End term Assignment (DS-58)

For the partial fulfillment of the course

International Trade and Investment

Date: 24th August, 2007

Submitted to: Submitted by:

Prof.A. Sahay Dheeraj K Pandey
 Assignment on WTO/DS-58

Table of Contents

United states prohibition on Shrimp export from India ,Malaysia, Pakistan and Thailand ……….2

Introduction………………………………………………………………………………………… … .9
US logic for the imposition 2
Articles supporting India’s claim 2
Articles supporting US’s defense 3
Implementation Panels and Appellate Body’s opinion on Art XX (g) 3
Legal and political issues (WTO rules vs. TREMS) 4
Procedural issues 4
Questions on the Approach taken by Appellate Body 5
Inference from the Article XX, the chapeau 6
Conclusion: Multilateralism and Unilateralism 7
Political context of the decision 7
Economic and Environmental basis 7

Australia’s import prohibition on untreated fresh, chilled or frozen salmon …………………………9

US's zeroing in on Ecuador's shrimp products……………………………………………………. …14.

References…………………………………………………………………………………………… ….16

List of Tables

Table1: Synopsis of DS-58…………………………………………………………………………………..…2

Table2: Synopsis of DS-18……………………………………………………………………….…………….9

Table3: Synopsis of DS-335………………………………………………………………………………… 16

ITI End Term Assignment Pg 1 D.K.Pandey

 Assignment on WTO/DS-58

DS- 58

UNITED STATES IMPORT PROHIBITION ON CERTAIN SHRIMP AND SHRIMP

PRODUCTS

Background:

Shrimp comes under Brick 10000614 :( Seafood Variety Packs) In May 1996, the United States effectively
prohibited imports of shrimp and shrimp products from all countries that do not require commercial shrimp
trawlers to use turtle-excluder devices (TEDs) to permit endangered species of sea turtles to escape from
trawling nets to avoid drowning. This case was brought forth for discussion by India, Malaysia and others who
were affected by this imposition.

Synopsis of DS-58:

Parties Articles Time line of dispute Logic of the Decision

party Panel Appellate
body
Respondents: Article XX, Establishment 25 Feb.1997 Unfair
US XI of Panel advantage to
other countries
Complainants: Circulation of 15 May 1998 Discrimination √ √
India ,Pakistan , Panel Report by prohibition
Thailand, Circulation of 12 Oct. 1998
Malaysia AB Report
Adoption 6 Nov. 1998

US logic for the imposition:

US observed that other countries have an unfair advantage over the domestic producers because of TED –
caught shrimps are more expensive. Therefore, in November, 1989, the US Congress passed a rider to the
Department of Commerce appropriations bill (Section 609 of Public Law 101-162), with support from alliance
of environmental and industry groups.

Section 609 directed the President to initiate negotiations with other nations for bilateral and multilateral
agreements for the protection of sea turtles and to ban the import of shrimp and shrimp products "which have
been harvested with commercial fishing technology which may affect adversely such species of sea turtles."
Congress provided a three-year time frame for countries to meet this standard before import bans would be
implemented.

Articles supporting India’s claim:

ITI End Term Assignment Pg 2 D.K.Pandey

 Assignment on WTO/DS-58

In January 1997, India, Malaysia, Pakistan and Thailand requested that the WTO Dispute Settlement Body
(DSB) to establish a panel to because they felt that this ban violated the prohibition on quantitative restrictions
as given in Article XI of GATT (1994).

US used the of revising the guidelines (section-609) and setting new criteria for certification of shrimp
exporters. Malaysia claimed that section-609 continued to violate Article XI: 1.And that US can’t impose any
prohibition in the absence of an international agreement allowing it to do so.

Articles supporting US’s defense:

Paragraphs (b) and (g) of GATT Article XX: It tells about the exception under which the import ban is
permitted. The four turtle species whose trade was under the dispute were listed as endangered on the
complaining party’s jurisdiction under the Convention on International Trade in Endangered Species of Wild
Fauna and Flora.

