anrep13 chap5 e

7/27/2019 Anrep13 Chap5 e

1/20

Dispute settlement

74World Trade Organization

Annual Report 201374

Dispute settlement

www.wto.org/disputes

Dispute settlement

WTO members filed 27 notifications of "requests forconsultations" the first stage in the dispute settlementprocess in 2012, more than three times as many as in 2011.

The Dispute Settlement Body established 11 new disputesettlement panels, adopted 18 panel reports and 11 AppellateBody reports.

The 20-year EU-Latin America banana disputes reached a

major milestone in 2012 when the European Union and LatinAmerican countries formally settled their claims.

The WTOs Legal Affairs Division held a conference in June2012 to mark the 30 years since its predecessor, the GATTOffice of Legal Affairs, was created.


2/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement


Dispute settlement activity in 2012 76

Appellate Body 90

World Trade Organization

Annual Report 2012

World Trade Organization

Annual Report 2012

Background on dispute settlementWTO members bring disputes to the WTO ifthey think their rights under trade agreementsare being infringed. Settling disputes is the

responsibility of the Dispute Settlement Body.


3/20

Dispute settlement



Dispute settlement


There was a sharp increase in dispute settlement activity in 2012 with both developed

and developing countries active in bringing disputes to the WTO for resolution. Some

WTO members, including Russia, participated for the rst time. Disputes covered a

wide variety of areas, including some that are less often adjudicated, such as issues

under the General Agreement on Trade in Services. The European Union and Latin

American countries formally settled the long-running banana disputes. Efforts to

achieve efciencies in dispute settlement processes continued. Finally, the legal

affairs division celebrated an important anniversary.

Dispute settlement activity in 2012

Conclusion o the banana disputesThe 20-year EU-Latin America banana disputes reached a majormilestone in 2012 when the European Union and Latin Americancountries ormally settled their claims. Parties to the disputehad initially signed the Geneva Bananas Agreement in 2009.Following this, a number o legal steps were required, includingeach country ratiying the 2009 agreement and the EuropeanUnion introducing legislation and regulations to implement it. Asthe WTOs membership has accepted the Bananas Agreementas part o the European Unions new scheduled commitment, itis now multilateral.

The new EU commitments to reduce its import taris onbananas were circulated on 27 July 2012 as a revision to the

European Unions list (ocially its schedule) o commitments.WTO members were then given three months under WTOregulations to object. As there were no objections, the WTODirector-General certied the revised EU Schedule at the endo October and on 8 November 2012 the European Union andLatin American countries signed a mutually agreed solutionthrough which they agreed to end all their pending bananadisputes.

30th anniversary o Legal Aairs DivisionIn June 2012, the WTOs Legal Aairs Division (LAD) held aconerence to mark the 30 years since its predecessor, theGATT Oce o Legal Aairs, was created. The establishmento the division was an early indication o the importance thatmembers and the Secretariat gave to a strong and clear legalramework or the conduct o international trade, including aneective and reliable dispute settlement system.

In a speech marking the event, Director-General Pascal Lamysaid that initially the emphasis had been on nding politicallyacceptable solutions. However, over the years, procedures hadevolved, moving to a dispute settlement system increasinglybased on rules. Finally, he recalled the bold changes that

members introduced at the end o the Uruguay Round, whenthey adopted the Dispute Settlement Understanding (DSU). As aresult, WTO members enjoy one o the most successul systemsor dispute settlement in the international sphere.

The European Union and ten Latin American countries signed an agreement on 8 November 2012 ending

20 years o EU-Latin American banana disputes.


4/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement


Enhancing panel efciencyIn March 2012, Deputy Director-General Alejandro Jarareported on his consultations with stakeholders on improving theeciency o the panel in ways that do not aect the DSU itsel.He grouped the proposals received into three broad categories:improving the eectiveness o the rst meeting o the panelwith the parties; improving the eciency in terms o lengthand cost o the process, including by emulating the AppellateBody practice o setting time-limits or parties oral statements;and improving the presentation o panel reports and reducingproduction costs through setting page limits or summarieso parties arguments, and reducing the number o annexesattached to reports.

The Deputy Director-General observed that some o theinnovations had already been put into place by some panels.Broader implementation would depend on WTO membersworking together with panellists. Members also made goodprogress in developing and designing a system to permit secureremote digital ling o dispute settlement documents.

Dispute settlement activity in 2012

In 2012, the Dispute Settlement Body (DSB) received 27notications o requests or consultations, the rst stage inthe WTOs dispute settlement process (see below). This is thehighest number o requests in the last ten years. In addition,numerous disputes were already making their way through thesystem. Thus, in addition to the panels already under way, the

DSB established 11 new panels to adjudicate 13 new cases.(Where more than one complaint deals with the same matter, thecomplaints may be adjudicated by a single panel.)

