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WORLD TRADE
ORGANIZATION

WT/DS126/RW
21 January 2000

(00-0227)

  Original: English

AUSTRALIA - SUBSIDIES PROVIDED TO
PRODUCERS AND EXPORTERS OF
AUTOMOTIVE LEATHER -

RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE
UNITED STATES


REPORT OF THE PANEL

(Continued)


ANNEX 2-6

AUSTRALIA'S COMMENTS ON NEW FACTUAL INFORMATION
FROM THE UNITED STATES

(3 December 1999)

1. Australia would like to comment on the new factual material in the USA's answers to questions from the panel on 1 December 1999. This is in respect to the status of the Informal Group of Experts (IGE).

2. In its answer to Question 4 addressed to the USA it says:

in the first paragraph

"The determination … by recognized experts"

and in the fourth paragraph

"Further, the Informal Group of Experts was created by the Committee on Subsidies and Countervailing Measures to clarify the calculation of subsidies. The experts were chosen by the Committee based on their substantive experience in subsidy calculation methodology. Their status and expertise in subsidy calculations should therefore be carefully considered by the Panel."

3. The IGE was set up by the Committee to try to develop the understanding referred to in SCM Footnote 62 to SCM Annex IV related solely to calculation issues under SCM Article 6.1(a). See G/SCM/5 and G/SCM/M/2, paragraphs 70-74, in particular 72.

4. Participants were not chosen by the Committee. The USA may be confusing the IGE with the Permanent Group of Experts.

5. There was no substantive qualification for participation in the IGE. There is no expertise on the issue of calculation in respect of SCM Article 6.1(a), let alone SCM Article 3.

6. Some participants from some Members, in particular the USA, reflected their countervail experience and this was in turn reflected in the IGE report as part of compromises over effectively irreconcilable concepts.

7. Australia's understanding is that of the list of persons who participated from time to time, at most two attended all the meetings of the IGE.

8. Members did not adopt the IGE's report and only noted it. There is no consensus amongst Members on the IGE's report and it does not constitute the understanding referred to in SCM Footnote 62, which has yet to be developed. Australia understood that the USA does not support the adoption of the IGE's report. Indeed the USA disagrees with the IGE's report even on the issue of allocation of subsidy benefits over time - see for example, G/SCM/M/16, paragraph 70.

ANNEX 3-1

ORAL STATEMENT OF THE EUROPEAN COMMUNITY

(23 November 1999)

Introduction

1. The European Communities makes this third party submission to you today because of its systemic interest in the correct interpretation of the Subsidies Agreement and the DSU.

Violation of Article 10.3 DSU

2. The EC wishes to express its profound disappointment with the refusal of the Panel communicated by fax of 11 November 1999 to allow the EC to receive the second written submissions of the parties in this case.

3. As the EC pointed out in its letter to the Panel of 8 November 1999, Article 10.3 DSU provides that:

"Third parties shall receive the submissions of the parties to the dispute to the first meeting of the panel."

4. Since in this case there is only one meeting of the Panel and the Panel is considering at that meeting both written submissions of each party, the EC should, in accordance with Article 10.3 DSU, have received all the submissions of the parties.

5. Not only is this clearly required by Article 10.3 DSU, it is also necessary for the EC to be able to make known its views on the issues that the Panel is actually considering at this meeting, rather than having to express views on the incomplete positions of the parties that have been developed and may even have changed in the further submissions that the Panel has before it at this meeting.

6. The EC considers that it is transparently wrong for the Panel to endeavour to justify this position, as it does in its fax message of 11 November, by arguing that "had the Panel decided to hold two meetings with the parties, as is the normal situation envisioned in Appendix 3 of the DSU, third parties would only have received written submissions made prior to the first meeting but not rebuttals made subsequently."

7. There is no requirement in the DSU for a panel to hold two meeting. This is only required by the Working Procedures contained in Appendix 3, which the Panel is entitled to modify, as has been done in this case, notably by deciding to only hold a single meeting. The requirement to allow the EC as third party to know the arguments of the parties that are before the Panel when it meets to consider this case at that single meeting is however laid down in Article 10.3 of the DSU, which the Panel was not entitled to modify. By denying the EC its right, the Panel has violated the DSU.

8. Faced with this position of the Panel, the EC also asked the parties to provide it with copies of their second written submissions on the basis of both Article 10.3 and, for good measure, Article 18.2 DSU. Australia responded positively, and the EC thanks Australia for its cooperation and respect for the rules, but the US has refused, a matter that the EC profoundly regrets, since it has contributed to preventing the EC from commenting on the substance of the issues before the Panel in this case.