Article XX (g): It is about exhaustible natural resources. It was found that sea turtles, recognized as
endangered by the Convention on the International trade in endangered Species (CITES), were ‘exhaustible’
within the meaning of Article XX (g). Appellate Body could see a clear 'means and ends' relationship between
the import ban, the requirement of the use of TEDs, and the conservation of sea turtles.

The TEDs regulations that the US had applied to its own shrimping industry convinced the Appellate Body
that the measure was 'made effective in conjunction with' domestic restrictions and that it was 'in principle an
even handed measure'.

Finally, while purporting to avoid the vexed question of the jurisdictional scope of the Article XX (g)
exception, (whether it can be used to justify measures aimed at protecting resources outside the territory of a
Member), the Appellate Body noted that there was a 'sufficient nexus between the migratory and endangered'
sea turtle populations and the United States for the purposes of the article.

Implementation Panels and Appellate Body’s opinion on Art XX (g):

Implementation panel examined the compatibility of the implementing measure with Article XX(g). It
concluded that the protection of migratory species was best achieved through international cooperation.
However, it found that whereas the Appellate Body had instructed the United States to negotiate an
international agreement for the protection of sea turtles with the parties to the dispute, the obligation at issue
was an obligation to negotiate, as opposed to an obligation to conclude an international agreement.

It then found that the United States had indeed made serious “good faith” efforts to negotiate such an
agreement. The implementation panel therefore ruled in favor of the United States, Malaysia appealed against

ITI End Term Assignment Pg 3 D.K.Pandey

 Assignment on WTO/DS-58

the findings of the implementation Panel. It argued that the panel made a mistake in concluding that the
measure no longer constituted a means of “arbitrary or unjustifiable discrimination” under Article XX.

This action of US was against Multilateralism as they imposed the ban without taking other parties into
agreement. The Appellate Body upheld the implementation panel’s finding and rejected Malaysia’s contention
that avoiding “arbitrary and unjustifiable discrimination” under the Article XX required the conclusion of an
international agreement.

Legal and political issues (WTO rules vs. TREMS):

It was a political battle, as the dispute was about the conflict between WTO rules and trade related
environmental measures (TREMs) has generated controversial result under the WTO’s Dispute Settlement
Understanding (DSU).However the issue was about unilateral TREM which was imposed by the US against
imports from developing countries. Environmentalists were in support of TREM’s as they felt that the WTO's
trade rules have consistently overridden environmental concerns. The outcome was an effort to accommodate
both the concerned parties.

The US justified the measure in part as a means of protecting a species recognized as highly endangered by a
multilateral environmental agreement (MEA) to which all disputants were Parties. The dispute thus brought to
a head perceived conflicts between industrialized and developing countries, environmentalists and free traders,
unilateralists and multilaterals, the WTO and MEAs.

The Appellate Body used a progressive and evolutionary approach to interpreting the DSU’s procedural rules
and the GATT 1994’s most controversial substantive paragraphs.

Procedural issues:

1) Rules of Treaty Interpretation:

The Appellate Body (AB) put a special emphasis on understanding the interpretation of the public
international laws as a part of dispute settlement procedure. Especially the Art 31.1 of the Vienna convention
on the law of treaties (VCLOT), as it puts emphasis on understanding the treaty ‘in good faith in accordance
with the ordinary meaning to be given to the terms of the treaty in their context’.

However in this case the appellate body went further and had drawn directly from the jurisprudence of the
International Court of Justice (ICJ), and from relevant multilateral environmental agreements (MEAs) to guide
its interpretation. It cites Article 31.3(c) of the VCLOT which provides that ‘any relevant rules of international
law applicable in the relations between the parties' form part of the appropriate context for the purpose of
treaty interpretation. Thus it is in direct conflict with ‘acting on good faith as mentioned in Art 31.1 of
VCLOT.