In 2012, the DSB also adopted 18 panel reports as well as11 Appellate Body reports. Finally, the arbitrator establishedreasonable periods o time or implementing the DSB rulingsand recommendations in two disputes.

Inormation about the disputes, including the reports adopted bythe DSB, can be ound in Table 1 on the next page.

Background on dispute settlement activity

The General Council convenes as the Dispute Settlement Body (DSB) to deal withdisputes arising rom any agreement contained in the Final Act o the Uruguay Roundthat is subject to the Understanding on Rules and Procedures Governing the Settlemento Disputes (Dispute Settlement Understanding). The DSB, which met 18 times during2012, has authority to establish dispute settlement panels, adopt panel and AppellateBody reports, maintain surveillance over the implementation o recommendations andrulings contained in such reports, and authorize suspension o concessions in the evento non-compliance with those recommendations and rulings.

At a ceremony to commemorate the 30th anniversary o the GATT/WTOLegal Aairs Division in June 2012, the WTO launched a new edition othe Analytical Index, a comprehensive guide to the interpretation andapplication o WTO agreements.


5/20

Dispute settlement



Dispute settlement


Table 1: Panel and Appellate Body reports circulated in 2012*

Case Documentnumber

Complainant(s) Respondent Third parties WTO Agreementscovered

Date o adoptionby DisputeSettlementBody

China RawMaterials (UnitedStates)

WT/DS394/AB/R

WT/DS394/R

United States China Argentina, Brazil,Canada, Chile,Colombia, Ecuador,European Union,India, Japan,Republic o Korea,Mexico, Norway,

Chinese Taipei,Turkey, Kingdom oSaudi Arabia

Chinas AccessionProtocol

GeneralAgreement onTaris and Trade(GATT) 1994

DisputeSettlementUnderstanding(DSU)

22 Feb 2012

China RawMaterials(European Union)

WT/DS395/AB/R

WT/DS395/R

EuropeanCommunities

China Argentina, Brazil,Canada, Chile,Colombia, Ecuador,India, Japan,Republic o Korea,Mexico, Norway,Chinese Taipei,Turkey, Kingdomo Saudi Arabia,

United States


GATT 1994

DSU

22 Feb 2012

China RawMaterials(Mexico)

WT/DS398/AB/R

WT/DS398/R

Mexico China Argentina, Brazil,Canada, Chile,Colombia, Ecuador,European Union,India, Japan,Republic o Korea,Norway, ChineseTaipei, Turkey,Kingdom o SaudiArabia, UnitedStates


GATT 1994

DSU

22 Feb 2012

Dominican

Republic SaeguardMeasures

WT/DS415/R Costa Rica Dominican

Republic

China, Colombia, El

Salvador, EuropeanUnion, Guatemala,Honduras,Nicaragua, Panama,Turkey, UnitedStates

Agreement on

Saeguards

GATT 1994

DSU

22 Feb 2012

DominicanRepublic SaeguardMeasures

WT/DS416/R Guatemala DominicanRepublic

China, Colombia,Costa Rica, ElSalvador, EuropeanUnion, Honduras,Nicaragua, Panama,Turkey, UnitedStates

Agreement onSaeguards

GATT 1994

DSU

22 Feb 2012


6/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement



Case Documentnumber




WT/DS417/R Honduras DominicanRepublic

China, Colombia,Costa Rica, ElSalvador, EuropeanUnion, Guatemala,Nicaragua, Panama,Turkey, UnitedStates


GATT 1994

DSU

22 Feb 2012


WT/DS418/R El Salvador DominicanRepublic

China, Colombia,Costa Rica,European Union,Guatemala,Honduras,Nicaragua, Panama,Turkey, UnitedStates


GATT 1994

DSU

22 Feb 2012

US Large CivilAircrat

(2nd complaint)

WT/DS353/AB/R

WT/DS353/R

EuropeanCommunities

UnitedStates

Australia, Brazil,Canada, China,Japan, Republic oKorea

Subsidies andCountervailingMeasures (SCM)Agreement

GATT 1994

DSU

23 Mar 2012

US CloveCigarettes

WT/DS406/AB/R

WT/DS406/R

Indonesia UnitedStates

Brazil, Colombia,Dominican Republic,European Union,Guatemala, Mexico,Norway, Turkey

Sanitary andPhytosanitaryMeasures (SPS)Agreement

Technical Barriersto Trade (TBT)Agreement

GATT 1994

DSU

24 Apr 2012

US Tuna II(Mexico)

WT/DS381/AB/R

WT/DS381/R

Mexico UnitedStates

Argentina, Australia,Brazil, Canada,China, Ecuador,European Union,Guatemala, Japan,Republic o Korea,New Zealand,Chinese Taipei,Thailand, Turkey,Bolivarian Republico Venezuela

TBT Agreement

GATT 1994

DSU

13 Jun 2012

(continued)


