Bridges Weekly Trade News Digest • Volume 6 • Number 33 • 2nd October 2002
Dispute Settlement Ii: Lumber, Sardines And Wine
Softwood lumber
On 27 September, the WTO issued the report of the panel (WT/DS236/R, available online at: http://docsonline.wto.org) that had examined Canada’s complaint over the United States’ preliminary determinations with respect to certain softwood lumber from Canada. As expected, the ruling was similar to a preliminary judgement released by the panel in July 2002, which in its essence found in favour of Canada. The dispute, in which Canada challenged countervailing duties imposed on imports of Canadian softwood lumber by the US, led to the formation of a panel on 5 December 2001 (see BRIDGES Weekly, 6 November 2001). The US contended that low stumpage fees in the form of royalties charged by Canadian provinces to loggers were an illegal subsidy for Canada’s softwood exports. Consequently, the US imposed countervailing duties of more than 19 per cent and antidumping duties of 8 per cent. Canada filed a dispute arguing, inter alia, that its stumpage fees did not meet the definition of a countervailable subsidy, as they did not confer "a benefit", an argument that was upheld by the panel.
In spite of the ruling, however, there is unlikely to be any respite for the hard-hit Canadian softwood industry soon: the US has indicated that it will appeal the decision, with a decision due in about six months. The softwood lumber dispute has had serious negative implications on the Canadian softwood lumber industry, based mainly in British Columbia and Quebec and to some extent in Ontario and Alberta. The higher export costs as a result of the US duties have forced many Canadian mills to shut down, with resultant job losses. However, some groups, including First Nations communities in British Columbia, have argued against the Canadian position, saying its stumpage fees do not value traditional land rights compensation or environmental costs appropriately (see BRIDGES Weekly, 2 May 2002).
EC - Sardines
On 26 September, the WTO Appellate Body handed down its report (WT/DS231/AB/R, see link above) on a case between Peru and the European Union over sardines. Essentially, the decision was in favour of Peru, with the Appellate Body upholding an earlier panel finding that the EU marketing standards for the sale of preserved sardines were WTO- inconsistent. Peru had filed the WTO complaint against the standards set out in EU Council Regulation (EEC) No. 2136/89 of 21 June 1989, arguing that they had unfairly restricted exports of Peruvian sardines to Europe. The claims by the EU to the effect that the panel erred in finding that the marketing standards constituted a "technical regulation" under the WTO Agreement on Technical Barriers to Trade (TBT) and that a standard set by the Codex Alimentarius Commission for Sardines products constituted a "relevant international standard" under the TBT Agreement, were rejected (see BRIDGES Weekly, 4 June 2002).
Notably, the dispute provided further elaboration regarding the right of non-parties to submit amicus curiae (’friend of the court’) briefs in WTO dispute proceedings. Two amicus curiae briefs were sent to the Appellate Body during the proceedings, one by a private individual, and another by Morocco, which had not exercised its third party rights at the panel stage and was therefore not allowed to make submissions to the Appellate Body. Peru objected to the briefs, arguing that only briefs attached to the submissions of parties in the dispute were acceptable under WTO rules. It also argued that accepting the brief from Morocco would allow a WTO Member to circumvent dispute settlement rules concerning third party rights. The Appellate Body rejected Peru’s arguments but went on to hold that the briefs were not of assistance in the appeal.
Argentina - Wine Restrictions
On 4 September, Argentina initiated dispute settlement proceedings against the EU over restrictions on wine imports. Argentina has attacked EU Council Regulation 1493/1999 and Commission Regulation 883/2001, which set out authorised "oenological practices" and the regulation of trade in wine between the EU and third countries. In its request for consultations with the EU on 4 September, Argentina contended that the requirements on oenological practices were more trade restrictive than necessary and thus created an unnecessary barrier to trade in violation of the WTO’s Agreement on Technical Barriers to Trade (TBT). In particular, Argentina alleged that the EU- authorised practices for the acidification of wine failed to take account of existing relevant international standards as required under Article 2.4 of the TBT Agreement. The EU has also signed bilateral trade agreements with third countries allowing them to export wine to the EU acidified with malic acid while refusing to grant other countries the same rights.
The period for consultations is due to end in approximately 30 days, upon which the request for panel establishment may be made, depending on the outcome of consultations.
"EC - Sardines" WTO news archives, 26 September 2002; "Philippines - Fresh Fruit Export Restrictions" WTO Reporter 27 September 2002; "Argentina - Wine Restrictions" WTO Reporter, 9 September 2002.