NEWS RELEASES

February 11, 2000 (12:20 p.m. EST) No. 23

CANADA TO APPEAL WTO PANEL RULING ON AUTOS

International Trade Minister Pierre S. Pettigrew and Industry Minister John Manley announced today that Canada intends to appeal the recent World Trade Organization (WTO) panel report that found Canadian Auto Pact measures to be inconsistent with Canada's WTO obligations.

"We believe there are compelling legal grounds to appeal aspects of the panel report. An appeal is important in order to seek to clarify the reasoning and the scope of the panel's findings," said Mr. Pettigrew.

"The government will continue to consult closely with the provinces and key industry stakeholders throughout the appeal process," said Mr. Manley. "The Canadian auto industry is strong. Production and employment are at record highs and we offer a highly skilled and productive labour force, competitive labour costs and an excellent business climate."

Canada will file its Notice of Appeal with the WTO prior to the first meeting of the WTO Dispute Settlement Body to be held in March to consider the issue. Proceedings take 60 to 90 days from the date the Notice of Appeal is filed.

The WTO Panel was established in February 1999 to examine complaints from Japan and the European Union that Canadian measures, that accord certain motor vehicle manufacturers an exemption from the applicable 6.1 percent duty on imported vehicles, constitute a violation of Canada's WTO obligations.

The Panel found that the measures are in violation of the most-favoured-nation and national treatment obligations under the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS), as well as provisions in the Agreement on Subsidies and Countervailing Measures prohibiting export subsidies. The Panel's final report was circulated to all WTO members and made public today.

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Backgrounders are attached.

For further information, media representatives may contact:

Sylvie Bussières

Office of the Minister for International Trade

(613) 992-7332

Jennifer Sloan

Office of the Minister of Industry

(613) 995-9001

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

This document is also available on the Department of Foreign Affairs and International Trade's Internet site: http://www.dfait-maeci.gc.ca

Backgrounder

FLOW CHART OF A TYPICAL WTO TRADE DISPUTE

(Time periods for disputes involving exports subsidies is halved)

Request for Consultations

If responding party does not reply within 10 days, or if it does

not enter into consultations within 30 days, or at period

mutually agreed, the complaining party can request the

establishment of a panel (other WTO members with substantial

trade interest have 10 days to join the consultations).

Consultations

60 days

Complaining State May Request Panel

The complaining State may request a panel at any

time after 60 days from the date the request is received by the

other State, provided consultations have not resolved

the issue.

Dispute Settlement Body (DSB) Establishes Panel

(usually within 10-30 days)

Panel's Terms of Reference

Composition of the Panel

(within 20 days of the establishment of the panel)

Panel Examination

Unless otherwise agreed, this should not exceed 6 months from composition of the panel.

For cases on prohibited subsidies, it should not exceed 3 months

(includes circulation of interim report within 13 to 22 weeks).

Final Panel Report Circulated to Members and DSB

(report circulated to disputing parties a few weeks in advance)

DSB Monitors Implementation of Adopted

Panel/Appellate Body Recommendations

Within 30 days of adoption, the responding party must inform the

DSB of its intentions regarding the implementation of the

recommendations.

Backgrounder

CHRONOLOGY OF THE CANADA-JAPAN/EU WTO AUTOS DISPUTE

July 1998 Japan requests WTO consultations on certain Canadian measures implementing the Auto Pact

August 1998 EU requests WTO consultations on certain Canadian measures implementing the Auto Pact

August 1998 Consultations with Japan

September 1998 Consultations with the EU

November 1998 Second set of consultations with the EU

February 1, 1999 WTO dispute settlement panel established to examine complaints of Japan and the EU. The United States, Korea and India reserve their rights to participate as third parties.

May 4, 1999 Japan and the EU present their first written submissions

June 1, 1999 Canada presents its counter-submission

June 14-15, 1999 First oral hearing. Third parties (U.S., India and Korea) file their submissions

July 2, 1999 Canada, Japan and the EU file their second written submissions

July 13-14, 1999 Second set of oral hearings

August 6, 1999 Descriptive part of the report released to Parties (Canada, Japan, EU)

October 13, 1999 Interim panel report circulated to Parties

October 27, 1999 Deadline for Parties to comment on "precise aspects" of interim panel report

December 22, 1999 Final panel report circulated to Parties

February 11, 2000 Final panel report circulated to other WTO members