Agenda

12:30 Welcoming lunch and introductory remarks

13:00 Panel discussion

• Moderator, Christophe Bellmann (ICTSD)
• Key issues, overview, and comments, Hannes Schloemann (WTI Advisors)
• The availability of Article XX to non-GATT claims, Cherise Valles (ACWL)
• Implications for resource conservation in the mining sector, Gilles Carbonnier (HEID)
• Implications beyond extractive resources; an outlook for future disciplines, Baris Karapinar (WTI)

13:45 Open Discussion

Registration required. Please register by Monday, 6 February with Matt Fleszar at mfleszar@ictsd.ch

In response to this need, ICTSD has engaged in a bottom-up assessment of the strategies that individual developing countries have developed to enhance their ability to make use of WTO dispute settlement and to coordinate such activities among public and private stakeholders on a national level. The outcome is the form of nine country studies is now presented in the book Dispute Settlement at the WTO – The Developing Country Experience. Countries covered in the analysis include Brazil, Argentina, China, India, Thailand, Bangladesh, Egypt, South Africa and Kenya. The publication concludes with a comprehensive list of recommendations. For further information kindly consult our webpage at: http://ictsd.org/i/dsu/98179/.

Agenda

“We will. The only decision is when,” Roberto Azevedo, Brazil’s chief trade official, told journalists, according to Reuters.

The announcement comes three weeks after the WTO’s Appellate Body upheld Brasilia’s challenge to the support that the US offers its upland cotton producers. The panel ruled that the US subsidies, which include marketing loans, counter-cyclical payments and export credit guarantees, were inconsistent with the country’s WTO obligations.

Brazil had complained that the payments artificially depress global cotton prices, pushing Brazilian producers out of the market (See BRIDGES Weekly, 11 June 2008, http://www.ictsd.org/weekly/08-06-11/wtoinbrief.htm#2).

But before it can take any retaliatory measures, Brazil must re-activate its request, first submitted in 2005, for permission to take countermeasures against the US. Usually, complainant countries apply sanctions to goods from the same sector in which the dispute occurred. In this case, however, Brasilia plans to renew its request for authorisation to ‘cross-retaliate’ in other sectors. Specifically, it will ask permission to suspend intellectual property protection obligations (in copyrights, trademarks, industrial designs, patents and the protection of undisclosed information), and to suspend concessions in several services sectors.

If and when Brasilia re-commences arbitration, the WTO panel will need to rule on both the type of countermeasures that can be taken as well as the level of sanctions that can be applied. Brazil is considering making two requests, one for US$1 billion and one for US$3 billion.

However, Brazilian officials have said that it would be at least a few months before any request is submitted. The issue of retaliation is especially complex and will be considered with great care, especially as Brazil must consider the risk of US retaliation in another sector.

Meanwhile, the US has again declared its disagreement with the recent ruling of the WTO Appellate Body, saying that the decision was based on outdated evidence. Washington claims that the land devoted to cotton in the US has fallen by 38.5 percent in the last two years, that subsidies have been reduced and that marketing loans were eliminated in September 2007. Furthermore, Washington has suggested that it will not take additional measures to remove its cotton subsidies. That sentiment, coupled with the farm bill passed by the US Congress last month - which generally maintains payments to cotton producers - has led many in Brazil to denounce the Washington’s lack of goodwill on the issue.

ICTSD reporting. “Brazil to seek U.S. trade sanctions over cotton” REUTERS, 20 June 2008; “Brazil Ponders on How to Retaliate Against US Cotton,” BRAZZILMAG.COM, 22 June 2008; “Brazil to Pursue $4 Billion in Sanctions Against U.S. on Cotton” Bloomberg, 17 June 2008; “EUA não devem rever política do algodão” AGENCIA ESTADO, 20 June 2008.

The US and Canadian claims, both submitted on 9 June (WT/DS320/13; WT/DS321/13), follow an appeal filed by the EU late last month. In that claim, Brussels protested the panel’s finding that its ban on imports of hormone-treated beef was illegal. The EU also faulted the panel for stopping short of explicitly ordering Washington and Ottawa to remove the extra duties they had imposed in retaliation to the ban (WT/DS320/12 and WT/DS321/12).

In a ruling circulated in March, the panel found fault with all three parties involved in the dispute (see BRIDGES Weekly, 2 April 2008, http://www.ictsd.org/weekly/08-04-02/story1.htm).

For the EU, the panel ruled that a lack of adequate scientific risk assessment meant that the import ban on hormone-treated beef, which Brussels modified in response to an earlier panel ruling, still failed to comply with the requirements of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.

The panel further ruled that the US and Canada had not followed proper procedures in continuing their trade retaliation against the ban. Washington and Ottawa have retained over US$125 million in annual sanctions on EU exports, such as Dijon mustard and Roquefort cheese, based on their unilateral determination that the EU’s modifications to its ban were not sufficient to bring it into compliance with a 1998 WTO ruling. The panel maintained that the US and Canada should have initiated legal proceedings to determine whether the import ban still violated WTO rules in order to maintain the sanctions.

