Appellate Body Report Research Articles

First WTO Case on Transitional Product-Safeguard Measure under Section 16 of the Protocol of China’s Accession to the WTO: Affirming Discriminatory Safeguard Measure by the WTO?

On 5 September 2011, the WTO issued the Appellate Body report for the first WTO case on a transitional product-specific safeguard measure, United States - Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China (U.S. - Tyres). Transitional product-specific safeguard measures (TSMs) are controversial primarily on two grounds. First, unlike a general safeguard measure (GSM) which must be applied non-discriminatorily to all imports regardless of their source, a TSM is applicable only to the imports from a single country, China. Second, a TSM is applicable under more relaxed conditions than those stipulated for a GSM, subjecting imports from China to a more vulnerable condition against the protectionist pressure from competing domestic producers of the importing countries. The core principle of the WTO disciplines, including those for safeguard measures, is the most-favored-nation (MFN) principle which stipulates the requirement of non-discrimination among nations, and the inherently discriminatory nature of TSM undermines this core principle. This article examines the TSM provisions in comparison to the general safeguard provisions and discusses the implications of the first WTO case, U.S. -Tyres, for the TSM regime.

Defining Development in WTO Law: The Legality and Parameters of Labour Rights Conditionality in the Generalised System of Preferences

This paper argues that GSP labour rights conditionality is in conformity with WTO law. This hinges on the critical question of whether the realisation of labour standards can meet a ‘development need,’ a term considered by the WTO Appellate Body report in the EC – Tariffs Preferences case, but yet undefined in WTO law. This paper first analyses the framework against which the lawfulness of non-trade conditions must be assessed: Article XX GATT and the WTO’s Enabling Clause. It then examines the meaning of ‘development needs.’ Based on a contemporary understanding of development theory, and consistent with the WTO Appellate Body’s own jurisprudence, this paper rejects the proposition that ‘development needs’ should be defined narrowly, in pure economic terms. Instead, it makes the case for an expansive yet nuanced understanding of this critical term which, properly construed, should be seen as including social and environmental concerns. The paper then assesses the legitimacy of labour rights conditionality as a means to advance development needs. The analysis demonstrates that the fulfilment of labour rights can be both constitutive of and instrumental to development. This makes GSP trade-labour linkage and differentiation between developing countries based on compliance with certain labour standards, in principle, permissible under WTO law. Finally, this paper addresses some of the technical aspects of labour conditionality schemes and suggests where they may need strengthening.

Appellate Body Report, United States – Clove Cigarettes

In September 2011, the World Trade Organization (WTO) released the report of a panel tasked with considering a complaint brought by Indonesia concerning prohibitions on certain flavored tobacco products implemented by the United States (US). The panel concluded that the US violated WTO law and recommended that the US be asked to bring its laws into conformity with WTO law.The US appealed the panel's decision. The Appellate Body of the WTO upheld the panel report on April 4, 2012. This case note gives a brief overview of the Appellate Body's report and examines the implications for tobacco control and public health more generally.

Commentary on the Appellate Body Report in Australia–Apples (DS367): judicial review in the face of uncertainty

AbstractTo justify certain sanitary and phytosanitary measures vis-à-vis New Zealand apple fruit, Australian authorities performed an import risk assessment that was riddled with scientific uncertainty. The quality and reliability of this assessment was the central bone of contention between the parties in the Australia–Apples dispute. In consequence, it featured prominently in the Appellate Body's discussion. In commenting on the Appellate Body Report, we are concerned with the standard of review of Members' decisions that are taken in situations of factual uncertainty. We discuss the elements in a Member's risk assessment that, in our view, should be considered ‘off limits’ for review by Panels if such assessment was performed in the presence of uncertain scientific facts, and how high degrees of uncertainty affect a Panel's ability to assess alleged less-trade-restrictive alternatives. Relying on findings from the disciplines of economics, decision analysis, and risk management, we introduce a basic framework for decisionmaking in conditions of uncertainty. We submit that certain types of decisions taken by the risk assessor cannot be subject to external review, since they necessarily contain subjective trade-offs on the part of the risk assessor. Applying our theoretical insights to the Apples case, we offer a series of recommendations concerning Panels' discretion to review Members' risk assessments and suggest concrete modifications to the standard of review currently applied by the Appellate Body.

