Bridges Weekly Trade News Digest • Volume 6 • Number 21 • 4th June 2002
WTO Dispute Settlement: Sardines Panel Sides With Peru
WTO Dispute Settlement: Sardines Panel Sides With Peru
In the first ruling to be decided under the WTO’s Agreement on Technical Barriers to Trade (TBT), on 29 May a dispute settlement panel decided in favour of Peru over the EC regarding a European ban on the import of Peruvian canned sardines. Also, on 3 May the WTO Dispute Settlement Body agreed to set up a panel to rule on the EC’s complaint on US steel safeguards.
Sardines
According to trade sources, the dispute settlement panel report (European Communities - Trade Description of Sardines WT/DS231/R) vindicates Peru in its contention that the EU ban was in violation of global trade rules. The dispute arose when the EC prohibited the use of the term "Peruvian sardines" on tins containing sardine-like fish species caught off the Peruvian coast. In early 2001, Peru requested consultations with the European Communities following the passage of EC Council Regulation (EEC No. 2136/89) that purported to lay down common market standards for trade in preserved sardines. Peru contended that the Regulation was inconsistent with Articles 2 and 12 of the Technical Barriers to Trade Agreement, Article XI: 1 of the GATT 1994 and the principle of non-discrimination under Articles I and III of the GATT 1994. Peru requested the establishment of a panel to examine the WTO consistency of the EC Regulation on 2 June 2001. The panel was established on 24 July 2001.
At issue were the trade descriptions of two small fish species - Sardina pilchardus and Sardinops sagax. Sardina pilchardus is found mainly around the coasts of the Eastern North Atlantic, in the Mediterranean Sea and in the Black Sea, while Sardinops sagax is found mainly in the Eastern Pacific along the coasts of Peru and Chile. Both parties in this dispute were in agreement that while both species displayed some differences, they also were significantly similar in their biological characteristics and habits. Both fish are used in the preparation of preserved and canned fish products. Article 2 of the EC Regulation provides, inter alia, that only products prepared from Sardina pilchardus may be marketed as preserved sardines. In other words, only products of this species may have the word "sardines" as part of the name on the container.
In its findings, the panel referred to Codex Stan 94 Article 2.1, which provides that canned sardines or sardine-type products are prepared from fresh or frozen fish from a list of 21 species, including Sardina pilchardus and Sardina sagax. Article 6 of Codex Stan 94 sets forth specific labelling provisions for these products. The panel found that this standard was not used as a basis for the EC Regulation and that the standard was not "ineffective or inappropriate" to fulfil the "legitimate objectives" pursued by the EC Regulation. It subsequently found that the EC Regulation was inconsistent with Article 2.4 of the TBT Agreement. In its report, the panel stated that "Article 2.4 of the TBT Agreement imposes an ongoing obligation on Members to reassess their existing technical regulations in light of the adoption of new international standards or the revision of existing international standards."
The EC has not yet stated whether it intends on appealing the ruling. If it does not, following the adoption of the ruling by the DSB, it will be required to either rescind or modify its measure to bring it into conformity with the WTO Agreements or provide appropriate compensation.
Update on Steel and Apples Disputes
On 3 June, a special DSB session was held in follow-up to four panel requests made at the last DSB meeting on 22 May (see BRIDGES Weekly, 28 May 2002). The first item on the meeting’s agenda was a second request by the EC for a dispute panel against US over American steel safeguards imposed in March. Being a second request by the EC for such a panel, the US could not stop the panel from being convened. The two Members now have 20 days to decide on panel members, after which if an agreement cannot be reached, they can request the WTO Director-General to decide.
The US did, however, refuse the formation of two other panels on the steel issue — being first requests from Japan and Korea respectively (WTO rules do allow the blocking of a first request). Another special DSB meeting was requested for 14 June to hear their second panel requests. Adding to this stream of steel panel requests, on 27 May, China requested a special DSB session of 7 June to hear its second request. Furthermore, Switzerland and Norway indicated at the 3 June session that they would request panels against the US safeguard measures. Due to the similarity of the subject matter of these requests for consultations, the various requests for panel establishment are likely to be consolidated into one panel by the DSB.
The next regular meeting of the DSB is scheduled for 24 June 2002.
"WTO Establishes Panel To Rule On US Steel Safeguards," EC PRESS RELEASE, 3 June 2002.