7/20

Dispute settlement



Dispute settlement



Case Documentnumber



US Shrimp &Sawblades

WT/DS422/R China UnitedStates

European Union,Honduras, Japan,Republic o Korea,Thailand, Viet Nam

Anti-DumpingAgreement

GATT 1994

23 Jul 2012

US COOL[country oorigin labelling](Canada)

WT/DS384/AB/R

WT/DS384/R

Canada UnitedStates

Argentina,Australia, Brazil,China, Colombia,European Union,Guatemala, India,Japan, Republico Korea, Mexico,New Zealand, Peru,Chinese Taipei

Rules o OriginAgreement

SPS Agreement

TBT Agreement

GATT 1994

23 Jul 2012

US COOL(Mexico)

WT/DS386/AB/R

WT/DS386/R

Mexico UnitedStates

Argentina, Australia,Brazil, Canada,China, Colombia,European Union,

Guatemala, India,Japan, Republico Korea, NewZealand, Peru,Chinese Taipei

Rules o OriginAgreement

SPS Agreement

TBT Agreement

GATT 1994

23 Jul 2012

Korea BovineMeat (Canada)*

WT/DS391/R Canada Korea Argentina, Brazil,India, China,European Union,Japan, ChineseTaipei, UnitedStates

SPS Agreement

GATT 1994

[not adopted]

China Electronic

Payment Services

WT/DS413/R United States China Australia, Ecuador,European Union,

Guatemala, Japan,Republic o Korea,India

GeneralAgreement on

Trade in Services(GATS)

31 Aug 2012

China GOES[grain-orientedfat-rolledelectrical steel]

WT/DS414/AB/R

WT/DS414/R

United States China Argentina,European Union,Honduras, India,Japan, Republic oKorea, Kingdom oSaudi Arabia, VietNam


SCM Agreement

GATT 1994

16 Nov 2012

(continued)

*Appellate Body reports are the shaded rows. Further inormation on these repor ts is provided in Table 5 on page 91.


8/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement



Case Documentnumber



Canada Feed InTari Program

WT/DS426/R Japan Canada Australia, Brazil,China, El Salvador,European Union,Honduras, India,Republic o Korea,Mexico, Norway,Kingdom o Saudi

Arabia, ChineseTaipei, UnitedStates

SCM Agreement

Trade RelatedInvestmentMeasures(TRIMs)Agreement

GATT 1994

[Panel Reportunder appeal on5 Feb 2013]

Canada RenewableEnergy

WT/DS412/R European Union Canada Australia, Brazil,China, El Salvador,India, Japan,Republic o Korea,Mexico, Norway,Kingdom o SaudiArabia, ChineseTaipei, Turkey,United States

SCM Agreement

TRIMs Agreement

GATT 1994

[Panel Reportunder appeal on5 Feb 2013]

Sharp increase in requests or consultationsThe number o requests or consultations the rst stagein dispute settlement proceedings and an obligatory stepbeore the establishment o a panel to adjudicate a complaint increased more than threeold in 2012 to 27, compared witheight in 2011 (see Figure 1).

However, this does not mean that 27 new disputes willnecessarily be working their way through the dispute settlementsystem in 2013, as about hal o disputes overall do not proceedbeyond the consultations stage. Oten, the parties reach a

satisactory settlement, or a complainant decides or otherreasons not to pursue the matter. This shows that consultationsare oten an eective means o dispute resolution in the WTO.

Consultations are one o the key diplomatic eatures o the WTOdispute settlement system. They allow parties to clariy the actsinvolved and the claims o the complainant, possibly dispellingmisunderstandings as to the true nature o the measure(s)at issue. In this sense, consultations serve either to lay theoundation or a settlement or or urther proceedings under theDSU. For those disputes that are not settled at the consultationsstage, which may last up to 60 days, the next step is theestablishment o a panel by the DSB.

Figure 1: Number o disputes fled per year

25

39

50

41

30

34

23

26

19

11

13

19

14

8

37

17

20

27

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1995

2011

0 10 20 30 40 50 60

2012

(continued)


9/20

Dispute settlement



Dispute settlement


Figure 3: Requests or consultations

in 2012, by respondent

Figure 2: Requests or consultations

in 2012, by complainant

Argentina

Brazil

China

Dominican Rep.

