week 3 Flashcards

Question

What is the role of the Appellate Body of WTO in the dispute settlement process?

Answer 1

Either side could appeal a panel’s ruling The Appellate Body of the World Trade Organization (WTO) is a standing group of seven experts who handle appeals from dispute reports. Each appeal is reviewed by three members from this group. These members are respected figures in law and international trade and serve four-year terms. The Appellate Body can uphold, modify, or reverse the legal findings from the initial panel's report. Appeals can only focus on legal issues and interpretations, not facts or evidence. Based in Geneva, the WTO Appellate Body is often seen as the 'Supreme Court' of World Trade.

Answer 2

The WTO Appellate Body is facing its biggest crisis in 23 years because the US has been blocking the appointment and reappointment of its members. By 2019, it could no longer function because the mandates of two of its three remaining members (out of seven) had expired. This crisis could have serious effects on the global trading system.

Answer 3

The US has been blocking appointments to the WTO Appellate Body for several reasons. Appellate bodies deal with sensitive issues that are not always clearly addressed in existing WTO law. There have been accusations of judicial overreach, especially on matters like the environment. Additionally, President Biden continued Trump’s freeze on new appointments. US officials have often avoided directly addressing the issue, instead emphasizing the broader need for WTO reform.

Answer 4

The Multiparty Interim Appeal Arbitration (MPIA) was created in March 2020 by the EU and 15 other WTO members as a temporary solution while the WTO Appellate Body is not working. It follows WTO appeal rules and allows members to voluntarily settle disputes. This keeps the dispute resolution system running despite the Appellate Body crisis.

Answer 5

Once a ruling is made by the panel or Appellate Body, the responding member doesn't go directly to jail. Instead, they must quickly bring their measures into line with WTO law and offer compensation for the breach. If no satisfactory compensation is agreed within 20 days, the complaining country can ask the Dispute Settlement Body (DSB) for permission to retaliate by suspending concessions or other obligations. This retaliation is temporary and aims to encourage compliance, and it should, in principle, be in the same sector as the dispute.

Answer 6

In the European Communities—Measures concerning Meat and Meat Products (Hormones) case, the WTO Appellate Body had to balance free trade with national sovereignty for health protection. This case is the most important one decided under the SPS Agreement, which regulates how WTO members can apply food safety and animal and plant health measures

Answer 7

The European Communities banned the use of certain hormones in farm animals and the sale of meat containing these hormones. They also prohibited the import of meat with artificial beef growth hormones, which were approved in the United States. WTO rules allow such bans, but only if there is valid scientific evidence showing it is necessary for health and safety. Canada and the United States challenged this ban and took the European Union to the WTO Dispute Settlement Body, filing complaints against the ban.

Answer 8

The European Communities argued that its import ban on hormone-treated meat was based on the precautionary principle and was in line with the SPS Agreement, which allows restrictions on health and safety grounds if supported by scientific analysis. The core of the dispute was that risk analysis cannot provide absolute certainty about health risks. While the US and Canada claimed hormone-treated beef was safe, the EU argued it was not. In 1997, the WTO Panel rejected the EU’s argument, ruling that the EU measure did not comply with the SPS Agreement.

Answer 9

The EU appealed the 1997 WTO Panel ruling, and in 1998, the WTO Appellate Body reversed most of the findings. The Appellate Body upheld the ruling that the EU's import ban did not meet the requirement of being based on a relevant risk assessment for human health. It stated that restrictive measures could be allowed with scientific certainty, but the precautionary principle could not override the SPS Agreement. In response, the EU ordered a new risk assessment on hormone residues in beef and updated its regulations, adopting Directive 2003/74/EC, to comply with WTO obligations.

Answer 10

In 1994, the WTO addressed concerns about the impact of shrimp imports on turtles. The US–Shrimp case was the first dispute under the WTO that involved balancing international trade regulations with environmental protection. The case highlighted the complex relationship between these two areas.

Answer 11

In 1987, the United States passed regulations requiring shrimp trawl vessels to use turtle excluder devices (TEDs) to prevent sea turtles from being caught during shrimp fishing. This was because certain sea turtle species were endangered. In 1989, the regulations were expanded, making it a requirement for all shrimp, regardless of origin, to be harvested in a way that did not harm sea turtles. Foreign shrimp could only be imported into the US if it met the same standards for protecting sea turtles. Countries had to implement regulations similar to those of the US to be eligible to export shrimp to the US.