Business Confidential Information

9. The EC also feels that it must recall its position on the special procedures for the protection of "Business Confidential Information."

10. The EC recognises that certain information used in panel proceedings may be of such a nature that particular care is called for to protect it. The EC cannot accept however that protective procedures are adopted which it is impossible for the EC to follow. As the EC explained in its letter to the Panel of 8 November, EC officials are not allowed to enter into personal commitments to third country governments concerning the conduct of dispute settlement proceedings. Such obligations may only be undertaken by the EC, which is bound vis-à-vis other WTO Members by Article 18.2 DSU to ensure that confidential information is protected. In the case of the EC, the effectiveness of this obligation is ensured by the fact that EC officials are all bound by the EC Treaty and their terms of employment not to disclose confidential information, including business confidential information.

The Agreement not to Appeal

11. The EC notes that the parties to this proceeding have agreed not to appeal the Panel Report. The EC does not believe that it is possible to exclude a right of appeal in panel proceedings under Article 21.5 DSU.

12. The EC believes that the fact that the parties have agreed not to appeal, and have apparently taken the view that other rules of the DSU (such as those relating to third parties) may be dispensed with or varied, means that this proceeding is in fact an arbitration under Article 25 DSU.

13. The EC believes that these circumstances, and the absence of the discipline of a potential appeal in these proceedings, should be taken into account by any future panel which is considering whether the reasoning of the report arising out of these proceedings is of any guidance in resolving similar questions with which it may be confronted.

The scope of the proceeding

14. This is a proceeding under Article 21.5 DSU. This provision allows a panel to adjudicate on two kinds of disagreements:

  • those relating to the existence of measures taken to comply with the recommendations and rulings; and

  • those relating to the consistency with a covered agreement of measures taken to comply with the recommendations and rulings.

15. The terms of reference of the Panel are set out in WT/DS126/8 of 4 October 1999 and seem to indicate that the disagreement in this case relates to the consistency with a covered agreement (that is, the Subsidies Agreement) of measures taken to comply with the recommendations of the Panel. In particular, the terms of reference do not clearly indicate whether there is a dispute before the Panel as to the existence of measures taken to comply with the recommendations.

16. The EC notes however that the parties have spent much time discussing whether certain action by Australia does in fact comply with the recommendation of the Panel. However, this is, for the EC, a question of the existence of measures taken to comply with the recommendations.

17. The EC understood document WT/DS126/8 of 4 October 1999 as limiting the mandate of the Panel to the question of whether the measures taken are in any way inconsistent with the Subsidies Agreement and not to include the consistency of those measures with the recommendations of the Panel.

Substance

18. The EC is unable to say much about the substantive issues that arise in these proceedings.

19. One of the reasons for this is arises out of the peculiar factual background to this case. That is that it involves an ad hoc subsidy and de facto export contingency. This means that the present case is particularly fact intensive - and it is particularly difficult for the EC to comment when it has not been shown the evidence.

20. One thing that is clear is that the burden of proof under a "compliance panel," under Article 21.5, whether the obligation for implementation arises under Article 19.3 DSU or 4.7 Subsidies Agreement, is on the party contesting the existence of implementation measures or their consistency with a covered agreement.

The Panel's Questions

21. The EC has received questions from the Panel yesterday but has not had time to consider how to respond before finalising this statement.

22. The EC will endeavour to provide answers in writing as requested. In this regard, it would be of great assistance to the EC to have the written submissions of the parties and their statements to the Panel. Even if the Panel and any of the parties should still consider that the EC is not entitled to receive the second written submissions, they may still consider it useful to allow the EC to have them voluntarily - and thus put into practice the principle of transarency in dispute settlement about which there is so much talk these days. The same applies to the oral statements.

Conclusion

23. The EC regrets that its submission is limited to procedural questions and that it has not been possible, for the time being, for it to assist the Panel on the substance of the difficult and fundamental issues concerning the interpretation of the Subsidies Agreement which arise in this case.

24. The EC nonetheless wishes the Panel well in its deliberations and thanks you for your attention.

ANNEX 3-2

EUROPEAN COMMUNITY'S ANSWERS TO WRITTEN QUESTIONS OF THE PANEL

(1 December 1999)

Questions N° 1 and 2

1. Each party has identified an amount of money that it refers to as the "prospective" amount of the subsidy to be repaid. Given that the subsidy itself was entirely paid before the Panel's report was adopted, in your view can any amount of repayment be considered "prospective" ? Please explain.

