American Shipper

Both sides seek Airbus adjudicators

The U.S. asked for arbitration to determine whether retaliation against the EU might be allowable; the EU followed with a request for formation of a separate dispute panel.

   The EU recently requested formation of a World Trade Organization dispute panel to determine whether it complied with a prior WTO Appellate Body ruling calling for it to end subsidies for Airbus aircraft manufacturing.
   The request comes after the United States challenged the EU’s compliance with that May 15 ruling at a WTO Dispute Settlement Body (DSB) meeting on May 28.
   According to the EU’s panel establishment request circulated to WTO members July 31, the EU notified the DSB on May 17 that it had adopted several additional measures to fully comply with the Appellate Body report, including withdrawing remaining subsidies and/or taking appropriate steps to remove their adverse effects.
   The U.S. and EU have agreed during the proceedings of the case — which started in 2006 — to cooperate to enable panels to circulate their final reports within 90 days of when they are established pursuant to Article 21.5 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes, which applies to this particular case.
   Further, the United States on July 13 requested the reinitiation of arbitration to determine whether it might be authorized to retaliate, arguing that EU actions taken pursuant to the case still aren’t compliant with its WTO obligations. 
   The U.S. and EU also agreed during the case that for any arbitration such as the United States is requesting, both parties would cooperate to enable the arbitration panel to circulate its decision within 60 days of when the “suspension of its proceedings ends,” or by the end of Sept. 11 in this case, according to the U.S.-EU “Sequencing Agreement” for proceedings drafted in 2012.
   The EU and U.S. held consultations on June 27, which didn’t resolve the disagreement, the EU’s request says.
   “The European Union notes that under Paragraph 2 of the Sequencing Agreement, which applies ‘for the exclusive purposes of this dispute,’ the parties agreed to accept the establishment of a panel at the first DSB meeting at which this request appears on the agenda,” the EU said in its request.
   The EU’s request is on the agenda for the next DSB meeting, scheduled for Aug. 15.
   If a panel is formed pursuant to the EU’s request on Aug. 15, circulation of that final panel report would be expected by the end of Nov. 13, according to the terms of the Sequencing Agreement.
   A WTO case similar to the U.S.-EU Airbus case is a U.S.-Mexico dispute over U.S. dolphin-safe tuna labeling regulations.
   On May 22, 2017, based on a WTO arbitration decision, Mexico received authorization to impose countermeasures on U.S. products at a level of up to $163 million per year, after arbitrators ruled that an initial change to U.S. dolphin-safe tuna regulations did not bring the U.S. into compliance with WTO rules.
   The U.S. then changed its regulation again, in 2016, and said it complied, initiating its own separate WTO compliance case.
   The WTO ruled on Oct. 26, 2017, that the U.S. brought its tuna labeling measures in line with WTO obligations, but Mexico on the same day announced it was appealing the ruling to the WTO Appellate Body.
   The Appellate Body is currently reviewing the case. Mexico said it would refrain from imposing sanctions until that case was completed.
   But there is no certainty that the U.S. would refrain from imposing any retaliation against the EU awarded through arbitration prior to resolution of the EU compliance case, as President Donald Trump and several senior administration officials have continually expressed a willingness to break from WTO rules in instances believed to present potential threats to U.S. sovereignty.
   The Office of the U.S. Trade Representative declined to comment.