General overview of active WTO dispute settlement cases involving the EC as complainant or defendant

1.1. Dispute settlement activities against the US

After the remarkable success in the “steel safeguards” case, dispute settlement activities against the US continue to represent the vast majority of our overall dispute settlement activities since the Community has presently 13 active WTO disputes underway with the United States. In 10 of these cases it is the Community which is the complaining party, being the defendant only in 3 cases (GMOs, Hormones, and Trademarks/Geographical Indications).

Regarding the substance of our offensive cases with the US, a majority of them (6) concerns the misuse of trade defence instruments (Anti-dumping, CVD and Safeguards) as well as subsidy related issues. Another important category (3) in our disputes with the US relates to intellectual property rights (trademarks and geographical indications, copyrights and patents). Finally, a sensitive category is constituted by health and environmental measures, with the new case on GMOs and the "old" Hormones dispute.

In terms of economic sectors covered, it should be noted that almost half of our offensive
cases (4) relate to the steel sector.

As far as procedural steps in the WTO are concerned, 7 cases are at the implementation stage (Byrd Amendment, Section 211 of the Omnibus Act (Havana Club), FSC, 1916 Anti-Dumping Act, a case involving 12 CVD orders on European firms, Section 110 of the Copyright Act cases and Hormones). 3 cases are at panel stage (Trademarks/Geographical Indications, GMOs, and "zeroing"). The remaining 3 cases are at the consultations stage (Section 337 of the 1930 Tariff Act on Copyrights, Carousel and US sunset reviews on certain steel products).1 Defensive cases where one single panel was composed on request of multiple complainants are counted as one.


1.2. Disputes with other third countries

As far as other third countries are concerned there are at present 4 cases at the implementation stage (Argentina - Hides and skins brought by the EC, EC - AD duties on malleable fittings brought by Brazil, EC – Hormones brought by Canada, EC-GSP brought by India), 8 cases at panel stage (Australia, Brazil and Thailand against the EC - Sugar subsidies regime, EC - Geographical indications brought by Australia (together with the US – see above), EC against the Korean Shipbuilding subsidies, EC – GMO brought by Canada and Argentina (together with the US – see above), EC - CVD measures on DRAM brought by Korea, EC against Australia - Sanitary and phytosanitary measures for agricultural and food products, EC - Customs classification of frozen boneless chicken cuts brought by Brazil and Thailand, EC - Shipbuilding Subsidies brought by Korea), and 2 at consultations stage (EC against India - Import restrictions under EXIM 2002-2007 and EC against India - 27 antidumping cases,). (See new developments in bold)

I – ARGENTINA

OFFENSIVE CASES

(1) DS 155 - Hides and skins (procedural stage: implementation) On 16 February 2001, the DSB adopted a panel report condemning certain aspects of the Argentinean regulations affecting the export of raw hides and skins, as well as some discriminatory elements of VAT and Income Tax regulations. A WTO arbitrator ruled on 31 August 2001 that the reasonable period of time for implementation would expire on 28 February 2002.
Argentina has taken a series of steps to implement the recommendations and rulings of the DSB with respect to both the customs procedures and the internal tax discrimination. In light of these steps towards full compliance and of the exceptional economic difficulties faced by Argentina, the EC and Argentina concluded on 25 February 2002 a procedural agreement preserving the right by the EC to have recourse to Articles 21.5 and 22.2 DSU procedures at a later stage. Since then, there has been further progress in the implementation of the WTO ruling, notably through the amendment of Resolucion 2235 of 1996 (the main measure subject to the dispute settlement procedure) by Resolucion General 1399 of 18 December 2002.

DEFENSIVE CASES

(1) DS 293 – EC – Measures affecting the approval and marketing of biotech products (GMOs) (procedural stage: panel) On 14 May 2003, Argentina requested consultations on certain measures concerning GMOs. Argentina argues that there is a suspension of approvals and/or undue delays in the approval of GMOs and GM food in the EU which is contrary to several WTO agreements (GATT, SPS, TBT, and AoA). Furthermore, Argentina considers that the restrictions imposed by several Member States on the sale or use of approved GMOs and GM food are inconsistent with WTO rules.

Consultations were held on 19 June 2003. A panel was established on 29 August 2003. After some discussions on panel composition, the complainants suddenly decided to request the WTO Director General to appoint the panellists, which he did on 4 March 2004. The panellists are: Christian Haberli (Switzerland - Chairman), Mohan Kumar (India) and Akio Shimizu (Japan). The panel procedure is ongoing.

II – AUSTRALIA

OFFENSIVE CASES

(1) DS 287 - Quarantine regime for imports (procedural stage: Panel) On 4 April 2003, the European Communities requested WTO consultations on the measures applied by Australia to protect human, animal and plant health against risks posed by imports of agricultural and food products (sanitary and phytosanitary measures).

These measures are thought to be contrary to the SPS Agreement, in particular Articles 4.1, 5.1 and 5.6. Consultations were held in Geneva on 8 May 2003 but failed to settle the dispute. The EC therefore requested that the DSB establish a panel. The panel request was established on 7 November 2003. At this stage, the panel has not yet been composed.

DEFENSIVE CASES

(1) DS 265 - Sugar subsidies (procedural stage: Panel) On 27 September 2002, Australia requested WTO consultations on Council Regulation (EC) 1260/2001 on the European Communities' common organisation of markets and all other legislation, regulations, administrative policies and other instruments relating to the EC regime for sugar and sugar containing products. Australia considers that the EC sugar regime (and most notably the so-called C-sugar) is inconsistent with Articles 3.3, 8, 9.1(a) and (c), 10.1 of the Agreement on Agriculture, Articles 3.1(a) and 3.2 of the SCM Agreement, Article III:4 and XVI of GATT 1994. Consultations were held on 21-22 November 2002. Australia requested the establishment of a Panel on 9 July 2003. This request was first considered at the DSB meeting of 21 July 2003. The panel was established when the request was tabled, for the second time, in the DSB meeting of 29 August 2003. Upon request from Australia, Brazil and Thailand, the DSB established a single panel for the three disputes DS265, DS265, DS283. After several rounds of unsuccessful attempts by the parties to agree on the selection of the panellists, the Director-General of the WTO composed the panel on 23 December 2003, upon request from the complainants. The panel proceedings have started thereafter, and the first oral hearing took place from 30 March to 1 April. The issuance of the panel’s final report to the parties is currently expected for early September 2004.

