DS610 China — Measures Concerning Trade in Goods and Services
The European Union submitted a first request for the establishment of a WTO dispute panel to examine its complaint regarding measures attributable to China restricting the trade in goods and services to or from Lithuania or linked to Lithuania.
Since at least December 2021, China has applied discriminatory and coercive measures against exports to or from Lithuania and against exports of EU products containing Lithuanian content, the EU said. These include the rejection of Lithuania imports by Chinese customs authorities, import restrictions affecting multinational companies that use input from Lithuania, and a cut on Chinese exports to Lithuania. China also formalised complete import bans on alcohol, beef, dairy, logs and peat shipped from Lithuania, using phytosanitary arguments for doing so; when asked for explanations, China failed to prove that these bans were justified, the EU said. Chinese customs statistics show that trade from Lithuania to China dropped 80% from January to October 2022 as compared with the previous year, the EU noted.
China’s measures restricting trade from Lithuania not only impact Lithuania but also affect intra-EU trade and intra-EU supply chains, and impact the functioning of the EU internal market. Consultations were held with China on 14-15 March 2022 with a view to reaching a mutually satisfactory settlement of the matter, the EU said, but unfortunately they failed to settle the dispute, prompting the EU to make its request for a panel.
China said it regretted the EU decision to request a panel and was not in a position to support such a request. China attaches great importance to WTO rules and its relevant commitments and carries out foreign trade with the EU and other WTO members in a manner that is transparent and compatible with WTO rules. China held consultations with the EU in good faith and continued to engage with the EU after the consultations with a view to exploring the possibility of resolving the dispute in an amicable way. China said it believes it is premature to establish a panel in this dispute.
The DSB took note of the statements and agreed to revert to the matter should a requesting member wish to do so.
DS611 China — Enforcement of Intellectual Property Rights
The European Union submitted a first request for a dispute panel to examine its claims regarding China’s enforcement of intellectual property rights. The EU said that Chinese measures unduly restrict the possibility to enforce intellectual property rights in China and are inconsistent with China’s obligation under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
The EU said other WTO members have granted patents in line with the TRIPS Agreement, for example on 3G, 4G and 5G mobile communication technologies. However, Chinese courts have prohibited the owners of those patents from going to the courts of those WTO members that granted the patents to enforce their rights in line with the TRIPS Agreement.
The EU said it raised this issue of China’s measures a number of times bilaterally as well as in the WTO TRIPS Council and during China’s trade policy review at the WTO, unfortunately without resolving the problem. Consultations with China took place on 6, 7 and 12 April 2020, and while useful in clarifying a certain number of points, they failed to solve the problem. The EU urged China to bring its measures in line with its WTO obligations.
China said it regretted and was puzzled by the EU move and was not in a position to support the panel request. China attaches great importance to the protection of intellectual property rights and has maintained a sound environment for innovation through various efforts, including effective intellectual property protection. With regard to the issue at dispute, China said that it is neither the creator nor the major user of the anti-suit injunction and that the domestic courts of many WTO members, particularly in the EU, have issued a considerable number of injunctions in standard essential patents-related litigations.
China said it is strongly dissatisfied that the EU has brought the decisions of Chinese courts before the WTO dispute settlement system and that this not helpful in resolving the dispute in a positive manner. China said it has fully engaged with the EU in good faith but that regrettably, the EU has chosen to request the establishment of a panel rather than continuing engagement with China bilaterally. Given the overall circumstance, China believes it is premature to establish a panel but remains open to further engagement with the EU.
The DSB took note of the statements and agreed to revert to the matter should a requesting member wish to do so.
DS546 United States – Safeguard Measure on Imports of Large Residential Washers
For the fourth time, WTO members agreed to give the Republic of Korea and the United States further time to discuss a possible settlement in the dispute initiated by Korea regarding a US safeguard measure on large residential washers.
Korea and the United States jointly asked the DSB to agree that, no later than 27 February 2023, the DSB will adopt the panel’s findings in the dispute “United States — Safeguard Measure on Imports of Large Residential Washers” (DS546) unless (i) the DSB decides by consensus not to do so or (ii) either party to the dispute notifies the DSB of its decision to appeal the ruling.
Korea said it is currently working with the United States to effectively resolve issues pertaining to this dispute and expects further progress to be made by extending the date for adoption of the panel report. The United States said the proposed decision, if adopted, would facilitate the resolution of the dispute.