2. The parties both argue that the phrase "withdraw the subsidy" has "prospective" effect only. One interpretation of the phrase "withdraw the subsidy", which is not argued by either party, would be that it means "repay in full" or "take back" the financial contribution to the recipient. Please comment on this possible interpretation, with specific reference to the text, context, and object and purpose of Part II of the SCM Agreement.

Answers 1 and 2

1. The EC considers the above questions to be linked and will answer them together. It will first set out its view that the obligation to withdraw a subsidy cannot be retroactive and must only be for the future. It will then briefly consider the question of how the prospective portion may be calculated. The withdrawal can only be prospective

1.1 The withdrawal can only be prospective

2. The EC agrees with the parties to this dispute that the remedy under Article 4 SCM Agreement, like all other remedies under the WTO, can only be prospective in nature and cannot seek to compensate for a violation to the extent that its effects are situated in the past. Retroactive effect of WTO remedies is not acceptable to the Members.

3. The intent of the Members to exclude retroactive effect of WTO remedies can be discerned from an interpretation of the WTO provisions in accordance with the customary rules of interpretation of public international law, as required by Article 3.2 DSU.

4. The customary rules of interpretation of public international law are set out in Articles 31 and 32 Vienna Convention on the Law of Treaties (VCLT). In particular, Article 31.1 provides that a treaty must be interpreted "in good faith accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.1 . Article 31.3(c) provides that "there shall be taken into account together with the context …. any relevant rules of international law applicable in the relations between the parties."

5. The EC is of the view that, since the WTO Agreement is part of international law, international law principles must generally be applied. It notes that the Appellate Body has made frequent reference to general international law, for example in the Hormone2 and Shrimp3 cases.

6. The relevant elements of context and legal principles which the EC submits should guide the Panel are as follows:

  • One purpose of the dispute settlement is to provide "security and predictability to the multilateral trading system" (Article 3.2 DSU).

  • The WTO Agreement, like international law in general, lays down rights and obligations for the States and International Organisations which are its Members. It does not create rights and obligations for private parties.

  • It is a general principle of law that legitimate expectations should be protected.

7. Since past trade effects can only be remedied in a market economy by interfering with the acquired rights of private parties, the EC considers that there can be no obligation on Members to remedy violations with retroactive effect. Indeed, any such obligation would be entirely ineffective since the resulting interference with private rights could give rise to claims within the internal legal systems of the Members to restore the status quo ante.

8. The EC considers that the principle of non-retroactivity of WTO remedies results clearly from the provisions of Article 19.1 DSU which imposes an obligation to "bring the measure into conformity with" the covered agreement and is confirmed by the circumstance that Article 21 DSU allows Members a reasonable period of time in which to implement panel reports. Even in the area of prohibited subsidies, Article 4.7 also allows a panel to take account of the impracticability of immediate implementation and to provide a period of time in which the subsidy is to be withdrawn. If immediate implementation is recognised as not being practicable, it goes without saying that retroactive implementation is not possible.

9. This principle has also been confirmed in the report of the Article 21.5 panel in European Communities - Bananas - Recourse by Ecuador4 where the panel held that:

"In framing this issue for consideration, we do not imply that the European Communities is under an obligation to remedy past discrimination. Article 3.7 of the DSU provides that "… the first objective of the dispute settlement is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements." This principle requires compliance ex nunc as of the expiry of the reasonable period of time for compliance with the recommendations and rulings adopted by the DSB. If we were to rule that the licence allocation to service suppliers of third-country origin were to be "corrected" for the years 1994 to 1996, we would create a retroactive effect of remedies ex tunc. However, in our view, what the EC is required to ensure is to terminate discriminatory patterns of licence allocation with prospective effect as of the beginning of the year 1999."

10. In the same way, the Article 22.6 Report referred to by the Panel in its Question 3 considered, as the Panel has noted in that question, that the level of nullification and impairment had to be assessed as it existed at the end of the reasonable period of time (which may, for a number of reasons, be different from that which existed before). This supports the view that the obligation to implement only relates to the future, not the past.

11. Consequently, the EC considers that the obligation to "withdraw" the prohibited export subsidy in Article 4.7 SCM Agreement can only be to withdraw the portion of it that corresponds to the future and not that which corresponds to effects which have occurred in the past. The EC will consider below the question of how the future portion may be calculated.