(2) DS 290 – Trademarks & geographical indications (procedural stage: panel) On 17 April 2003, Australia requested WTO consultations regarding Regulation No 2081/92 on geographical indications. Consultations were held 27 May 2003. Australia requested the establishment of a panel for the first time on 29 August 2003. The panel request argues that Regulation No 2081/92 is contrary to the TRIPs agreement (Articles 1, 2, 3, 4, 16, 20, 22, 24, 41, 42, 63), Articles I and III:4 of the GATT, and Article 2 TBT.

The panel was established at the DSB meeting on 2 October 2003. The Director-General of the WTO composed the panel on 13 February 2004. . The EC filed its first written submission on 25 May 2004. The Panel is expected to issue its final report to the parties on 30 November 2004.

III – BRAZIL

DEFENSIVE CASES

(1) DS 219 - EC- Anti-Dumping duties on imports of malleable fittings from Brazil (procedural stage: implementation) Brazil’s complaint focuses on the anti-dumping duties adopted and imposed by the EC (Council Regulation (EC) no 1784/2000 of 11 August 2000) on imports of malleable cast iron tube or pipe fittings originating in Brazil. Brazil requested consultations with the EC pursuant to Article 4 of the DSU, Article XXIII of GATT 1994 and Article 17 of the Agreement on Implementation of Article VI of GATT 1994 (Anti-Dumping Agreement). Above consultations were held in Geneva on 7 February 2001 without results. On 8 June 2001, Brazil requested the establishment of a WTO panel. It claims that the invitation of the investigation and the imposition and collection of provisional and definitive anti-dumping duties referred to above violate GATT 1994 Articles I and VI and several provisions of the AD Agreement (Articles 1, 2, 3, 4.1, 5, 6, 7, 9, 11, 12 and 15).

The WTO panel has been established at the DSB meeting of 24 July 2001. Discussions took place between the parties in search of an amicable solution. To that effect the parties agreed on 15 January 2002 to suspend the panel proceeding until 1 March 2002. The proceedings were further suspended until 5 April 2002. At the request of Brazil panel proceedings were resumed on 22 April 2002. The final report was issued to the disputing parties on 10 December 2002 and represents a success for the EC, the panel having rejected practically all Brazilian claims raised under the AD Agreement. The panel report was circulated to the WTO membership on 7 March 2003. Brazil notified the DSB on 23 April 2003 of its decision to appeal. Due to the time required for completion and translation of the Report, the Appellate Body will not be able to circulate its Report by 23 June 2003, but it will do so no later than 22 July 2003. .

The AB report was finally circulated on 22 July 2003 and found overwhelmingly in favour of the EC. In view of the number of the original Brazilian claims (around 40) and the nature of the three claims accepted by the panel/AB (two closely linked procedural issues relating to non-disclosure of information plus zeroing), the panel report as modified by the AB can be qualified as a major success for the EC. The Commission services are already working on the proper implementation of the DSB rulings and recommendations following the adoption of the panel and AB reports on 18 August 2003. The EC engaged in discussions with Brazil to determine a mutually agreed RPT in accordance with DSU Article 21.3(b). According to the agreement reached, the RPT was fixed to 7 months and expired on 19 March 2004. In implementation of the relevant DSB rulings and recommendations, Council regulation No 436/2004 of 8 March 2004 was published. Through this Regulation the EC reassessed its initial findings by taking fully into account the findings and conclusions set out in the Panel and the AB reports. The Regulation was already notified to the WTO.

(2) DS 266 - Sugar subsidies (procedural stage: Panel)

On 27 September 2002 Brazil requested WTO consultations on Council Regulation (EC) 1260/2001 on the European Communities' common organisation of markets and all other legislation, regulations, administrative policies and other instruments relating to the EC regime for sugar and sugar containing products. Brazil considers that the EC sugar regime (and most notably the so-called C-sugar) is inconsistent wit Articles 3.3, 8, 9.1(a) and (c), 10.1 of the Agreement on Agriculture, Articles 3.1(a) and 3.2 of the SCM Agreement, Article III:4 and XVI of GATT 1994. Consultations were held on 21-22 November 2002. Brazil requested the establishment of a Panel on 9 July 2003. This request was firstconsidered at the DSB meeting of 21 July 2003. The panel was established when the request was tabled, for the second time, in the DSB meeting of 29 August 2003. Upon request from Australia, Brazil and Thailand, the DSB established a single panel for the three disputes DS265, DS265, DS283. After several rounds of unsuccessful attempts by the parties to agree on the selection of the panellists, the Director-General of the WTO composed the panel on 23 December 2003, upon request from the complainants. The panel proceedings have started thereafter, and the first oral hearing took place from 30 March to 1 April. The issuance of the panel’s final report to the parties is currently expected for early September 2004.


(3) DS 269 - Frozen chicken cuts (procedural stage: panel)

On 11 October 2002, Brazil requested WTO consultations on the recent EC Commission Regulation No. 1223/2002 of 8 July 2002 concerning the classification of certain goods (frozen chicken cuts). Brazil claims that through this Regulation its commerce has been accorded treatment less favourable than that provided in the EC Schedules in contravention of the EC obligations under Articles II and XXVIII of the GATT 1994. WTO consultations took place in Geneva on 5 December 2002. A second round of consultations took place on19 March 2003. On 19 September 2003 Brazil submitted its first request for the establishment of a panel with respect to the EC’s customs classification of frozen boneless chicken. Brazil claims that through its classification practices/measures the EC has nullified and impaired benefits accrued to Brazil in violation of Articles II and XXIII of the GATT 1994. The panel was established at the DSB meeting of 7 November 2003. Subsequently, the DSB at its meeting of 21 November decided to establish a single panel to examine both claims (identical) brought by Brazil and Thailand (DS 286). Through a joint letter dated 17 June 2004, Brazil and Thailand requested the WTO Director General to determine the composition of the Panel. The Panel was composed by the Director General on 28 June 2004.

