TWN Info Service on WTO and Trade Issues (Feb11/07)
22 February 2011
Third World Network

Panel set to examine Dominican Republic's safeguard measures
Published in  SUNS #7084 dated 9 February 2011

Geneva, 8 Feb (Kanaga Raja) -- The WTO Dispute Settlement Body (DSB) on Monday agreed to establish a single panel, at the request of Costa Rica, Guatemala, Honduras and El Salvador, to examine safeguard measures imposed by the Dominican Republic on imports of polypropylene bags and tubular fabric from the four countries.

Each of the four Central American countries made a second-time request for a panel, and panel establishment was automatic. A first request for a panel was made at a meeting of the DSB on 25 January.

Panama, Colombia, Nicaragua, the European Union, Turkey, China and the United States reserved their third-party rights to the dispute.

In largely similarly-worded communications to the DSB, the four countries said that the dispute concerns the provisional and definitive safeguard measures imposed by the Dominican Republic on imports of polypropylene bags and tubular fabric and the investigation that led to the imposition of those measures.

The measures at issue were imposed pursuant to an investigation conducted by the Regulatory Commission on Unfair Trade Practices and Safeguard Measures of the Dominican Republic.

According to the complainants, on 15 December 2009, at the request of the company Fersan S. A., the Commission declared the initiation of an investigation with a view to the application of safeguard measures on imports from all origins of polypropylene bags and tubular fabric classified under subheadings 5407.20.20, 6305.33.10 and 6305.33.90 of the Tariff of the Dominican Republic. On 17 December 2009, the Commission published a notice of initiation of an investigation.

On 16 March 2010, the Commission decided to impose a provisional safeguard (duty) of 38 per cent on imports of polypropylene bags and tubular fabric classified under subheadings 5407.20.20 and 6305.33.90 of the Tariff of the Dominican Republic. It was also decided to exclude from the application of the measure imports from Mexico, Panama, Colombia and Indonesia pursuant to Article 9.1 of the Agreement on Safeguards.

On 25 March 2010, the Commission published a notice of application of provisional measures on imports of polypropylene bags and tubular fabric. The duration of the provisional safeguard measure was 200 days, said the complainants.

On 5 October 2010, the Commission decided to impose a definitive safeguard (duty) of 38 per cent on imports of polypropylene bags and tubular fabric classified under subheadings 5407.20.20 and 6305.33.90 of the Tariff of the Dominican Republic. The Commission then issued a notice of application of the definitive measures on imports of polypropylene bags and tubular fabric. In that notice and in the final resolution, the Commission pointed out that pursuant to Article 9.1 of the Agreement on Safeguards, the definitive safeguard measure would not apply to imports from Mexico, Panama, Colombia and Indonesia. The measure is being applied for 18 months starting on 18 October 2010.

The complainants considered amongst others that the Commission's preliminary and final determinations do not contain reasoned and adequate findings and conclusions with respect to the various relevant factual and legal aspects of the determinations relating to the product under investigation, the domestic like product, and the domestic industry, and this affects the determinations of increased imports, serious injury and causality that stem from those prior determinations. These omissions are inconsistent with Articles 2.1, 3.1, 4.1(a), 4.1( c), 4.2(a), 4.2(b), 4.2( c) and 6 of the Agreement on Safeguards, and Article XIX: 1(a) of the GATT 1994.

They also considered that the preliminary and final determinations do not contain reasoned and adequate findings and conclusions regarding the alleged unforeseen developments and to explain how those developments resulted in increased imports of the specific products covered by the safeguard measure. These omissions are inconsistent with Articles 3.1, 4.2(a), 4.2(b), 4.2( c), 6 and 11.1(a) of the Agreement on Safeguards and Article XIX: 1(a) of the GATT 1994.

Moreover, they said, the preliminary and final determinations do not contain reasoned and adequate findings and conclusions with respect to the alleged effect of the obligations incurred under the GATT 1994, and how that effect would have resulted in increased imports of the specific products covered by the safeguard measure. These omissions are inconsistent with Articles 3.1, 4.2(a), 4.2(b), 4.2( c), 6 and 11.1(a) of the Agreement on Safeguards and Article XIX: 1(a) of the GATT 1994.

Nor do the preliminary and final determinations contain reasoned and adequate findings and conclusions with respect to the alleged increase in imports of the specific products under investigation, in absolute terms or relative to domestic production. These omissions are contrary to Articles 2.1, 3.1, 4.2(a), 4.2(b), 4.2
( c), and 6 of the Agreement on Safeguards and Article XIX: 1(a) of the GATT 1994.

The complainants also considered that although the state of the domestic industry was found to be favourable, the preliminary and final determinations do not contain reasoned and adequate findings and conclusions as to the existence of the alleged serious injury, understood as significant overall impairment of the domestic industry.

Nor does the preliminary determination contain any reasoned and adequate findings and conclusions with regard to the critical circumstances to justify the provisional measure, or with regard to all of the factors that are required to be examined for the determination of serious injury.

