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European Communities – Measures Affecting Butter Products

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European Communities - Measures Affecting Butter Products Dispute:(WT/DS72) In June 1996, the European Communities ruled that New Zealand butter manufactured by the AMMIX and spreadable butter‑making processes was not eligible for New Zealand’s countryspecific tariff quota (CSTQ) for butter established by the EC’s WTO Schedule because it believed that these butter products were not “manufactured directly from milk or cream” (one of the conditions of the CSTQ). The practical effect of the decision was that these two products would be levied by the EC at the much higher out-of-quota tariff rate. New Zealand disagreed with the EC ruling. After extensive bilateral discussions on this issue the EC confirmed that it would not alter its position. This left New Zealand with no avenue for redress other than WTO dispute settlement. New Zealand requested WTO consultations in March 1997. When consultations failed to resolve the dispute, New Zealand requested an adjudicative panel which was established in November of that year. The parties to the dispute (New Zealand and the EC) made written and oral submissions to the Panel during 1998. Before the Panel’s Report was made public, New Zealand agreed to an EC proposal to explore a settlement of the dispute. In February 1999, New Zealand requested a suspension of the panel proceedings in order to allow settlement negotiations to take place. Settlement negotiations were eventually successful, and in November 1999, New Zealand notified the WTO that a mutually agreed solution to the dispute had been reached. As part of the settlement, the EC has passed a regulation which clarifies that New Zealand exports of spreadable and AMMIX butter do qualify for entry under New Zealand’s CSTQ for butter. Source: http://www.mfat.govt.nz/Treaties-and-International-Law/02-Trade-law-and-free-tradeagreements/ 0-EU-Butter.php Foreword: Ammix is one of the two commercial butter making processes used in New Zealand: 1. Fritz, developed from the traditional batch churning process of crystallised cream 2. in Ammix fresh milk fat is mixed with cream and salt and shock cooled to give rapid crystallisation. Source: http://nzic.org.nz/ChemProcesses/dairy/3B.pdf Marzia Liberale! Assignment abei 702 WTO 1 http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp2_e.htm Marzia Liberale! Assignment abei 702 WTO 2 The panel process Here below the various stages a dispute can go through in the WTO Dispute Settlement Mechanism. At all stages, countries in dispute are encouraged to consult each other in order to settle “out of court”. At all stages, the WTO director-general is available to offer his good offices, to mediate or to help achieve a conciliation. Steps of the WTO dispute settlement mechanism undertaken to solve the dispute WT/DS72: “European Communities - Measures Affecting Butter Products” 1.Request for Consultations 24 March 1997 Complaint by New Zealand. This request, dated 24 March 1997, is in respect of decisions by the EC and the United Kingdom’s Customs and Excise Department,The Commission of the European Communities (EC) has decided that New Zealand butter manufactured by the ANMIX butter-making process and the spreadable butter-making is not "manufactured directly from milk or cream" so as to be excluded from eligibility for New Zealand’s country-specific tariff quota established by the European Communities’ WTO Schedule (annexed to General Agreement on Tariff and Trade 1994 (theGATT1994)). New Zealand alleges violations of Articles II, X and XI of GATT, Article 2 of the TBT Agreement, and Article 3 of the Agreement on Import Licensing Procedures. WTO SETTLEMENT MECHANISM: “MET” With regular communication, dated 24 March 1997, from the Permanet Mission of New Zealand to the Permanent Delegation of the European Commission and to the Dispute Settlement Body (DSB), NZ requests Consultation in accordance with Article 4.4 of the DSU. 2.Request for the Establishment of a Panel 07 November1997 Request by New Zealand. On 7 November 1997, New Zealand requested the establishment of a panel. WTO SETTLEMENT MECHANISM: “MET” After Consultation the WTO Dispute Settlement Mechanism contemplate the request for the establishment of a Panel, regularely requested by NZ. 3.Constitution of the Panel Established 18 November 1997 WTO SETTLEMENT MECHANISM: “MET” The DSB established a panel on 18 November 1997 by the second DSB meeting, as prescibed by the WTO Dispute Settlement Mechanism. 