Statement by the European Union regarding the panel report in the dispute “Indonesia – Measures relating to raw materials” (DS592)
The European Union said it welcomed the panel’s final report in the DS592 dispute. It noted the panel’s finding that Indonesia’s export ban and domestic processing requirements on nickel ore are inconsistent with the WTO’s ban on export prohibition in Article XI:1 of the General Agreement on Tariffs and Trade (GATT) 1994, are not covered by the exemption in Article XI:2(a) of the GATT because they do not constitute a prohibition or restriction temporarily applied to prevent or relieve critical shortages of products essential to Indonesia, and are not justified by the exception in Article XX(d) of the GATT because they are not necessary to secure compliance with relevant laws and regulations
The EU said that while it recognized Indonesia’s right to file an appeal, and that Indonesia is not responsible for the absence of a functioning Appellate Body, it deeply regrets that Indonesia has not availed itself of the opportunity – offered repeatedly by the EU – to have the appeal adjudicated through appeal arbitration. A working alternative to the non-functioning Appellate Body exists and serves precisely to preserve the rights of both parties in a dispute, particularly the right to have the dispute resolved through adjudication and have the panel report reviewed upon appeal, the EU said.
This case demonstrates once again the grave consequence of the blockage of the Appellate Body appointments; without a fully functioning dispute settlement system, members will see the rules-based system eroding, and the temptation to use the blockage of the system to maintain WTO inconsistent and protectionist measures may sometimes be too strong to resist, the EU said.
Indonesia said it believes its policy is WTO-compliant and that it provided the panel with compelling facts and evidence throughout the proceedings to demonstrate the factual conditions of the critical shortage of nickel ore in Indonesia, as well as the contribution of nickel ore to the national economy. Indonesia believes the panel committed several legal errors and that it was well within its legitimate rights to request the Appellate Body to reverse the panel’s findings. The Appellate Body remains the appropriate forum to address this matter, Indonesia said.
Canada, Russia and China took the floor to comment on the defunct Appellate Body’s impact on the dispute settlement system and the availability of alternative appeals arrangements.
Appellate Body appointments
Mexico, speaking on behalf of 127 members, introduced for the 61st time the group’s proposal to start the selection processes for filling vacancies on the Appellate Body. The extensive number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body which is seriously affecting the overall WTO dispute settlement system against the best interest of members, Mexico said for the group.
More than 20 delegations took the floor, many reiterating statements made in past meetings that stressed the importance of the WTO’s two-tiered dispute settlement system to the stability and predictability of the multilateral trading system and the need to resolve the deadlock. Many delegations also noted the commitment made by ministers at the WTO’s 12th Ministerial Conference to engage in discussions aimed at securing a fully functioning dispute settlement system by 2024 and pledged their support for securing an outcome within the prescribed time period.
The United States said members are aware of the longstanding US concerns with WTO dispute settlement. Those concerns remain unaddressed, and the US does not support the proposed decision from the 127 members. Fundamental reform is needed to ensure a well-functioning WTO dispute settlement system, and the first step towards reform is to better understand the interests of all members in WTO dispute settlement. Properly followed, an approach centred on the interests of members can facilitate greater mutual understanding without resorting to the same positions that have slowed the reform discussion for many years. The US said it looks forward to engaging further with those members that are also seeking an improved and reformed dispute settlement system.
For the 127 members, Mexico again came back to say the fact a member may have concerns about certain aspects of the functioning of the Appellate Body cannot serve as pretext to impair and disrupt the work of the DSB and dispute settlement in general. It said there was no legal justification for the current blocking of the selection processes, which is causing concrete nullification and impairment of rights for many members.
The Chair of the DSB, Ambassador Athaliah Lesiba Molokomme (Botswana), recalled the commitment by WTO members at MC12 to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all members by 2024. She said it was her understanding that informal discussions in this regard are currently ongoing. The Chair also recalled that on 10 November, an informal meeting on WTO reform was held which covered the dispute settlement system, and she hoped that going forward, members will be able to find a solution to this matter.
Under this item, 11 members took the floor to condemn Russia’s invasion of Ukraine. Ukraine welcomed the support expressed by the 11 members. The Russian delegate responded by saying that the WTO was not the proper venue for a discussion of this nature.
Surveillance of implementation
The United States presented status reports with regard to DS184, “US — Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan”, DS160, “United States — Section 110(5) of US Copyright Act”, DS464, “United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea”, and DS471, “United States — Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China.”
The European Union presented a status report with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products.”
Indonesia presented its status reports in DS477 and DS478, “Indonesia — Importation of Horticultural Products, Animals and Animal Products.”
Next meetings
The next regular DSB meeting will take place on 27 January 2023.
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