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TWN
Info Service on WTO and Trade Issues (Feb25/12) Geneva, 25 Feb (D. Ravi Kanth) — For the 84th time, the United States on 24 February blocked a request from Colombia on behalf of 130 countries to start the selection process to fill the seven vacancies at the World Trade Organization’s Appellate Body, a recurring development that has stymied the enforcement function of the global trade body, said people familiar with the development. The US stand since December 2019, when Washington blocked funds to the Appellate Body, appears to be in line with the unilateral tariffs being imposed by the Trump administration on all WTO members, said people familiar with the development. The prospects of restoring the two-stage dispute settlement system, with binding outcomes from the Appellate Body, seem highly unlikely as the ongoing reform of the dispute settlement system, especially the appeal/review mechanism, appears to be of little value, said people familiar with the development. The WTO’s Director-General, Ms Ngozi Okonjo-Iweala, in her statement made at the General Council on 18 February, said “there are other areas where we are making progress such as Dispute Settlement Reform, which is advancing, and the development issues that we discussed at the retreat, among others.” However, she did not provide any material evidence as to how the dispute settlement reform is going to restore the two-tier dispute settlement system, with the Appellate Body at the helm of resolving global trade disputes, said people familiar with the development. At a meeting of the Dispute Settlement Body (DSB) on 24 February, the US repeated its stand that Washington’s concerns with WTO dispute settlement remain unaddressed, and that it does not support the proposed decision tabled by Colombia on behalf of 130 members. Several members, especially Colombia, highlighted the urgent need to restore a fully functioning dispute settlement system. It appears that China, Canada, Hong Kong-China, Switzerland, Singapore, the European Union, Australia, Norway, Japan, and New Zealand urged the members to consider joining the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). However, it is not clear how the MPIA could replace a fully functioning Appellate Body. Also, the US was apparently silent on the issue of the third anniversary of Russia’s invasion of Ukraine, when several of its Western allies – the United Kingdom, Canada, Switzerland, the EU, Australia, Norway, New Zealand, Korea, and Japan – condemned Russia for the unilateral war it launched against Ukraine, said people familiar with the development. CHINA-TURKIYE DISPUTE Meanwhile, under another agenda item, China secured approval from the DSB for the establishment of a dispute panel, after Beijing pressed ahead with a second panel request to examine various measures taken by Turkiye concerning the import of electric vehicles (EVs) from China, said people familiar with the development. At a time when the WTO’s enforcement function “hangs by a thread” amid the unilateral tariff measures being imposed by the Trump administration against WTO members, China appears to be rather confident in taking up trade disputes at the WTO, despite being aware that ultimately any appeal of a panel ruling will remain “in cold storage” because of a dysfunctional Appellate Body, said people familiar with the development. At the DSB meeting on 24 February, China made a second-time request for the establishment of a dispute panel to rule on Turkiye’s allegedly trade-restrictive measures on imports of EVs from China. China’s first panel request was blocked by Ankara at a previous DSB meeting on 27 January. China alleged that Ankara’s measures are tantamount to being protectionist and discriminatory in halting the import of Chinese EVs into Turkiye, said people familiar with the development. In its communication to the DSB, China raised the following issues/measures concerning electric vehicles (EVs) and certain other types of vehicles originating in China: additional duties on the importation of EVs from China; a requirement of an import permit certificate to import EVs and certain other types of vehicles from China (import permit certificate scheme); additional duties on the importation of other types of vehicles from China; and an exemption from those duties offered to imports benefiting from the investment incentive certificate under Turkiye’s investment incentives program (investment certificate exemption). China argued that Ankara’s alleged measures are inconsistent with Articles I:1, II:1(a), II:1(b); III:4, X:3(a), and XI:1 of the GATT 1994; and Articles 2.1 and 2.2 of the TRIMs Agreement. Beijing said that the two sides were unable to reach an amicable agreement, following which Beijing decided to press for a second panel request. Turkiye apparently expressed sharp concern that China was making a second panel request without exhausting the on-going bilateral consultative processes, said people familiar with the development. After the DSB agreed to the establishment of a dispute panel, the EU, Japan, the Republic of Korea, Brazil, Canada, Australia, the United Kingdom, the US, Switzerland, Norway, Singapore, the Russian Federation, Thailand and India reserved their third party rights to participate in the panel proceedings, said people familiar with the development. China’s dispute against Turkiye appears to be a “bell-weather” case as it has implications for other trade disputes concerning the alleged protectionist and discriminatory measures being imposed by several countries, including the EU and Canada among others, against Chinese EVs, said people familiar with the development. INDONESIA-EU DISPUTE Under another agenda item, the DSB adopted the panel report on Indonesia’s challenge of certain measures imposed by the EU concerning palm oil and oil palm crop-based biofuels. The panel issued a rather “mixed” ruling on 10 January in which both sides shared their respective views. On EU measures that were found to be inconsistent with the WTO rules, the EU will have a month to inform the DSB of its intentions with respect to the implementation of the panel’s rulings and recommendations, said people familiar with the development. Indonesia said that the panel found that the EU’s 2018 renewable energy directive and related regulations unfairly discriminated against Indonesia’s palm oil biofuels. Jakarta demonstrated that the EU’s reasoning with reference to climate change, biodiversity, and public morals bears no connection to the specific matter at issue. Indonesia said the economic impact of the EU’s discriminatory measures is substantial and has severely affected Indonesia’s palm oil exports, impacting millions of farmers and businesses, particularly small-holders. Indonesia said the EU must adjust its policy and the measures at issue so that they are in line with the WTO agreements, adding that it will closely monitor implementation and expects swift compliance without undue delay, said people familiar with the development. The EU said that the panel’s findings confirm that the EU has the right to take measures to ensure that its policies on renewable fuels do not exacerbate greenhouse gas emissions associated with indirect land-use change. While raising some concerns regarding the panel’s findings on what constitutes a technical regulation under WTO rules, the EU said the panel found that the EU measures at issue aim to achieve legitimate environmental objectives and that they are science-based. Russia apparently criticized the EU’s measures, while St Vincent and the Grenadines, on behalf of the Organisation of African, Caribbean and Pacific States, voiced its assessment on the implications arising from the panel report. Brazil apparently said that it expects that the adoption of the panel report will not constitute a precedent or influence future disputes, nor create a political and legal environment conducive to the proliferation of such unilateral measures. The US expressed its disappointment that the panel at times simply adopted the Appellate Body’s previous allegedly erroneous interpretations of the Agreement on Technical Barriers to Trade (TBT). The US alleged that persistent erroneous interpretations such as this are emblematic of the WTO’s Appellate Body and panel overreach. +
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