ITI End Term Assignment Pg 4 D.K.Pandey

 Assignment on WTO/DS-58

GATT however takes a pure economic approach on the contrary and maintains that environmental treaties
'could not be taken as practice under the General Agreement, and therefore could not affect the interpretation
of it' either as primary or supplementary means of interpretation .So in this case while deciding about the law,
the appellate body took the evolutionary approach to treaty interpretation on the basis that the laws have been
framed 50 years ago and were not contemporary.

Rio declaration:

AB used the principles in it to say that US has discriminated among members in the application of
environmental measure. Ministerial declaration was used as a supplementary measure to interpret the
agreement due to ambiguity in the text of Trips agreement.

But the declaration was not used as a final binding legal argument. In application of Articles 31 and 32 of the
Vienna convention on the law of treaties, the AB regarded the declaration to be a part of supplementary means
of interpretation

Amicus briefs are another area of controversy. Four amicus briefs were submitted in this case The Appellate
Body made a preliminary procedural ruling to all four amicus briefs, while at the same time, seeking
clarification from the US as to the extent to which it was adopting as its own, the legal arguments contained in
the briefs. The US confirmed its agreement with these arguments, but to the extent they ‘concur with the US
arguments contained in its main submission’. And only those briefs were further examined which received
some support.

Thus the treatment of Amicus briefs is quite controversial and DSU vests all powers on the Appellate Body
itself the discretion to determine in which circumstances it will admit and consider such submissions.

Questions on the Approach taken by Appellate Body:

Questions have been raised about the Appellate Body's recognition of the discretion of a panel or of the Body
itself to accept non-requested information (Amicus briefs), over the objections and without the endorsement
of a WTO Member over the scope of the Body's powers. This gives judicial independence and openness of the
dispute-settlement system.

The Body's analysis relies heavily on the finding of a broad discretionary authority and mandate granted to
both panels and the Body by the DSU, to develop their own procedures in a flexible manner.

However those against this approach feel that the Body has overstepped its power, which is limited to’
clarifying the existing provisions’ of the DSU and other covered agreements. By doing so, it have encroached
on the exclusive authority of the General Council and the Ministerial Conference to adopt interpretations of
the WTO agreements.

ITI End Term Assignment Pg 5 D.K.Pandey

 Assignment on WTO/DS-58

They suggest that a deluge of amicus briefs will distract future panels from the arguments submitted by the
member states themselves, and argue that a liberal approach to receiving amicus briefs may give NGOs greater
access to the system than, for example, members who are third party interveners, and who under WTO rules
must demonstrate a substantial interest in a dispute before being heard.

Inference from the Article XX, the chapeau

Article XX, the Chapeau prevents the abuse of the 'limited and conditional’ exceptions under which a measure
has been preliminarily justified under Article XX’s subparagraphs. So with respect to this dispute US was
required to establish that the application of its measures did not constitute any arbitrary discrimination between
countries where the same conditions prevail and that such discrimination should not put a disguised restriction
on trade.

With respect to this case the Panel decided that the application of the US measure was arbitrary and
unjustifiable and Appellate Body was in agreement to this.

The Appellate body’s rejection of the US measure was thus highly qualified as it is not acceptable, in
international trade relations, for one WTO member to use an economic embargo to require other members to
adopt essentially the same comprehensive regulatory program, to achieve a certain policy goal, as that in force
within that Member's territory, without taking into consideration different conditions which may occur in the
territories of those other members.

It was essentially the rigidity of the US regulation and the absence of basic standards of fairness and due
process in the certification procedures that led the Body to conclude that the US measure was both
unjustifiable and arbitrary discrimination.

This was an attempt by US to apply TREMs unilaterally, with the intent to achieve a change in policy or
behavior within another member, and may discriminate against products that are produced by environmentally
harmful process and production methods (PPMs).

Such behavior may override the GATT prohibitions of these categories of measures, and the conditioning
access to a member’s domestic market on whether exporting members comply with, or adopt, a policy or
policies unilaterally prescribed by the importing member and may, to some degree, be a common aspect of
measures falling within the scope of one or another of the exceptions (a) to (j) of Article XX.

