European Union Election Observation Mission
Ghana, 2016

EU STATEMENTS AT THE REGULAR DSB MEETING, 26 October 2020

Geneva, 26/10/2020 - 00:00, UNIQUE ID: 201026_13
Local Statements

AGENDA POINT 1: SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

B. UNITED STATES – SECTION 110(5) OF THE US COPYRIGHT ACT: STATUS REPORT BY THE UNITED STATES (WT/DS160/24/ADD.184)

We thank the United States for its status report and its statement today.

We refer to our previous statements. We would like to resolve this case as soon as possible.


AGENDA POINT 1: SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB


C.         EUROPEAN COMMUNITIES – MEASURES AFFECTING THE APPROVAL AND MARKETING OF BIOTECH PRODUCTS: STATUS REPORT BY THE EUROPEAN UNION (WT/DS291/37/ADD.147)


First intervention

During the on-line meetings of the Standing Committee on GM Food and Feed held on 15 September and 7 October 2020, the Commission presented for vote eight authorisations representing 38 possible GMOs[1]. Due to the current public health situation, the voting is carried out by written procedure ending fourteen days after the date of the meeting concerned. The Commission will present authorisations that did not receive a qualified majority vote in favour or against in the next meeting of the Appeal Committee

The EU-US Biotech Dialogue, organised on 22 October 2020, is the ideal opportunity to provide a detailed state of play of all authorisations pending in EFSA or in the Commission. These detailed overview clearly demonstrate that the delays are not systematically due to “actions or inactions of the EU and its Member States”, as claimed by the US. A large part of the delays has always been and remains linked to incomplete applications and lack of reactivity on the part of applicants.

The EU continues to progress with the authorisations where the European Food Safety Authority has finalised its scientific opinion and concluded that there are no safety concerns.

As repeatedly explained by the EU and confirmed by the US delegation during the EU-US biannual consultations held on 12 June 2019, efforts to reduce delays in authorisation procedures are constantly maintained at a high level at all stages of the authorisation procedure.


The United States frequently refers to what is known as the EU “opt-out Directive”. We would like to reiterate that the DSB recommendations and rulings do not cover the “opt-out Directive”.


The EU acts in line with its WTO obligations. Finally, we recall that the EU approval system is not covered by the DSB's recommendations and rulings.

 

Second intervention

The WTO Agreements do not require full international harmonisation and leave some regulatory space or autonomy to individual WTO Members. The European Union has different regulatory approaches to non-GMOs and GMOs but, in all cases, such regulations do not discriminate between imported and domestic like products.
No EU Member State has imposed any “ban”. Under the terms of the Directive, an EU Member State can adopt measures restricting or prohibiting cultivation only when such measures are in line with EU law and are reasoned, proportional, non-discriminatory and based on compelling grounds.


The free movement of seeds is embedded in Article 22 of Directive 2001/18/EC: ‘Member States may not prohibit, restrict or impede the placing on the market of GMOs, as or in products, which comply with the requirements of this Directive’. We also note that according to the provisions of the opt-out Directive (Article 26b, point 8) the measures adopted under the Directive ‘shall not affect the free circulation of authorised GMOs’ in the EU.


Currently the EU Common Catalogue of varieties of agricultural species includes 150 varieties of maize MON 810, which are allowed to be marketed in the EU. Until today, the Commission has never received any complaints from seed operators or other stakeholders concerning the restriction of marketing of MON810 seeds in the EU. This confirms the smooth functioning of the internal market of MON810 seeds.


We would invite the US to provide any evidence they may have at their disposal substantiating the disruption of the free movement of MON810 seeds in the EU.

 

AGENDA POINT 2: UNITED STATES – CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000: IMPLEMENTATION OF THE RECOMMENDATIONS ADOPTED BY THE DSB

A.    STATEMENT BY THE EUROPEAN UNION

First intervention

Despite US having repeatedly indicated that the DSB’s recommendations and rulings are fully implemented by adopting the Deficit Reduction act in 2013, disbursements under CDSOA have been made every year since. Every disbursement that still takes place under this legal basis is clearly an act of non-compliance with DSB recommendations and rulings. The US must fully stop transferring collected duties, for the item to be considered resolved and removed from under the DSB's surveillance.


