Seoul 2 June 2006 TRADE REMEDIES “in the era of FTAs”

Seoul 2 June 2006 focus on two issues Exercise of jurisdiction by WTO panels Parallelism: scope of investigation/ application of safeguard measures in the case of RTAs

Seoul 2 June 2006 Exercise of jurisdiction by WTO panels Recent WTO dispute may also be relevant in area of trade remedies: Mexico – Tax measures on soft drinks and other beverages (DS308) Issue: whether the WTO Panel could decline, and should have declined, to exercise jurisdiction with respect to certain claims because they arguably related to broader market access issues under NAFTA

Seoul 2 June 2006 Exercise of jurisdiction by WTO panels Panel’s terms of reference (Article 7, DSU) Panel’s function (Article 11, DSU) Members’ obligation to have recourse to DSU when seeking redress of violation of obligations under the covered agreements (Article 23, DSU)

Seoul 2 June 2006 Exercise of jurisdiction by WTO panels Member’s right to initiate a WTO dispute when it considers that any benefits accruing to it are being impaired by another Member’s measure (Article 3.3, DSU) – entitlement to a panel ruling

Seoul 2 June 2006 Exercise of jurisdiction by WTO panels A WTO panel “would seem... not to be in a position to choose freely whether or not to exercise jurisdiction....”

Seoul 2 June 2006 Exercise of jurisdiction by WTO panels AB expressed no view as to whether there may be other circumstances in which legal impediments could exist that would preclude a panel from ruling on the merits of the claims before it. E.g. –Mexico did not take issue with the Panel's finding that neither the subject matter nor the respective positions of the parties were identical in the dispute under the NAFTA and this dispute –Mexico could not identify a legal basis that would allow it to raise, in a WTO dispute settlement proceeding, the market access claims it was pursuing under the NAFTA –It was undisputed that no NAFTA panel had decided the "broader dispute" to which Mexico alluded. –Mexico expressly stated that the so-called NAFTA "exclusion clause" had not been "exercised".

Seoul 2 June 2006 Exercise of jurisdiction by WTO panels See also Panel Report, Argentina – Poultry Anti-dumping duties (DS241) - The panel referred to Article1 of the Protocol of Olivos, which provides that, once a party decides to bring a case under either the MERCOSUR or WTO dispute settlement forum, that party may not bring a subsequent case regarding the same subject-matter in the other forum, and went on to state: “The Protocol of Olivos... does not change our assessment, since that Protocol has not yet entered into force, and in any event it does not apply in respect of disputes already decided in accordance with the MERCOSUR Protocol of Brasilia. Indeed, the fact that parties to MERCOSUR saw the need to introduce the Protocol of Olivos suggests to us that they recognised that (in the absence of such Protocol) a MERCOSUR dispute settlement proceeding could be followed by a WTO dispute settlement proceeding in respect of the same measure.”

Seoul 2 June 2006 Exercise of jurisdiction by WTO panels No basis in DSU to adjudicate non- WTO disputes

Seoul 2 June 2006 Parallelism Issue of scope of investigation and scope of application of a safeguard measure in relation to FTAs has arisen in a number of WTO disputes: e.g. Argentina-Footwear (EC) ; US- Wheat Gluten; US- Line Pipe

Seoul 2 June 2006 Parallelism Conditions for imposing a safeguard measure: Member’s determination that product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products (Articles 2.1 and 4.2, Agreement on Safeguards) Rule on application of safeguard measure: Safeguard measures shall be applied to a product being imported irrespective of its source (Article 2.2, Agreement on Safeguards) Articles XIX and XXIV of the GATT 1994

Seoul 2 June 2006 Parallelism According to AB, in the usual course, the imports included in the determinations should correspond to the imports included in the application of the measure

Seoul 2 June 2006 Parallelism According to AB, a gap between imports covered under the investigation and imports falling within the scope of the measure can be justified only if the competent authorities establish explicitly that imports from sources covered by the measure satisfy the conditions for the application of the measure

Seoul 2 June 2006 Parallelism Competent authorities must provide a reasoned and adequate explanation of how the facts support their determination

Seoul 2 June 2006 Parallelism whether Article 2.2 of the Agreement on Safeguards permits a Member to exclude imports originating in member states of FTAs from the scope of a safeguard measure; whether Article XXIV GATT 1994 permits excepting other members of an FTA from a safeguard measure.