DS Roundup: Tuna-Dolphin Public Hearing, WTO Panel Establishments

30 March 2017

The past fortnight has seen several WTO disputes advance to their next stages, including with the establishment of panels in cases involving renewable energy and goods in transit, respectively. Meanwhile, the compliance panels in the long-running dispute on dolphin-safe tuna labels broadcast their hearing on the subject last week.

China has also requested a panel (DS516) to review the European Union’s anti-dumping rules, saying that with the expiry of certain provisions of Beijing’s accession protocol from when it joined the WTO in 2001, the EU no longer has grounds to treat China as “non-market economy” in anti-dumping cases.

Non-market economy disputes

Late last year, Beijing requested WTO consultations with both Brussels (DS516) and Washington (DS515) regarding the methodologies used under their respective anti-dumping rules. (See Bridges Weekly, 19 January 2017)

Specifically, China has taken issue with being treated as a “non-market economy” in these trade remedy investigations, which affects how both EU and US authorities determine “normal value.” The term “dumping” involves cases where goods are being sold overseas at prices that fall below their home market levels, the latter of which is known as the good’s “normal value.”

In these cases, WTO members are allowed to impose duties to counter this dumping, so long as the investigation proves that dumping has taken place and has injured domestic industry, among other conditions.

During the meeting of WTO’s Dispute Settlement Body (DSB) held last week, China tabled its first request for a panel to hear its case against the EU, though it has not yet put forward a similar request regarding the US.

Currently, EU law requires Chinese producers wishing to be treated like those from “market economies” to meet a certain set of criteria on the subject. While the EU’s executive arm has put forward a proposal to revise its anti-dumping law – moving away from lists distinguishing between market and non-market economies for a policy focusing on cases where price or cost distortions arise – this policy is still making its way through the bloc’s legislative processes. (See Bridges Weekly, 10 November 2016)

Sources say that the EU raised this pending legislative change when it rejected China’s first panel request. For its part, China noted its awareness of the planned revisions and suggested that the scope of its consultations request is wide enough to cover them.

At the global trade body, respondents in a dispute are allowed to block one panel request; if a second request is made, a panel is automatically established.

Panel establishments

Also at last week’s DSB meeting, a panel was established to hear India’s complaint (DS510) over renewable energy incentives in eight US states, in light of previous claims by New Delhi that these incentives have been made contingent on meeting domestic content requirements. India tabled its request for consultations on the subject last September. The states involved are California, Connecticut, Delaware, Massachusetts, Michigan, Minnesota, Montana, and Washington. (See Bridges Weekly, 15 September 2016)

At the meeting, the US said it would “vigorously defend” those measures, while also arguing that India’s renewable energy equipment exports to the US are limited. “The state-level programmes identified in India’s request would appear to have virtually no effect on commerce at all,” the US added.

In a separate case, the DSB also established a panel in response to a second request (DS512) from Ukraine regarding the alleged restrictions by Russia on transit of goods from the former through the latter’s territory in route to other countries. That case also began last September.

Tuna case: Compliance panels hold hearing

Separately, the compliance panels in the long-running dispute between the US and Mexico on dolphin-safe tuna labelling (DS381) agreed to publicly broadcast a video recording of their hearing, with Mexico’s statements and those of some third parties redacted. While the broadcast took place last week, the hearing itself was held in late January.

This particular dispute dates back nearly a decade, with Mexico challenging the US labelling policy as discriminatory and unnecessary in 2008. The Appellate Body found in 2012 that the measure violated trade rules on various grounds. (See Bridges Weekly, 16 May 2012)

While the US made changes to its labelling regime the following year, Mexico questioned whether these went far enough to address these issues, with the Appellate Body deeming in 2015 that the US had not made sufficient changes. (See Bridges Weekly, 16 April 2015)

Mexico requested permission last year to suspend tariff concessions and related obligations on a list of products, to the tune of US$472.3 million annually – a level that drew objections from the US, causing the case to go to arbitration. (Bridges Weekly, 24 March 2016)

The US also made additional changes to the labelling regime, and both sides subsequently asked for compliance panels to review these changes. As a result, there are now two compliance panels, as well as an arbitrator, made up of the same three members.

During the hearing broadcast last week, the US delegate said that the original finding of trade rule violations was made “on a narrow ground affecting tuna product produced from fisheries other than the [Eastern Tropical Pacific] large purse seine fishery.”

Purse seine refers to the type of nets that are used primarily by Mexican fishers, which are set on dolphins to catch the tuna found beneath them, while the Eastern Tropical Pacific refers to the region involved, given that tuna and dolphin only swim together there. The US then added that its changes to the labelling regime were meant to address the “narrow ground” of the Appellate Body ruling in 2012.

According to the US, Mexico had initiated the first compliance proceeding because Washington’s 2013 policy revisions “did not give Mexican tuna product access to the [dolphin-safe] label.” With the second revision, the US claimed that “this long-running dispute should come to an end by finding that the United States has come into compliance with the DSB recommendations and rulings.”

The compliance panels have indicated that their final reports to the parties can be expected by mid-May this year.

ICTSD reporting.

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