The EU will continue to put this point on the agenda as long as the US has not fully implemented the WTO ruling and the disbursements cease completely. The EU will continue to insist – as a matter of principle – independently of the cost resulting from the application of such limited duties.


The EU renews its call on the United States to abide by its clear obligation under Article 21.6 of the DSU to submit implementation reports in this dispute, as the issue remains unresolved. If the US does not agree the issue remains unresolved, nothing prevents it from seeking a multilateral determination through a compliance procedure.

 

AGENDA POINT 3:  EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT: IMPLEMENTATION OF THE RECOMMENDATIONS ADOPTED BY THE DSB

First intervention

As in the previous DSB meetings, the US has again stated that the EU is taking inconsistent positions under Article 21.6 of the DSU, depending on whether the EU is a complaining party or a defending party in a dispute.

The US assertions are without merit.

As the EU has repeatedly explained in past meetings of the DSB, the crucial point for the defending party’s obligation to provide status reports to the DSB is the stage of the dispute. In the Airbus case, the dispute is at a stage where the defending party does not have an obligation to submit status reports to the DSB.

We would like to remind the DSB that in the Airbus case the EU notified a new set of compliance measures to the DSB. That new set of compliance measures were a clear demonstration that the EU – contrary to the US in the parallel Boeing-case – is serious about and committed to achieving compliance.

That new set of compliance measures were subject to an assessment by a compliance panel and that panel’s report was issued on 2 December 2019. As noted in our statement at the December meeting of the DSB, the EU is of the view that significant aspects of the compliance panel’s report cannot be regarded as legally correct and are very problematic from a systemic perspective when it comes to assessing compliance with the subsidy disciplines of the WTO agreements. It is in order to have these legal errors corrected that the EU has filed an appeal against the compliance panel’s report on 6 December 2019.

We are concerned that with the current blockage of the two-step multilateral dispute settlement system, we are losing the possibility of a proper appellate review of the serious flaws contained in the panel report. While the blockage continues, we stand ready to discuss with the US alternative ways to deal with this appeal. We are also committed to finding a balanced negotiated solution with the US that would allow leaving both aircrafts disputes behind us.

These considerations do not, however, alter the fact that the compliance proceeding in this dispute has not been concluded.

Whether or not the matter is “resolved” in the sense of Article 21.6 remains the very subject matter of this ongoing litigation. How can it be said that the defending party should submit “status reports” to the DSB in these circumstances?

The EU would be very concerned with a reading of Article 21.6 of the DSU that would require the defending party to notify the purported “status of its implementation efforts” through the submission of status reports to the DSB, while dispute settlement proceedings on that precise issue are ongoing. The EU notes that its reading of the provision is supported by other WTO Members.

The view of the EU is further supported by Article 2 of the DSU on the administration of the dispute settlement rules and procedures: where, further to the disagreement between the parties on compliance, a matter is with the adjudicators, it is temporarily taken out of the DSB’s surveillance.

Under Article 21.6 DSU, the issue of implementation shall remain on the DSB's agenda until the issue is resolved. In the Byrd Amendment case, the EU does not agree with the US assertion that it has implemented the DSB recommendations and rulings. This means that the issue remains unresolved for the purposes of Article 21.6 DSU. If the US does not agree the issue remains unresolved, nothing prevents it from seeking a multilateral determination through a compliance procedure, asking for a confirmation of its assertion that the CDSOA measure has been repealed in line with the WTO findings, just like the EU is doing in the Airbus case.

The EU willingness to find a negotiated solution is also shown by the EU notification of 21 August 2020, which was discussed at the previous DSB meeting, of additional and extraordinary compliance measures that withdraw all remaining subsidies and constitute appropriate steps to remove adverse effects, substantially in excess of what is required by Article 7.8 of the SCM Agreement. These additional and extraordinary measures go far beyond what is required in order to discharge the European Union’s compliance obligations required by Article 7.8 of the SCM Agreement.