IV – CANADA

DEFENSIVE CASES

(1) DS 292 – EC – Measures affecting the approval and marketing of biotech products (GMOs) (procedural stage: panel) On 13 May 2003, Canada requested consultations on certain measures concerning GMOs. Canada argues that there is a suspension of approvals of GMOs and GM food in the EU which is contrary to several WTO agreements (GATT, SPS, TBT, and AoA). Furthermore, Canada considers that the restrictions imposed by several Member States on the sale or use of approved GMOs and GM food are inconsistent with WTO rules. Consultations were held on 25 June 2003. A panel was established on 29 August 2003. After some discussions on panel composition, the complainants suddenly decided to request the WTO Director General to appoint the panellists, which he did on 4 March 2004. The panellists are: Christian Haberli (Switzerland - Chairman), Mohan Kumar (India) and Akio Shimizu (Japan). The panel procedure is ongoing.

V – India

OFFENSIVE CASES

(1) DS 270 - Import Restrictions maintained under India's EXIM policy 2002-2007 (procedural stage: consultations)
India continues to maintain restrictions on over 600 products in her 2002-2007 EXIM policy. In 1998 consultations were held to address a range of products of concern to the EC contained in the then 1997-2002 EXIM policy. Following the consultations India was provided with a list of priority products for early removal, and since then, an up until the publication of the new EXIM policy in 2002, there has only been modest improvement. New consultations were requested on 23 December 2002, with India accepting on 28 December. The United States’ request to join the consultations was accepted by India, and they were held on 17 February 2003in a constructive manner. India responses to the questions that had been sent to them in advance, in relation to the 101 products cited in our consultation request, and most importantly reinforced our resolve in relation to the products of most concern to us (as reported in the past to the 133). The 2003 EXIM review announced in March of this year went some way to addressing EU concerns, notably those covering pharmaceutical products. This was welcome news. However India continues to maintain restrictions on a number of items raised during the consultations which remain of importance for EU exporters. The Commission is pursuing discussions with India with a view to reach a mutually acceptable solution.

(2) DS304 –Anti-Dumping Measures - (procedural stage: consultations)
On 8 December 2003, the EC requested consultations with India concerning antidumping measures on imports of certain EC products. 27 products are at stake, which account for more than € 50 millions of EC exports: Methylene Chloride; Phenol; Vitamin A Palmitate; Para Hydroxy Phenyl Glycirine Base; Vitamin AB2D3K; Acrylic Fibre; Sodium Nitrite; Cold Rolled Flat Products Stainless Steel; Flexible Slabstock Polyol; High Styrene Rubber; Vitamin AD3; Acrylic Fibre below 1.5 denier; Purified Terephtalic Acid; Sodium Cyanide; Seamless Tubes; OXO Alcohols; Hydroxyl Amine Sulphate; Sodium Ferrocyanide; Caustic Soda; Aniline; Theophiline and Caffeine; Chlorine Cloride; Vitamin C; Black and White Photographic Paper; Thermal Sensitive Paper; Acrylonitrile Butadiene Rubber; Acrylic Fibres. The EC considers that the Indian antidumping investigations and measures on these products are inconsistent with the obligations set forth in Article VI:1 of GATT 1994 and Articles 1, 3.1, 3.2, 3.5, 6.6, 6.8 (including Annex II), 6.9 and 12.2 of the Anti-Dumping Agreement in particular because the determination of the effect of the dumped imports on prices does not seem to be based on positive evidence and on an objective examination; there is no demonstration that dumped imports caused the alleged injury and that injury caused by other factors was not attributed to dumping; interested parties were not properly informed of the relevant essential facts which formed the basis for the decision to apply the anti-dumping measures and did not have sufficient time to defend their interests; interested parties were not properly informed of the reasons why evidence or information they had submitted within the investigation procedure were not accepted; the public notice of information concluding the investigation did not contain all relevant information on the matters of fact and law and reasons which led to the imposition of the anti-dumping

measures. India accepted the EC request for consultations on 12 December 2003. Consultations are still ongoing.

DEFENSIVE CASES

(1) DS 246 - GSP regime (procedural stage: implementation)

On 5 March 2002, India requested consultations against certain aspects of the EC GSP regime, which it considers in violation of Article I of the GATT and paragraphs 2(a), 3(a) and 3(c) of the Enabling Clause. Consultations took place on 25 March 2002. At the DSB meeting of 19 December 2002 India requested for the first time the establishment of a panel. The panel was established at the DSB meeting of 27 January 2003. Through a letter dated 3 March 2003, India announced its decision to limit its complaint to the GSP "drugs" regime. The panel was composed by the D-G of the WTO on 6 March 2003. The panel meetings were held at 14-16 May and 8)9 June 2003. The final report was sent to the disputing parties end of October 2003. The report was circulated to the entire WTO Membership 1 December 2003. By a notification dated 8 January 2004 the EC notified its decision to appeal certain issues of the Panel Report. The AB hearing was held on 19 February 2004. The AB report was issued on 7 April 2004 and adopted on 20 April 2004. The report, while maintaining that the EC Drugs Regime is inconsistent with Article I of the GATT, reversed the panel rigid interpretation of the “Enabling Clause” and it asserted that developed countries may differentiate under certain conditions among GSP beneficiaries with the objective of responding positively to special needs of developing countries. The EC and India have entered into discussions to agree on a reasonable period of time (RPT) to implement the relevant DSB rulings and recommendations.

VI – KOREA

OFFENSIVE CASES

(1) DS 273 – Shipbuilding subsidies (procedural stage: panel)
On 21 October the EC requested consultations against certain subsidies granted by Korea to its shipbuilding industry, which it considers in violation of Articles 3 and 5 of the WTO Subsidies Agreement. Three rounds of consultations took place in November, December and May 2003 which failed to resolve the issue. As a result, at the DSB meeting of 21 July a Panel was established. At the same meeting the special fact finding Annex V procedure requested by the EC was also launched; the Annex V procedure was concluded on 10 November. The Panel report (originally expected in August 2004) will be delayed until November due to the unfortunate event of the death of Mr El-Naggar (the distinguished chairman of the Panel); Mr Lacarte-Muro (ex-member of the Appellate Body) has in the meantime been selected as the new member and chairman of the Panel. The first oral hearing chaired by Mr El-Naggar took place on 9-10 March. The second oral hearing chaired by Mr Lacarte-Muro took place on 17-18 June.