Answer 12

India, Malaysia, Pakistan, and Thailand filed a formal dispute at the WTO after being denied import certificates for shrimp that did not meet the US requirements. They argued that the US violated Article XI of the GATT, which prohibits quantitative restrictions on imports. The US defended its regulations, stating they were applied non-discriminatorily and aimed at protecting endangered sea turtles. The US also argued that even if the regulations violated Article XI, they were justified under Article XX of the GATT, which allows exceptions for certain health and environmental measures. Seven WTO members joined the case as third parties, and both the Panel and Appellate Body received various amicus curiae briefs.

Answer 13

In May 1998, the WTO panel ruled that the US import ban on shrimp was inconsistent with Article XI of the GATT and could not be justified under Article XX of the GATT. In October 1998, the Appellate Body confirmed the panel’s overall finding but changed its reasoning. It determined that the US measure, although potentially justified under Article XX (g) for environmental protection, failed to meet the requirements of the chapeau of Article XX, which ensures fairness and due process. Therefore, the US measure was not justified under Article XX GATT.

Answer 14

The US–Shrimp case showed that unilateral environmental measures by a WTO member are not automatically against GATT rules. Countries can require others to follow certain policies if the measure is justified under Article XX of the GATT. However, the Appellate Body stated that these measures must be fair, consider other countries’ conditions, and seek a multilateral solution before acting unilaterally. The US failed to meet these requirements but later adjusted its rules and worked to reach a global agreement for sea turtle protection. This case cleared up the uncertainty about the legality of unilateral trade measures and their extraterritorial impact, which had been unclear from earlier rulings on the US tuna ban.

Answer 15

The United States raised concerns with China in 2009 about its restrictions on exporting several raw materials, including rare earths, tungsten, and molybdenum. These materials are essential for products like wind turbines, flat screens, and industrial batteries. China controls most of the global supply of rare earths and tungsten, making these restrictions significant for international markets. The export limits included quotas, duties, and other requirements that affected global trade.

Answer 16

China's export restrictions on raw materials significantly affect global trade, raising prices and limiting availability for industries worldwide. These restrictions give a competitive edge to Chinese industries by allowing them to purchase raw materials at lower prices. Non-Chinese buyers often pay double the price for the same materials. For industries like wind turbine manufacturing and LCD displays, materials like rare earths can account for over 50% of production costs, making the price difference a major competitive disadvantage for companies outside of China.

Answer 17

The United States identified 32 measures through which China allegedly imposes export restrictions and argued these violated Articles VIII, X, and XI of the GATT 1994. The US also noted additional unpublished restrictions. On 2 July 2009, the European Communities requested to join the consultations, followed by Canada, Mexico, and Turkey on 6 July 2009. On 4 November 2009, the US formally requested the establishment of a WTO panel, but on 19 November 2009, the Dispute Settlement Body (DSB) deferred the panel's creation.

Answer 18

The dispute is sensitive for three main reasons: Economic and strategic importance: The materials, especially rare earths, are crucial for high-tech industries, military applications, and green technologies. Environmental balance: There's a need to balance mining and trade of these materials while also protecting the environment and ensuring sustainable development, as outlined in the WTO's founding agreement. WTO obligations: There is difficulty in defining the relationship between the WTO’s rules and the obligation to eliminate export duties, creating a complex legal issue.

Answer 19

The Panel Report found that China violated various WTO provisions through its export restrictions (duties and quotas). The Appellate Body confirmed the Panel's main findings, agreeing that China’s export restrictions breached its WTO commitments and could not be justified under WTO law. The Appellate Body made some modifications, but these did not change the conclusion that China’s measures violated WTO rules.

Answer 20

A secure supply of critical raw materials (CRMs) is essential for the stability of entire economic value chains. These materials have a wide range of commercial and military applications, extending beyond just renewable energies. They are crucial in products like mobile phones, computer hard drives, electric vehicle batteries, and also precision-guided missiles and high-tech ammunition.

Answer 21

China is the world’s largest producer of lithium batteries for electric mobility, and it commands a 60% share of the global electric vehicle (EV) market. By strategically dominating the mining, metallurgy, and material science sectors – often referred to as the “three Ms” – China has gained control over much of the world’s clean-tech supply chains.

