Disputes Roundup: WTO Panels to Hear China, Russia Cases Against EU

23 July 2015

WTO panels are now set to hear two complaints against the EU – one filed by Russia on the bloc’s energy policies and the other tabled by China on poultry meat tariffs – after the complainants in both disputes filed second panel requests at a meeting of the Dispute Settlement Body (DSB).

At the 20 July DSB meeting, a first panel request by Indonesia regarding the EU’s anti-dumping duties on biodiesel was also rejected, while Argentina announced that it had agreed a timeline with the EU, US, and Japan for bringing its import policies into compliance with WTO rules.

Russia-EU energy row at panel stage

Russia’s complaint (DS476) over the EU’s Third Energy Package – a 2009 policy which sets common rules for transmission, distribution, supply, and storage of natural gas within the 28-nation bloc– has now advanced to the panel stage, after Moscow filed its second panel request on the subject.

An earlier panel request had been rejected by Brussels in June, with the original consultations request being filed over a year ago. (See Bridges Weekly, 25 June 2015)

Russia has argued that these energy sector regulations violate trade rules by not according imports of Russian natural gas the same treatment as that to imports originating from third countries.

Furthermore, according to the panel request, Russia “considers that the [Third Energy Package], like the EU's natural gas and broader energy policy overall, unjustifiably restricts imports of natural gas originating in Russia and discriminates against Russian natural gas pipeline transport services and service suppliers.”

The EU reiterated on Monday that its energy policies are in line with global trade rules, while repeating earlier concerns that Russia’s panel request has expanded the scope of the original complaint by including new measures and claims, according to sources familiar with the meeting. 

Panel to hear China complaint

The EU-China dispute concerning the 28-nation bloc’s tariffs on poultry meat products (DS492) has now advanced to the panel stage, after Beijing submitted its second panel request on the subject.

Brussels had moved to renegotiate its tariff concessions on certain poultry meat products in 2006 and then again in 2009, reaching deals with Brazil and Thailand in 2006 for the first and 2012 for the second.

Beijing had submitted a request for consultations earlier this year, arguing that it should have been included in the renegotiation process. At the time of the renegotiations, the EU had said that China did not have a “principal or substantial supplying interest” in the goods involved, given the restrictions in place at the time on Chinese poultry imports over avian flu concerns.

China has also challenged the country-specific quotas that the EU reached with Brazil and Thailand, arguing that the latter two countries have been given a market access advantage that other WTO members lack, among various other concerns. The allocation of these tariff-rate quotas (TRQs), China added, also “do not approach as closely as possible” the shares that WTO members would have should these not be in place.

The TRQs and tariff rates that resulted from the renegotiation also “failed to maintain a general level of reciprocal and mutually advantageous concessions not less favourable to trade than that existing prior to the medication,” Beijing said in its panel request.

Along with violating global trade rules, China claims, this move significantly hurt the interests of its domestic producers and exporters.

The EU, for its part, has said that its policies are fully in line with WTO rules, and reportedly said at the DSB meeting that China did not have any substantial supplying interest during the renegotiation process, nor did it come forward within the relevant 90 days after the start of the second renegotiation to signal interest as a “substantial supplier,” according to sources familiar with the meeting.

Indonesia requests panel in EU biodiesel case

At Monday’s DSB meeting, a first request by Indonesia for a panel be established in its complaint (DS480) against the EU’s anti-dumping duties on biodiesel imports was rejected, sources confirmed. 

Under WTO rules, a first request for a panel may be rejected by a respondent; however, should Indonesia re-submit the request, a panel will then be automatically established to hear the case.

The anti-dumping duties are already the subject of another dispute (DS473) lodged by Argentina against the EU, with that case currently undergoing review by a panel. A report in that case is expected by the end of this year, according to a communication circulated by the panel last December.

In its panel request, Jakarta raised questions over the “cost adjustment” methodology used by EU investigative authorities in the anti-dumping investigation, as well as citing various other concerns about how the probe was conducted.

The duties under scrutiny were confirmed by the EU in November 2013, following a 15-month European Commission investigation into claims that Argentina and Indonesia were exporting their energy product to the 28-nation bloc at a price below its normal value, a practice known as “dumping.”

While Argentina had filed its original consultations request in December 2013, Indonesia had followed suit several months later, in June 2014, and held consultations with the EU in July of that same year. (See Bridges Weekly, 12 June 2014)

Argentina and Indonesia together make up 90 percent of the EU’s biodiesel imports, as well as over 20 percent of the 28-nation bloc’s market share. The two countries are the world’s top suppliers of the fuel.

At Monday’s DSB meeting, Indonesia reportedly reiterated its concerns over the cost adjustment methodology’s use in the investigation, sources said. The EU, for its part, reportedly noted that this panel request comes nearly a year since the two sides held consultations on the subject, and that panel proceedings are already well underway in the Argentina case on the issue.

Argentina compliance date set in import restrictions case

In January of this year, the WTO’s Appellate Body ruled that a series of Argentine import restrictions were in violation of global trade rules, upholding an earlier panel ruling. (See Bridges Weekly, 22 January 2015)

The original dispute was filed almost three years ago following claims from the EU, Japan, and the US alleging that Argentina’s various trade-related requirements (TRRs) under its comercio administrado, or managed trade, policy were restricting imports and giving domestic products an unfair edge over their foreign equivalents (DS438, DS444, and DS445).

At this week’s DSB meeting, Argentina reported that it had reached an understanding with the complainants on the “reasonable period of time” for bringing the WTO-inconsistent measures into compliance, with the parties agreeing on a 31 December deadline.

ICTSD reporting.

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