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TWN Info Service on WTO and Trade Issues (Jul15/24)
29 July 2015
Third World Network

 
Panels set over EU measures on energy, poultry products
Published in SUNS #8067 dated 22 July 2015
 
Geneva, 21 Jul (Kanaga Raja) -- The WTO Dispute Settlement Body (DSB) on Monday agreed to establish two panels in disputes involving the European Union, one brought by the Russian Federation over certain EU measures relating to the energy sector, and the other by China over EU measures affecting tariff concessions on certain poultry meat products.
 
Both were second-time requests and panels establishment were automatic.
 
In other actions, requests for the establishment of panels by Indonesia over anti-dumping measures imposed by the EU on bio-diesel, and on anti-dumping and countervailing measures imposed by the US on certain coated paper were blocked by the EU and the US, respectively.
 
These were first-time requests and panels establishment will be automatic when both these come up again before the DSB.
 
In the EU-Russia dispute over certain restrictions and requirements maintained by the European Union and its Member States within their respective territories, including Croatia, Hungary and Lithuania through the so-called "Third Energy Package", Japan, the US, Brazil, Ukraine, India and China reserved their third-party rights.
 
According to the Russian communication to the DSB, the EU adopted the Third Energy Package (TEP) in July 2009. The TEP's principal component regarding gas, Directive 2009/73/EC (the Directive), establishes what it describes as common rules for the transmission, distribution, supply and storage in the EU of natural gas, including LNG (liquified natural gas).
 
The Directive also states that the TEP repealed and replaced the legal acts making up the Second Energy Package (SEP), even though certain SEP measures related to exemptions remain in effect.
 
As such, said the Russian Federation, the TEP is the latest in a series of legal instruments and policy initiatives designed to tighten and centralize control over the EU energy market, including the rights of Russian suppliers of natural gas and natural gas services, as well as imported Russian gas as a source of supply to the EU market.
 
The Russian Federation considers that the TEP, like the EU's natural gas and broader energy policy overall, unjustifiably restricts imports of natural gas originating in Russia and discriminates against Russian natural gas pipeline transport services and service suppliers.
 
Among the EU measures cited by the Russian Federation are unbundling, third-country certification and infrastructure exemption measures; capacity allocation measures; and "projects of common interest" measures.
 
The Russian Federation considers that these measures are inconsistent with the obligations of the EU and its Member States under Articles II: 1, VI: 1, VI: 5(a), XVI, including XVI: 1 and XVI: 2(a), (e) and (f), and XVII of the GATS; and Articles I: 1, III: 4, X: 3(a) and XI: 1 of the GATT 1994.
 
In its statement at the DSB, Russia reiterated that the request for panel establishment follows from its efforts to find a solution with the EU, including through formal WTO consultations held in June and July 2014.
 
Unfortunately, said the Russian Federation, the matter has not been resolved during the consultations. Noting that the measures are still in place, the Russian Federation considers that the measures in question were adopted and are applied by the EU in violation of numerous provisions of the WTO Agreements.
 
In its statement, the EU said that it is confident that its Third Energy Package is fully consistent with its WTO obligations and is ready to defend its legislation.
 
The EU recalled that at the DSB meeting of 19 June, it had expressed its concerns that the Russian request impermissibly expands the scope of the dispute.
 
The EU considers that the panel request expands manifestly the scope of the dispute, changing the essence of the complaint.
 
Indeed, the EU said, the request for consultations did not mention some of the key measures identified in sections 2 and 3 of the panel request, concerning respectively "Capacity allocation measures" and "projects of common interest".
 
Nor did the request for consultations provide any indication of the claims Russia now makes in those two sections, it added.
 
EU-CHINA DISPUTE OVER POULTRY MEAT PRODUCTS
 
Also at its meeting on Monday, the DSB agreed to establish a panel in the dispute brought by China over measures imposed by the EU affecting imports of certain poultry meat products from China.
 
Brazil, the US and Russia reserved their third party rights to this dispute.
 
In its communication to the DSB, China said that the measures are the result of two EU requests to modify the EU tariff concessions on certain poultry meat products under Article XXVIII of the GATT 1994 in 2006 and in 2009 and the refusal by the EU to modify the Tariff Rate Quotas (TRQs) upon China's request.
 