12. The EC realises that this position means that the SCM Agreement may be considered not to provide a "remedy " against past subsidies (i.e. those which have been expensed prior to the deadline for implementation).5 However this is a common feature of all the Multilateral Trade Agreements and an unavoidable consequence of the present rules which must be accepted. The WTO Agreement only provides a right to have violations remedied for the future.

13. The absence of a remedy for past and consummated violations has always been a well-known feature of the GATT/WTO system. First, it is inherent in the principle that DSB rulings do not have retroactive effect. Second, it is established and accepted that it can lead in some cases to there being no remedy at all for the complaining party. In the Panel Report under the Agreement on Government Procurement on Norway - Procurement of Toll Collection Equipment for the City of Trondheim there was such a situation and the panel discussion of GATT practice is still pertinent.

"… the Panel observed that, under the GATT, it was customary for panels to make findings regarding conformity with the General Agreement and to recommend that any measures found inconsistent with the General Agreement be terminated or brought into conformity from the time that the recommendation was adopted. The provision of compensation had been resorted to only if the immediate withdrawal of the measure was impracticable and as a temporary measure pending the withdrawal of the measures which were inconsistent with the General Agreement ... Questions relating to compensation or withdrawal of benefits had been dealt with in a stage of the dispute settlement procedure subsequent to the adoption of panel reports."

"The Panel also believed that, in cases concerning a particular past action, a panel finding of non-compliance would be of significance for the successful party: where the interpretation of the Agreement was in dispute, panel findings, once adopted by the Committee, would constitute guidance for future implementation of the Agreement by Parties.

"In the light of the above, the Panel did not consider that it would be appropriate for it to recommend that Norway negotiate a mutually satisfactory solution with the United States that took into account the lost opportunities of United States companies in the procurement or that, in the event that such a negotiation did not yield a mutually satisfactory result, the Committee be prepared to authorise the United States to withdraw benefits under the Agreement from Norway with respect to opportunities to bid of equal value to the Trondheim contract.6

14. It is significant that this experience with the 1979 Government Procurement Agreement led the Parties to the WTO Government Procurement Agreement to negotiate special provisions on domestic challenge procedures (Article XX) so as to provide a remedy where the WTO system could not. No such mechanism has yet been negotiated in the field of subsidies.

15. The EC does not consider that it is possible to find support for retroactive remedies against prohibited subsidies by relying on the presence of the word "withdraw" in Article 4.7.

16. The word "withdraw" is also found in Article 3.7 and Article 26.1(b) DSU where it is used to mean the same as "bring into conformity" in Article 19.1 DSU. It does not therefore imply any retroactive effect but merely an obligation to withdraw the future effects.

1.2 The calculation of the prospective portion

17. Certain subsidies provide a benefit which is fully expensed in the period in which it is granted (e.g. a bounty paid on the export of each shipment) . Others provide a benefit which extends over a longer period of time (e.g. a loan at a concessionary interest rate or a large one-off grant). In the latter case, the benefit cannot be allocated only to the period when the subsidy is granted, but should be allocated over the period of time that the benefit is conferred.

18. The period of time over which the benefit is conferred is a question of fact in each case.

19. In the present case, Australia has argued that the grant was made in order to compensate Howe for being "excised" from the current Import Credit Scheme (ICS) from 1 April 1997 to its due termination date of 30 June 2000 (after which it will be replaced by the new general textiles, clothing and footwear programme coming into force on 1 July 2000 which will include automotive leather.7

20. The EC is not in a position to take a view on this issue of fact. If the Panel finds it to be correct that Australia granted this subsidy as a temporary replacement for the ICS and that Howe would have considered the payment as relating to this period and treated it and accounted for it accordingly, it may be that the subsidy may be properly allocated over this period. If this were so, one would expect the amount of the grant to correspond to the amount of the ICS assistance which it was replacing.

21. The EC disagrees with Australia that the duration of the de facto export contingency is necessarily relevant to the question of the allocation period (although it may be relevant supporting evidence). The period over which an export subsidy benefits a company may be different from the period over which export performance is measured or the company has export performance obligations. The question of whether removal of export contingency is sufficient to remove the violation is also a different question from the question of what is the future benefit resulting from the financial contribution and what action is necessary to remove it.

22. In addition, without taking a position on the facts of this particular case, the EC considers that the average useful life of assets (AUL) may also, in certain circumstances, be a valid methodology for allocating non-recurring subsidies over time.