The European Union has procured these additional, extraordinary and costly compliance measures in an effort to persuade rational and reasonable stakeholders in the United States, including consumers, employers, workers, government officials and entities, airlines and other economic operators, that now is the time to draw a line under these disputes.  It is not in the interests of anyone that the European Union and the United States now proceed to, or continue, mutually assured retaliation, and certainly not in the current economic climate.

Instead of progressively stepping-up retaliatory measures, we should step them down. With that in mind, the European Union reaffirms its determination to obtaining a long-term resolution to the WTO aircrafts disputes. A balanced negotiated settlement is the only way to avoid mutually imposed countermeasures.


Second intervention

With regard to the additional RLI not covered by the EU notification that were mentioned by the US. The EU reiterates its position as expressed earlier, that the compliance proceeding in this dispute has not been concluded due to the current blockage of the two-step multilateral dispute settlement system

Moreover, some of the measures mentioned by the US have actually been amended and the EU has fully explained this to the Unite States.

Finally, it must be noted that the other contested measures relates to the Repayable Launch Investment for the development of the A380 aircraft model. It is well known that Airbus decided last year to completely wind-down the A380 programme. The last Airbus 380 rolled out the production line in Toulouse a couple of weeks ago. The production line is closed and employees have been moved to other operations. The A380 RLI therefore cannot cause any more adverse effects on the US.

 

AGENDA POINT 5: STATEMENT BY CHINA REGARDING THE PANEL REPORT IN "UNITED STATES – TARIFF MEASURES ON CERTAIN GOODS FROM CHINA"

This is yet another dispute that illustrates the grave consequences of the blockage of Appellate Body appointments since 2017. That blockage frustrates the essential rights of Members that were agreed multilaterally in the DSU.

In that regard we refer to EU’s intervention under item 7 of the DSB meeting on 28 September 2020, where we elaborated on these consequences and on the possibility of appeals being adjudicated upon through appeal arbitration based on Article 25 of the DSU, consistently with the principles of the DSU. We will not repeat these points today.

The EU takes note of US’ decision to appeal the panel report in this case. The panel report will therefore not be adopted by the DSB today.

The EU intervened as third party in this case and will intervene before the AB once the proceedings can resume. We therefore reserve our position for the purposes of these appellate proceedings.

This being said, we would like to offer some brief remarks on the substance of the report.

The EU would like to recall, as expressed in its written submission, that it shares the concerns expressed by the US regarding the protection of intellectual property rights and discriminatory conditions applying to foreign licensors of intellectual property in China.

However, we do welcome the general approach of the panel to the exception in Article XX(a) of the GATT.

In our view, much as the text of Article XX itself, the panel’s approach strikes the right balance between the Members’ legitimate right to protect public morals and the need to ensure that exceptions are not used to circumvent the Members’ obligations under the GATT.


Second intervention

The EU’s appeal to the Appellate Body in DS494 must not be confused with “blocking the dispute resolution” or appealing “into the void”.

The EU attaches great importance to maintaining a functioning two-tier dispute settlement process. This is why we have actively supported all efforts to find a solution to the impasse over the Appellate Body appointments and this is also why the EU, together with other Members, has put in place the MPIA.

However, if the other party is not willing to agree on such contingency measures while the impasse continues, the EU may have no choice but to appeal before the Appellate Body. Whether or not such appeal would be processed is in the hands of the other party.

In the DS494 dispute, the EU offered to Russia to agree on a means of having the appeal heard through appeal arbitration based on Article 25 of the DSU and that offer still stands.

 

AGENDA POINT 6: UNITED STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT (SECOND COMPLAINT)

A.    RECOURSE TO ARTICLE 7.9 OF THE SCM AGREEMENT AND ARTICLE 22.7 OF THE DSU BY THE EUROPEAN UNION (WT/DS353/35)


The European Union takes note of the award of the Arbitration Panel of 13 October 2020 for an amount of USD 3.993 Billion annually,  together with the confirmation by the Appellate Body, adopted by the Dispute Settlement Body on 11th April 2019, in the context of this case, that, with respect to the ‘Foreign Sales Corporation and Extraterritorial Income Exclusion’, relevant outstanding rulings and recommendations of the DSB and the authorisation based on them  remain operative.

