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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.
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Dispute settlement activity in 2012 76
Appellate Body 90
World Trade Organization
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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.
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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.
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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.
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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
Chinas AccessionProtocol
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
Chinas AccessionProtocol
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
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Table 1: Panel and Appellate Body reports circulated in 2012*
Case Documentnumber
Complainant(s) Respondent Third parties WTO Agreementscovered
Date o adoptionby DisputeSettlementBody
DominicanRepublic SaeguardMeasures
WT/DS417/R Honduras DominicanRepublic
China, Colombia,Costa Rica, ElSalvador, EuropeanUnion, Guatemala,Nicaragua, Panama,Turkey, UnitedStates
Agreement onSaeguards
GATT 1994
DSU
22 Feb 2012
DominicanRepublic SaeguardMeasures
WT/DS418/R El Salvador DominicanRepublic
China, Colombia,Costa Rica,European Union,Guatemala,Honduras,Nicaragua, Panama,Turkey, UnitedStates
Agreement onSaeguards
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
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Table 1: Panel and Appellate Body reports circulated in 2012*
Case Documentnumber
Complainant(s) Respondent Third parties WTO Agreementscovered
Date o adoptionby DisputeSettlementBody
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
Anti-DumpingAgreement
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.
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Table 1: Panel and Appellate Body reports circulated in 2012*
Case Documentnumber
Complainant(s) Respondent Third parties WTO Agreementscovered
Date o adoptionby DisputeSettlementBody
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
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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
Anti-DumpingAgreement
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
Chinas AccessionProtocol
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
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Table 2: Requests for consultations in 2012
Case Documentnumber
Complainant Date o initialrequest
WTO Agreementscited
Status as o endo 2012
China Measures relatedto the Exportation o RareEarths, Tungsten andMolybdenum
WT/DS432 European Union 13 Mar 2012 GATT
Chinas AccessionProtocol
Panel work hascommenced
China Measures relatedto the Exportation o RareEarths, Tungsten andMolybdenum
WT/DS433 Japan 13 Mar 2012 GATT
Chinas AccessionProtocol
Panel work hascommenced
Australia CertainMeasures concerningTrademarks and otherPlain PackagingRequirements applicableto Tobacco Products andPackaging
WT/DS434 Ukraine 13 Mar 2012 GATT
TRIPS Agreement
TBT Agreement
Panel established/panel compositionpending
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
Panel established/panel compositionpending
United States Countervailing DutyMeasures on CertainProducts rom China
WT/DS437 China 25 May 2012 GATT
SCM Agreement
Chinas AccessionProtocol
Panel work hascommenced
Argentina MeasuresAecting the Importationo Goods
WT/DS438 European Union 25 May 2012 GATT
TRIMs AgreementImport LicensingAgreement
AgricultureAgreement
SaeguardsAgreement
Panel request pendingbeore the DSB
South Arica Anti-Dumping Duties on FrozenMeat o Fowls rom Brazil
WT/DS439 Brazil 25 Jun 2012 GATT
Anti-DumpingAgreement
In consultations
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Table 2: Requests for consultations in 2012
Case Documentnumber
Complainant Date o initialrequest
WTO Agreementscited
Status as o endo 2012
China Anti-Dumping andCountervailing Duties onCertain Automobiles romthe United States
WT/DS440 United States 5 Jul 2012 GATT
Anti-DumpingAgreement
SCM Agreement
Panel established/panel compositionpending
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
Panel request pendingbeore the DSB
European Union Anti-Dumping Measures onImports o Certain FattyAlcohols rom Indonesia
WT/DS442 Indonesia 27 Jul 2012 GATT
Anti-DumpingAgreement
In consultations
European Union and aMember State CertainMeasures Concerning theImportation o Biodiesels
WT/DS443 Argentina 17 Aug 2012 GATT
TRIMs Agreement
Panel request pendingbeore the DSB
Argentina MeasuresAecting the Importationo Goods
WT/DS444 United States 21 Aug 2012 GATT
Import LicensingAgreement
TRIMs Agreement
SaeguardsAgreement
Panel request pendingbeore the DSB
Argentina MeasuresAecting the Importationo Goods
WT/DS445 Japan 21 Aug 2012 GATT
Import LicensingAgreement
TRIMs Agreement
SaeguardsAgreement
Panel request pendingbeore the DSB
Argentina MeasuresAecting the Importationo Goods
WT/DS446 Mexico 24 Aug 2012 GATT
AgricultureAgreement
Import LicensingAgreement
TRIMs Agreement
SaeguardsAgreement
Technical Barriersto Trade (TBT)Agreement
In consultations
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Table 2: Requests for consultations in 2012
Case Documentnumber
Complainant Date o initialrequest
WTO Agreementscited
Status as o endo 2012
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
Anti-DumpingAgreement
Panel established/panel compositionpending
China Certain MeasuresAecting the Automobileand Automobile-partsIndustries
WT/DS450 United States 17 Sep 2012 GATT
SCM Agreement
Chinas AccessionProtocol
In consultations
China Measures Relatingto the Production andExportation o Apparel andTextile Products
WT/DS451 Mexico 15 Oct 2012 GATT
SCM Agreement
Chinas AccessionProtocol
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)
Anti-DumpingAgreement
In consultations
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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.
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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
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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.
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Dispute settlement
www.wto.org/disputes
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.
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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 - -
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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
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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.
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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.
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