Questions N° 3 and 4

3. In European Communities - Regime for the Importation, Sale and Distribution of Bananas - Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, the Panel noted that "any assessment of the level of nullification or impairment presupposes an evaluation of consistency or inconsistency with WTO rules of the implementation measures taken by the European Communities, i.e. the revised banana regime, in relation to the panel and Appellate Body findings concerning the previous regime", WT/DS27/ARB, 9 April 1999, at para. 4.3. The Panel further noted that both parties accepted that it was the consistency or inconsistency with WTO rules of the new EC bananas regime - and not of the previous regime - that had to be the basis for the assessment of the equivalence between the nullification suffered and the level of the proposed suspension, id. At para. 4.5. and that it would be the WTO-inconsistency of the revised EC regime that would be the root cause of any nullification or impairment suffered by the United States. Id. At para 4.8. Is there any relationship, or should there be, between the concept of "equivalence" of the nullification or impairment of benefits to the suspension of concessions under Article 22 of the DSU, and calculation of the relevant amounts, and the calculation of the amount to be withdrawn in accordance with Article 4.7 of the SCM Agreement ?

4. Further to the preceding question, would your answer change in light of the provisions of Article 4.10 of the SCM Agreement ? That is, Article 4.10 of the SCM Agreement provides for "appropriate countermeasures" in the event a recommendation of the DSB is not followed, that is, the subsidy found to be prohibited is not withdrawn. Article 9 provides that the term "appropriate" countermeasures does not allow countermeasures that are disproportionate in light of the fact that the subsidies in question are prohibited. Does or should this have any relation to or consequences for the calculation of the amount to be withdrawn ?

Answers to 3 and 4

23. The EC does not consider that the Recourse to Arbitration by the European Communities under Article 22.6 of the DSU referred to in the question can properly referred to as a "Panel" as is done in the question. It was, as its title indicates, an arbitration, even if the arbitrators were evidently confused about their role and powers. It was, in particular, never adopted by the DSB. However much the same conclusions can be drawn from the Panel Report on European Communities - Regime for the Importation, Sale and Distribution of Bananas - Recourse to Article 21.5 by Ecuador, referred to above.

23. The EC does not believe that there is, nor should there be, any relationship between the level of suspension of concessions under Article 22 DSU or the level of appropriate countermeasures under Article 4.10 SCM Agreement to be imposed in case of non-implementation of the report and the proportion of the subsidy to be withdrawn under Article 4.7 SCM Agreement.

24. It is true that the level of suspension of concessions under Article 22 DSU must be equivalent to the nullification and impairment. However the obligation to implement a panel report is an obligation to "bring the measure into conformity with [the covered agreement with which an inconsistency has been found]" (see Article 19.1 DSU) or to "withdraw the subsidy" found to be prohibited (see Article 4.7 SCM Agreement), not to remove any nullification and impairment. The nullification and impairment is assumed to be removed to whatever extent is required by the bringing into conformity of the measure or the withdrawal of the subsidy.

25. Bringing a measure into conformity or the withdrawing the subsidy can be more or less burdensome for the Member found to have violated the WTO Agreement than suffering temporary withdrawal of concessions or countermeasures. It may be more or less beneficial for the complaining Member. There is no necessary relationship between the obligation to bring a measure into conformity or withdraw a subsidy and the temporary measures of constraint provided for in case of non-compliance such that the calculation of the latter can help to assess the nature or extent of the former.

Questions N° 5 and 6

5. Australia has argued, based on the Panel's original decision, that it is entitled to replace a prohibited export subsidy with a WTO-consistent subsidy, and that the 1999 loan at most falls into this category of replacement. Assuming the 1999 loan is not inconsistent with the SCM Agreement, it might nonetheless be argued that once the DSB has adopted a decision that a subsidy was inconsistent, that ruling could not be implemented simply by replacing the inconsistent subsidy with a consistent one. That is, to implement a recommendation to "withdraw the [prohibited] subsidy" by repayment, and then immediately replace it with a WTO-consistent subsidy would have no remedial effect, because the harmful trade effects presumed to have been caused by the prohibited subsidy in the first instance would necessarily continue. Please comment on this proposition.

6. The United States agreed, in the original dispute, that a Member is permitted to replace a prohibited subsidy with a non-prohibited subsidy, and that the consistency of the new subsidy would need to be judged on its own merits. In your view, can this argument be reconciled with the US's new argument that the 1999 loan should be judged on the basis of the Panel's original finding concerning the grant ?