DEFENSIVE CASES

(1) DS 299 – CVD measures on DRAMs (procedural stage: panel) On 25 August, Korea requested consultations against EC’s definitive countervailing measures on DRAMs (semiconductors) made by Hynix in Korea, which it considers in violation of the WTO Subsidies Agreement. In July, Korea had already requested consultations against EC’s provisional CVD measures; these took place on 19 August. This second round of consultations took place on 8 October 2003 in Geneva. On 19 November Korea requested (for the first time) the establishment of a Panel. Following Korea’s second request the Panel was established at the DSB meeting of 23 January. The Panel was constituted on 24 March 2004. Under the Panel’s timetable the report is expected in January 2005.

(2) DS 301 – Shipbuilding subsidies (procedural stage: panel)
On 3 September, Korea requested consultations against certain alleged subsidies granted by the EC to its shipbuilding industry, which it considers in violation of Articles 3 and 5 of the WTO Subsidies Agreement. A first round of consultations took place on 9 October 2003 in Geneva. A second round of consultations took place on 14 November 2003 in Geneva. Korea had at the time suggested that a third round of consultations might be necessary in the future. However, Korea decided to split its claims and at the DSB meeting of 17 February 2004 has proceeded with the first request for a panel against the Temporary Defence Mechanism (TDM) for shipbuilding. At the same time Korea requested new consultations on the other EU State aid measures (see case DS 307 below).The Panel was established at the DSB meeting of 19 March and composed on 13 May 2004.

(3) DS 307 – Shipbuilding subsidies (procedural stage: consultations)
This is the continuation of the remainder of case DS301 (see above). Due to the fact that Korea changed the scope of its consultations request in comparison to DS 301, these are considered as new consultations. Consultations will take place on 23 July.

VII– THAILAND

DEFENSIVE CASES

(1) DS 283 – EC export subsidies on sugar (procedural stage: Panel)
On 14 March 2003, Thailand requested WTO consultations on Council Regulation (EC) No. 1260/2001 on the common organisation of the markets in the sugar sector and other related EC legislation, regulations, administrative policies and other instruments applicable to sugar and sugar-containing products. Thailand considers that the EC sugar regime is inconsistent with Article III:4 of the GATT 1994, Articles 3.1(a), 3.1(b) and 3.2 of the SCM Agreement and Articles 3.3, 8, 9:1 and 10.1 of the Agreement on Agriculture. Consultations were held on 8 April 2003. Thailand requested the establishment of a Panel on 9 July 2003. This request was first considered at the DSB meeting of 21 July 2003. The panel was established when the request was tabled, for the second time, in the DSB meeting of 29 August 2003. Upon request from Australia, Brazil and Thailand, a single panel was established for the three disputes DS265, DS265, DS283. After several rounds of unsuccessful attempts by the parties to agree on the selection of the panellists, the Director-General of the WTO composed the panel on 23 December 2003, upon request from the complainants. The panel proceedings have started thereafter. The issuance of the panel’s final report to the parties is currently expected for early September 2004.

(2) DS 286 - Frozen Chicken Cuts (procedural stage: panel)
On 25 March 2003, Thailand requested WTO consultations on the recent EC Commission Regulation No. 1223/2002 of 8 July 2002 concerning the customs classification of certain goods (frozen boneless chicken cuts). Thailand claims that through this Regulation, its commerce has been afforded treatment less favourable than that provided in the EC Schedule in contravention of the EC obligations under Article II of the GATT 1994. The consultations were held in Geneva on 21 May 2003. On 27 October 2003, Thailand requested the establishment of a panel. The DSB meting at its meeting of 21 November 2003 decided to establish a single panel to hear both claims (identical) brought by Thailand and Brazil on this matter (see above DS 269). As indicated above under DS 269, Director General of the WTO proceeded to compose the Panel following the relevant request, on 28 June 2004.

VIII - USA

OFFENSIVE CASES

1 .1. Cases on Trade Defence Instruments and Subsidies

(1) DS 136 - 1916 Anti-Dumping Act (procedural stage: implementation)
On 26 September 2000, the DSB adopted the panel and Appellate Body reports that found the US antidumping legislation of 1916 incompatible with the WTO Agreements as it provides remedies to dumping, like the imposition of triple damages, fines, and imprisonment, none of which are permitted by the WTO Agreement on Anti-Dumping. The US had originally been granted by the DSB until 26 July 2001 to comply with the WTO ruling, but on 24 July 2001 the United States asked the DSB for authorisation to extend the deadline. In order to facilitate US compliance with DSB ruling and in light of the US commitments to terminate pending cases, the EC agreed to extend the implementation period, which expired on 20 December 2001. The US Administration sent a bill repealing the 1916 Act and terminating cases pending before US courts to Congress prior to the summer recess. However, it is only on the last day of the implementation period that that bill was formally introduced in the House of Representatives by M. Thomas, chairman of the Ways and Means committee. Therefore, to safeguard its rights the EC requested on 7 January 2002 the DSB’s authorisation to suspend the application of the obligations under GATT 1994 and the Anti-Dumping Agreement, more precisely to allow the EC to adopt an equivalent regulation to the 1916 Act against imports from the United States.

This "mirror" regulation would allow the EC to impose on US companies found to dump their products in Europe additional duties corresponding, over the five year projected life of the measures, to three times the amount of the damage suffered by companies in the EC. The investigation would be conducted by the EC as part of the anti-dumping investigation and the additional duties would be paid to the EC budget (and not to the complainants). Japan, which is co-complainant in this case, has submitted a request for suspension of obligations similar to the EC one. The US requested an arbitration under Article 22.6 DSU against these requests at the special DSB meeting on 18 January 2002. The two parties agreed that arbitration would be suspended until 30 June 2002 so as to facilitate adoption of the necessary legislation by Congress. On 19 September 2003, the EC asked for re-activation of the arbitration in light of the persisting inaction of the US.