GATT 1994 had article XX paragraphs (a) to (j) which gives measures that are recognized as exceptions to
substantive obligations, because the domestic policies embodied in such measures have been recognized as
important and legitimate in character.

ITI End Term Assignment Pg 6 D.K.Pandey

 Assignment on WTO/DS-58

Conclusion: Multilateralism and Unilateralism

One issue is about the effort made in reaching the agreements which may become an essential precondition for
any unilateral TREMs, and by what criteria a future panel or the Appellate Body will assess whether a
respondent has tried hard enough. Example in this case US put forth the argument that it had successfully
concluded an Inter-American Convention for the Protection and Conservation of Sea Turtles and it was
sufficient evidence for it take unilateral and coercive procedures as it did.

Proponents of Multilateral Environmental Agreements may well be concerned if Article XXV becomes the
rule which guides the WTO’s tests on the adequacy of future environmental agreements.

While the Appellate Body seems to open a narrow opportunity for unilateral and coercive trade measures to be
applied for environmental purposes, WTO's intends to retain for itself the jurisdiction to arbitrate the
compatibility of such measures with trade rules.

Political context of the decision:

This was a typical case of national versus international governance. The WTO rules are based on the Uruguay
Round treaty which has many gaps and ambiguities, because it was negotiated with over 120 national
participants, and diplomatic needs to come to closure rather than discussing the difference was the main issue.
So while settling disputes it becomes important to decide whether it is appropriate or feasible to pass the
responsibility of correcting these gaps and problems to dispute settlement bodies and what procedures to
follow to help them take the right decision.

In this case panels and appellate body undertook the task of law making rather than law applying, arguably
more appropriate for a legislature, or negotiations. Yet the WTO rules regarding decision making and
negotiation were quite old and designed by the Uruguay round negotiators to preserve 'sovereignty' for the
nation-states, and have not gone under change thus they impose a number of constraints on the exercise of
power.

Thus the issue becomes a political war because the human institutions established, like WTO, American
constitution etc, have a way of evolving and redefining their context with the changes in time which may
become controversial in interpretation.

Economic and Environmental basis:

The first clause of the preamble to the WTO Agreement calls for the expansion of trade in goods and services,
and recognizes that WTO Agreements should allow for "optimal use of the world’s resources in accordance
with the objective of sustainable development", and should seek "to protect and preserve the environment".

ITI End Term Assignment Pg 7 D.K.Pandey

 Assignment on WTO/DS-58

It holds that economic performance and environmental performance are not necessarily incompatible.
International cooperation is the most effective means to address global and trans-boundary environmental
problems, rather than unilateral measures which may be less environmentally effective and more trade
disruptive.

My views are in line with the views of European Communities who asserts that "while countries have the
sovereign right to design and implement their own environmental policies through the measures they consider
appropriate to protect their domestic environment -- all countries have a responsibility to contribute to the
solution of international environmental problems." Thus, the most effective means to attain the shared
objectives relating to the conservation of global resources is by proceeding through the process of international
co-operation” rather than unilateral decisions.

The Section 609 was applied by US in a totally discriminatory manner. The US ban can be seen as an economic
embargo which requires all other exporting Members, if they wish to exercise their GATT rights, to adopt
essentially the same policy (together with an approved enforcement program) as that applied to, and enforced
on, United States domestic shrimp trawlers.

Initially the provisions of 609(b) (2) (A) and (B) appeared to permit a degree of discretion or flexibility and few
exceptions were allowed in determining the standards for comparability and giving flexibility in their
application. However, later such flexibility was through the practice of the administrators in making
certification determinations. Under the new Guidelines, any exception to the requirement of the use of TED
was made comparable to those of the United States.

It was not acceptable because in international trade relations, it can’t be expected for one WTO Member to use
an economic embargo to require other Members to adopt essentially the same comprehensive regulatory
program, to achieve a certain policy goal, without taking into consideration different conditions which may
occur in the territories of those other Members.

