In a paper to be discussed at a 16 April special (negotiating) session of the Dispute Settlement Body (DSB), the EC has proposed several amendments to the WTO's Dispute Settlement Understanding (DSU) as part of negotiations "on improvements and clarifications" of the DSU as mandated by the Doha Declaration in paragraph 30. The EC proposal (TN/DS/W/1, searchable at the WTO website, http://docsonline.wto.org/gen_search.asp) suggests setting out clear provisions to define the framework and conditions for allowing so- called amicus curiae ('friend-of-the-court') briefs -- i.e. unsolicited submissions by non-parties of the dispute at issue -- in WTO dispute settlement cases. The paper also explores the option of providing parties to a dispute with the flexibility to open up panel hearings to the public upon mutual consent. The EC paper also proposes amendments to the DSU on the process of selecting panellists, on the so- called 'sequencing' issue on retaliation (see BRIDGES Weekly, 19 March 2002), and on further clarifications and modifications of the DSU.

The EC proposal on regulating amicus curiae submissions is mainly drawn from an 8 November 2000 WTO Appellate Body (AB) decision (WT/DS135/9) on an "additional procedure to deal with any written briefs received by the Appellate Body from persons other than a party or a third party" to the EC-Asbestos dispute. This procedure set out rigorous criteria for the application for leave as well as to file an effective amicus curiae submission with the AB for the purposes of the asbestos case only. The EC adopted this two-stage approach set out in the AB's decision as well as most of the criteria developed by it.

At that time, the AB's case-specific "additional procedure" led to a vehement outcry by most WTO Members, spearheaded by India and Pakistan, accusing the AB of overreaching its authority. The EC, the US, New Zealand and Switzerland had been the only other Members to support the decision of the AB (see BRIDGES Monthly, Year 4 No. 9, p.1 ).

At press time, key delegations previously involved in the DSU reform debate, such as the US and India, had not yet issued official responses to the EC proposal. However, in a 15 March letter to US Trade Representative (USTR) Robert Zoellick, US Senator Max Baucus called on the USTR to "pursue reforms to the DSU that...enhance the rights of non- government interested parties to participate meaningfully in such [DSU] proceedings." On amicus curiae submissions, however, Baucus stated that he was not convinced that "the two-step process for seeking leave on an ad hoc basis before filing amicus briefs as proposed by the EU" would be the best approach to the issue.

"Dispute Settlement: Sen. Baucus Calls Dispute Resolution Reform Most Important' U.S. Objective in WTO Talks," WTO REPORTER, 16 April 2002; ICTSD Internal Files.

PANEL REPORT IN US-INDIA AUTO CASE ADOPTED

On 5 April, India was unable to convince the WTO Dispute Settlement Body (DSB) to reject the adoption of the panel report on India's measures affecting the automotive sector (WT/DS146/R and Corr.1, WT/DS175/R and Corr.1). Arguing that the panel had overreached its competence and made inappropriate findings on how India should implement its obligations, India tried in an unprecedented effort to have the DSB only partly adopt the panel report. However, the attempt was inhibited by the EC, which reminded Members that the Dispute Settlement Understanding (DSU) provided that both panel and Appellate Body (AB) reports were to be unconditionally adopted by the DSB unless the DSB decides by consensus not to do so (DSU Articles 16.4 and 17.14).

The WTO panel found in the complaint brought by the US and the EC that India's law requiring auto producers to use locally produced auto parts in manufacture and automobile exports was in violation of WTO rules. Although India has already revoked the rule, the panel also found that the contracts originally signed between the Indian government and car manufacturers established under the old law would still impose WTO- incompatible performance requirements on foreign automobiles.

Arguing that the panel's jurisdiction was limited to ruling on measures that were in place at the time of the WTO complaint, India proposed that the DSB suspend adoption of the findings and conclusions for one month, in order to enable Members to analyse the systemic implications of the panel's findings.

The US, although it voiced understanding for India's concerns, did not support the Indian effort, but recommended that the DSB adopt the report. In contrast, the EC backed the panel ruling, saying that only the complete termination of all local content and export requirements contained in the contracts would lead to India's full compliance with the findings and conclusions in the report.

Although India had originally appealed the panel report, India formally withdrew its appeal on 14 March. Consequently, with the report's 5 April adoption by the DSB, the findings and conclusions set out therein became legally effective.