4. Composition of the Panel 13 January 1998 Composition of the Panel was notified on 13 January 1998 WTO SETTLEMENT MECHANISM: “MET” The parties to the dispute agreed on 13 January 1998 according to the to the WTO Dispute Settlement Mechanis timeframe that requires the compositon to be agreed within maximum 30 days after Panel Establishment. (Christmas suspension of activity applyes). The following Panel Composition was chosen: Chairman: Mr. Attie Swart Members: Mr. Robert Hudec Ms. Claudia Orozco Jaramillo The United States reserved its rights as a third-party to the dispute. Marzia Liberale! Assignment abei 702 WTO 3 5. Panel suspension of proceedings 18 February 1998 At the request of the complainants, dated 18 February 1998, the Panel agreed to suspend the panel proceedings from 19 February 1998 until 30 March 1998, pursuant to Article 12.12 of the DSU in order to explore whether it would be possible to reach a mutually agreed solution. WTO SETTLEMENT MECHANISM: “MET” During all stasges of the dispute settlement the WTO Dispute Settlement Mechanism pursue mediation and conciliaton. The suspension of proceedings conforms to that. 6. Panel examination - not applicable WTO SETTLEMENT MECHANISM: “NOT MET” Normal procedure contemplate two meeting with the parties and one meeting with a third party which is relevant to the dispute, according to Article 12 and 10 of the DSU. Those steps were not fulfilled because of the Panel suspension of proceeding requested by NZ. 7. Interim review stage - Descriptive part of report - not applicable Normal procedure of the WTO Dispute Settlement Mechanism contemplate these documents to be sent to the parties for comment, but those 8. Panel Report 7 Dicember 1998 WTO SETTLEMENT MECHANISM: “NOT MET” Due to administrative constraints, the Panel was not able to issue its report within six months. The Panel submitted its interim report to the parties on 7 December 1998. 9. Panel suspension of proceedings 24 February 1999 On 24 February 1999, New Zealand requested the Panel to suspend its work in accordance with Article 12.12 of the DSU until 25 March 1999 (WT/DS72/6). After that New Zealand asked for five aditional suspension until November 1999. WTO SETTLEMENT MECHANISM: “MET” The suspension of proceedings conforms to the mediation and conciliation process advised at all times during the dispute by the WTO Dispute Settlement Mechanism. 10. Mutually agreed solution 18 November 1999 In a communication dated 18 November 1999, the parties notified a mutually agreed solution to this dispute. The Panel tooke note of the mutually agreed solution between the parties to the dispute. WTO SETTLEMENT MECHANISM: “MET” The Mutually agreed solution is reached in compliance to the Article 12.7 of the DSU which provides that "Where a settlement of the matter among the parties to the dispute has been found, the report of the panel shall be confined to a brief description of the case and to reporting that a solution has been reached." 11. Reporting of Mutually agreed solution 24 November 1999 Accordingly, the Panel concludes its work by reporting that a mutually agreed solution to this dispute has been reached between the parties. WTO SETTLEMENT MECHANISM: “MET” Marzia Liberale! Assignment abei 702 WTO 4 EXTRA STEP OF THE WTO DISPUTE RESOULUTION MECHANISM NOT APPLICABLE TO DISPUTE WT/DS72: In case a Mutually agreed solution was not met as for the case of the dispute WT/DS72 here discussed, the WTO Dispute Settlement Mechanism would have relied on the Panel report and allowed additional time for implementation, “Reasonable Period of TIme” (15 to 18 months). a. Implementation : “Any Member can raise the issue of implementation at any time in the DSB. Unless the DSB decides otherwise. The item remains on the DSB’s agenda until the issue is resolved. At least ten days before each such DSB meeting, the Member concerned is required to provide the DSB with a written status report of its progress in the implementation. b. Surveillance: “The DSB must continue to keep under surveillance the implementation of the recommendations or rulings it has adopted. This includes cases where compensation has been provided or concessions or other obligations have been suspended but the recommendations to bring a measure into conformity with (WTO) law have not been implemented (Article 22.8 of the DSU).” c. Non implementation: in case Implementation is not raised parties negotiate compensation according to Article 22 of the DSU. d. Retaliation: If not compensation is agreed upon, the DSU authorize retaliation when a country does not comply with a ruling 30 days after the Reasonable Period of time Expires. Source: www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c6s7p2_e.htm Document released undertaking the WTO Dispute Settlement Mechanism to solve the dispute WT/ DS72 as above described: 1. Request