On 24 February 2004, the arbitrators accepted that the EC had the right to suspend its obligations under the GATT 1994 and the AD Agreement so as to adopt specific antidumping rules for products originating in the US. The application of the specific legislation must remain within the limit of a ceiling corresponding to the amounts payable by EC companies pursuant to final judgements or out-of-court settlements. Two other repealing bills were introduced, but none were adopted or even discussed and all became void following the adjournment of the Congress in November 2002. Since the start of the new Congress in January 2003, three repealing bills have been introduced in the House of Representatives (one bill in March) and in the Senate (two bills in May). The House bill was voted out of the Committee for consideration by the whole House in February 2004, but there has not been any progress since then and there is no indication when the debate and the vote will take place in the House. In the Senate, there was not any progress. As currently drafted, one of these bills only would terminate the pending court cases. Three cases brought on the basis of the 1916 Act against EC companies have caused substantial litigation costs. The Council adopted on 15 December 2003 a "blocking" regulation. This regulation (1) prohibits the recognition and enforcement in the EC of decisions based on the 1916 AD Act (2) entitles EC companies to counter-sue the US plaintiff to recover damages and expenses caused by the application of 1916 AD Act.

(2) DS 217 – “Byrd amendment" (procedural stage: implementation)
The “Byrd amendment” signed into law in October 2000 provides that the proceeds from anti-dumping and countervailing duty cases shall be paid to the US companies responsible for bringing the cases. On 22 December 2000, the EC, together with eight other WTO partners (Australia, Brazil, Chile, India, Indonesia, Japan, Korea, and Thailand), requested formal WTO consultations with the US. This joint action is a clear indication of the important systemic concerns that the legislation raises among WTO members. Consultations with the US were held on 6 February 2001 but did not lead to any result since the US representative indicated that the Administration (despite the opposition of the previous Administration to the amendment, as expressed during the legislative discussions) will take no steps to convince the Congress to revoke the law. On the contrary, the granting of the subsidies will start as from the new fiscal year.

On 26 June 2001, the US published in the Federal Register the “proposed rules” for implementing the Byrd amendment. Upon joint request from the nine co-complainants, a single panel was established by the DSB on 23 August 2001. On 21 May 2001, Canada and Mexico requested formal WTO consultations with the US on the Byrd amendment. They joined the panel proceeding initiated by the other nine cocomplainants at a special meeting of the DSB on 10 September 2001. The panel report has confirmed that the Byrd amendment was an impermissible response to dumping and subsidy and rendered meaningless the WTO provisions requiring Members to test the domestic industry's support for application before initiating an investigation by making such support a condition to get access to funds. The US appealed the panel report on 18 October 2002. The Appellate Body released its report on 16 January 2003 and confirmed the Panel's central finding that the Byrd amendment is an impermissible response to dumping and subsidy. The DSB adopted the Panel and the Appellate Body reports in its meeting of 27 January 2003. On 26 February 2003, the US informed the DSB that it was willing to implement but needed a reasonable period of time to do so. In the absence of greement between the US and the complainants on the implementation deadline, an arbitrator was appointed on 2 April 2003 to determine the reasonable period of time to comply with the DSB recommendations and rulings. On 13 June 2003, the arbitrator granted to the US until 27 December 2003 to comply with the WTO ruling and recommendation. On 13 June 2003, the arbitrator granted to the US until 27 December 2003 to comply with the WTO ruling and recommendation. The US has failed to meet that deadline and to date there has not been any signs that the US was working on implementation. On 15 January 2004, to preserve its rights, the EC sent a request to the WTO seeking the authorisation to apply on US products an additional import duty. The level of the sanctions will be determined by the amount of payments made in the latest annual distribution.

To the amount of payments attributed to duties collected on EC products will be added a portion of payments attributed to duties collected on countries which are not authorised to retaliate against the US. The level of the duty will vary every year to adapt to the variations in the Byrd payments but the products subject to the additional duty (to be defined at a later stage) will remain the same. Brazil, Canada, Chile, India, Japan, Korea and Mexico have also requested the authorisation to apply sanctions against the US. The US objected to the requests and the matter has now been referred to arbitration. The issuance of the award initially announced on 2 June 2004 has been postponed. No new date has been determined yet. In the meantime, the US authorities have distributed to domestic petitioners more than US $ 231 million in January 2002 and US $ 330 million in January 2003. The third distribution on which details are not yet fully available would amount to about US $ 242 million. On 2 June 2004, the US administration published a notice setting forth the companies that are potentially eligible for the distribution of the duties collected during the present fiscal year (1 October 2003 – 30 September 2004). This notice is the first step for a fourth distribution that, absent implementation by the US, will start on 1 October 2004.

(3) DS 212 - US countervailing measures on privatised EU firms/follow-up to the British Steel case (procedural stage: implementation)
This case is the follow-up of a previous WTO case “Lead Bar from UK” also known as “British Steel” (DS 138). In the British steel case, the AB found, in May 2000, that the US change in ownership methodology was WTO inconsistent because the investigating authority did not evaluate the nature of the privatization. The AB also found that a privatization at arm’s length and for fair market value eliminates the benefit to the privatized firm of all the subsidies previously bestowed. The US, instead of implementing the WTO ruling, refused to revise the previous cases where the change in ownership methodology was used and, in January 2001, developed a new methodology, the so-called “same person” approach, to be applied to all the new investigations (or reviews). This new methodology was also clearly WTO-inconsistent, and after a long series of discussions with the US, the Community was forced to request a new Panel.

The complaint brought by the Community in this case concerned the two methodologies, the US law governing changes in ownership (Section 1677(5)(F)) and the decision of the US authorities to impose or maintain countervailing duties in 12 cases involving the following firms: Usinor and GTS (France), Dillinger (Germany), Corus (United Kingdom), AST, Ilva and Cogne Acciai Speciali (Italy), SSAB (Sweden) and Aceralia (Spain) Therefore no alternative was left but to pursue the matter before the WTO. The request for the establishment of these panels was presented for the first time at a special DSB meeting held on 23 August 2001. Despite a commitment not to do so, the US opposed the establishment of the panels. The panel was established at a special DSB meeting on 10 September 2001. The final report was circulated on 31 July 2002. The panel has found that the US measures are inconsistent with WTO rules. The US has appealed the panel's report. On 9 December 2002, the Appellate Body upheld the incompatibility of the US measures and practice, while "saving" its legislation. The Appellate Body report was adopted on 8 January 2003. The reasonable period of time for implementation expired on 8 November 2003. The US informed the DSB of the measures they have taken to comply on 7 November 2003.