This marks the end of some sixteen years of litigation, in which the United States has complained about EU subsidies to Airbus, whilst the EU has complained about US subsidies to Boeing, including, notably, various Washington State tax exemptions, the FSC/ETI tax exemption, which was found in earlier phases of this dispute to be a prohibited subsidy, NASA and DoD research and development subsidies and various other measures. And here we are now, with rights to countermeasures in the same order of magnitude.

Accordingly, the European Union requests to be authorised to take countermeasures towards the United States under Article 7.9 of the SCM Agreement and Article 22.7 of the DSU in a manner consistent with the award decision.

But we recognise that the world, and the situation in this sector, is now different than it was 16 years ago. And this we see as an opportunity that should lead us to leave the path of litigation, and to seek a sustainable negotiated solution of this matter.

The European Union reiterates its position that it is not in the interests of anyone that the European Union and the United States now proceed to mutually imposed retaliation.

Instead of progressively stepping-up countermeasures, we should step them down. The European Union continues to stand ready to discuss such an approach with the US, even at this late hour. But if the US remains out of compliance, and does not suspend their countermeasures, we have no choice but to exercise our rights.

 

AGENDA POINT 7: THAILAND – CUSTOMS AND FISCAL MEASURES ON CIGARETTES FROM THE PHILIPPINES

A.    STATEMENT BY THE CHAIRMAN ON CONSULTATIONS WITH THAILAND AND THE PHILIPPINES WITH REGARD TO THE RECOURSE TO ARTICLE 22.2 OF THE DSU (WT/DS371/32)

B.    STATEMENT BY THE PHILIPPINES

C.    STATEMENT BY THAILAND


In these extraordinary circumstances of the paralysis of the Appellate Body, the EU calls on the parties concerned to seek an agreed solution that would preserve the above rights for both parties in a balanced manner. The EU would like to point out that the parties could decide to submit the suspended appeal for completion under an appeal arbitration procedure pursuant to Article 25 of the DSU, such as the MPIA. Such an appeal arbitration procedure could, for all practical purposes, replicate all substantive and procedural aspects of Appellate Review.

The EU trusts that the DSB Chair can assist the parties in reaching such a solution.

The European Union disagrees with the assumption that the sequencing agreement concluded between the Philippines and Thailand precludes the Philippines to request the suspension of concessions in this case. The EU wishes to refer to its previous statements on this matter.


AGENDA POINT 10: APPELLATE BODY APPOINTMENTS


The European Union refers to its statements on this issue in previous meetings, starting in February 2017, and to its statement in the General Council meetings, including on 9 December 2019.

Since 11 December 2019, the WTO no longer guarantees access to a binding, two-tier, independent and impartial resolution of trade disputes. This is in clear breach of the WTO Agreements.

As we have said so many times, WTO Members have a shared responsibility to resolve this issue as soon as possible, and to fill the outstanding vacancies as required by Article 17.2 of the DSU.

We thank all Members that have co-sponsored the proposal to launch the appointment processes. We invite all other Members to endorse this proposal.

 


[1]             Meeting of 15 September 2020: Soybean SYHT0H2, Maize MON 87427 x MON 89034 x MIR162 x NK603 (stack + 10 possible sub-combinations = 11 GMOs), Maize MON 87427 x MON 87460 x MON 89034 x MIR162 x NK603 (stack + 14 possible sub-combinations = 15 GMOs. Meeting of 7 October 2020: 2 new authorisations (soybean MON 87751 x MON 87701 x MON 87708 x MON 89788, only stack approval, no sub-combinations, and maize MON 87427 x MON 89034 x MIR162 x MON 87411, approval of stack and 6 sub-combinations) and 3 renewals (maize MIR604, maize MON 88017, maize MON 89034).

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