Apr 24, 1998

 

DSB ADOPTS SEPARATE RULINGS AGAINST ARGENTINA, USA

 

Geneva, 23 Apr (Chakravarthi Raghavan) -- The Dispute Settlement Body of the World Trade Organization adopted Wednesday the report of the Appellate Body and the panel ruling against Argentina in a complaint by the US over specific duties on textiles and clothing imports and an ad valorem statistical tax on all imports.

The DSB also adopted the panel ruling against the United States, in the "Kodak-Fuji" photofilm dispute, brought by the US about the restrictive business practices and anti-competitive measures in Japan resulting in Fuji being able to restrict the market for Kodak.

In other matters, India advised the DSB of its accord with the United States on a 15-month perid to implement a panel ruling, adopted on 16 January, requiring India to implement the "mailbox" provisions of the TRIPS to receive patent applications on chemicals and pharmaceuticals, and provide exclusive marketing rights.

India told the DSB that the two sides had agreed on the 15 months as a "reasonable period" for implementation, that the necessary legislation was being preapred and would be introduced in parliament as soon as possible and the new law could well be operational by 19 April 1999.

Indonesia complained in the DSB about the "release" to the media of the interim report of a panel over the Indonesia national car project dispute (raised by the US, EC and Japan against Indonesia) and the comments on it by the US Trade Representative, and the "cavalier way" the rules of the DSU were being disregarded.

The initial press report on this appeared in the Japanese media, and the USTR's comments came in a US Information Agency bulletin.  

Under the DSU rules, interim reports are made available confidentially only to parties for comments, and panel rulings too are first made available to parties, and circulated among other WTO members and made public a month later. But invariably, the contents are made available by one side or the other to the media and published unattributively, and this has been arousing concern among other members who are raising it as part of the review of the DSU due in 1999.

Ironically, on the same day that Indonesia raised this question at the DSB (it had also protested to the panel itself as soon as the reports were leaked and published in the Japanese and US media), the panel's final report against Indonesia which has only been circulated to the disputants, and yet to be made available to other WTO members, became available to the media, and news reports published on Thursday 

The US dispute against Argentina, (the EC has taken up a similar complaint against Argentina to panels, presumably to establish its own 'rights' and ability to retaliate), related to specific duties on imports of textiles and clothing products, and a general 3% statistical service tax (in both cases resulting in duties above the 33% tariff bindings) and hence GATT-illegal.  

Argentina made a lengthy presentation, before the adoption, in effect reiterating its views and position on the issues before the panel and the appellate body.

After the adoption of the report, the IMF which got itself invited as an observer made a statement wanting dispute panels to seek its views on such disputes. India for its part said this raised systemic issues.

India said it had been involved in extensive consultations, on the IMF-WTO agreement and the WTO General Council decision on this, and did not understand to involve the IMF making observations as it had. It required careful reflection, and India would raise the issue at appropriate time before the General Council.

The Kodak-Fuji dispute, as it has become popularly known, had been brought up by the US as a "non-violation" complaint under Art. XXIII.1

(b) of the GATT 1994 -- one where no law or regulation contrary to the GATT obligations, but neverthless one where application by Japanese government of measures was resulting in nullification and impairment of benefits accruing to the US.

The panel ruled against the US on the ground among others that there the 'measures' of private parties in the market had the sanction of government, put in place after the exchange of tariff and other concessions between the two countries or of whose existence there was no prior knowledge.

Of the 15 and odd disputes that have gone to the panel stage at the WTO, this is the first one adopted without either of the parties taking the issue to the appellate body.

Japan welcomed the ruling, while the US and EC regretted it. The EC used the opportunity to claim that the ruling raised some systemic issues and the WTO should hence go ahead and agree to negotiate competition issues, as soon as the study group set up at Singapore to look at trade and competition issue completes its work and reports at the end of the year.

Under other items on the agenda, the US pressed Canada to provide detailed information about the time-table for Canada's implementation of the ruling against it over periodicals, the differing treatment to US periodicals with a socalled split run -- printed in the US, with some inserts of Canadian news, and distributed in Canada and claiming 'national treatment' with Canadian periodicals in respect advertisements and postal charges etc.

On the EC banana regime, and its plans to implement the ruling of the panel as modified by the appellate body, the EC has been given time till 1 January 1999 to implement it. But Ecuador, Guatemala, Honduras, Mexico, Panama and the US have been raising before the DSB their complaint that the draft proposals of the EC Commission would not

comply with the ruling. The EC has so far refused to comment on the substance. On Wednesday, the EC described the repeated statements of the exporting countries at several meetings of the DSB as akin to "guerilla warfare" and again refused to respond on the substance.

Cuba noted that the EC complaint against the US over the Helms-Burton law had been allowed to lapse (on the basis that the US would not take actions against EC companies), but that the illegal nature of the US law remained and Cuba reserved its right to raise the issue at the appropriate time.