The US has been obliged to replace the unacceptable “same person” methodology with a new methodology, which, although not completely satisfactory, is an important evolution of the US position. Furthermore, the application of the new methodology led to the termination of four CVD cases and positively impacted on other four (duty rates reduced). Notwithstanding this result, there are certain aspects of the US privatization approach which fall short of compliance with the DSB rulings in this case. In particular, the US decision to maintain CVD measures in the four “sunset reviews” needs to be changed, and the benchmark for the calculation of subsidy benefits, including those from the sale of employees’ shares, is clearly inflated. The EC has therefore requested consultations with the US under Article 21.5 in order to ascertain whether a mutually acceptable solution can be reached on these issues. A first round of consultations took place on 24 May 2004. (4) DS 213 - US application of de minimis rules in AD/CVD sunset reviews (procedural stage: implementation) In this case, DOC has recommended continuation of AD/CVD measures, in spite of the amounts of dumping and subsidy being below the current de minimis level. On 8 December 2000, the Commission held WTO consultations with the US on the case of corrosion resistant steel from Germany without achieving any progress.

Last attempt was made with the new US Administration in order to find an acceptable solution without having to resort to WTO panels, with no avail. Therefore no alternative was left but to pursue the matter before the WTO. The request for the establishment of these panels was presented for the first time at a special DSB meeting held on 23 August 2001. Despite a commitment not to do so, the US opposed the establishment of the panels. The panel was established at a special DSB meeting on 10 September 2001. The final report was circulated on 3 July 2002. The panel has found that the US measures are inconsistent with the WTO SCM Agreement. The US appealed the panel's report. On 28 November, the Appellate Body reversed the panel report and held the US law on de minimis consistent with its WTO obligations. The Appellate Body report was adopted on 19 December 2002. On 1 April 2004, the US repealed the measures at issue.

(5) DS 108 - Foreign Sales Corporation ("FSC") (procedural stage: implementation) The history of this case goes back to 1971 to the Domestic International Sales Corporation (DISC) scheme, which was declared an illegal export subsidy by a GATT panel in 1976 (the panel ruling was adopted in 1981). The US replaced the DISC scheme with the FSC scheme in 1984. At the time the EU contested the legality of the FSC but did not pursue it due to the opening of the Uruguay Round trade negotiations. Following further complaints by EU companies, and in view of the increasing amount of FSC subsidies being granted by the US, the EU resumed bilateral contacts with the US in 1997. Since no progress was made, the EU requested a WTO panel to pronounce itself on the dispute. The Panel in its report of October 1999 found the FSC to constitute an illegal export subsidy under both the Subsidies Agreement and (in relation to agricultural products) the Agriculture Agreement. The US appealed against the Panel Ruling but the Appellate Body confirmed the panel findings on the illegality of the FSC scheme. The US was then given until 1 October 2000 (extended to 1 November 2000) to withdraw the FSC scheme. In an effort to comply with the WTO ruling, on 15 November 2000, President Clinton signed the FSC Replacement Act (ETI Act) into law. The ETI Act, however, did not modify the substance of the export subsidy scheme and as a result on 17 November 2000, the EU launched a further Panel on compliance and at the same time presented a request for countermeasures for an amount of US $ 4,043 million.

On 20 August 2001, the WTO compliance panel examining the ETI Act issued its report in full support of the EU. In particular, the panel found that the ETI Act also constituted a prohibited export subsidy under WTO rules. The US appealed but in January 2002 the WTO Appellate Body once more confirmed the panel findings. As a result, on 30 August 2002 the WTO arbitrators authorised the EU to impose countermeasures at the level of US $ 4,043 million by increasing the customs duties on certain selected products up to 100%. The selection of the products destined for countermeasures, was made following consultation with EU economic operators (through a publication on 13 September of a Notice in the OJ) and Member States. The aim of the consultation was to minimise the negative consequences that any eventual countermeasures could create to EU industry; in that respect, the Commission included in the list products on which the US import share was low. On 28 March Member States gave their agreement to the definitive list, which was adopted by the Commission on 23 April 2003. Subsequently the EC notified the list to the WTO and on 7 May 2003, the DSB gave its authorisation for the imposition of countermeasures. The EC stated it would evaluate US progress on implementation in autumn 2003 and decide on countermeasures accordingly. The Council Regulation 2193/03 was adopted on 8 December and published in OJ L 328 of 17 December 2003. On the basis of the Regulation, countermeasures started being gradually applied as from 1 March; they will remain in force until the US comes into compliance (i.e., WTO compatible law signed by the President). In this connection, the EC is monitoring closely progress in Congress on the adoption of an FSC repeal bill. Bills to repeal FSC have been passed by both the Senate and the House of Representatives in May and June respectively. The two bills need to be reconciled following the so-called “conference” procedure which is expected to be initiated in July.

(6) DS 262 - US sunset reviews on certain steel products (procedural stage: consultations)
On 8 December 2000, the US decided to maintain for a further five years the anti-dumping and countervailing duties imposed in August 1993 on cut-to-length steel plate from Germany and corrosion-resistant steel from France and Germany. The US legislation on sunset reviews as well as the results of these specific sunset reviews appear to be inconsistent with several provisions of the WTO agreements. The main issues are the treatment on non-cooperation of the exporters, the definition of the de minimis dumping margin, the standards for assessing cumulatively the imports in the injury analysis and the treatment of negligible import volumes in sunset reviews. On 25 July 2002, the EC requested consultations with the US under Articles 17 of the antidumping agreement, 30 of the subsidy agreement, 4 of the DSU and XXII:1 of the GATT 1994. Consultations were held on 12 September 2002. (Japan whose exports of corrosionresistan steel are also subject to an anti-dumping duty imposed in 1993 and maintained inthe same sunset review initiated dispute settlement on the US decision in January 2002.

The panel's report on Japan's claims was circulated in August 2003 and favoured a strictly literal interpretation of the AD Agreement that conflicts with Japan and EC approach to sunset reviews. Japan appealed certain issues of law. The AB report upheld the US decision to maintain the AD duty on Japanese products, but reversed the Panel on a number of systemic issues. Even if sunset reviews remain subject to lower standards than original investigations (for e.g. no de minimis thresholds, right to initiate without prima facie evidence), the AB accepted that the continuation of the duty was the exception, recalled the obligation to conduct a full investigation and to define basic concepts such as dumping in a consistent way. The Panel and Appellate Body reports were adopted on 9 January 2004).