Answers to 5 and 6

26. It appears that the Panel's question assumes a retroactive remedy when it relates the "remedial effect" to "the harmful trade effects presumed to have been caused". The EC has already explained that there can be no retroactive effect of WTO remedies.

27. The EC also considers that the Panel's question begs a number of questions. First it is necessary to ask what is required by implementation or withdrawal? If a "remedial effect" is required, what remedial effect? It is only then that the Panel's question arises and the answer to it will not only depend on the answers to the earlier questions but also on the specific factual circumstances of which the EC has not been informed.

Question N° 7

7. Do you agree that the logic of the remedies under SCM Agreement is that prohibited subsidies are subject to the most severe remedies, actionable subsidies the next most severe, and non-actionable the least severe ? If not, why not and on what legal basis ?

Answer to 7

28. The EC considers that the SCM Agreement contains the remedies considered appropriate for the particular characteristics of each type of subsidy. It does not consider it correct to describe them in terms of "severity." They are simply different.

ANNEX 4

PROCEDURES GOVERNING BUSINESS CONFIDENTIAL INFORMATION

I. BASIC PRINCIPLE

1. The treatment of information as Business Confidential under these procedures imposes a substantial burden on the Panel and the parties. The indiscriminate designation of information as Business Confidential could limit the ability of a party to fully include in its litigation team individuals who have particular knowledge and expertise relevant to presenting the party's case, impede the work of the Panel and complicate the Panel's task in formulating credible public findings and conclusions. Accordingly, while the Panel recognizes that parties have a legitimate interest in protecting sensitive Business Confidential information, the Panel expects that parties will exercise the utmost restraint in designating information as Business Confidential.

II. DEFINITIONS

approved person" means

(i) a Panel member;

(ii) a representative; or

(iii) a Secretariat employee

who has filed with the Chairman of the Panel a Declaration of Non-disclosure.

"capital city office" means the buildings and grounds of the United States Trade Represen tative in Washington, DC, United States of America, and [ appropriate designation for Australia ].

"conclusion of the Panel" means when,

(i) pursuant to DSU Article 16.4, the Panel report is adopted;

(ii) pursuant to DSU Article 16.4, the Panel report is not adopted; or

(iii) when the authority for establishment of the Panel lapses pursuant to DSU Article 12.12.1

"Business Confidential information" means any information that has been designated as Business Confidential by the party submitting the information, and that is not otherwise available in the public domain.

"Declaration of Non-disclosure" means a copy of the declaration set out in Annex I, signed and dated by the person making the declaration.

"designated as Business Confidential" means:

(i) for printed information, clearly marked with the notation 'BUSINESS CONFIDENTIAL INFORMATION' and with the name of the party that first submitted the information;

(ii) for binary-encoded information, clearly marked with the notation 'BUSINESS CONFIDENTIAL INFORMATION' on a label on the storage medium, and clearly annotated in the binary-encoded files with the notation 'BUSINESS CONFIDENTIAL INFORMATION' and with the name of the party that first submitted the information; and

(iii) for uttered information, declared by the speaker to be "Business Confidential information" prior to the disclosure, and identified with the name of the party that first submitted the information.

"dispute" means the United States' recourse under Article 21.5 of the DSU in respect of measures taken by Australia to comply with the recommendations and rulings of the WTO Dispute Settlement Body in the dispute WT/DS126, entitled "Australia -Subsidies Provided to Producers and Exporters of Automotive Leather".

"DSU" means the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes.

"Geneva mission" means the buildings and grounds of the United States and Australia at 1-3 Avenue de la Paix, 1211 Geneva and 2 Chemin des Fins, 1209 Geneva, respectively.

"information" means:

(i) printed information;

(ii) binary-encoded information stored in computer diskettes, computer disc drives, CD roms, or other electronic media; or

(iii) uttered information,

including without limiting the generality of the foregoing, offers, agreements, reports, forecasts, compilations, studies, plans, presentations, charts, graphs, pictures and drawings.

"Panel" means the WTO panel considering this dispute pursuant to DSU Article 21.5 and the 14 October 1999 decision of the WTO Dispute Settlement Body.

"Panel meeting" means a substantive meeting of the Panel with the parties as described in the working procedures adopted by the Panel.

"Panel member" means a person serving on the Panel.

"Panel process" means the process of the Panel as described in relevant provisions of the DSU.

"party" means the United States or Australia.

"premises of the WTO" means buildings and grounds of the WTO at Centre William Rappard, Rue de Lausanne 154, Geneva, Switzerland.