ITI End Term Assignment Pg 8 D.K.Pandey

 Assignment on WTO/DS-58

DS- 18

AUSTRALIA’S IMPORT PROHIBITION ON UNTREATED FRESH, CHILLED OR

FROZEN SALMON

Background:

Australia's prohibition on the importation of untreated fresh, chilled or frozen salmon from Canada under
Quarantine Proclamation No. 86A, dated 19 February 1975.Canada complained that the application of the
import prohibition in question was inconsistent with the obligations of the Government of Australia under
GATT 1994 and the SPS Agreement.

Parties Agreement Time line of dispute Logic of the Decision

cited party Pane Appellate
l body
Respondent: SPS Arts. Establishment 10 April 1997 Measures
Australia 5.1, 5.5 and of Panel affecting
5.6 Circulation of 12 June 1998 importation of
Panel Report salmon
Complainant Circulation of 20 October 1998 √ √
:Canada AB Report
Adoption 6 November 1998

The prohibition:

Australia implemented QP86A on 30 June 1975, which imposed restrictions on the importation of products
derived from salmonids. It primarily had application to the protection of the animal health status of trout
recreational fisheries in Australia from disease introduction and, potentially, for the purposes of protecting the
animal health status of any future commercial salmonid industry which might be developed in Australia

Though the entry of commercial imports of heat-treated salmon product for human consumption together
with non-commercial quantities of other salmon (primarily for scientific purposes) subject to prescribed
conditions was allowed but it was restricted.

Provisions of the agreements under challenge:

(i) Articles XI and XIII of GATT 1994;

(ii) Articles 2 and 5 of the SPS Agreement.
(iii) Rules and Procedures Governing the Settlement of Disputes ("DSU"), pursuant to Article XXIII:
1 of GATT 1994
(iv) Article 11.1 of the Agreement on the Application of SPS Agreement.

ITI End Term Assignment Pg 9 D.K.Pandey

 Assignment on WTO/DS-58

Canada argued, in the first instance, that Australia's measure was an illegal import prohibition under
Article XI: 1 of GATT 1994. Although Australia's measure was a sanitary measure which affected international
trade within the meaning of Article 1.1 of the SPS Agreement, it was not "developed and applied according to
the provisions of the Agreement" (Article 1.1) and was thus inconsistent with the SPS Agreement. Since there
was no presumption that the measure was consistent with the SPS Agreement, Article 2.4 of the SPS
Agreement could not be used to justify Australia's violation of Article XI of GATT 1994.

Australia agreed that the measure was a sanitary measure which affected international trade within the
meaning of Article 1.1 of the SPS Agreement. Thus, Australia observed, the Panel would first have to examine
claims in respect of the SPS Agreement in order to avoid a situation where the Panel first found
inconsistencies with regard to a Party's obligations under GATT 1994 and subsequently found that party to be
in full conformity with its obligations under the SPS Agreement and therefore, within the meaning of
Article 2.4 of the SPS Agreement, in conformity with the relevant provisions of GATT 1994. Australia
indicated that whereas the parties were in agreement that the measure came within the scope of the SPS
Agreement, they did not agree on the identification of the measure at issue.

The SPS Agreement (Burden of proof)

Canada argued that Australia's measure was inconsistent with Articles 2, 3 and 5 of the SPS Agreement.
Canada accepted that it was required to present evidence sufficient to establish a presumption of a prima facie
case that Australia's measure was inconsistent with its obligations under the SPS Agreement. In this regard,
Canada maintained that it had put forward evidence that provided legal arguments showing that Australia's
measure was inconsistent with the above cited provisions. It was Australia's obligation, in turn, to put forward
any alternative scientific evidence to demonstrate the scientific basis for its measure.

Australia agreed that it was up to the complaining party to provide prima facie evidence to raise a presumption
of inconsistency with regard to Australia's measure. However, Australia argued that Canada had not met the
evidentiary and legal burden of proof in regard to all provisions cited by Canada. Hence, Australia argued that
the mere assertion of a claim did not amount to proof as have been the case in findings of earlier cases solved
by DSB.