for Consultations by New Zealand 24/03/1997 2. Request for the Establishment of a Panel by New Zealand 07/11/1997 3. Constitution of the Panel Established at the Request of New Zealand 18/11/1997 4. Note by the Secretariat 19/01/1998 5. Communication from the Chairman of the Panel 02/03/1998 6. Communication from the Chairman of the Panel 23/12/1998 7. Communication from the Chairman of the Panel 01/03/1999 8. Communication from the Chairman of the Panel - Addendum 29/03/1999 9. Communication from the Chairman of the Panel - Addendum 08/04/1999 10.Communication from the Chairman of the Panel - Addendum 18/05/1999 11. Communication from the Chairman of the Panel - Addendum 19/07/1999 12.Communication from the Chairman of the Panel - Addendum 08/10/1999 13. Notification of Mutually Agreed Solution 18/11/1999 14. Report of the Panel 24/11/1999 Source: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Query=(@Symbol=+wt/ds72/*) &Language=ENGLISH&Context=FomerScriptedSearch&languageUIChanged=true Marzia Liberale! Assignment abei 702 WTO 5 OBJECTIVES OF THE WTO DISPUTE SETTLEMENT MECHANISM The World Trade Organization is a global institution which purpose is to ease international trade around the World facilitating negotiations and agreements between Nations (ie regional trade agreements, least-developed countries status). The WTO purpose is to stimulate international growth and development while protecting stability and promoting good governance among members and others nations. International trade transactions involve an higer degree of uncertainty and risk than domestic transactions. The WTO aim at reducing the risks involved in these transactions and solve disputes that may arise in case of breach of agreements or when Goverments put into place trade measure that violate set trade rules (i.e unfear subsidies & countervailing duties or technical barriers to trade, regional trade agreements) The main objective of the WTO dispute settlement mechanism is to be: 1. equitable, 2. fast, 3. effective, 4. mutually acceptable The WTO Dispute Settlement Mechanism is a multilateral system of settling disputes that imply abiding with set procedures and rules, and respecting judgement.The WTO’s procedure underscores the rule of law, and it makes the trading system more secure and predictable. Ruling is not longer’s the Nation’s ruling.The dispute can arise between two countries or more. Also third groups of countries may declare they have an interest in the case and take part in the process. Source:http://www.wto.org/english/thewto_e/whatis_e/tif_e/utw_chap3_e.pdf The fast resolution of disputes is a main goal for the WTO, in fact conciliation and mediation are advised at all times by the DSB. “The system is based on clearly-defined rules, with timetables for completing a case. First rulings are made by a panel and endorsed (or rejected) by the WTO’s full membership. Appeals based on points of law are possible. However, the point is not to pass judgement. The priority is to settle disputes, through consultations if possible. By January 2008, only about 136 of the 369 cases had reached the full panel process. Most of the rest have either been notified as settled “out of court” or remain in a prolonged consultation phase — some since 1995.” Source:http://www.wto.org/english/thewto_e/whatis_e/tif_e/utw_chap3_e.pdf TIMEFRAME FOR SETLEMENT PROCESS For the WTO the faster resolution is the better. Under GATT rules were set to solve disputes but the need for a more efficient, reliable and fast way of solving disputes was neded. That was achieved through The WTO Dispute Settlement Mechanism which uses a more structured process with a planned timetable and deadlines set at different stages of the process. This more effective mechanism avoid stalls of the process and assure a prompt settlement, minimizing the losses involved in long disputes. Marzia Liberale! Assignment abei 702 WTO 6 The approximate time for a dispute to settle through the WTO Dispute Settlement Mechanism would approximately be 1 year if appeal doesn’t take place. The time increases up to 1 year and 3 moths in case of appeal. The agreed times are flexible and if a case is claimed to be urgent (ie in case of perishable goods) the process is accelerated as much as possible. Note: The 12 (no appeal) or 15 (appealed) months timing apply if is necessary to go through the whole settlement process, when a Mutually Agreed Solution is not reached as advocated by the DSU. Source http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm COOPERATION AND CONSULATION Settling disputes is the responsibility of the Dispute Settlement Body which consists of all WTO members. First stage: consultation (up to 60 days). Before taking any other