(7) DS 294 – Zeroing methodologies in the establishment of dumping margins (procedural stage: Panel)
In original investigations, the US Department of Commerce ('DOC') calculates the dumping margin using the methodology condemned in the Bed linen case. This methodology consists in disregarding negative dumping margins established for certain models of the product concerned (put at zero) when calculating the overall margin for the product. Although this dispute was concerned with the EU practice, it unambiguously condemned the “zeroing” methodology as such when used in well-defined circumstances. The US refuses to abandon its methodology, arguing that the Bed-Linen decisions have effect inter-partes only. In reviews, DOC systematically uses a calculation methodology, which also includes"zeroing" in circumstances not foreseen by the WTO AD Agreement. WTO consultations were requested on 12 June 2003 on the law, the implementing regulation, the DOC methodologies and 21 specific cases (new investigations and annual reviews of the duty or administrative reviews). An additional request for consultation was made on 8 September 2003 on 10 additional new investigations. In most cases, without “zeroing”, the dumping margin would have been de minimis or even negative and, therefore, no anti-dumping duty would have been imposed or collected. Two rounds of consultations were held in 2003. A first request for the establishment of a Panel was put forward in the DSB meeting of 17February 2004. The Panel was established at the DSB meeting of 19 March 2004. Composition of the Panel is on-going.


1. 2. Cases on Intellectual Property Rights
(8) DS 160 - Section 110(5) of the US Copyright Act (“Homestyle exemption”)(procedural stage: implementation)

On 27 July 2000, the DSB adopted the Panel report that found Section 110(5)(B) of the US Copyright Act to be incompatible with the TRIPs Agreement, in connection with the Bern Convention on the Protection of Literary and Artistic Works, as it provides an exceedingly broad derogation from the exclusive right of authors to authorise the public communication of their works. The US had originally been granted until 27 July 2001 to comply with the WTO rulings. On 24 July 2001 the DSB approved an extension of the reasonable period of time given to comply with the recommendations and rulings of the DSB until 31 December 2001, or the date on which the current session of the US Congress adjourns, whichever is earlier. The EC did not object to such an extension on the basis of the following premises: - The US would negotiate a solution for the benefit of the EU right holders affected by the operation of Section 110(5) US Copyright Act. - An arbitration procedure under Article 25 of the DSU would determine the economic losses due to the WTO-incompatible Section 110(5)(B) of the US Copyright Act. The arbitrators rendered their award on 12 October 2001 and determined that the level of nullification or impairment was equal to € 1.219.900 per year. The award was circulated on 9 November 2001. Talks with the US continued after the arbitration procedure, and the parties eventually found common ground regarding a possible future mutually acceptable arrangement. The US was to provide financial assistance to EU performing societies with a view to developing activities for the promotion of authors’ rights, pending compliance with the DSB recommendations and rulings. The understanding covered a 3-year period ending on 21 December 2004. The EC’s right to suspend concessions or other obligations has been safeguarded by means of a request under Article 22.2 DSU made on 7 January 2002. The requested suspension of TRIPs obligations consists in the levying of a special fee to US right holders that apply for action by the EU customs authorities to block pirated copyright goods. There is an ongoing arbitration procedure on the EC’s request, which is currently suspended in order to facilitate the implementation of a mutually acceptable arrangement. In July 2002, the US Congress passed the Trade Promotion Authority Act, which included a provision setting up a fund for the payment of settlements of WTO disputes. The Wartime Supplemental Appropriations Act, approved in April 2003, foresaw an appropriation to make a payment in connection with the Section 110(5) dispute. In the light of this legislative development, the US and the EC notified to the WTO a mutually satisfactory temporary arrangement on 23 June. In September 2003, the US made the agreed payment. For the time being there are no legislative initiatives to bring the Copyright Act into compliance with the TRIPs agreement.

(9) DS 176 - Section 211 of the US Omnibus Appropriations Act ("Havana Club") (procedural stage: implementation)
Section 211 U.S. Omnibus Appropriations Act was adopted by the U.S. Congress in October 1998. It is designed to diminish the rights of owners of U.S. trademarks and trade-names which previously belonged to a Cuban national or company which was expropriated in the course of the Cuban revolution. On 26 September 2000 a WTO panel has been established to rule on the compatibility of Section 211 with the obligations of the US under the TRIPs Agreement. The panel has circulated its report to the WTO Members on 6 August 2001. The EC lodged an appeal against the panel report on 4 October 2001. The Appellate Body issued its report on 2 January 2002. It substantially reversed the reasoning of the panel. It indeed ruled that trade names are protected by the TRIPs agreement, and found Section 211 in violation of both the national treatment and the MFN obligations of the TRIPs Agreement. It however reversed the finding of the panel on Article 42 TRIPs and maintained the finding of the panel that the TRIPs does not govern the issue of the determination of ownership of IP rights. The report of the Appellate Body has been adopted at the regular DSB meeting on 1 February 2002. The US and the EC reached an agreement on the reasonable period of time for the US to implement the DSB ruling and the US officially acknowledged that compliance ‘call for legislative action by US Congress’. The reasonable implementation period due to expire on 31 December 2002 was extended until 31 December 2004.

(10) DS 186 - Section 337 of the 1930 Tariff Act on Copyrights (procedural stage : consultations)
Section 337 of the U.S. Tariff Act declares the importation into the U.S. of articles infringing U.S. intellectual property rights illegal. It authorises the U.S. International Trade Commission (ITC) to investigate allegations of such practices and, if a violation is found, to exclude the articles from entry into the U.S. The procedures and remedies under Section 337 of the US Tariff Act are substantially different from the internal procedures in the case of domestic goods which allegedly infringe US intellectual property rights: notably, the means of defence under the Section 337 procedure are limited. These differences appear to breach the National Treatment clauses of the GATT and the TRIPs agreements, among other provisions. In 1989, a GATT panel already condemned Section 337, which was subsequently amended. However, the amendments were only partial and clearly insufficient. WTO consultations took place on 28 February 2000, with no positive outcome. Since then, the ITC has started new investigations against a number of European and Canadian companies. The Commission is concerned by these developments and it regularly raises the “Section 337” issue in its bilateral contacts with the US Administration. The Commission does not discard possible further action at the WTO level.

