WTO RULINGS & TRADE DISPUTES

Submitted by: Bindu Thushara. N IGTC August 23, 2013

CONTENTS
Introduction
WTO & Dispute Settlement Body(DSB) WTO backs US in Chicken trade dispute with china Result of Dispute Settlement process by WTO References

INTRODUCTION
The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade.
The organization deals with regulation of trade between participating countries It provides a framework for negotiating and formalizing trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiation

WTO & DISPUTE SETTLEMENT BODY(DSB)

The WTOs dispute settlement agreement is formally known as the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). The DSU provides the primary legal means of settling trade related conflicts in the WTO. Settlement of disputes is the responsibility of the DSB (composed of all Members of the WTO). The DSB has the sole authority to establish panels of experts to consider the case and to accept or reject the panels findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation when a country does not comply with a ruling.

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A dispute arises when a country adopts a trade policy measure or takes some action that another member considers to be a violation of a WTO agreement. A dispute may also arise if a member feels that, as a result of another countrys action, it has been denied WTO benefits to which it is entitled. A third group of countries can also declare that they have an interest in the case and when that is the case, they enjoy some rights as Third Parties.

WTO BACKS USA IN CHICKEN TRADE DISPUTE WITH CHINA

The dispute concerns China's imposition of anti-dumping and countervailing measures on broiler chicken products from the United States. The U.S. appeal to the WTO dates back to 2011. The United States challenged before the Panel both the substantive analysis of China's Ministry of Commerce (MOFCOM) under several provisions of the Anti-Dumping and SCM Agreements and the GATT 1994, as well as the manner in which MOFCOM conducted its investigations. The chicken dispute is part of a larger set of strains in the U.S.-China trade relationship. The U.S. and China are the world's largest economies and the U.S. runs a larger trade deficit with China than with any other country in the world.

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The ruling found that China breached its WTO obligations and recommended that China comply with WTO rules. China is entitled to a period of time to comply with the rules and can also appeal the ruling.

The Panel of WTO found that the allocation methodology MOFCOM adopted was inconsistent with Article 2.2.1.1, because MOFCOM allocated processing costs to products that were not actually associated with their production and sale.
The Panel found that China had not rebutted the United States' prima facie case that MOFCOM had allocated the costs of producing certain products (blood and feathers) to the other products produced by the particular respondent concerned.

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The United States claimed that China acted inconsistently with Article 6.2 of the Anti-Dumping Agreement as, despite a specific request from the United States Government, MOFCOM did not provide an opportunity for the interested parties with adverse interests to meet and present their views. The Panel upheld the claim as it found that no evidence on the record supported China's assertion that MOFCOM had contacted these Chinese interested parties and MOFCOM had taken no other action to organize a meeting between the US Government and these parties.

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The United States claimed that MOFCOM improperly calculated the amount of per unit subsidization in the subject imports and as a result acted inconsistently with Articles 19.4 of the SCM Agreement and VI:3 of the GATT 1994.

In particular, the United States claimed that MOFCOM improperly allocated subsidies received for the production of all chicken products only to the production of subject products.
The Panel concluded MOFCOM had not explained how its subsidy calculation ensured that it only countervailed those subsidies bestowed on the production of subject products and thus upheld the United States' claim.

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The United States claimed that MOFCOM's price effects analyses were inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement and 15.1 and 15.2 of the SCM Agreement.
The United States argued that MOFCOM's findings of price undercutting resulted from a comparison of subject import and domestic average unit values: o At different levels of trade o Included different product mixes. The Panel upheld the United States' arguments with respect to differences in product mix.

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The United States claimed that MOFCOM's public notice of the Preliminary and Final Anti-Dumping and Countervailing Duty Determinations were inconsistent with the requirement in Articles 12.2 of the Anti-Dumping Agreement and 22.3 of the SCM Agreement to disclose the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities.

The Panel upheld the claim with respect to the Final Determinations and exercised judicial economy with respect to the Preliminary Determinations.

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The United States made an additional claim under Articles 12.2.2 of the Anti-Dumping Agreement and 22.5 of the SCM Agreement with respect to MOFCOM's failure to explain the reason for its rejection of the US argument on level of trade.
The Panel rejected an objection by China that the claims fell outside its terms of reference because they were not identified in the request for establishment of a panel, and upheld the US claim on the merits. Finally, WTO ruled in favor of the U.S. on August 02, 2013 in a longstanding trade dispute over allegations China unfairly imposed antidumping tariffs that restricted American poultry exports.

RESULT OF DISPUTE SETTLEMENT PROCESS BY WTO

Trade friction is channeled into the WTO's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries' trade policies conform with them. It ensures that the risk of disputes spilling over into political or military conflict is reduced. By lowering trade barriers, the WTOs system also breaks down other barriers between peoples and nations. U.S. Trade Representative, Michael Froman said the WTO ruling was a victory for the U.S. and hopes it would prevent further violations of the American exporters.

REFERENCES
http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr00_e.ht m http://www.commercialdiplomacy.org/manuals/wto_dispute.htm http://economictimes.indiatimes.com/news/internationalbusiness/wto-backs-us-in-chicken-trade-dispute-withchina/articleshow/21559422.cms. http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds427_e.htm