3.

COMMENTS BY THIRD PARTIES

CANADA

Canada argued that GATT 1994 should be applicable to existing countervailing

measures, even if those measures were first enacted or imposed before the
entry into force of the WTO. There was nothing retroactive in requiring WTO
members to continue to maintain only those tariff and non-tariff measures
consistent with their GATT 1994 obligations.

It noted that contracting parties under the GATT which were also signatories
to the Tokyo Round SCM Code had the choice of proceeding under the said
Code or the GATT, and the choice of forum depended on the nature of the
asserted inconsistency, the nature of the obligations, and the remedies
available. It explained that the existence of potential recourse to the Tokyo
Round SCM Committee for dispute settlement under the Tokyo Round SCM
Code was not dispositive of the issue - the availability of one forum and legal
instrument did not foreclose the availability of other fora or instruments to
WTO Members, and in particular did not foreclose reliance on basic GATT
obligations by WTO Members. Similarly, the possibility of domestic review
proceedings in Brazil was not dispositive of the issue. Nothing in the Tokyo
Round SCM Code, the SCM Agreement, or GATT 1994 required the Philippines
to challenge existing measures through domestic review mechanisms to the
exclusion of the WTO dispute settlement process.

Finally, Canada agreed that Brazil’s failure to consult with the Philippines was
a violation of its obligations under the DSU. Entering into consultations where
a request is made was a basic procedural obligation of every WTO Member.
Brazil should have presented its substantive or procedural objections to the
Philippines during consultations, and at the meetings of the DSB, and
ultimately to a panel, rather than frustrating the consultative process.

EUROPEAN COMMUNITIES

On the question of the law applicable to this dispute, the EC took the position
that the Philippines had brought its complaint to the wrong forum under the
wrong law. The EC argued that the principle of non-retroactivity of treaty
obligations, embodied in Article 28 of the Vienna Convention, precluded the
application of Article VI of GATT 1994 to the Brazilian countervailing
measures in question. The EC rejected the Philippines' argument that Article
30.3 of the Vienna Convention required the application of GATT 1994 to this
dispute. The EC argued that there was no conflict between the Tokyo Round
SCM Code and GATT 1994 with respect to the Brazilian investigation, since
Article VI of GATT 1994 did not apply to that investigation. The EC supported
Brazil's view that Article 28 of the Vienna Convention precluded the
application of Article VI of GATT 1994 to this dispute, since the investigation
was initiated pursuant to an application made prior to the entry into force of
the WTO Agreements, including the SCM Agreement.

The EC distinguished between the application, investigation, and imposition of

duties and the continued collection of taxes, saying that the latter could be
characterized as a situation arising out of the former. As such, the law
applicable during the former should likewise be applicable for the latter.

INDONESIA

Indonesia supported the argument that the countervailing duty imposed by

Brazil was inconsistent with GATT 1994 and the Agreement on Agriculture. In
Indonesia's view, the Philippine programs, although they could be categorized
as subsidies, were not countervailable, as they were fully in compliance with
developing countries' rights and the de minimis exception of Article 6 of the
Agriculture Agreement. Indonesia argued that since Brazil's determination
was made in August 1995, the Agreement on Agriculture was applicable.
Indonesia also argued that Brazil erred in relying on the best information
available, and failed to take account of relevant information submitted by the
Philippines.

SRI LANKA

Sri Lanka took the position that Brazil’s countervailing duties was inconsistent
with the GATT 1994. As with the Philippines, Sri Lanka asserted that its
programs investigated by Brazil were not subsidies since they were paid for
by a mandatory levy on exports of coconut products. In addition, the
Philippine domestic support measures found by Brazil to constitute subsidies,
like the Sri Lankan domestic support measures also found by Brazil to
constitute subsidies, fell into the "green box" category of non-actionable
subsidies under Article 13 of the Agreement on Agriculture.
UNITED STATES

The US asserted that the Philippines was entitled to invoke the GATT 1994,
and that Brazil improperly relied on the fact that it commenced its
investigation prior to 1 January 1995 to argue that GAT 1994 did not apply. It
explained that when Brazil became a WTO member, it assumed the obligation
not to impose countervailing duties inconsistent with the GATT 1994, an
obligation which it accepted notwithstanding its countervailing duty
investigation on desiccated coconut. The US further asserted that, should
Brazil fail to respect its obligation to levy countervailing duties in a manner
consistent with GATT 1994, and levy duties in a manner inconsistent with its
schedule of tariff concessions, it would impair its tariff bindings in violation of
GATT 1994, which it accepted when it became a WTO Member. To be clear,
the US reiterated that the act of imposing a countervailing duty was the act
that is relevant in the present case, which act occurred after 1 January 1995.
As such, Brazil was obligated to impose duties in accordance with its
commitments under GATT 1994. The US also took the position that, should
the Panel find that the Philippines was within its rights to bring this dispute
under GATT 1994, the Panel must conduct its examination based on Article VI
of the GATT 1994, without any reference to the Tokyo Round SCM Code or
SCM Agreement.

The US likewise argued that Brazil’s injury determination was flawed. First, is
that Brazil did not present any causal connection between the subsidized
imports and the material injury it supposedly suffered, which is inconsistent
with the provisions of Article VI of the GATT 1994. Second, was that Brazil did
not use a consistent definition of domestic injury for its conclusions of
material injury. The failure to base conclusions concerning material injury on
a consistent industry definition, with no plausible reasons for this
inconsistency, was impermissible in the light of the requirement in Article VI
to assess material injury to "an" established domestic industry.

As to the issue of the terms of reference, the US simply argued that the Panel
was required to examine the matter before it, which meant the subject matter
of the dispute described in the request for establishment of a panel.

Source:
Brazil - Measures Affecting Desiccated Coconut - Report of the Panel, WT/DS22/R (17
October 1996); Retrieved 13 March 2020 from URL:
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