United States – Anti-Dumping Measures on Polyethylene Retail Carrier Bags from Thailand: a cat in the bag

AbstractThis paper analyzes the dispute between Thailand and the United States regarding the method of calculating the anti-dumping duty on polyethylene retail carrier bags from Thailand. In December 2006, after a series of WTO Appellate Body reports, the United States ceased zeroing in original investigations. The United States implemented the policy change prospectively, that is only for future cases. Consequently, the margins in this case remained unchanged because they had been calculated in 2004. Thailand challenged the United States' use of zeroing in the final determination. The US did not contest the claim. The Panel confirmed that zeroing was used and, following the long line of Appellate Body rulings, found the United States' practice inconsistent with Article 2.4.2 of the Anti-Dumping Agreement. After the Panel Report was adopted, the United States retroactively applied the policy change to the facts of this case and recalculated the margins without zeroing. The relative simplicity of the panel proceeding and the United States' willingness to amend the calculations following the adoption of the Panel Report may invite other WTO members to pursue a similar course of action in instances where their exporters have been subjected to US zeroing.

WTO Dispute Settlement 1995-2011--A Statistical Analysis

In each of the past few years, we have presented in this journal a statistical analysis of World Trade Organization (WTO) dispute settlement (DS). This year, we continue that analysis by adding data for 2011. The statistical analysis below focuses on several different aspects of the DS system. First, we will examine the ‘complaints’. Specifically, we will look at: Next, we will examine the ‘decisions’ that have been made pursuant to the Dispute Settlement Understanding (DSU), that is, the panel and Appellate Body reports and the arbitration awards and decisions. In particular, we will look at the following: We will then consider separately the issue of complaints and decisions relating to ‘compliance’ under the special provisions of DSU Article 21.5. Finally, we include data on the country of origin of WTO panelists. Generally, a ‘complaint’ arises under WTO DS when one Member1 requests consultations with another Member pursuant to the DSU. For each ‘complaint’, the WTO Secretariat assigns an individual DS number. As of 1 January 2012, there have been 4272 WTO complaints filed under the DSU. Over the past 17 years, the number of complaints filed each year has been as follows:

What Is a ‘Public Body’ for the Purpose of Determining a Subsidy after the Appellate Body Ruling in US – AD/CVD?

The Appellate Body Report in US - AD/VCD set a new standard for defining a 'public body' whose financial contribution may constitute a subsidy under Article 1.1 of the SCM Agreement. It reversed the Panel's interpretation that a public body is 'any entity controlled by the government' and found instead that a 'public body' is an 'entity that possesses, exercises or is vested with governmental authority'. While the new standard introduces some uncertainty into the revelant test, it is not clear that it has substantively narrowed the conduct subject to the disciplines of the SCM Agreement over all. Investigating authorities may need to expand the scope of their inquiries. The entrustment and direction of private bodies under Article 1.1(a)(1)(iv) also remains an avenue through which the financial contributions of governments can be assessed.

The WTO Panel Report on Boeing subsidies: a critical assessment

On 31 March 2011, the World Trade Organisation’s Dispute Settlement Body circulated the final Panel Report on US subsidies for the aircraft manufacturer Boeing. The long expected decision marks a turning point in the biggest trade dispute in WTO history, but its interpretations diverge substantially: both the United States and the European Union have claimed a “sweeping” victory, and yet both parties appealed parts of the Panel Report in April 2011. In addition, the Airbus Appellate Body Report in the Airbus case, which was issued on 18 May 2011, reversed many of the Panel’s findings against the EU. Which WTO-inconsistent subsidies did the Dispute Settlement Body find and what is the outlook for the future?

Why Fragmentation of International Law Matters: The Case of Indonesia’s Bilateral Investment Treaty Policy and Its Impact on Its Effective Use of the WTO’s Dispute Settlement System

An unexplored are in the discussions of fragmentation of international law is the relationship between the WTO Agreements and Bilateral Investment Treaties (BITs). Indonesia has recently challenged the United States before the Dispute Settlement Body of the World Trade Organization in a case regarding US measures affecting the importation and sale of cigarettes from Indonesia. If a WTO Panel or the Appellate Body were to find the United States’ measures inconsistent with the WTO Agreements and the United States were not to comply with the Panel or Appellate Body report, the WTO could authorize Indonesia to suspend concessions to the United States under the GATT, the GATS or the TRIPS agreement. This paper addresses the possible conflicts that might arise between the authorization to suspend concessions under the WTO Agreements on the one hand and BITs on the other. This paper argues that a BIT between Indonesia and the Unites States could severely undermine Indonesia’s position to persuade the United States to comply with an adverse ruling by the WTO in the cigarettes case.