European Union

Honduras

India

Indonesia

Japan

Mexico

Panama

3

1

1

2

1

1

3

2

1

3

Ukraine

1

0 1 2 3 4 5 6

United States

2

5

Viet Nam 1

Table 2: Requests for consultations in 2012

Case Documentnumber

Complainant Date o initialrequest

WTO Agreementscited

Status as o endo 2012

Turkey SaeguardMeasures on Imports oCotton Yarn (other thanSewing Thread)

WT/DS428 India 13 Feb 2012 GATT

SaeguardsAgreement

In consultations

US Anti-DumpingMeasures on CertainShrimp rom Viet Nam

WT/DS429 Viet Nam 16 Feb 2012 GATT


WTO Agreement

DSU

Viet NamsAccession Protocol

In consultations

India Measuresconcerning the Importationo Certain AgriculturalProducts

WT/DS430 United States 6 Mar 2012 SPS Agreement

GATT

Panel established/panel compositionpending

China Measures relatedto the Exportation o RareEarths, Tungsten andMolybdenum

WT/DS431 United States 13 Mar 2012 GATT


Panel work hascommenced

Which WTO members were active in 2012?

O the 27 new requests or consultations, Latin Americanmembers launched nine, with Argentina the most active withthree complaints. A number o Asian members, including Japan,were also active during 2012. The United States initiated verequests, with China on the receiving end o three o them,while the European Union initiated two (see Figures 2 and 3).

Overall, as the inormation in Table 2 shows, developingcountries participated strongly in the dispute settlementsystem, both as complainants and respondents.

Argentina

Australia

China

European Union

India

South Africa

Turkey

United States

3

7

3

1

1

0 87654321

5

1

6


10/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement



Case Documentnumber


WTO Agreementscited



WT/DS432 European Union 13 Mar 2012 GATT




WT/DS433 Japan 13 Mar 2012 GATT



Australia CertainMeasures concerningTrademarks and otherPlain PackagingRequirements applicableto Tobacco Products andPackaging

WT/DS434 Ukraine 13 Mar 2012 GATT

TRIPS Agreement

TBT Agreement


Australia CertainMeasures ConcerningTrademarks, GeographicalIndications and other PlainPackaging Requirementsapplicable to Tobacco

Products and Packaging

WT/DS435 Honduras 4 Apr 2012 GATT

TRIPS Agreement

TBT Agreement

Panel request pendingbeore the DSB

United States Countervailing Measureson Certain Hot-RolledCarbon Steel Flat Productsrom India

WT/DS436 India 12 Apr 2012 GATT

SCM Agreement


United States Countervailing DutyMeasures on CertainProducts rom China

WT/DS437 China 25 May 2012 GATT

SCM Agreement



Argentina MeasuresAecting the Importationo Goods

WT/DS438 European Union 25 May 2012 GATT

TRIMs AgreementImport LicensingAgreement

AgricultureAgreement

SaeguardsAgreement


South Arica Anti-Dumping Duties on FrozenMeat o Fowls rom Brazil

WT/DS439 Brazil 25 Jun 2012 GATT


In consultations

(continued)


11/20

Dispute settlement



Dispute settlement



Case Documentnumber


WTO Agreementscited


China Anti-Dumping andCountervailing Duties onCertain Automobiles romthe United States

WT/DS440 United States 5 Jul 2012 GATT


SCM Agreement


Australia CertainMeasures concerningTrademarks, GeographicalIndications and other Plain

Packaging Requirementsapplicable to TobaccoProducts and Packaging

WT/DS441 Dominican Republic 18 Jul 2012 GATT

Trade-relatedAspects oIntellectual Property(TRIPS) Agreement

TBT


European Union Anti-Dumping Measures onImports o Certain FattyAlcohols rom Indonesia

WT/DS442 Indonesia 27 Jul 2012 GATT


In consultations

European Union and aMember State CertainMeasures Concerning theImportation o Biodiesels

WT/DS443 Argentina 17 Aug 2012 GATT

TRIMs Agreement



WT/DS444 United States 21 Aug 2012 GATT

Import LicensingAgreement

TRIMs Agreement

SaeguardsAgreement



WT/DS445 Japan 21 Aug 2012 GATT


TRIMs Agreement

SaeguardsAgreement



WT/DS446 Mexico 24 Aug 2012 GATT

AgricultureAgreement


TRIMs Agreement

SaeguardsAgreement

Technical Barriersto Trade (TBT)Agreement

In consultations

(continued)


12/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement



Case Documentnumber


WTO Agreementscited


United States MeasuresAecting the Importationo Animals, Meat andOther Animal Productsrom Argentina

WT/DS447 Argentina 30 Aug 2012 GATT

SPS Agreement

WTO Agreement

Panel request pendingbeore DSB

United States MeasuresAecting the Importationo Fresh Lemons

WT/DS448 Argentina 3 Sep 2012 GATT

Sanitary andPhytosanitary

Measures (SPS)Agreement

WTO Agreement

Panel request pendingbeore the DisputeSettlement Body (DSB)

United States Countervailing andAnti-Dumping Measureson Certain Products romChina

WT/DS449 China 17 Sep 2012 GATT

SCM Agreement



China Certain MeasuresAecting the Automobileand Automobile-partsIndustries

WT/DS450 United States 17 Sep 2012 GATT

SCM Agreement


In consultations

China Measures Relatingto the Production andExportation o Apparel andTextile Products