CLAIMS OF THE PARTIES:

Canada's claims

1) Canada claimed that the Australia's measure of import prohibition was illegal under Article XI: 1 of GATT
1994, and that it found no justification in Article XI: 2 or Article XX or in GATT 1994.

2) Canada’s argument was that Australia's measure fell within the definition of a sanitary measure in accordance
with Article 1 of the SPS Agreement, and Annex A.1 (a) and it had not been developed and applied in
accordance with the SPS Agreement.

ITI End Term Assignment Pg 10 D.K.Pandey

 Assignment on WTO/DS-58

 Further the measure violated Article 3.1 of the SPS Agreement as it was not based on existing
international standards

 There was no proper assessment of the risks to salmonid life or health and accordingly the
prohibition failed to meet the requirements of Article 5.1.

 Article 5.2 of the SPS Agreement advises to measure the risk through scientific evidence and which
was not done by Australia.

 It violated Article 5.5 as the measure has resulted in a disguised restriction to trade as in different
situations it put different levels of protections to be appropriate.

 The measure was in conflict with Article 2.2 of the SPS Agreement because it was maintained
without sufficient scientific evidence.

 The measure arbitrarily or unjustifiably discriminated between Members where similar conditions
prevailed (Australia and Canada) and thus violated Article 2.3.

3) Canada further that the application of the Australian measures nullified or impaired benefits accruing to
Canada under the WTO Agreement pursuant to Article XXIII: 1(a) or (b) of GATT 1994.

Australia's claims

1) Australia claimed that the burden of proof lied on Canada to provide sufficient evidence to raise a
presumption that Australia's measure was inconsistent with the rights and obligations under the cited
Agreements. Australia claimed that Canada had not satisfied its evidentiary and legal burden of proof in
respect of the claims it had made.

2) Australia claimed that the Panel should first examine consistency with the SPS Agreement. Australia
claimed that unless Canada could successfully demonstrate that Australia's measure did not conform to the
provisions of the SPS Agreement, the measure would be presumed to be in accordance with the provisions of
GATT 1994, as Article 2.4 of the SPS Agreement provided that if a measure conformed with the provisions of
the SPS Agreement the measure was presumed to be in accordance with obligations of Members under the
provisions of GATT 1994 which related to the use of SPS measures, in particular the provisions of
Article XX(b).

3) Australia further claimed that the Panel's terms of reference did not extend to Canada's claims of non-
violation, nullification and impairment under Article XXIII: 1(b) of GATT 1994 and that Article 3 did not
have application to the measure at issue so its measure was not in violation of the SPS Agreement or GATT
1994.

ITI End Term Assignment Pg 11 D.K.Pandey

 Assignment on WTO/DS-58

Economic and political aspects of DS-18

The measures at issue in each of this case and some others have shown that measures were imposed by
developed countries. In each case, the panel and Appellate Body ruled for the complainants (exporters) on at
least some grounds, so these disputed cases have shown that the measures of countries with advanced
scientific establishments are not immune to challenge.” (Josling, Roberts and Orden, 2004).

It was observed that Australia imposed a ban on uncooked salmon but did not impose a similar ban on herring
or ornamental fin-fish – each of which presented as much as or even more of a risk to domestic fish stock –
helped to infer that the ban was imposed as a means of protecting domestic producers.

Moreover, the scientific study Australia used to justify its ban did not contain an evaluation of the likelihood of
the spread of disease and thus failed to satisfy the requirements of the SPS Agreement and level set by
international health standards. The ban was nonetheless judged to be in violation of the SPS Agreement as it
was not backed by an objective risk assessment. Although the Appellate Body was willing to acknowledge that
the ban was originally motivated by “consumer concerns” rather than by protectionism, the overall outcome of
the case suggests that the WTO will rule against measures based on popular misconceptions of risks as well as
more overtly discriminatory measures.

Concerns of Australia’s Aquaculture Industry

Australia had concerns about the potential negative impact of the decision were expressed by representatives
of the aquaculture industry, fishing bodies and environmental interests.