actions the countries in dispute have to talk to each other to see if they can settle their differences by themselves. If that fails, they can also ask the WTO director-general to mediate or try to help in any other way. Second stage: the panel (up to 45 days for a panel to be appointed, plus 6 months for the panel to conclude). If consultations fail, the complaining country can ask for a panel to be appointed. The country “in the dock” can block the creation of a panel once, but when the Dispute Settlement Body meets for a second time, the appointment can no longer be blocked (unless there is a consensus against appointing the panel). Source:http://www.wto.org/english/thewto_e/whatis_e/tif_e/utw_chap3_e.pdf The Dispute Settlement Body has the sole authority to establish “panels” of experts to consider the case, and to accept or reject the panels’ findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation when a country does not comply with a ruling. Panels are like tribunals. But unlike in a normal tribunal, the panellists are usually chosen in consultation with the countries in dispute. Only if the two sides cannot agree does the WTO director-general appoint them. Panels consist of three (possibly five) experts from different countries who examine the evidence and decide who is right and who is wrong. The panel’s report is passed to the Dispute Settlement Body, which can only reject the report by consensus. Panellists for each case can be chosen from a permanent list of well-qualified candidates, or from elsewhere. They serve in their individual capacities. They cannot receive instructions from any government. Source: http://www.wto.org/english/tratop_e/dispu_e/ab_members_bio_e.htm Marzia Liberale! Assignment abei 702 WTO 7 • Final report: A final report is submitted to the two sides and three weeks later, it is circulated to all WTO members. If the panel decides that the disputed trade measure does break a WTO agreement or an obligation, it recommends that the measure be made to conform with WTO rules. The panel may suggest how this could be done. • The report becomes a ruling: The report becomes the Dispute Settlement Body’s ruling or recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report (and in some cases both sides do). RULING The Uruguay Round agreement also made it impossible for the country losing a case to block the adoption of the ruling. Under the previous GATT procedure, rulings could only be adopted by consensus, meaning that a single objection could block the ruling. Now, rulings are automatically adopted unless there is a consensus to reject a ruling — any country wanting to block a ruling has to persuade all other WTO members (including its adversary in the case) to share its view. Although much of the procedure does resemble a court or tribunal, the preferred solution is for the countries concerned to discuss their problems and settle the dispute by themselves. The first stage is therefore consultations between the governments concerned, and even when the case has progressed to other stages, consultation and mediation are still always possible. APPEAL AND ARBITRAL TRIBUNAL Either side can appeal a panel’s ruling. Sometimes both sides do so. Appeals have to be based on points of law such as legal interpretation — they cannot reexamine existing evidence or examine new issues. Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government. The appeal can uphold, modify or reverse the panel’s legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days. The Dispute Settlement Body has to accept or reject the appeals report within 30 days — and rejection is only possible by consensus. Source: http://www.wto.org/english/thewto_e/whatis_e/tif_e/utw_chap3_e.pdf Even once the case has been decided, there is more to do before trade sanctions (the conventional form of penalty) are imposed. The priority at this stage is for the losing “defendant” to bring its policy into line with the ruling or recommendations. The dispute settlement agreement stresses that “prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members”. In principle, the sanctions should be imposed in the same sector as the dispute. If this is not practical or if it would not be effective, the sanctions can be imposed in a different sector of the same agreement. In turn, if this is not effective or practicable and if the circumstances are serious enough, the action can be taken under anoth- er agreement. The objective is to minimize the chances of actions spilling over into unrelated sectors while at the same time allowing the actions to be effective. Source: http://www.wto.org/english/thewto_e/whatis_e/tif_e/utw_chap3_e.pdf   8
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