WT/DS451 Mexico 15 Oct 2012 GATT

SCM Agreement


In consultations

European Union andCertain Member States Certain MeasuresAecting the RenewableEnergy Generation Sector

WT/DS452 China 5 Nov 2012 GATT

Subsidies andCountervailingMeasures (SCM)Agreement

Trade in InvestmentMeasures (TRIMs)Agreement

In consultations

Argentina MeasuresRelating to Trade in Goodsand Services

WT/DS453 Panama 12 Dec 2012 GATT

General Agreementon Trade in Services(GATS)

In consultations

China MeasuresImposing Anti-DumpingDuties on High-Perormance StainlessSteel Seamless Tubesrom Japan

WT/DS454 Japan 20 Dec 2012 General Agreementon Taris and Trade(GATT)


In consultations

(continued)


13/20

Dispute settlement



Dispute settlement


Member Complainant Respondent

Antigua and Barbuda 1 0

Argentina 18 22

Armenia 0 1

Australia 7 13

Bangladesh 1 0

Belgium 0 3

Brazil 26 14

Canada 33 17

Chile 10 13

China 11 30

Colombia 5 3

Costa Rica 5 0

Croatia 0 1

Czech Republic 1 2

Denmark 0 1

Dominican Republic 1 7

Ecuador 3 3

Egypt 0 4

El Salvador 1 0

European Union (ormerly EC) 87 73

France 0 4

Germany 0 2

Greece 0 3

Guatemala 8 2

Honduras 8 0

Hong Kong, China 1 0

Hungary 5 2

India 21 21

Indonesia 6 5

Ireland 0 3

Italy 0 1

Japan 17 15

Member Complainant Respondent

Korea, Republic o 15 14

Malaysia 1 1

Mexico 23 14

Moldova, Republic o 1 1

Netherlands 0 3

New Zealand 7 0

Nicaragua 1 2

Norway 4 0

Pakistan 3 2

Panama 6 1

Peru 3 4

Philippines 5 6

Poland 3 1

Portugal 0 1

Romania 0 2

Singapore 1 0

Slovak Republic 0 3

South Arica 0 4

Spain 0 3

Sri Lanka 1 0

Sweden 0 1

Switzerland 4 0

Chinese Taipei 3 0

Thailand 13 3

Trinidad and Tobago 0 2

Turkey 2 9

Ukraine 3 1

United Kingdom 0 3

United States o America 104 119

Uruguay 1 1

Venezuela, Bolivarian Republic o 1 2

Viet Nam 2 0

Table 3: WTO members involved in disputes, 1995 to 2012*

*This table indicates notications o requests or consultations received by the WTO.


14/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement


What issues are being litigated?

The DSB established a single panel to consider complaintsby the European Union, Japan and the United States relatingto Chinas alleged restrictions on the export o rare earths.Complaints brought by Canada and Norway against theEuropean Union or banning the importation and marketing oseal products entered into the panel phase.

A panel was established to examine Ukraines complaint againstAustralias requirements concerning plain packaging on tobaccoproducts. Honduras and the Dominican Republic also havepending requests beore the DSB on a similar subject. Alsopending beore the DSB are requests rom the European Union,the United States and Japan to establish a panel to look at theircomplaints concerning Argentinas measures that allegedly

restrict the importation o goods.

Figure 4: WTO agreements reerred to in

requests or consultations, 1995-2012

(number o times)

The DSB set up seven panels in 2012 to examine complaints in

the area o trade remedies; these disputes concern anti-dumpingmeasures (to deal with export products sold at prices lowerthan those charged in the home market), countervailing duties(subsidies) and saeguard actions (to guard against importsurges). Trade remedies allow governments to take remedialaction in situations where the domestic industry is being injured.The recent trend o increasing numbers o disputes in the traderemedies area continued in 2012.

Table 2 shows the variety o WTO agreements that were raisedin the disputes initiated in 2012. All disputes initiated in 2012included challenges under the GATT 1994; since 1995, 355o the 428 requests or consultations have included a claimunder this agreement. Disputes under the Agreement on Trade-

Related Aspects o Intellectual Property Rights (TRIPS) and theTechnical Barriers to Trade (TBT) Agreement occur much lessoten than do disputes under the Sanitary and PhytosanitaryMeasures (SPS) Agreement, the Subsidies and CountervailingMeasures (SCM) Agreement, and the Anti-Dumping Agreement.Chart 3 shows the number o times an agreement has beenreerred to in requests or consultations rom 1995 to 2012.

Reports issued

O the reports issued by panels and the Appellate Body during2012, our addressed claims under the TBT Agreement andthree addressed export restrictions. A long report dealt withsubsidies relating to large civil aircrat, and another report on thecase China-GOES (grain oriented fat-rolled electrical steel)

addressed claims under the Anti-Dumping Agreement and theSCM Agreement.

