct mirrored that in “an almost identical claim” brought by Indonesia in 2018, Australia – Anti-Dumping Measures on A4 Copy Paper (DS529), adopted by the DSB on 27 January 2020.” China said that the “findings in this report impugn many concepts that Australia applies in normal value determinations not only with respect to products exported from China but also with respect to products exported from other WTO Members as well.” In response to China’s comments, Australia said that the ruling provides further confirmation that investigating authorities are afforded flexibilities under the WTO’s Anti-dumping Agreement when constructing normal value and that it would engage in good faith with China to negotiate a reasonable period of time for Australia to bring its measures into conformity with the ruling. Aside from the above two trade disputes, the US, for the tenth time, voiced its concerns over the ruling issued by a panel against “US – Origin Marking Requirement (Hong Kong, China)” at the DSB meeting. The US apparently referred back to its previous statements regarding its position on essential security (grounds). Interestingly, the US has appealed the panel’s findings before the Appellate Body, knowing full well that it has made the Appellate Body dysfunctional since December 2019. In its response, Hong Kong-China said that it is ready to have the case adjudicated by the Appellate Body. Hong Kong-China noted that six panels have all dismissed the US claim that invoking national security in defense of a trade-restrictive measure is entirely self-judging. Intervening on the US concerns, China made a long statement expressing “serious concerns on the United States’ request to reintroduce this fully and repeatedly debated item into the DSB agenda.” China said that it expects “the United States, who is an advocate of more efficient operation of the WTO bodies, to take the lead and follow Rule 27 of the rules of procedure for DSB.” As a third party in the dispute, China praised “the Panel’s impartial and objective rulings and recommendations.” China said, “it is clear from the text, the context, the object and purpose and the negotiating history that the security exception under GATT 1994 is not entirely self-judging, as correctly found by this Panel and six previous panels.” “If the US really intends to address this issue, it should work with members in a more proactive and constructive manner to restore the appeal mechanism so that the US appeal could be heard,” China said. China said it “firmly believe[s] that the restored appeal mechanism is the proper place to correct the errors made by the panel, if any, rather than repeatedly bringing the issue to the agenda of DSB meeting.” Beijing rejected “in the strongest terms the United States’ false allegations and unilateral judgement and interference of other members’ internal affairs.” “Several times during the DSB meeting when listening to the US intervention, I was confused whether I entered into a wrong meeting room since our collective understanding is that the WTO dispute settlement mechanism, including the DSB meeting, is a forum to resolve trade disputes rather than a place to discuss political issues,” China said. Moreover, according to China, “any member, regardless of its power and size, shall refrain from taking unilateral and protectionist measures in the name of “national security”, or using it as a vehicle to disregard the core principles of the WTO or to interfere with other members’ internal affairs.” In another trade dispute concerning “India – Tariff Treatment on Certain Goods in the Information and Communications Technology Sector,” Chinese Taipei and India requested additional time for the DSB to consider for adoption the panel rulings in the dispute initiated by Chinese Taipei regarding India’s tariffs on certain high-tech goods. At the end of the meeting, the DSB elected Ambassador Saqer Abdullah Almoqbel of the Kingdom of Saudi Arabia as the chair of the DSB for 2024. +
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