WTO APPELLATE BODY ISSUES REPORT ON AUTOPACT

May 31, 2000 (12:40 p.m. EDT) No. 126

WTO APPELLATE BODY ISSUES REPORT ON AUTOPACT

International Trade Minister Pierre Pettigrew and Industry Minister John Manley announced today that the World Trade Organization (WTO) Appellate Body has confirmed that the Auto Pact measures are inconsistent with Canada's WTO obligations under the General Agreement on Tariffs and Trade and the Agreement on Subsidies and Countervailing Measures.

The Appellate Body, however, agreed with Canada that a WTO dispute settlement panel was not justified in finding that Canada had violated its most-favoured-nation (MFN) obligation under the General Agreement on Trade in Services. This reverses the panel's earlier finding.

"We will need to examine the Appellate Body report carefully before making any decisions on implementation," said Mr. Pettigrew. "We will continue our consultations with the provinces and industry stakeholders, as we have been doing. Canada will honour its WTO obligations."

The Ministers noted that Canada`s auto sector is strong, internationally competitive and highly productive for reasons independent of the Auto Pact. The Ministers remain confident that this sector will continue to perform strongly.

The Appellate Body's report was circulated to all WTO members and made public today. The report will likely be adopted by the WTO Dispute Settlement Body in June. Canada will have to indicate to the WTO its intentions with respect to implementation within 30 days of adoption.

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

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A backgrounder is attached.

For further information, media representatives may contact:

Sylvie Bussières

Office of the Minister for International Trade

(613) 992-7332

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

Jennifer Sloan

Office of the Minister of Industry

(613) 995-9001

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

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