Also issued in 2012 were reports addressing claims underagreements that have not recently been the subject o disputes:China Electronic Payment Services, which concerns USclaims under the General Agreement on Trade in Services(GATS), and Canada Renewable Energy and Canada Feed-in Tari Programs, where the European Union and Japanraised claims under the Trade-Related Investment Measures(TRIMS) Agreement.

Findings o the reportsIn 2012, the Appellate Body issued a number o reports on

technical regulations: US Clove Cigarettes, US Tuna II andUS COOL (country o origin labelling).

US Clove Cigarettes concerns a tobacco control measureadopted by the United States that prohibited the sale andproduction o favoured cigarettes, including clove cigarettes,other than menthol-favoured cigarettes. US Tuna II (Mexico)concerns the use o a dolphin-sae label or tuna productssold on the US market. US-COOL concerns country o originlabelling requirements or meat products derived rom bothdomestic and imported livestock.

One o the basic principles o the WTO is non-discrimination;thus, a country should not discriminate without justicationbetween trading partners and it should not discriminate between

its own and oreign products, services, service providers, or

90Subsidies

97Anti-Dumping

34TRIMs

32TRIPs 37

Licensing

44Safeguards

40SPS

67Agriculture

44TBT

355GATT 1994


15/20

Dispute settlement



Dispute settlement


nationals. In other words, these disputes concern how members

deal with non-trade concerns under the TBT Agreement, whichsets specic rules or technical regulations, standards andconormity assessment procedures.

Such regulations and standards may be drawn up bygovernments to address various policy concerns, includinganimal lie or health, human health or saety, or the environment.All three recent disputes concerned technical regulations, whichare mandatory measures laying down product characteristics,their related processes and production methods, or labellingrequirements.

In US Clove Cigarettes, US Tuna II (Mexico) and US COOL, the Appellate Body rst explained that this non-

discrimination principle is also ound in the TBT Agreement.It added that technical regulations will, by their very nature,establish distinctions between products according to theircharacteristics or production methods, and it explained that anydetrimental impact o the regulations on imports that stemmedexclusively rom legitimate regulatory distinctions would notamount to discrimination.

In these three disputes, the Appellate Body was not persuadedthat the detrimental impact o the technical regulations stemmedrom legitimate regulatory distinctions and thereore ound allthree technical regulations at issue inconsistent with the TBTAgreement provision on non-discrimination (Article 2.1).

Another aspect o the TBT Agreement examined in these three

disputes was the requirement under Article 2.2 that technicalregulations not be more trade-restrictive than necessary toull a legitimate objective, taking into account the risks thatnon-ullment would create. The complainant bears the burdeno demonstrating that the technical regulation is more trade-restrictive than necessary and, or this purpose, in most casesit will present possible alternative measures that are lesstrade-restrictive and can achieve to the same degree the sameobjective as the challenged measure. It is or the member whosemeasure is challenged to explain its policy justications.

In all three o the TBT disputes, the panel or Appellate Bodyaccepted the policy aims identied as legitimate objectives.Those objectives were the protection o human health, animal

lie or health, or the environment, and the provision o consumerinormation. The ban on favoured cigarettes in US CloveCigarettes was ound by the panel to be not more trade-restrictive than necessary to ull the objective o protectinghuman health, although the measure was struck down on othergrounds.

In US Tuna II, the Appellate Body reversed the nding thatthe labelling requirements at issue were inconsistent with Article2.2. However, the Appellate Body could not ultimately determinethe consistency with Article 2.2 o the labelling requirements atissue in US COOL because there were insucient actualndings.

During 2012, export restrictions were also the subject o WTO

dispute settlement. The GATT 1994 requires members, withcertain exceptions, to eliminate all prohibitions and quantitativerestrictions on exports (Article XI) . However, it does not preventmembers rom imposing duties or taxes on their exports.Although this is the general rule, some recently acceded WTOmembers have undertaken commitments in their accessionprotocols to reduce or limit the export taris or export dutiesthey apply to certain goods.

In China Raw Materials, the European Union, the UnitedStates and Mexico challenged a number o export restrictionsthat they alleged China placed on the exportation o certain rawmaterials. In 2012, the Appellate Body issued its report in thisdispute. The Appellate Body agreed with the panel that there is

no basis in Chinas Accession Protocol to allow the applicationo Article XX o the GATT 1994 to Chinas obligations under therelevant paragraph o the Accession Protocol.

Furthermore, the Appellate Body upheld the panels nding thatChina did not demonstrate that its export quota on reractory-grade bauxite was temporarily applied to either prevent orrelieve a critical shortage, within the meaning o Article XI:2(a) o the GATT 1994. The Appellate Body agreed with thepanel that such a restriction must be o a limited duration andnot indenite. Moreover, the Appellate Body ound that the termcritical shortages reers to those deciencies in quantity thatare crucial and o decisive importance, or that reach a vitallyimportant or decisive stage.

