Wednesday, August 17, 2011

WTO Dispute Settlement News

WTO Two recent developments in WTO Dispute Settlement news include a request for consultations with Canada filed by the European Union (EU) relating to alleged Canadian subsidies for its energy sector and a panel report in the Phillipines-Taxes on Distilled Spririts (DS396) case.

In Canada-Measures Relating to the Feed-In Tariff Program (DS 426), the EU alleges that several Canadian measures relating to the energy sector constitute prohibited and/or countervailable subsidies.  More specifically, the EU considers that these measures are inconsistent with Canada's obligations under:  

  • Articles 3(1)(b) and 3(2) of the SCM Agreement, because the measures are deemed to be subsidies within the meaning of Article 1.1 of the SCM Agreement that are prohibited insofar they are provided contingent upon the use of domestic over imported goods, namely contingent upon the use of equipment for renewable energy generation facilities produced in Ontario over such equipment imported from other WTO Members, including the EU;
  • Article III:4 of the GATT 1994, because the measures accord less favourable treatment to imported equipment for renewable energy generation facilities over like products originating in Ontario; and
  • Article 2.1 of the TRIMs Agreement, in conjunction with paragraph 1(a) of the Agreement's Illustrative List, because the measures are trade-related investment measures inconsistent with Article III:4 of the GATT 1994 which require the purchase or use by enterprises of equipment for renewable energy generation facilities of Ontario origin.

The parties will now have 60 days in which to engage in consulations before a dispute settlement panel may be established.

In other WTO news, the panel in Phillipines-Taxes on Distilled Spririts found that Phillipines law relating to taxes on distilled spirits (e.g., gins, rum, vodka, brandies) violates Phillipines' obligations under the General Agreement on Tariffs and Trade (GATT) 1994, Article III:4 because although facially neutral, de facto, higher taxes are charged on the types of raw ingredients commonly used in imported spirits as compared to the raw material (mainly cane sugar) used in domestically-produced spirits. 

The panel circulated its report on Monday, August 15.  The Phillipines will now have 60 days to decide whether to appeal the report to the Appellate Body or to bring its tax regime into compliance.  More details may be found here.


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