1. 3. Cases dealing with US unilateralism

(11) DS 200 - Carousel (procedural stage: consultations)
WTO consultations have been held in Geneva on 5 July 2000. The 133 Committee has decided in July 2000 that the EC would immediately request the establishment of a panel against the US legislation as soon as sanctions are rotated. Despite strong rumours that rotation could have taken place by 14 November or 18 November 2000, i.e. within 180 days or 6 months after the entry into force of the law, this did not happen. The political agreement reached on 10 April 2001 in the Bananas dispute should reduce the US domestic pressure to apply the carousel. The US 100% duties introduced in the context of this dispute have been terminated as of 1 July 2001. The two situations where the USTR is not obliged by law to rotate the carousel are (1) when there is a determination of imminent compliance, or (2) when the affected industry agrees not to rotate the sanctions.

DEFENSIVE CASES

(12) DS 48 + DS 26 - Hormones (procedural stage: implementation) On the basis of the studies reviewed by the Scientific Committee on Veterinary Matters relating to Public Health ("SCVPH"), on 5 May 2000 the Commission adopted a proposal to amend the “hormones directive.” This proposal provides for a permanent ban of 17ß oestradiol, which carcinogenic and genotoxic effects have been clearly demonstrated, and a provisional ban for the other 5 hormones. The new directive entered into force on 14 October 2003. The adoption of new rules based on a revised risk assessment brings the EU into conformity with its WTO obligations. At the Dispute Settlement Body meeting of 7 November 2003 the EC notified the new Directive as compliance in this case. Both Canada and the US disagreed and stated that they will keep their sanctions. At the DSB on 1 December 2003, the EC noted that this disagreement on compliance should be solved through multilateral DSB procedures. In this regard, the EC has informed Canada and the US its readiness to discuss procedural matters further with a view to agree on appropriate action.

(13) DS 174 – Trademarks & geographical indications (procedural stage: Panel)
On 7 June 1999, the US requested WTO consultations regarding Regulation No 2081/92 on geographical indications. Those consultations took place on 9 July 1999. At that point in time, the US argued that the Regulation was contrary to Articles 3, 16, 24, 63 and 65 of the TRIPs agreement. The US, although considering that the consultations had not allowed solving the dispute, did not request the establishment of the Panel. On 4 April 2003, the US requested additional WTO consultations on the same matter. The new consultation request argues that Regulation No 2081/92 on geographical indications is contrary to the TRIPs agreement (now including Articles 4 and 22), and also Articles I and III:4 of the GATT. Consultations took place on 27 May 2003. The US requested the establishment of a panel on for the first time on 29 August 2003. The panel was established at the DSB meeting on 2 October 2003. The panel request argues that Regulation No 2081/92 is contrary to the TRIPs agreement (Articles 1, 2, 3, 4, 16, 20, 22, 24, 41, 42, 63), Articles I and III:4 of the GATT. The Director-General of the WTO composed the panel on 13 February 2004. The EC filed its first written submission on 25 May 2004. The Panel is expected to issue its final report to the parties on 30 November 2004.

(14) DS 291 – EC – Measures affecting the approval and marketing of certain biotech products (GMOs) (procedural stage: panel)
On 13 May 2003, the US requested consultations on certain measures concerning GMOs. The US argues that there is a suspension of approvals in the approval of GMOs and GM food in the EU, which is contrary to several WTO agreements (GATT, SPS, TBT, and AoA). In this connection, the US also complains about the failure to consider for approval a number of specific products listed in the consultations request. Furthermore, the US considers that the restrictions imposed by several Member States on the sale or use of approved GMOs and GM food are inconsistent with WTO rules. Consultations were held on 19 June 2003. A panel was established on 29 August 2003. Consultations were held on 19 June 2003. A panel was established on 29 August 2003. After some discussions on panel composition, the complainants suddenly decided to request the WTO Director General to appoint the panellists, which he did on 4 March 2004. The panellists are: Christian Haberli (Switzerland - Chairman), Mohan Kumar (India) and Akio Shimizu (Japan). The panel procedure is ongoing.

Trade/D/3 - Last update on 2 July 2004
18
LIST OF ACTIVE WTO DISPUTE SETTLEMENT CASES
I – Argentina
1. Offensive cases
1) Hides and skins
2. Defensive cases
1) EC – Measures affecting the approval and marketing of biotech products
(GMOs)
II - Australia
1. Offensive cases
1) Quarantine measures for imports (SPS)
2. Defensive cases
1) EC Sugar regime
2) Geographical indications
III – Brazil
1. Defensive cases
1) EC anti-dumping duties in imports of malleable fittings from Brazil
2) EC Sugar regime
3) EC - Customs classification of frozen boneless chicken cuts
IV - Canada
1. Defensive cases
1) EC – Measures affecting the approval and marketing of biotech
products (GMOs)
2) Hormones
V – India
1. Offensive cases
1) Import Restrictions maintained under India's EXIM policy 2002-2007
2) AD measures on imports of certain products from the EC and/or MS.
2. Defensive cases
1) EC General System of Preferences
19
VI –Korea
1. Offensive cases
1) Shipbuilding subsidies (DS273)
2. Defensive Cases
1) Shipbuilding subsidies (DS 307)
2) CVD measures on DRAM
3) Shipbuilding - TDM (DS301)
VII – Thailand
1. Defensive cases
1) EC Sugar regime
2) Customs classification of frozen boneless chicken cuts
VIII – USA
1. Offensive cases
1) 1916 Anti-dumping Act
2) "Byrd amendment"
3) US countervailing measures on privatised EU firms
4) Foreign Sales Corporation (FSC)
5) US sunset reviews on certain steel products
6) Zeroing methodologies in the establishment of dumping
7) Homestyle exemptions in Section 110 of the US Copyright Act
8) Section 211 of the Omnibus Appropriations Act (Havana Club)
9) Section 337 of the 1930 Tariff Act on Copyrights
10) Carousel
2. Defensive cases
1) Hormones
2) Trademarks and Geographical Indications
3) EC – Measures affecting the approval and marketing of biotech products
(GMOs)
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