The question o export restrictions will be considered againby a WTO dispute panel in 2013 as the DSB established inSeptember 2012 a panel to consider complaints about exportrestrictions that China allegedly imposes on a number o rareearths.

In March 2012, the DSB adopted the panel and Appellate Bodyreports in the dispute brought by the European Union overaircrat subsidies provided by the United States (US LargeCivil Aircrat, oten reerred to as the Boeing dispute).

In the Boeing dispute, the Appellate Body upheld the panelsndings that certain US subsidies enabled Boeing to launch its787 plane (known as the Dreamliner) in 2004, thereby causing

serious prejudice to the interests o the European Communitieswith respect to 200-300 seat large civil aircrat. The AppellateBody also ound that certain subsidies had price eects andthus cause serious prejudice to the interests o the EuropeanCommunities with respect to 100-200 seat large civil aircrat.No serious prejudice was ound with respect to 300-400 seatlarge civil aircrat.

This was the second o the large and complex cases brought tothe WTO dispute settlement system concerning subsidies givenby governments to the civil aircrat industry. An earlier caseconcerned European subsidies provided to Airbus.


16/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Dispute settlement


Dispute settlement activity relating to these cases is

nevertheless continuing. According to the DSU, once a paneland/or Appellate Body report has been adopted, the disputemoves to the compliance stage where parties must bring intoconormity the measures ound not to be consistent with WTOrules.

The United States has alleged that the steps taken bythe European Union have ailed to bring its measures intocompliance with the DSBs recommendations and rulings. Acompliance panel has been set up to examine this issue. In theparallel dispute, the United States has notied the DSB that ithas ully complied with the DSB recommendations and rulings.The European Union disagreed and a compliance panel wasestablished to address this dispute.

ConclusionsIn sum, WTO dispute settlement activity increased markedlyin 2012. It is clear that WTO members, both developed anddeveloping, continue to have a high degree o condence in theWTO dispute settlement mechanism to resolve their disputesin a air and ecient manner. It is also evident that membersare condent that the system is capable o adjudicating a widevariety o disputes covering signicant questions and complexissues.


17/20

Dispute settlement



Appellate Body

www.wto.org/appellatebody

The Appellate Bodys workload remained intense in 2012, although the number of

new appeals levelled off. The Appellate Body circulated reports in nine disputes

during 2012, four of which concerned appeals led in 2011. New appeals were led

in ve disputes, all of which were concluded in 2012. One Article 21.3(c) arbitration

proceeding concerning the reasonable period of time for implementation was carried

out in 2012. In June, a new member was appointed to the Appellate Body.

Appellate Body

A ull list o appeals led and Appellate Body reports circulatedin 2012 is provided in Tables 4 and 5. Further inormation oncirculated reports is provided in Table 1 on pages 78-80.

Table 4: Appeals led in 2012

Panel reports appealed Date o appeal Appellant Document number Other appellant Document number

US Clove Cigarettes 5 Jan 2012 United States WT/DS406/6 - -

US Tuna II (Mexico) 20 Jan 2012 United States WT/DS381/10 Mexico WT/DS381/11

US COOL [CertainCountry o OriginLabelling] (Canada)

23 Mar 2012 United States WT/DS384/12 Canada WT/DS384/13

US COOL (Mexico) 23 Mar 2012 United States WT/DS386/11 Mexico WT/DS386/12

China GOES [GrainOriented Flat-RolledElectrical Steel]

20 Jul 2012 China WT/DS414/5 - -


18/20

Dispute settlement


Annual Report 2013

Dispute

settlement

Appellate Body


Table 5: Appellate Body (AB) reports circulated in 2012

Panel reports appealed Date o appeal Appellant Documentnumber

Other appellant(s) Documentnumber

Circulation dateo AB report

China Raw Materials(United States)*

31 Aug 2011 China WT/DS394/11 United States WT/DS394/12 30 Jan 2012

China Raw Materials(European Union)*

31 Aug 2011 China WT/DS395/11 European Union WT/DS395/12 30 Jan 2012

China Raw Materials(Mexico)*

31 Aug 2011 China WT/DS398/10 Mexico WT/DS398/11 30 Jan 2012

US Large Civil Aircrat

(2nd Complaint)

1 Apr 2011 European Union WT/DS353/8 United States WT/DS353/10 12 Mar 2012

US Clove Cigarettes 5 Jan 2012 United States WT/DS406/6 - - 4 Apr 2012

US Tuna II (Mexico) 20 Jan 2012 United States WT/DS381/10 Mexico WT/DS381/11 16 May 2012

US COOL (Canada)** 23 Mar 2012 United States WT/DS384/12 Canada WT/DS384/13 29 Jun 2012

US COOL (Mexico)** 23 Mar 2012 United States WT/DS386/11 Mexico WT/DS386/12 29 Jun 2012

China GOES 20 Jul 2012 China WT/DS414/5 - - 18 Oct 2012

* These three Appellate Body reports were circulated in a single document.

