WTO Cloves Decision Adopted in DSB Meeting; U.S. Offshore Gambling, Zeroing Disputes Discussed

Additionally, Antigua and Barbuda complained that the U.S. is not in compliance with panel and Appellate Body reports in US - Measures Affecting the Cross Border Supply of Gambling and Betting Services (DS285), and Brazil said it acknowledged U.S. efforts to eliminate zeroing in administrative reviews, but it remained concerned that the U.S. did not address all of the findings in US — Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice from Brazil (DS 382).

U.S. Says Appellate Body Improperly Acted as Regulator in Indonesia Clove Cigarettes Case

With regard to US -- Measures Affecting the Production and Sale of Clove Cigarettes, Indonesia said it welcomed the adoption of the reports (WT/DS406/AB/R and WT/DS406/R) and looked forward to working with the U.S. to implement the recommendations.

The U.S. said it welcomed the panel finding that its measure was consistent with Article 2.2 of the Technical Barriers to Trade (TBT) Agreement. However, in light of the finding which acknowledged that the measure met a legitimate public health objective, the U.S. said it found it difficult to understand the Appellate Body’s conclusion that the measure resulted in a breach of Article 2.1 of the TBT Agreement.

According to the U.S., several aspects of the Appellate Body’s findings and analysis on Article 2.1 were problematic, especially the findings and analysis related to the regulatory distinction between clove and menthol cigarettes. While the Appellate Body had recognized that the panel failed to explain its reasons for rejecting the U.S. regulatory approach, instead of overturning the panel’s findings, the Appellate Body engaged in its own analysis. The U.S. said that by engaging in its own analysis, the Appellate Body reached conclusions that were not based on the panel’s findings or undisputed facts. According to the U.S., the Appellate Body appeared to have placed itself in the position of the regulator and the U.S. believed the result of this dispute should be of serious concern to any member regulating for the benefit of public health. The U.S. was also disappointed with the panel and Appellate Body’s findings that the challenged measure’s three-month interval between publication and entry into force was not reasonable and thus inconsistent with Article 2.12 of the TBT Agreement.

Antigua and Barbuda Says U.S. Not in Compliance in US -- Gambling and Betting Services

In a prepared statement read by Domenica, Antigua and Barbuda said the U.S. was not in compliance with the ruling of the panel, the Appellate Body and the Dispute Settlement Understanding (DSU) Article 21.5 compliance panel pertaining to US — Measures Affecting the Cross Border Supply of Gambling and Betting Services (DS285), initiated in 2004.

In Antigua and Barbuda’s view, the U.S. continued to criminally prosecute Antiguan-based remote gaming service providers for providing services to consumers in the U.S. Antigua and Barbuda said that despite the effort of Antigua and Barbuda to negotiate a settlement with the U.S., the U.S. never presented a plan nor worked towards a compromise.

Antigua and Barbuda informed the DSB that it had formally notified the U.S. of its desire to seek recourse to the Director General in finding a mediated solution to this dispute. Antigua and Barbuda requested that this matter remain under the DSB’s surveillance and that the U.S. should provide monthly status reports pursuant to Article 21.6 of the DSU.

St Lucia, speaking on behalf of the Organization of Eastern Caribbean States (OECS) strongly supported Antigua and Barbuda’s statement and underscored that all members must respect their commitments.

U.S. Says Antigua and Barbuda Only Objector to U.S. Modification Excluding Gambling from Commitments

In response to Antigua and Barbuda’s complaints, the U.S. said that it accepted the results of the dispute settlement process and was responding to the panel and Appellate Body findings by invoking the established, multilateral procedures for modification of a member’s General Agreement on Trade in Services (GATS) schedule of concessions. In May 2007, the U.S. initiated the modification procedure, provided for under GATS Article XXI (Modification of Schedules), so as to reflect the original U.S. intention to exclude gambling from the scope of U.S. commitments. The U.S. entered into discussions with those members notifying that their interests could be affected by the modification. The U.S. offered compensatory adjustments under which it would replace the gambling-related commitment with other commitments of equal or greater value.

According to the U.S., the discussions were successful with the sole exception of Antigua and Barbuda, who maintained an objection to the modification in the U.S. schedule. The U.S. said it had met repeatedly with Antigua and Barbuda and had offered real and substantial benefits, based on specific requests made by Antigua and Barbuda. The U.S. believed an agreement was within grasp.

With regard to Antigua and Barbuda’s suggestion that the matter be referred to mediation or good office, the U.S. said it would consider this. However, the U.S. further emphasis that, in light of the fact that the U.S. and Antigua and Barbuda had previously come close to a resolution, a serious effort to re-engage in negotiations would be more productive than referring the matter to a third party. The U.S. concluded by saying the process under GATS Article XXI was the proper forum for further discussion of this matter.

Brazil Still Concerned About Zeroing in AD Reviews; Says U.S. Should Recalculate AD Assessments

The World Trade Organization reports that, as required by DSU rules, the U.S. had already circulated on 12 April 2012 a written status report (WT/DS382/10/ADD.4) on its implementation of the findings in Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice from Brazil (DS 382). At the meeting, the U.S. informed the DSB of additional developments since then.

The U.S. said the International Trade Administration final rule published on February 14, 2012, applied to all products from all members, including the products of Brazil covered in this dispute. The U.S. also said that in March 2012, the U.S. International Trade Commission (ITC) made a determination to revoke the antidumping duty order in its sunset review of the order on orange juice from Brazil. On April 13, 2012, the ITC published its formal determination in the sunset review. In accordance with that determination, on April 20 the ITA issued a notice revoking the antidumping duty order on the products covered in this dispute. The revocation is effective as of March 9, 2011. As a result, imports of orange juice from Brazil entered on or after March 9, 2011 were not subject to antidumping duties, and all antidumping duty cash deposits on entries on or after that date would be refunded.

Brazil said it acknowledged the U.S. efforts to abandon “zeroing” in future reviews, but it remained concerned that the U.S. final rule does not address all the findings in this dispute. Brazil said the new rule did not encompass the recalculation without “zeroing” of assessment rates applying to past entries that remain unliquidated at the end of the reasonable period of time. According to Brazil, in order to fully comply, the U.S. had to not only abandon the use of “zeroing” in the future, but also stop collecting anti-dumping duties that were calculated with the use of that illegal methodology. Consequently, Brazil had concluded a sequencing agreement (WT/DS382/11) with the U.S. to preserve its rights concerning future legal steps in this dispute.

Brazil said it would closely monitor the implementation of the final rule in the next months, and would consult with the U.S. before the end of 2012, with a view to achieving a solution to this dispute.