In its appeal filed last week, the US stated that the panel’s finding on that topic “is in error and is based on erroneous findings on issues of law and legal interpretations.”

For its part, Brussels welcomed the panel’s ruling that US and Canadian retaliatory tariffs breached WTO rules, but disagreed with the panel’s determination that its ban was illegal, calling the assessment “flawed.”

“The panel made legal errors when it found that the new EU hormones directive does not comply with the WTO Agreement on Sanitary and Phytosanitary Measures,” the EU appeal stated.

The dispute began more than a decade ago, when a WTO panel first ruled that the US and Canada could impose punitive tariffs on European products to retaliate against Brussels’ ban on imports of beef produced with six growth-promoting hormones that are common in the US and Canada.

ICTSD reporting; “Notification of an Other Appeal by Canada,” WWW, 16 June 2008; “Notification of an Other Appeal by the United States,” WWW, 16 June 2008; “EU appeals WTO ruling over US beef hormone ban,” EU BUSINESS, 2 June 2008; “EU appeals WTO panel ruling on US and Canadian sanctions on EU goods in hormone-treated meat dispute,” EUROPEAN COMMISSION, 29 May 2008.

The DSB’s ruling, which confirms Brazil’s view after several years of disputes and appeals, marks the first time that a developed country’s agricultural policy has been successfully challenged at the WTO.

In December, five years after Brazil first requested a consultation, a WTO panel issued a report, known as Article 21.5, upholding Brazil’s claim that the marketing loans and countercyclical payments that the US offers its cotton farmers violate both the Agreement on Subsidies and Countervailing Measures and the General Agreement on Tariffs and Trade.

The US appealed that ruling in February, maintaining that its cotton payments fall outside the scope of Article 21.5 and that they do not significantly suppress global cotton prices.

The panel, in its report last week, again sided with Brazil, rejecting the US appeal. It was convinced by Brazil’s arguments that even a small drop in prices harms Brazilian producers, given their narrow profit margins, and that US cotton producers’ ‘artificially high’ market share reflects the impact of these subsidies.

Furthermore, the Appellate Body ruling allows Brazil to retaliate by imposing more than US$1 billion worth of sanctions on US imports each year. The WTO has suggested that this could take the form of a suspension of intellectual property rights.

While the ruling will prove encouraging to developing country trade negotiators, it is far from certain that the US will terminate its cotton subsidies. Indeed, after the issuing of an interim report by the WTO last July, then-US Agriculture Secretary Mike Johanns said that his government would “work very, very hard” to maintain payments to domestic cotton producers. This stance was confirmed in the farm bill passed by the US Congress last month. That legislation offers cotton producers subsidies of US$2-4 billion for over the next five years.

ICTSD reporting. “Brazil claims WTO cotton victory,” BBC NEWS, 27 July 2007; “US loses in cotton dispute at WTO,” BBC NEWS, 2 June 2008; “US loses WTO Brazil cotton appeal,” AL JAZEERA INTERNATIONAL, 2 June 2008.

The official complaint centres on three products: cable or satellite boxes with internet capability; flat panel displays for computers; and computer printers that also have the capacity to scan, copy or fax.

Washington and Tokyo claim that these products should be duty free under the WTO’s Information Technology Agreement (ITA), which prohibits tariffs on high-tech products among the agreement’s signatories.

But Brussels maintains that the ITA does not apply when technology changes have given a product multiple functions. For example, from the EU perspective, cable boxes with internet capability should properly be classified as video recorders because they can record live television, and thus should fall outside the scope of the ITA.

According to a statement by the European Commission “both the spirit and explicit provisions in the ITA make it clear that extension to new products to reflect technological change would not be automatic, but based on periodic review by signatories.”

Indeed, Brussels has on several occasions called for a renegotiation of the ITA, but the US has objected, arguing that technological developments of the products covered by the agreement were foreseeable and that new products should therefore be automatically included under its rules.

Global exports of the products targeted in the complaint amounted to an estimated US$70 billion in 2007. US Trade Representative Susan Schwab has said that EU duties reach 14 percent on some items.

Under WTO rules, the countries involved will now engage in consultations for 60 days. If no resolution has been reached at the end of that period, the US and Japan can ask a WTO panel to determine whether the EU is meeting its trade obligations.

ICTSD reporting; “EU-US trade row erupts over IT products,” EURACTIV, 30 May 2008; “U.S. files WTO case vs EU over tech tariffs,” REUTERS, 28 May 2008; “Remarks by Ambassador Susan Schwab United States Trade Representative,” 28 May, 2008; “EU rejects claims over technology tariffs,” EUROPEAN COMMISSION TRADE ISSUES, 28 May, 2008.