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TWN
Info Service on WTO and Trade Issues (Sep26/23) WTO:
Panel set on EU's CBAM, US again blocks AB appointments Geneva, 28 Sep (D. Ravi Kanth) -- For the 100th time, the United States on 25 September blocked a request from 130 members to expeditiously fill all seven vacancies in the dysfunctional Appellate Body (AB), which would ensure that the enforcement function remains paralyzed, a development that comes days before Washington convenes the G20 trade ministerial meeting in Wisconsin, said people familiar with the development. The US, however, justified its action, saying that it does not support the proposed decision tabled by the 130 members, while reiterating for the umpteenth time Washington's fundamental concerns with the WTO dispute settlement system, and that the joint proposal does not address its concerns. The continued blocking of the proposal signals Washington's opposition to the continuation of a rules-based, member-driven, and intergovernmental WTO, said a participant who asked not to be identified. "Clearly, members face a choice, either to be dictated by the US or standing firm in their opposition to the proposed US reforms of the trade body," the person said. Earlier, the chair of the DSS reform discussions, Ambassador Guilherme de Aguiar Patriota of Brazil, reported on the purpose of the information sessions, stating that the "goal is to share institutional memory and not to be engaged in technical discussions without members' consent." Given the broad support for the information sessions, the chair said that the first session focused on the history of the system, including trends in dispute activity and the use of different means of dispute resolution. Additionally, the session focused on DS review processes following MC12 and MC13, said people familiar with the discussions. COLOMBIA'S PUSH While thanking Colombia for piloting the request on behalf of 130 countries to make the Appellate Body functional again, China reiterated "the urgency of restoring an independent and impartial two-tier dispute settlement system, and call upon Members to join this proposal." Around 20 members, including the European Union and the African Group, supported the proposal to fill the AB vacancies. Colombia expressed regret that "for the 100th occasion members have not been able to launch the selection processes," adding that "ongoing conversations about reform of the dispute settlement system should not prevent the Appellate Body from continuing to operate fully." Colombia stated that "members shall comply with their obligations under the Dispute Settlement Understanding to fill the vacancies as they arise." EU'S CBAM The Russian Federation pressed ahead with its second request for the establishment of a WTO dispute panel (DS639) to adjudicate on the European Union's controversial Carbon Border Adjustment Mechanism (CBAM) package and the underlying alleged export subsidy under the EU scheme for trading greenhouse gas emission allowances. The DSB agreed to the establishment of the panel - the first of its kind to adjudicate on the controversial CBAM, said a person familiar with the development. Argentina, Brazil, Canada, China, India, Indonesia, Japan, the Kingdom of Saudi Arabia, the Republic of Korea, Malaysia, Norway, Paraguay, Singapore, Switzerland, Chinese Taipei, Thailand, the United Kingdom and the United States reserved their third-party rights to participate in the proceedings. Russia argued that the CBAM package creates significant trade barriers for covered goods imported into the EU and is inconsistent with the EU's obligations under the WTO. Moscow further argued that the EU's allocation of allowances to certain companies under the Emissions Trading System (ETS) amounts to an export subsidy designed to strengthen the competitiveness of certain domestic industries. In a sharp response, the EU apparently stated that it is participating in the proceedings not because it views Russia's actions as legitimate, but because it firmly supports the rules-based multilateral trading system. Brussels seemingly maintained that the situation was extraordinary, noting that the Russian Federation - which it said continues to wage a war of aggression on Ukraine in violation of international law - is seeking to rely on international law to improve access for exports into the EU market. However, the EU expressed confidence that the CBAM and ETS are WTO-compatible. Australia, Canada, Japan, Korea, New Zealand, Norway, Switzerland, Ukraine, and the United Kingdom likewise condemned Russia's invasion of Ukraine. Russia appears to have reminded the EU that the Ukraine issue does not concern the DSB, suggesting that political disagreements should not prevent the functioning of the WTO, said people familiar with the development. In its complaint over the EU's CBAM, Russia lists how the EU violated the core WTO principles, including: 1. Articles I:1, II:1(a), II:1(b), III:1, III:2, III:4, X:3(a), and XI:1 of the GATT 1994 (Article 1 refers to most- favoured-nation treatment, Article II concerns the sanctity of binding tariff commitments and Article III deals with national treatment); 2. Paragraph 2, second sentence, of Bulgaria's Protocol of Accession and General Council Decision of 2 October 1996, in conjunction with paragraphs 25 and 92 of the Working Party Report on Bulgaria's accession to the WTO; 3. Paragraph 2, second sentence, of Latvia's Protocol of Accession and General Council Decision of 14 October 1998, in conjunction with paragraphs 40 and 131 of the Working Party Report on Latvia's accession to the WTO; 4. Paragraph 2, second sentence, of Estonia's Protocol of Accession and General Council Decision of 21 May 1999, in conjunction with paragraphs 41 and 141 of the Working Party Report on Estonia's accession to the WTO; 5. Paragraph 2, second sentence, of Croatia's Protocol of Accession and General Council Decision of 17 July 2000, in conjunction with paragraphs 47 and 225 of the Working Party Report on Croatia's accession to the WTO; 6. Paragraph 2, second sentence, of Lithuania's Protocol of Accession and General Council Decision of 8 December 2000, in conjunction with paragraphs 42 and 189 of the Working Party Report on Lithuania's accession to the WTO; and 7. Articles 1.2, 1.3 and 3.2 of the Import Licensing Agreement. In addition, the Russian Federation claimed that the alleged subsidy appears to be inconsistent with Articles 1.1(a)(1)(i), 1.1(a)(1)(ii), 1.1(a)(1)(iii), and 3.1(a) on their own and read together with Annexes I(a), I(f), I(g), and I(1) of the SCM Agreement; and Articles VI and XVI of the GATT 1994. Meanwhile, in another trade dispute regarding "Measures concerning electric vehicles and other types of vehicles from China," China and Turkiye requested additional time for the DSB to consider the adoption of the panel report circulated on 28 July 2026. The dispute concerns Turkiye's additional duties imposed on Chinese electric vehicles (EVs) and some hybrid vehicles, as well as Turkiye's import permit licensing scheme. China and Turkiye asked that the DSB delay consideration of the panel report until 27 October 2026 to allow time for continued engagement toward a resolution. The US said it supports efforts to continue dialogue with the aim of achieving a mutually agreed solution. The DSB agreed to the request. +
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