"representative" means:

(i) an employee of a party;

(ii) an agent for all purposes of a party; or

(iii) a legal counsel or other advisor of a party,

who has been authorized by a party to act on behalf of such party in the course of the dispute and whose authorization has been notified to the Chairman of the Panel and to the other party, but in no circumstances shall this definition include an employee, officer or agent of a private company engaged in automotive leather manufacturing.

"Secretariat" means the Secretariat of the World Trade Organization.

"Secretariat employee" means a person employed or appointed by the Secretariat who has been authorized by the Secretariat to work on this dispute and whose authorization has been notified to the Chairman of the Panel, including without limiting the generality of the foregoing, interpreters and transcribers present at the Panel hearings.

"secure location" means a locked storage receptacle on the premises of the WTO chosen by the Secretariat to provide secure storage for Business Confidential information.

"submit" means:

(i) the filing by a party of printed or binary-encoded information at the Secretariat during the dispute;

(ii) the filing by a party of printed or binary-encoded information with the Panel during a Panel hearing; or

(iii) the uttering of information during a Panel hearing.

"third party" means the European Communities or Mexico.

III. SCOPE

1. These procedures apply to all Business Confidential information submitted during the Panel process, but do not apply to a party with respect to Business Confidential information first submitted by that party, including in derivative form.

IV. OBLIGATION ON PARTIES

1. Each party shall ensure that its representatives comply with these procedures.

V. SUBMISSION BY A PARTY

1. When submitting information, a party may designate all or any part or parts of that information as Business Confidential information. Business Confidential information shall be submitted in three copies: one copy of the Business Confidential information shall be provided to the Secretariat, and two copies shall be provided to the other party. Of the two copies for the other party, one copy is for that party's Geneva mission, and one copy is for that party's capital city office.

2. Where a submission by a party incorporates Business Confidential information first submitted by the other party, that submission shall identify all such information as set forth in Article II of these procedures concerning "designated as Business Confidential".

3. If, taking into the account the Basic Principle stated in Article I, the Panel considers that a party has designated as Business Confidential information which is not reasonably entitled to such treatment, the Panel may decline to consider such information. In such a case, the party submitting the information may, at its discretion:

(i) withdraw the information, in which case the Panel and the other party shall promptly return the information to the party submitting it; or

(ii) withdraw the designation of the information as Business Confidential.

4. When submitting printed or binary-encoded Business Confidential information, the party shall also provide:

(i) a non Business Confidential edited version, redacted in such a manner as to convey a reasonable understanding of the substance of the information;

(ii) a non Business Confidential summary in sufficient detail to convey a reasonable understanding of the substance of the information; or

(iii) in exceptional circumstances, a written statement:

(a) that such a non Business Confidential edited version or non Business Confidential summary cannot be made, or

(b) that such a non Business Confidential edited version or non Business Confidential summary would disclose facts that the party has a proper reason for wishing to keep business confidential.

b If the Panel considers that a non-Business Confidential edited version or summary does not fulfill the requirements of paragraph 4(i) or (ii), or that such exceptional circumstances as justify a statement pursuant to paragraph 4(iii) do not exist, the Panel may decline to consider the Business Confidential information in question. In such a case, the party submitting the information may, at its discretion,

(i) withdraw the information, in which case the Secretariat and the other party shall promptly return the information to the party submitting it; or

ii) comply with the provisions of paragraph 4 to the satisfaction of the Panel.

6. When uttering Business Confidential information at a Panel meeting, the speaker shall also provide a brief non-Business Confidential oral statement in sufficient detail to convey a reasonable understanding of the substance of the information that will be uttered.

VI. STORAGE

1. The Secretariat shall store all Business Confidential information submitted in the secure location when not in use by an approved person.

2. Each party shall store all Business Confidential information submitted to it by the other party in a locked storage receptacle, to which only approved persons have access, at the premises of its Geneva mission or its capital city office, when not in use by an approved person.

3. An approved person shall take all necessary precautions to safeguard Business Confidential information when in use and when being stored.

VII. OBLIGATION NOT TO DISCLOSE

1. Where Business Confidential information has been submitted pursuant to these procedures, no approved person who views or hears such information shall disclose that information, or allow it to be disclosed, to any person other than another approved person, except in accordance with these procedures.

2. The Panel shall not disclose Business Confidential information in its report, but may make statements of conclusion drawn from such information.