They further said that the measures at issue do not exempt all of the developing countries whose share of imports does not exceed 3 per cent. Moreover, the required parallelism between the substantive evaluation of the determinations of increased imports, serious injury and causal link on the one hand, and the coverage of the measures at issue as regards origin on the other, was not respected. These omissions are inconsistent with Articles 2.1, 2.2, 4.2(a), 4.2(b), 4.2( c), 5.1, 6 and 9.1 of the Agreement on Safeguards, and Article XIX: 1(a) of the GATT 1994.

The four countries said that the Dominican Republic failed to provide the Members having a substantial interest as exporters of the products concerned adequate opportunity for consultations prior to the adoption of the definitive measure. Nor did the Dominican Republic seek to agree on any adequate means of trade compensation for the adverse effects of the measures on the trade of other Members. This omission is inconsistent with Articles 8.1 and 12.3 of the Agreement on Safeguards and Article XIX: 2 of the GATT 1994.

The complainants considered that the measures at issue are inconsistent with Article I: 1 of the GATT 1994 in that they are measures that are not applied to products originating in or consigned from particular origins, and this constitutes an advantage that has not been accorded immediately and unconditionally to other WTO Members.

Moreover, they added, the measures at issue are duties and charges other than ordinary customs duties that are contrary to Article II: 1(a) and the second sentence of Article II: 1(b) of the GATT 1994.

In view of the 18-month period of validity of the definitive safeguard measure and to ensure that the dispute settlement system provides an effective solution to this dispute, the complainants expressed hope that the panel will issue the final report to the parties as soon as possible, and in any case not later than the period of six months from the date that the composition and terms of reference of the panel were agreed upon, as stipulated in Article 12.8 of the DSU (Dispute Settlement Understanding).

According to trade officials, all four complainants reiterated the statements that they had made at the last meeting of the DSB on 25 January, when the dispute came before the DSB for the first time.

At that DSB meeting, all four complainants said that the Dominican Republic's safeguard measures were inconsistent with WTO rules. They said that consultations, which were held on 16-17 November 2010, failed to resolve the matter.

In particular, said trade officials, Costa Rica said that the measure at stake resulted in a complete halt of its imports which had a very harmful effect on its industry. It expressed concerns as to the extremely easy way with which the Dominican Republic was using an exceptional mechanism (the safeguard measure).

At the DSB meeting on Monday, all four countries asked the panel to submit its report within the six month period as stipulated in Article 12.8 of the DSU, given the urgency of the situation.

According to trade officials, the Dominican Republic said that one single round of negotiations would not enable parties to resolve all issues.

In an intervention, trade officials said that Panama expressed regret that the Dominican Republic did not give a positive consideration to the concerns raised by the four complainants. It added that it joined the consultations, it having substantial commercial interests in the issue.

Panama stressed that the products covered by the safeguard measures were important for its exporters. It said that although the Dominican Republic's measures did not apply to its products, this could change at any time.

In other actions, following a joint request by both parties in the dispute US - Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China (WT/DS399), the DSB agreed to extend the 60-day time period for the parties to appeal the report.

The panel report in this dispute was circulated on 13 December 2010 and would have to be adopted (in the absence of an appeal by either party) by 13 February
2011. This has now been extended to 24 May 2011.

Article 16.4 of the DSU states that within 60 days after the date of circulation of a panel report to the Members, the report shall be adopted at a DSB meeting unless a party to the dispute formally notifies the DSB of its decision to appeal or the DSB decides by consensus not to adopt the report.

In a joint request to the DSB, both China and the United States tabled a draft decision for adoption, in which the DSB agrees that, upon a request by the People's Republic of China or the United States of America, the DSB shall no later than 24 May 2011 adopt the report of the panel in the dispute United States - Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China
(WT/DS399/R) unless (i) the DSB decides by consensus not to do so, or (ii) either party to the dispute notifies the DSB of its decision to appeal pursuant to Article 16.4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes.

In their joint request, they said that the draft DSB decision, if adopted, would provide greater flexibility in scheduling any possible appeal.

In its statement on this agenda item, the US said that it was not joining this request out of any concerns with the panel report. It added that the report's conclusions were well-founded.

According to trade officials, the US noted that it was the third decision that the DSB had taken this year to delay possible appeals in three different disputes. It said that the Appellate Body was currently working on two appeals, one of which was filed in July 2010.

The US called for a swift resolution of these pending appeals which it said could help minimize delays and backlogs.

Trade officials said that following this joint request, the DSB agreed that it shall, no later than 24 May 2011, adopt the panel report, unless the DSB decides by consensus not to do so, or China or the US notifies the DSB of its decision to appeal.

A similar situation arose at the last meeting of the DSB on 25 January, this time in the dispute EC - Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China (WT/DS397). The panel report in this dispute was circulated on 3 December 2010, and would have to have been adopted in the absence of an appeal on 3 February 2011 (in accordance with the 60-day time period).

Both China and the European Union tabled a draft decision for adoption by the DSB, in which the DSB agrees to extend the date for the adoption of the panel report (in the absence of an appeal) to 25 March 2011.

In their joint request, both China and the EU said that they consider that the decision would provide greater flexibility in scheduling given the heavy workload on the Appellate Body at this time.

The DSB, at its 25 January meeting, thus agreed to the joint request to extend the deadline to 25 March 2011. +