Specifically, said China, the first request was made by the EU on 7 June 2006 through a notification to the WTO Members of its intention to modify its tariff concessions for three tariff subheadings.
 
The EU undertook modification negotiations under Article XXVIII of GATT 1994 with Thailand and Brazil, which the EU considered to have a principal or substantial supplying interest in products covered by these subheadings, while it refused to recognize China's claim of substantial interest.
 
The EU subsequently reached an agreement with Brazil and Thailand on 23 November 2006 and 6 December 2006, respectively, on the basis of TRQs almost entirely reserved for Brazil and/or Thailand, and out-of-quota bound rates significantly in excess of the pre-modification bound rates. The modification was implemented in 2007.
 
According to the Chinese communication, the second request was made by the EU on 11 June 2009 through a notification to WTO Members of its intention to modify its tariff concessions on eight tariff subheadings.
 
The EU undertook modification negotiations under Article XXVIII of GATT 1994 with Thailand and Brazil, which it considered to have a principal or substantial supplying interest in the products covered by these subheadings, while it refused to recognize China's claim of principal supplying interest.
 
The EU subsequently entered into an agreement with Thailand and Brazil on 18 June 2012 and 26 June 2012, respectively, on the basis of TRQs that again are almost entirely (or in some cases entirely) reserved for Brazil and/or Thailand, and out-of-quota tariff rates significantly in excess of the pre-modification bound rates. This modification was implemented in 2012 and became effective from March 1, 2013.
 
On 19 December 2013, China further requested the EU to enter into consultation pursuant to Article XIII. 4 of the GATT 1994 referring to China's substantial supplying interest in several of the tariff items as evidenced by more recent statistics of imports from China.
 
During consultations on 19 May 2014, the EU refused to consider the amendment of the TRQs, said China.
 
China said that the measures appear to be inconsistent with the EU's obligations under Articles I, II, XIII and XXVIII of the GATT 1994.
 
In its statement at the DSB, China explained that the EU, in 2006 and 2009, twice modified its tariff concessions on certain poultry meat products, and that TRQs were instituted as a result. Most of the Members, including China, could share only extremely limited portions of the TRQs.
 
This has caused significant damage to the interests of Chinese poultry meat producers and exporters. China expressed hope that through the WTO dispute settlement proceeding, the EU would adjust its measures and thereby resolve China's concerns.
 
To that end, China said that it is willing to work constructively with the EU with a view to finding a mutually satisfactory solution to this matter, and properly settle the dispute.
 
In its statement, the EU took note of China's decision to request a WTO panel on the EU's modifications of concessions on certain poultry meat products which were established in 2007 and 2013 respectively.
 
According to the EU, the modifications were established after the EU had initiated rebinding exercises for its GATT concessions pursuant to Article XXVIII and after negotiations with the substantial suppliers, i. e. Brazil and Thailand.
 
Based on the relevant import statistics, China did not have substantial supplying interest in any of the rebinding exercises under GATT Article XXVIII, said the EU.
 
According to the EU, in the second rebinding exercise, China did not even come forward within the relevant 90-day period to signal its interest as a substantial supplier.
 
The EU said that it has scrupulously followed the procedures of GATT Article XXVIII during both exercises and has explained this also to China.
 
It is convinced that its measures are in conformity with the WTO Agreements and will defend them vigorously before a panel.
 
OTHER ACTIONS
 
Under the agenda item of Indian measures concerning the importation of certain agricultural products, India informed the DSB that it had sent a letter to the US on 13 July announcing its intention to comply with the recommendations and rulings of the DSB in this dispute.
 
India said that it stands ready to discuss with the US a "reasonable period of time" (RPT) for complying with the DSB recommendations and rulings.
 
The US said that it is ready to discuss the RPT with India.
 
The DSB also adopted the report of the panel in the dispute brought by Japan over definitive safeguard measures imposed by Ukraine on certain passenger cars. Ukraine did not appeal the panel report.
 
Meanwhile, under "other business", Argentina informed the DSB that it had reached an understanding with the US, Japan and the EU (the parties to the dispute) for a reasonable period of time to comply with the recommendations and rulings of the DSB in the dispute over measures imposed by Argentina affecting the importation of goods.
 
This reasonable period of time shall be 11 months and five days from 26 January 2015, the date of adoption of the recommendations and rulings of the DSB. Accordingly, the reasonable period of time expires on 31 December 2015. +

 


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