VIII. DISCLOSURE

1. Business Confidential information submitted by a party and stored at the Geneva mission or capital city office of the other party may only be viewed by an approved person acting as representative of that other party.

2. An approved person viewing or hearing Business Confidential information may take written summary notes of that information for the sole purpose of the Panel process.

3. Business Confidential information shall not be copied, distributed, or removed from the premises of the WTO, or from the premises of a party's Geneva mission, or from the premises of a party's capital city office, except as specifically provided in these Procedures.

4. Notwithstanding paragraph 3. above, a party may bring with it to a Panel meeting, for the sole purpose of that meeting, one of the two copies of Business Confidential information that it has received from the other party under these procedures, and shall immediately thereafter return any and all such information to the locked storage receptacle at its premises.

5. Notwithstanding paragraph 3. above, a Panel member may make and remov e from the premises of the WTO a copy of Business Confidential information. Any copies of Business Confidential information removed from the premises of the WTO by a Panel member shall be used exclusively by that Panel member for the purpose of working on the dispute, and shall be returned to the Secretariat upon conclusion of the Panel. Copies of Business Confidential information removed from the premises of the WTO by a Panel member shall be stored in a locked receptacle.

IX. DISCLOSURE AT A PANEL MEETING

1. A party that wishes to submit Business Confidential information during a Panel meeting shall so inform the Panel prior to doing so. The Panel shall exclude persons who are not approved persons from the meeting for the duration of the submission of such information.

X. DISCLOSURE TO THIRD PARTIES

1. Article 10.3 of the DSU provides that "[t]hird parties shall receive the submissions of the parties to the dispute to the first meeting of the Panel." Accordingly, disclosure of Business Confidential information contained in the first written submissions of the parties shall be granted to representatives of third parties who have filed a Declaration of Non-disclosure with the Chairman of the Panel. The provisions of these procedures shall apply mutatis mutandis to any such disclosure.

XI. TAPES AND TRANSCRIPTS

1. Any tapes and transcripts of Panel meetings at which Business Confidential information is uttered shall be treated as Business Confidential information under these procedures.

XII. RETURN OR DESTRUCTION

1. After the conclusion of the Panel the Secretariat and the parties shall:

(i) return any printed or binary-encoded Business Confidential information (including any notes taken pursuant to paragraph VIII:2 above) in their possession to the party that first submitted such Business Confidential information, or certify in writing that any such Business Confidential information has been destroyed, unless the party that first submitted such Business Confidential information objects;

(ii) destroy all tapes and transcripts of the Panel hearings that contain Business Confidential information and certify in writing that this has been done, unless the parties mutually agree otherwise.

ANNEX I

DECLARATION OF NON-DISCLOSURE

In accordance with the Procedures Governing Business Confidential information contained in Procedures on Business Confidential Information of the Panel on Australia-Subsidies Provided to Producers and Exporters of Automotive Leather (WT/DS126) - Recourse to Article 21.5 of the DSU Requested by the United States (the Procedures), I agree to the following:

Words defined in the procedures have the same meaning in this Declaration of Non-Disclosure as in the Procedures.

  1. I acknowledge having received a copy of the Procedures, a copy of which is attached.
     
  2. I acknowledge having read and understood the Procedures.
     
  3. I agree to be bound by, and to adhere to, the provisions of the Procedures and, accordingly, without limitation, to treat confidentially all Business Confidential information that I may view or hear from time to time in accordance with the Procedures.

Executed on this __________ day of ____________, 1999.

BY: __________________________

Name:

Title:

(Advisors only) Affiliation or employment:

__________



1 Article 31.1 Vienna Convention on the Law of Treaties, 1969.

2 WT/DS26/AB/R and WT/DS48/AB/R of 16 January 1998 (paras 120 to 125).

3 WT/DS58/AB/R of 12 October 1998 (para 130).

4 Report by the Panel on European Communities - Regime for the Importation, Sale and Distribution of Bananas - Recourse to Article 21.5 by Ecuador, WT/DS27/RW/ECU, 12 April 1999, at paragraph 6.105.

5 The term “expensed” is used as in the Report of the Informal Group of Experts G/SCM/W/415/ Rev.2.

6 GPR/DS.2/R, adopted on 13 May 1992, paras. 4.21, 4.24 and 4.26.

7 See second written submission of Australia at e.g. paragraph 6.



1 By exchange of letters dated 1 October 1999, the parties to this dispute have mutually agreed that they both will unconditionally accept the Panel report and that there will be no appeal of that report.



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