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The Directive also states that the TEP repealed and replaced the legal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. +
