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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by the European Communities.

On 17 March 1999, the EC requested consultations with the US in respect of definitive safeguard measures imposed by the US on imports of wheat gluten from the European Communities. The EC contended that by a Proclamation of 30 May 1998, and a Memorandum of the same date, by the US President, under which the US imposed definitive safeguard measures in the form of a quantitative limitation on imports of wheat gluten from the EC, effective as of 1 June 1998. The EC considered these measures to be in violation of Articles 2, 4, 5 and 12 of the Agreement on Safeguards; Article 4.2 of the Agreement on Agriculture; and Articles I and XIX of GATT 1994.

On 3 June 1999, the EC requested the establishment of a panel. At its meeting on 16 June 1999, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

Further to a second request to establish a panel, the DSB established a panel at its meeting on 26 July 1999. Australia, Canada and New Zealand reserved their third-party rights. On 11 October 1999, the Panel was composed. The report of the panel was circulated to Members on 31 July 2000. The panel found that:

1. the United States had not acted inconsistently with Articles 2.1 and 4 of the Safeguards Agreement or with Article XIX:1(a) of the GATT 1994 in

• redacting certain confidential information from the published USITC Report or
   
• determining the existence of imports in “increased quantities?and serious injury.

2. the definitive safeguard measure imposed by the US on certain imports of wheat gluten based on the US investigation and determination was inconsistent with Articles 2.1 and 4 of the Safeguards Agreement in that

• the causation analysis applied by the USITC did not ensure that injury caused by other factors was not attributed to imports and
   
• imports from Canada (a NAFTA partner) were excluded from the application of the measure after imports from all sources were included in the investigation for the purposes of determining serious injury caused by increased imports (following a separate inquiry concerning whether imports from Canada accounted for a “substantial share?of total imports and whether they “contributed importantly?to the “serious injury?caused by total imports).

3. The panel further concluded that the US failed to notify immediately the initiation of the investigation under Article 12.1(a) and the finding of serious injury under Article 12.1(b) of the Safeguards Agreement.
    
4. in notifying its decision to take the measure only after the measure was implemented, the US did not make timely notification under Article 12.1(c). For the same reason, the US violated the obligation of Article 12.3 to provide adequate opportunity for prior consultations on the measure.
    
5. the US therefore also violated its obligation under Article 8.1 of the Safeguards Agreement to endeavour to maintain a substantially equivalent level of concessions and other obligations to that existing under the GATT 1994 between it and the exporting Members which would be affected by such measures, in accordance with Article 12.3 of the Safeguards Agreement.

On 26 September 2000, the US notified its decision to appeal to the Appellate Body certain issues of law and legal interpretation covered in the Panel Report and certain legal interpretations developed by the Panel. The Appellate Body circulated its report on 22 December 2000. The Appellate Body:

• upheld the Panel’s conclusion that the US had not acted inconsistently with its obligations under Articles 4.2(a) and 4.2(b) of the Safeguards Agreement, but, in so doing, reversed the Panel’s interpretation of Article 4.2(a) of the Safeguards Agreement that the competent authorities are required to evaluate only the “relevant factors?listed in Article 4.2(a) of that Agreement as well as any other “factors?which were clearly raised before the competent authorities as relevant by the interested parties in the domestic investigation;
   
• reversed the Panel’s interpretation of Article 4.2(b) of the Safeguards Agreement that increased imports “alone? “in and of themselves? or ?i>per se? must be capable of causing “serious injury? as well as the Panel’s conclusions on the issue of causation;
   
• found, nonetheless, that the US had acted inconsistently with its obligations under Article 4.2(b) of the Safeguards Agreement;
   
• upheld the Panel’s finding that the US had acted inconsistently with its obligations under Articles 2.1 and 4.2 of the Safeguards Agreement;
   
• upheld the Panel’s findings that the US had acted inconsistently with its obligations under Articles 12.1(a) and 12.1(b) of the Safeguards Agreement;
   
• reversed the Panel’s finding that the US had acted inconsistently with its obligations under Article 12.1(c) of the Safeguards Agreement; found that the US had acted consistently with its obligations under Article 12.1(c) of that Agreement to notify “immediately?its decision to apply a safeguard measure;
   
• upheld the Panel’s finding that the US had acted inconsistently with its obligations under Article 12.3 of the Safeguards Agreement, and, in consequence, upheld the Panel’s finding that the US had acted inconsistently with its obligations under Article 8.1 of the Safeguards Agreement;
   
• the Panel did not act inconsistently with Article 11 of the DSU in concluding that the USITC had “considered industry productivity as required by Article 4.2(a)?of the Safeguards Agreement;
   
• the Panel did not act inconsistently in finding that the USITC was not required to evaluate the overall relationship between the protein content of wheat and the price of wheat gluten as a “relevant factor? under Article 4.2(a) of the Safeguards Agreement, during the post-1994 period of investigation; and,
   
• the Panel did not act inconsistently in declining to draw “adverse?inferences from the refusal of the US to provide certain allegedly confidential information requested from it by the Panel under Article 13.1 of the DSU;
   
• the Panel acted inconsistently with Article 11 of the DSU in finding that “the USITC Report provides an adequate, reasoned and reasonable explanation with respect to ‘profits and losses’” and, therefore, reversed this finding; and found no error in the Panel’s exercise of judicial economy in not examining the claims of the EC under Article XIX:1(a) of the GATT 1994, and also under Article 5 of the Safeguards Agreement and Article I of the GATT 1994.

At its meeting of 19 January 2001, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.

 

Implementation of adopted reports

At the DSB meeting of 16 February 2001, the US announced that it intended to implement the recommendations and rulings contained in the panel and Appellate Body reports. On 20 March 2001, the EC requested that the reasonable period of time for implementation be determined by binding arbitration pursuant to Article 21.3(c) DSU. On 10 April 2001, the parties to the dispute notified the DSB that they had mutually agreed that the reasonable period of time shall be four months and 14 days, that is from 19 January 2001 to 2 June 2001.