"India Seeks To Limit Impact Of WTO Ruling Against Auto Regime," INSIDE US TRADE, 12 April 2002.

US-STEEL: CONSULTATIONS END WITHOUT RESULT, PANEL ON HORIZON

n the looming trade spat between the US and six other WTO Members on additional tariffs of up to 30 percent on steel imports imposed by the US (see BRIDGES Weekly, 20 December 2001), the EC, Japan, China, Korea, Norway and Switzerland declared in a 12 April joint statement that they were intending to proceed to request a WTO panel if the US failed to withdraw its "WTO incompatible safeguards [on certain steel imports] without delay." Further, the group denounced the US' "systematic abuse" of safeguards instruments, hinting at the fact that all US safeguards previously brought to WTO Dispute Settlement were deemed to contravene the WTO Agreements by the Appellate Body (AB).

The six WTO Members that had requested consultations with the US under the Dispute Settlement Understanding (DSU) issued the 13 April communiqué at the end of a series of talks jointly held between the group of the complainants and the US. In an interview given after the 12-13 April consultations, an EC official stated that the US "didn't say anything on the legal issues which was new" and that it had refused to admit the WTO incompatibility of its new steel safeguards. The discussion, which both the EC and the US called "constructive," did not deliver any solutions which could potentially settle the dispute prior to the establishment of a trade panel, sources reported. The EC, which was the first Member to request formal dispute settlement consultations on 7 March, will be in a position to ask for the establishment of a panel in early May. In the event the US blocks the EC's request, a second request, which could not be staved off again, could lead to the establishment of a panel in mid-May.

Several US safeguard procedures have in the past been subject to adverse WTO rulings, including UK-Hot Rolled Lead and Carbon Steel (WT/DS138/AB/R), Japan-Hot Rolled Steel (WT/ DS184/R) and Korea-Welded Carbon Quality Line Pipe (WT/DS202/R).

In parallel to the DSU proceedings, the coalition of six countries together with Australia, Brazil, Bulgaria, Malaysia and New Zealand, further requested consultations under the WTO Safeguards Agreement which would potentially allow Members hit by the US trade measures to ask for appropriate compensation and -- in case no agreement is reached -- to retaliate through the suspension of "substantially equivalent concessions or other obligations" (Article 8.2). The Members challenging the US measures at the Committee on Safeguards could impose the trade sanctions 90 days after the 20 March US safeguard was put in place, provided that the safeguard was not taken as "a result of an absolute increase in imports" and that the US measure does not conform to WTO rules. In contrast, proceedings under the DSB can take up to two years to complete.

Leading European industry groups such as the Federal Union of German Industries (BDI) or the Confederation of British Industries (CBI), however, "do not believe that the [European] Commission should impose sanctions on American products before the WTO dispute settlement panel has ruled in July," a BDI spokesperson stated. According to the lobby group, EC retaliations against the US would not go without a response by the Americans and would "set a very bad example" leading to other countries imposing similar measures in other disputes.

Nevertheless, the EC has already reacted to the US trade restrictions on steel by unilaterally adopting on 27 March its own trade restrictions on steel so as to prevent floods of steel imports being diverted into the EC by virtue of the US action. On imports surmounting the recent level of imported steel, the EC is applying tariffs varying from 14.9 percent to 26 percent as provisional safeguard measures to 15 steel products. The measures are limited to a half-year term and will effectively exclude most developing countries from their coverage, with the exception of 14 developing country Members, including Argentina, Brazil and China (see European Commission Regulation (EC) No 560/2002 of 27 March 2002, viewable at http://europa.eu.int/comm/trade/pdf/steelreg_en.pdf).

"Steel: Six WTO Members Call For Termination Of US Steel Tariffs As Dispute Talks End," WTO REPORTER, 15 April 2002; "Steel: Fearing Trade War, EU Industry Groups Lobby States To Reject EC Steel Retaliation," WTO REPORTER, 15 April 2002; "Steel: US Holds Talks With Six Countries On Steel Tariffs; Little Progress Reported," WTO REPORTER, 12 April 2002; "EU Adopts Temporary Measures To Guard Against Floods Of Steel Imports Resulting From US Protectionism," EU PRESS RELEASE, 27 March 2002.