US Compliance with WTO Rulings on Zeroing in Anti-Dumping

AbstractThis paper reviews the WTO Appellate Body Reports on United States–Zeroing (EC) (Article 21.5 DSU – EC) (WT/DS294/AB/RW, 14 May 2009) and United States–Zeroing (Japan) (Article 21.5 DSU – Japan) (WT/DS322/AB/RW, 18 August 2009). The Appellate Body found that the United States had not brought its anti-dumping measures into compliance with the WTO Anti-Dumping Agreement as it continued to use zeroing in annual reviews of anti-dumping orders. We argue that this conclusion – based on a complicated discussion of what constitutes a ‘measure taken to comply’ – could have been reached through a much simpler and direct argument. Continued noncompliance by the United States generates costs to traders targeting the United States and the trading system more generally. We argue that from a broader WTO compliance perspective consideration should be given to stronger multilateral surveillance of anti-dumping practice by all WTO members and to more analysis and effective communication by economists regarding the costs of zeroing and anti-dumping practices more generally.

United States – Continued Existence and Application of Zeroing Methodology: the end of Zeroing?

AbstractThis is the eighth Appellate Body Report in which some aspect of zeroing was adjudicated. As in the prior cases, the AB again found the US practice inconsistent with several aspects of the Anti-Dumping Agreement. The novelty in this dispute was the EC attempt to broaden the concept of what constitutes an appealable measure. The EC challenged whether a WTO decision regarding zeroing could apply to subsequent proceedings that might modify duty levels and asked the AB to decide whether the United States' continued use of zeroing in the context of a given case was consistent with WTO obligations. The AB stated that in its attempt to bring an effective resolution to the zeroing issue, the EC is entitled to frame the subject of its challenge in such a way as to bring the ongoing use of the zeroing methodology in these cases, under the scrutiny of WTO dispute settlement. The AB then cautiously applied the new perspective to US zeroing practice.

EU Dispute Settlements in the WTO: Selected Pending Cases

The EU is frequently referred to as one of the Titans of the WTO and this is why its trade disputes frequently receive a lot of attention from academics, practitioners and the media. This attention frequently arises at the later stages of the proceedings – during oral hearings, after the Panel Report or the Appellate Body Report. However, the focus of our study lies primarily on disputes which are still at the very early phase of their development. The scope of this report has required the narrowing down of the subject-matter, and the authors have concentrated on the movement of goods, covering five pending cases. First, the report covers cases where the EU is the respondent. It looks at the measures which the EU has adopted internally, examining their background and inquiring how these measures affect trade. It is generally known that EU legislation can pose barriers both to internal and to external trade, and it is interesting that such legislation can be challenged both within the EU – before the European Court, or in the international arena – before WTO bodies. An example of this is the pending disputes on seals and poultry. Then, the report looks at measures from third countries which EU traders have considered to be obstacles to trade, and which the EU decided to challenge using the WTO dispute settlement mechanism. These cases in which the EU acts as a complainant concern India’s and the Philippines’ measures on spirits, and China’s rules on raw materials.

The ‘Culture and Trade Debate’ Continues: The UNESCO Convention in Light of the WTO Reports in China – Publications and Audiovisual Products: Between Amnesia or Déjá Vu?

This article looks at the present state of the ‘culture and trade debate’ by tracing the developments that have taken place since the adoption and entry into force of the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions on 18 March 2007. It examines whether actual progress has been made in the regulatory field addressing the issues of trade liberalization, on the one hand, and cultural diversity, on the other. Against a strong sentiment of a déjá vu, the evaluation is based on scholarly writings on the expected legal impact of the Convention as well as novel regulatory problems in the field of the cultural industries. It also briefly looks at the work of the bodies established under the UNESCO Convention and, last but not least, reviews it in light of the recent Appellate Body Report in China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products.

China and Cultural Products at the WTO – WTO Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Products), WT/DS363/AB/R (circulated 21 December 2009, adopted 19 January 2010)

View China and Cultural Products at the WTO &#8211; WTO Appellate Body Report&#44; <i>China</i> &#8211; <i>Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisu by Tania Voon - Legal Issues of Economic Integration

The Shareholder Wealth Implications of WTO Disputes: First Evidence from Anti-Subsidy Panels

This event study investigates how capital markets evaluate the effectiveness of the World Trade Organization’s dispute resolution and enforcement mechanism. Event studies have been widely used in the domestic context to measure the impact of litigation on stock prices of involved corporations. This paper expands the existing Law and Finance research from the traditional domestic context to the international WTO level. WTO anti-subsidization cases are examined in this event study because there the link between WTO disputes and private corporations is most evident. First evidence from the single-beneficiary cases suggests that the requests for panel implementation and the circulation of Panel and Appellate Body reports tend to have statistically significant impacts on the beneficiary’s share price. The requests for consultations, formal panel implementations, and the adoption of rulings did not result in significant effects for shareholder wealth which is consistent with findings in the domestic context.