Australia commands a premium in the international market for food products as a result of its disease free
status. Should diseases not currently found in fish be introduced into Australia as a result of the amended
measures, the consequences are potentially significant.

Its 'clean and green' image is a prime marketing device, allowing that state to charge a premium on many of its
products. Any disease incursion has the potential to undermine the image and impact negatively on that
premium. Further the environment and native fish species are also at risk.

Draft Report:

The "May 1995 Draft Report" concluded that no evidence of the spread of diseases via fish products was
found despite "the wide scale movement of salmonid product within and between continents". Furthermore,
the report listed a sequence of events of which each event had to occur for the imported salmon products to
cause an exotic disease to become established in Australia.

ITI End Term Assignment Pg 12 D.K.Pandey

 Assignment on WTO/DS-58

It was noted that the risk of disease introduction might be reduced to negligible values if one or more events in
the sequence were extremely unlikely to occur or if a number of events in the sequence had a relatively low
probability and it did not merit continuation of the quarantine restrictions.

Summary of Key Panel/AB findings:

The Panel found that Australia's measures complained against were inconsistent with Articles 2.2, 2.3, 5.1, 5.5,
and 5.6 of the Sanitary and phytosanitary agreement, and also nullified or impaired benefits accruing to Canada
under the Sanitary and phytosanitary agreement.

SPS Art.5.1: The Appellate Body, although reversing the Panel's finding because the Panel had examined the
wrong measures (i.e. heat-treatment requirement), still found that the correct measure at issue – i.e. Australia's
import prohibition – violated Articles 5.1 and 2.2 of the Sanitary and phytosanitary Agreement because it was
not based on a "risk assessment" requirement.

SPS Art.5.5: The Appellate Body upheld the Panel's finding and found that Australia had acted inconsistently
with respect to Article 5.5 and 2.3 since "arbitrary or unjustifiable" levels of protection were applied to several
different yet comparable situations so as to result in "discrimination or a disguised restriction" (i.e. more strict
restriction) on imports of salmon, compared to imports of other fish and fish products such as herring and
finfish.

SPS Art.5.6: The Appellate Body reversed the Panel's finding that the heat-treatment violated Art. 5.6 by
being” more trade-restrictive than necessary", because heat treatment was the wrong measure. The Appellate
Body, however, could not complete the Panel's analysis of this issue under Art.5.6, due to insufficient facts on
the record.

ITI End Term Assignment Pg 13 D.K.Pandey

 Assignment on WTO/DS-58

DS-335

US’S ZEROING IN ON ECUADOR’S SHRIMP PRODUCTS

Background:

Ecuador requested consultations with the United States concerning the final affirmative determination of sales
at less than fair value with respect to certain frozen warm water shrimp from Ecuador published by the United
States Department of Commerce (DOC).

Ecuador, argued that United states DOC’s practice of “zeroing” negative anti-dumping margins, was against
the provisions of Article VI of the GATT 1994 and Articles 1, 2.1, 2.2, 2.4, 2.4.2, 5.8, 6.10, 9.2, 9.3, 9.4, and
18.1 of the Anti-Dumping Agreement.

Synopsis of DS-335:

Parties Agreement Time line of dispute Logic of the Decision

cited party Panel Appellate
body
Complaint: ADA: Articles 1, Establishment of 19 July Antidumping √
Ecuador 2.1, 2.2, 2.4, 2.4.2, Panel 2006 margins on
5.8, 6.10, 9.2, 9.3, Ecuador shrimp
9.4, and 18.1 were unjustified
Defendant: GATT: Art VI Circulation of 30 Jan
US Panel Report 2007
Circulation of AB
Report
Adoption of panel 20 Feb
report 2007

Ecuador’s complaint:
Ecuador requests the Panel to find that the United States acted inconsistently with Article 2.4.2, of the Anti-
Dumping Agreement by using "zeroing" when calculating the dumping margins for Exporklore, Promarisco
and "all others" in the anti-dumping investigation of certain shrimp from Ecuador. “Zeroing” refers to the
practice where the export price of a product is lower than the price in the exporting country, which creates a
positive dumping margin.