Answer 22

In contrast to China, the European Union and the United States are heavily dependent on imports of CRMs from abroad, relying on international commodity markets and access to foreign mines. Currently, China supplies 98% of the EU’s rare earth elements (REEs) and around 60% of its CRMs. This makes both regions vulnerable, especially during times of geopolitical tension, as China can leverage its natural resources in such situations.

Answer 23

In 2017, a World Bank study explicitly warned that the global energy transition and climate protection policies would demand significantly greater use of CRMs than previously forecasted.

Answer 24

Although there are generally no severe geological shortages of CRMs, challenges arise due to instability in producing countries, restrictive environmental regulations, poor governance, and resource nationalism. These factors are expected to further intensify global demand and access to a stable supply of CRMs in the coming decades.

Answer 25

Mining projects and plants in the U.S. and the EU face rocketing investment needs, budget overruns, delays, missed production targets, and insufficient commercial profitability. These projects also compete against low, subsidized Chinese prices, leading to higher costs for goods made from CRMs sourced in North America or Europe. For example, rare earth magnets in the U.S. are about 50 percent more expensive than their Chinese counterparts.

Answer 26

Even new reprocessing initiatives by American or European companies depend on Chinese technology, to which Beijing can restrict access. For example, last year, China banned exports of rare earth processing technology, limiting the ability of these initiatives to function without Chinese resources.

Answer 27

The World Trade Organization's decision on Australia's plain packaging tobacco measures is of great interest to public health experts who view comprehensive measures that include regulation of tobacco packaging as an effective way to meet important public health objectives, such as reducing smoking, especially by teens.

Answer 28

Australia's tobacco plain packaging legislation came into full effect on 1 December 2012. The legislation prohibits logos, brand imagery, colours, and promotional text other than brand and product names in a standard colour, position, font style, and size appearing on tobacco packaging. Tobacco plain packaging forms part of a comprehensive range of tobacco control measures to reduce the rate of smoking in Australia and is an investment in the long-term health of Australians.

Answer 29

The Plain Packaging Measures directed that brand images, display logos, and promotional text be removed from cigarette packages, doing away with the use of attractive colors, eye-catching designs, and engaging characters on tobacco packages that public health experts argued made smoking more appealing and attracted new customers, especially teens. Australia applied plain packaging in conjunction with graphic health warnings (GHWs). The Plain Packaging Measures formed part of Australia’s comprehensive tobacco control scheme, which included taxation measures and educational campaigns.

Answer 30

Consultations with Australia in relation to Australia's tobacco plain packaging measure were requested by Ukraine (on 13 March 2012), Honduras (on 4 April 2012), Dominican Republic (on 18 July 2012), Cuba (on 3 May 2013), and Indonesia (on 20 September 2013). Consultations were held with Ukraine on 12 April 2012, Honduras on 1 May 2012, Dominican Republic on 27 September 2012, Cuba on 13 June 2013, and Indonesia on 20 October 2013.

Answer 31

The WTO dispute settlement process regarding Australia's tobacco plain packaging measure began with five countries—Ukraine, Honduras, Indonesia, the Dominican Republic, and Cuba—requesting consultations and dispute panels. A total of 41 WTO Members expressed interest in joining the disputes as third parties. The WTO Director-General appointed the same panelists for all five disputes, and the panel proceedings were harmonized to be heard together. In May 2015, Ukraine requested to suspend its dispute proceedings in search of a mutually agreed solution. However, as Ukraine took no further action for over 12 months, the authority for its proceedings lapsed.

Answer 32

The Panel rejected all of the complainants' claims that Australia's measure is inconsistent with WTO rules. The Panel confirmed Australia's tobacco plain packaging measure is making a meaningful contribution to improving public health. Honduras (on 19 July 2018) and the Dominican Republic (on 23 August 2018) appealed certain aspects of the Panel's findings to the Appellate Body. Neither Indonesia nor Cuba filed appeals, and the reports in respect of their disputes were adopted by the WTO Dispute Settlement Body on 27 August 2018. On 2 October 2018, Australia filed its submission (and executive summary) responding to the appeal claims brought by Honduras and the Dominican Republic.

Answer 33

Two challenges to Australia's tobacco plain packaging law were heard by the High Court in April 2012. On 15 August 2012, the Court ruled that the law was not against the Constitution. In October 2012, the Court explained that, by a 6-1 majority, there was no acquisition of property that would require compensation under the Constitution.

week 3 Flashcards

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