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EU - Seal Ban Update
In November, Canada and Norway requested dispute settlement consultations with the European Union over the latter’s import ban on all seal products except those that “result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence.” The ban will enter into force on 20 August 2010.
On 16 September, the European Commission published Regulation 1007/2009, which prohibits the import and sale of seal furs, meat and blubber in all 27 member countries. As some EU countries already have national-level sales and import bans in place, while others do not, the regulation states that in order to “eliminate the present fragmentation of the internal market, it is necessary to provide for harmonised rules while taking into account animal welfare considerations [...] Since the concerns of citizens and consumers extend to the killing and skinning of seals as such, it is also necessary to take action to reduce the demand leading to the marketing of seal products and, hence, the economic demand driving the commercial hunting of seals.”
Canada and Norway said in July that they would challenge the import ban at the WTO unless exemptions were made for countries that have strict guidelines for ‘humane and sustainable’ sealing practices (Bridges Year 13 No.2 page 10).
Announcing the decision to initiate dispute settlement proceedings, Canada’s trade minister, Stockwell Day, said that his country’s seal hunt was “a legitimate economic pursuit, and the EU’s decision on the importation seal products is based neither on science nor on facts.”
The complainants claimed, inter alia, that the EU’s new regime was inconsistent with the TBT Agreement’s requirement that technical regulations be ‘no more trade-restrictive than necessary’. The case could hinge on whether the EU can show that the embargo is necessary to protect animal life and health, and thus qualifies as one of the exceptions available under GATT Article XX(b) and TBT Article 2.2.
China - Raw Materials
At the request of the EU, Mexico and the United States a single dispute settlement panel was established on 21 December on China’s export restrictions on nine chemical compounds commonly used by the steel, chemicals and aluminium industries worldwide.
WTO disciplines on export bans and duties are weak, and a case built on such grounds alone would probably fail. However, the complainants’ main point is that the restrictions violate China’s WTO accession protocol, under with Beijing committed to eliminating export taxes on all but 84 products. As the compounds targeted by the plaintiffs are not among them, the complaints may prove successful (Bridges Year 13 No.3 page 8).
The core claim of the complainants is that China’s export duties, quotas and administrative measures on raw material exports distort the international market and confer an unfair advantage to domestic industries, which have a cheap and unlimited supply at their disposal.
The Chinese ministry commerce said the purpose of the restrictions was to protect the environment by raising the cost of resource extraction. “The overseas demand for those products has been shrinking, so it is an exaggeration to say that China’s measure would affect the EU or US steel industry’s recovery from the financial crisis,” it added.
The case raises the broader question of ‘resource nationalism’, i.e. limiting foreign firms’ access to key raw materials in order to encourage domestic processing and exports of higher value-added goods. Many developing countries consider this an essential industrial development tool, but resource-poor EU, for one, has vowed to combat the practice, including through WTO litigation and by prohibiting the use of export restrictions in its bilateral/regional trade agreements.
Reflecting the systemic interest of the case, twelve countries (excluding the complainants) have reserved third party rights in the dispute.
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