For defending its argument Ecuador relied on the verdict of the Appellate Body report in US – Softwood
Lumber V, arguing that in that case, the DSB ruled that a similar measure was inconsistent with Article 2.4.2 of
the Anti-Dumping Agreement.

ITI End Term Assignment Pg 14 D.K.Pandey

 Assignment on WTO/DS-58

United States reaction:

United States United States "acknowledged" the accuracy of Ecuador’s description of the USDOC’s use of
"zeroing" in the measures at issue and "recognized" that a measure using a similar calculation, which was the
subject of the US – Softwood Lumber V Report, was ruled by the DSB to be inconsistent with Article 2.4.2.

Panel’s analysis:

The Panel found in this case that the responding party, United States was not contesting any of the
complaining party’s claims. In the light of this situation, the Panel made an “objective assessment of the
matter” under DSU Article 11. Ecuador complained about the zeroing by the USDOC and its inconsistency
with Article 2.4.2.

The United States, accepted the use of ‘zeroing’ in calculating the dumping margins.” The United States also
recognized that “a measure using a similar calculation was the subject of the US – Softwood Lumber V report,
and that the DSB ruled that the measure was inconsistent with Article 2.4.2.”

Applying Softwood Lumber -V decision to this case, the Panel found that the United States had breached
Article 2.4.2 in the investigation on shrimp from Ecuador.

The Panel added that, ‘zeroing’ in the context of the weighted average-to-weighted average methodology in
original investigations (first methodology in the first sentence of Article 2.4.2) was inconsistent with Article
2.4.2.”

Outcome of the dispute:

This case was a special case because in the case, the US was not contesting any issues of the dispute, because a
series of authoritative Appellate Body rulings on the WTO-inconsistency of the zeroing methodology left the
United States without any credible arguments to make in response to Ecuador’s claims.

The Panel concluded that the US Department of Commerce acted inconsistently with Article 2.4.2 in its final
and amended final affirmative determinations of sales at less than fair value (dumping) with respect to certain
frozen warm water shrimp from Ecuador, and in its final anti-dumping duty order.

The US agreed that USDOC breached the Anti-Dumping Agreement by using zeroing during the
investigation. The United States also agreed in advance to a compliance period of six months to implement the
Panel’s expected rulings. It agreed to recalculate the dumping margins in a manner consistent with the Panel’s
rulings. This was a mutually agreed on solution, the parties agreed to cooperate in the Panel proceedings, going
so far as to “share with each other drafts of their respective written submissions prior to submitting them to
the panel” something which is rarely seen in dispute settlements

ITI End Term Assignment Pg 15 D.K.Pandey

 Assignment on WTO/DS-58

References

1. Jackson J.H (2000) .International economic law in times that are interesting.Journal of international
economics.

2. Rajapakse A .Regulation of biotechnology goods and issues for developing counties before the
multilateral trading system .Asian biotechnology and Development Review, Vol.8, No.3, pp 55-68.

3. Shaffer G. United States-Import Prohibition of Certain Shrimp and Shrimp Products .The American
Journal of International Law, Vol. 93, No. 2., (Apr., 1999), pp. 507-514.

4. Retrieved from www.blackwell-synergy.com/doi/abs/10.1111/1467-9388.00181 On 22 August 2007.

5. Retrieved from http://www.aph.gov.au/senate/committee/rrat_ctte/completed_inquiries/1999-

02/salmon_final/report/b01.doc On 22 August 2007.

6. Retrieved from http://www.wto.org/English/tratop_e/dispu_e/cases_e/ds335_e.htm On 22 August

2007.

7. Retrieved from http://www.wto.org/English/tratop_e/dispu_e/cases_e/ds58_e.htm On 22 August

2007.

8. Retrieved from http://www.wto.org/English/tratop_e/dispu_e/cases_e/ds18_e.htm On 22 August

2007.

ITI End Term Assignment Pg 16 D.K.Pandey