Case Note: China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (WT/DS363/AB/R)

The report of the Appellate Body of the WTO Dispute Settlement Body in China – Publicationstouches new ground by ruling on a few key legal issues. Its significance and ramifications go well beyond the present case and may influence subsequent WTO jurisprudence relating to the distinction between goods and services, trading rights commitments and availability of General Agreement on Tariffs and Trade (GATT) Article XX defense, etc. Nevertheless, the Appellate Body report has its shortcomings, especially in relation to what the author views to be a flawed interpretation of GATT Article XX(a). This paper argues for the Appellate Body abandoning the present interpretive approach in favour of a truly holistic and integrated analytical framework in its future jurisprudence.

Lost in Translation: A Comparative Analysis of Plurilingual Interpretion in WTO Panel and Appellate Body Reports

This article analyzes the extent to which the Appellate Body and WTO panels compare the authentic texts in their examination of the WTO Agreements and the extent to which the parties themselves do so in their arguments. The texts of the WTO Agreements are authentic in English, French and Spanish. Article 33 of the Vienna Convention on the Law of Treaties governs the interpretation of treaties authenticated in two or more languages. WTO practice diverges significantly from the rules set out in Article 33 and the travaux preparatoires of the International Law Commission. The terms of a plurilingual treaty are presumed to have the same meaning in each authentic text, which means that a treaty interpreter need not compare the authentic texts as a routine matter as a matter of law. Nevertheless, routine comparison of authentic texts would be good practice in the WTO context, since there are several discrepancies that could affect the interpretation of WTO provisions.Presented at the SIEL 2010 Conference in Barcelona.

Suspensions: To Be Continued - The Consequences of the Appellate Body Report in Hormones II

In October 2008, the WTO Appellate Body (AB) issued its report on Hormones II, marking the next stage in the long-running Hormones case. This comment discusses the AB’s findings on the matter. It outlines how the AB has shown the correct procedural avenue for cases involving compliance panels, regarding the standard of review, burden of proof and the use of Article 21.5 DSU. In particular, the AB resolves the hitherto unanswered question of how to handle cases concerning the compliance of implementing measures in the post-suspension stage. However, some important consequences of the report involve the choice of scientific experts in SPS cases, and the use of the so-called carousel technique by parties that are allowed to suspend concessions. This comment shows how these issues may pose serious threats to the objectiveness of panel procedures, as well as the security and predictability of the multilateral trading system.

WTO Dispute Settlement 1995-2009 -- A Statistical Analysis

In each of the last few years, we have presented in this journal a statistical analysis of World Trade Organization (WTO) dispute settlement. This year, we continue that analysis by adding data for 2009. The statistical analysis below focuses on several different aspects of the dispute settlement system. First, we will examine the ‘complaints’. Specifically, we will look at: Next, we will examine the ‘decisions’ that have been made pursuant to the Dispute Settlement Understanding (DSU), that is, the panel and Appellate Body reports and the arbitration awards and decisions. In particular, we will look at the following: We will then consider separately the issue of complaints and decisions relating to ‘compliance’ under the special provisions of DSU Article 21(5). Finally, we include data on the country of origin of WTO panelists. We conclude this year's piece with a section on the rise of China in WTO dispute settlement. We conclude this year's piece with a section on the rise of China in WTO dispute settlement.

Commentary on the Appellate Body Report in EC–Bananas III (Article 21.5): waiver-thin, or lock, stock, and metric ton?

AbstractAt first glance, the Appellate Body Report in Bananas III (Article 21.5; Second Recourse) does not seem to be a case for the Guinness Book. The AB upheld most of the Panel's findings, and the EC lost big. This was hardly surprising, given that the contested measure only marginally differed from the measure at issue in the first recourse to a compliance Panel. It is at second sight that this AB Report reveals its interesting facets. We highlight a few remarkable legal and economics aspects, some of a more systemic nature, some offering practical insights: For practitioners, the role of estoppel in WTO litigation, the legal effect of Panel suggestions, and the relevance of Uruguay Round Modalities Papers as interpretative tools may be of interest. Readers more concerned with systemic aspects of the WTO may take interest in the economics of tariff quotas, the inherently discriminatory nature of tariff-quota allocation in the WTO, and the relevance of compliance proceedings for the damage calculation under Article 22.6 of the DSU.