WTO Dispute 393: Chile Antidumping Case

Home Case Brief WTO Dispute 393: Chile Antidumping Case
WTO Dispute 393: Chile Antidumping Case


World Trade Organization (WTO) is playing a key role in regional trade relations. It was vital due to its significance in world trade and its external trade relations, and continues playing a key role in the world business (World Trade Organization, p. 258). Access to unilateral or bilateral or multilateral dispute settlement is helping it to examine and anchor the more complex regional disciplines. In fact, WTO rules and regulations act like a magnifying glass of countries’ trade policies. In this area, goodwill and reputation, high-value asset to draw attention business and negotiate trade contract, is thus stake. The dispute between Argentina and Chile regarding wheat safeguard case is in such point. Chile lost the case of wheat safeguards with Argentina and WTO played a major role in it. The WTO decision on this case concludes that by maintaining a border measure similar to a variable import levy and to a minimum import price, Chile is acting in a manner inconsistent with Article 4.1 of the Agreement on Agriculture. “In the panel Report, circulated to Members of the WTO on 3 May 2002, the Panel found that Chile’s price band system is inconsistent with Article 4.2 of the Agreement on Agreeculture and Article II:1(b) of the GATT 1994. the Panel also found that Chile’s safeguard measures on wheat, wheat flour and edible oils violated certain provisions of the Agreement on Safeguards and the GATT 1994” (World Trade Organization, p. 3047). Argentina’s argument was that Chile’s price band system was either a ‘variable import levy’, a ‘minimum import price’ or a ‘similar border measure other than ordinary custom duties (Trebilcock and Howse, p. 340).

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For this reason it has failed to apply the recommendations and rules & regulations of the Dispute Settlement Body. Such case is considered very importantly by WTO to solve the problem in better way. McMahon states that

“On 25 September 2003, Chile published in the Official Journal Law No. 19.897 establishing rules on the importation of goods into the country, amending Article 12 of Law No. 18.525 and the Customs Tariff, and on 4 October 2003 Chile published in the Official Journal Supreme Decree No. 831 of the Ministry of Finance regulating the application of Article 12 of Law 18.525, as substituted by Article 1 of Law 19.897.6 This Decree regulates certain aspects of the PBS, the modifications of which entered into force on 16 December 2003 for the products at issue in this dispute, with the exception of edible vegetable oils, which ceased to be subject to the PBS as of the date of publication of Law No. 19.897” (p. 43).

Initiation steps taken by Chilean Government

On 11 April 2008, the Asociación de Molineros del Centro A.G. submitted application for the initiation for an investigation into claimed dumping and the application of impermanent anti-dumping measures on import of wheat flour from Argentina. After a week later, the national commission decided to initiate an examination into possible dumping of imports of wheat from Argentina. On 3 July 2008, the Minister of Finance of Chile decided to impose a provisional anti-dumping duty of 30.3% on imports of wheat flour from Argentina. Finally, on 2 January 2009, the Minister of Finance confirmed the anti-dumping duty of 30.3% on imports of wheat flour from Argentina under tariff heading 1101.0000 of the customs tariff.

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Responses by Argentine Government

On all these accounts, there are some problems with the rules which do not support the action taken by Chilean Government. According to Argentina, the investigation done by Chilean authorities, the determinations made and the extra duties imposed is inconsistent with Chile’s responsibilities under the provisions of GATT 1994 and the anti-dumping agreement. In addition, Argentina regards the anti-dumping measures on importing wheat flour from Argentina violates the Articles 1, 2, 3, 5, 6, 7, 9, 12, 13 and 18 of the Anti-Dumping Agreement and Annex II thereto and Article VI of the GATT 1994.

According to Argentina, the price band system is not limited with the measures, but also with the rules and recommendation of WTO. There have been however more disputes going on between the two sides regarding the mixed oil price and safety measures. After all, these disputes did not affect the overall Articles and their implementation.

The following WTO rules were allegedly broken and what the panel founds is given below:-

  • By maintaining a continuous border measure parallel to a variable import levy and to the minimum import price, Chile has acted in a manner which violates with Article 4.2 of the agreement on Agriculture and thus failed to apply the implement the rules and recommendations of the Dispute Settlement Body.
  • It was unnecessary, for the resolution of the dispute, to make separate findings under Articles II: 1(b) of GATT 1994 and XVI:4 of the WTO Agreement (Report Of The Appellate Body).

Implementation status of adopted reports

On 11 November 2002, at the DSB meeting, Chile declared that it intended to act in accordance with the recommendations and rules & regulations of the DSB. To that point, Chile engaged in the consultations with the other actor Argentina to find a mutual satisfactory solution of that dispute in a persuasive way. In addition to this, Chile stated that it would need additional and reasonable time to bring its measure into conformity with the rules & regulations and recommendations of the DSB. On 6 December 2002, it also informed DSB that Chile and Argentina has been failed to reach into the mutual agreement. Besides this, they have been also failed to agree on the length of the required period of time. Therefore, Argentina and Chile agreed on the issue of postponing the deadline of binding arbitration which could be completed no longer than ninety days. They informed this to the DSB and stated about the extension of time to implement those recommendations and rulings of DSB.

On 17 March 2003, the judge concluded that the extension of reasonable period of time should be extended to Chile. The reasonable period of time can be extended so that Chile can implement the recommendations and rulings of the DSB.

On 23 January 2004, at the meeting of DSB, both Chile and Argentina stated about the bilateral agreement regarding the process under articles 21.5 and 22 of the DSU. In this related field, Chile also stated that the issue of sequencing between 21.5 and 22 can not be implemented until further agreement. In this case Argentina noted the issue of consultations regarding the implementation of recommendations and rulings of DSB.

On 19 may 2004, however, Argentina recommended consultations with other actor Chile under the rules and regulations of Article 21.5 of the DSU. In addition to this, it requested to hold up the establishment of the former panel under the Article 21.5 of the DSU. Finally, at the meeting held on 20 January 2006, Dispute Settlement Body (DSB) agreed to refer the matter raised by Argentina to the former original panel if possible (Report of the Appellate Body).

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Implications for firms and industries

The dispute has given several implications for the various firms and industries involved and these are as follows:-

  • In case of internal institutional setting, the absence of comprehensible and pre-established tools to handle dispute is detrimental to all parties. While private industries risks subjective dismissal of the case, the public sectors provide an uncertain and unavoidable decisions. The considerable time, cost and expertise required to run the dispute for the firms and industries of developing countries is certainly a problem. However, by reallocating public officials to make a stable and multidisciplinary corps of specialists to handle trade disputes can be considered as a cost-effective solution. By this way, past experience and learning can be implemented to reconcile the two sides.
  • In terms of business involvement, the key element for the firms and industries was their participation in the sense of responsibility with the public agencies. It gives a great lesson of understanding the importance of accurate information, statistical data and financial cooperation.
  • From the perspective of capacity building, the case is to be said as a shared learning understanding among all parties. It encourages building up a strong confidence of public agents for the purpose of other products.
  • The bargaining strategy taken by governments and their temporal de-linking issues provide the basic experience of calculating the maximum and minimum losses of all firms and industries.
  • It gives a clear idea of how the process can be lengthened to reallocate all the information from all the parties involved in the case.