WTO Establishes Panels To Mediate Trade Disputes

by Ulrika Lomas, Tax-News.com, Brussels

27 January 2010

At the meeting of the World Trade Organization's (WTO's) Dispute Settlement Body (DSB) on January 19, 2010, panels were established to mediate in the complaint filed by China on duties placed by the US allegedly to restrict Chinese tyre imports, and to review the Philippines' tax regime on imported spirits.

The first panel was granted on the back of an application by China to the WTO following failed consultations between China and the US, which started in September 2009. According to the WTO, China "deeply regretted" the US decision to impose restrictions on Chinese tyres and believed it was a departure from the international consensus of G20 leaders to fight against protectionism. China has urged the US to promptly withdraw its measures.

Responding, the US remains confident that the measures challenged were consistent with its WTO obligations and with the product-specific safeguard mechanism provided in China's Protocol of Accession. The US added that in just four years, US tyre imports from China more than tripled by volume and the value of those imports rose to USD1.8bn. The US said that in those same four years its production had fallen by more than 25%, while 14% of US workers in the industry had lost their jobs.

The DSB established a further panel on the European Union's (EU's) request, which challenged the Philippine tax regime on distilled spirits. The EU said it had no choice but to request the establishment of a panel for a second time and declared that recent statements by the Philippines clearly indicated that there was no prospect of the passing of a bill that would bring a solution to this problem. The EU noted that this longstanding tax discrimination had worsened over the years and added that imported spirits were subject to an excise tax 10 to 50 times higher than the tax imposed on domestic spirits. The EU said that its exports to the Philippines had more than halved between 2004 and 2007 as a result of this increasing discrimination.

The US has also announced its concern about the Philippine excise tax and its effect on market access for its exports of distilled spirits. The US said that it filed a request for consultations with the Philippines on January 14, 2010.

In its response, the Philippines announced its regret that the EU chose to renew its request for the establishment of a panel. The Philippines reiterated its full commitment to a rules-based multilateral trading system and firmly believed that its excise tax was fully consistent with its WTO obligations.

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