** These two Appellate Body reports were circulated in a single document.

Details o the Appellate Bodys ndings are set out on pages87-89. By the end o 2012, the Appellate Body had circulated117 reports since its establishment in 1995.

One Article 21.3(c) arbitration proceeding concerning thereasonable period o time or implementation was carried out in2012. Further inormation about the arbitration is provided belowin Table 6.

Table 6: Article 21.3(c) arbitration awards circulated in 2012

Dispute Parties Document number Circulation date o arbitration award

US COOL Canada

Mexico

United States

WT/DS384/24

WT/DS386/23

4 Dec 2012


19/20

Dispute settlement



Appellate Body


Members o the Appellate Body, rom let to right: David Unterhalter, Ujal Singh Bhatia, Peter Van denBossche, Yuejiao Zhang, Ricardo Ramrez-Hernndez, Thomas R . Graham, and Seung Wha Chang

Background on the Appellate Body

The Appellate Body consists o seven members appointed bythe Dispute Settlement Body. Each member is appointed or aterm o our years, with the possibility o being reappointed orone urther our-year term. Three members o the AppellateBody hear an appeal o a panels ruling. Any party to a disputemay appeal the panel report to the Appellate Body. The appeal

is limited to issues o law covered in the panel report and legalinterpretations developed by the panel.

Appellate Body members

The rst term o oce o Ms Yuejiao Zhang expired on 31 May2012. The DSB reappointed Ms Zhang or a second our-yearterm beginning on 1 June 2012.

Mr Shotaro Oshima resigned rom the Appellate Body eective6 April 2012. On 24 May 2012, the Dispute Set tlement Bodyappointed Mr Seung Wha Chang (Republic o Korea) to serveor our years as Appellate Body member commencing on1 June 2012. Mr Chang was sworn in on 13 June 2012. Hisbiography is provided below.

As o 1 June 2012, the seven Appellate Body members are:

Ujal Singh Bhatia (India) (2011-15)

Seung Wha Chang (Republic o Korea) (2012-16)

Thomas R . Graham (United States) (2011-15) Ricardo Ramrez-Hernndez (Mexico) (2009-13)

David Unterhalter (South Arica) (2006-13)

Peter Van den Bossche (Belgium) (2009-13)

Yuejiao Zhang (China) (2008-16).

Ms Yuejiao Zhang served as Chair o the Appellate Body rom11 December 2011 to 31 May 2012. Ms Zhang was re-electedto serve as Chair or the period 1 June to 31 December 2012.


20/20

Dispute settlement

Dispute

settlement

Seung Wha Chang (Republic o Korea)

Born in the Republic o Korea on 1 March 1963, Seung WhaChang is currently Proessor o Law at Seoul National University,where he teaches international trade law and internationalarbitration.

He has served on several WTO dispute settlement panels,including US FSC [oreign sales corporations], Canada Aircrat Credits and Guarantees, and EC Trademarks andGeographical Indications. He has also served as chairman ormember o several arbitral tribunals dealing with commercialmatters. In 2009, he was appointed by the InternationalChamber o Commerce as a member o the International Courto Arbitration.

Proessor Chang began his proessional academic career atthe Seoul National University School o Law in 1995 and wasawarded proessorial tenure in 2002. He has taught internationaltrade law and, in particular, WTO dispute settlement at morethan ten oreign law schools, including Harvard Law School, YaleLaw School, Stanord Law School, New York University, DukeLaw School and Georgetown University. In 2007, Harvard LawSchool granted him an endowed visiting proessorial chair title,Nomura Visiting Proessor o International Financial Systems.

In addition, Proessor Chang previously served as a SeoulDistrict Court judge, handling many cases involving internationaltrade disciplines. He also practised as a oreign attorney at aninternational law rm in Washington D.C., handling international

trade matters, including trade remedies and WTO-relateddisputes.

Proessor Chang has published many books and articles inthe eld o international trade law. In addition, he serves as aneditorial or advisory board member o the Journal o InternationalEconomic Law (Oxord University Press) and the Journal oInternational Dispute Settlement (Oxord University Press) .

Proessor Chang holds a Bachelor o Laws degree (LL.B.) anda Master o Laws degree (LL.M. ) rom Seoul National UniversitySchool o Law and a Master o Laws degree (LL.M. ) as well asa doctorate in international trade law (S.J.D.) rom Harvard LawSchool.

Mr Seung Wha Chang o the Republic o Korea was sworn in as amember o the Appellate Body on 13 June 2012.

anrep13 chap5 e

Documents