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2017 | Supplement | Chapter

7. Remedies: The Procedural Measures

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Abstract

The working of the WTO is based on specific set of objectives. The main objectives of the WTO are to promote trade liberalization and to create fair opportunities for development among its Member States. Following the liberal market policies based on the WTO system, the trading opportunities for the Member States has indeed grown, but they are obliged to follow specific set of rules as check and balances, restricting discriminatory, market distortionary and other inefficient trade practices.
This Chapter deals with the procedural measures to be applied for dispute resolution in case of disagreement between the parties. Member States are expected to follow the WTO rules and comply with the provisions of the SCM Agreement. Trade subsidies can be compared to the two sides of the same coin. For practical reasons, there can be relevant justifications for the state support in the form of subsidies, for example, during the initial phase of industrialization or when the society is transforming from agricultural to industrial mode.
After attaining membership, Member States are expected to formulate domestic policies consistent with the WTO Agreements. However, in cases where party is affected by the subsidy practices or due to the non-compliance, it has to recourse to the DSB. This chapter deals specifically with the procedure for the solutions if a party suffers from the subsidy practices by other Member States. Therefore, the discussion in this chapter is basically confined to the remedies because of the subsidies creating distortionary effect to the other parties.

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Footnotes
1
Hodu (2006), p. 14.
 
2
Article 3 Clause 1, Members affirms their adherence to the principles for the management of disputes here to fore applied under Articles XXII and XXIII of GATT 1947, and the rules and procedures as further elaborated and modified herein. Clause 2. The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law. Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.
 
3
Article XXII of the GATT 1947 encourages the parties to resolve the matter through consultation.
 
4
Article XXIII of the GATT 1947 implies that if any benefit is hindered by the failure of the other party to fulfil its obligations, the party concerned can make a written proposal to consider the matter that has caused an adverse situation.
 
5
Bossche (2008), p. 235.
 
6
Article 4.10 during consultations, Members should give attention to the particular problems and interests of the Developing country Members.
 
7
When a dispute is between a Developing country Member and a Developed country Member, the panel shall, if the Developing country so requests, include at least one panelist from a Developing country Member.
 
8
In the context of consultations involving a measure taken by a Developing country Member, the parties may agree to extend the periods established in paragraphs 7 and 8 of Article 4. If, after the relevant period has elapsed, the consulting parties cannot agree that the consultations have concluded, the chairman of the DSB shall decide, after consultation with the parties, whether to extend the relevant period and, if so, for how long…for detail reference, see the article.
 
9
Where one or more of the parties is a Developing country Member, the panel’s report shall explicitly indicate the form in which account has been taken of relevant provisions on differential and more favourable treatment for Developing country Members that form part of the covered agreements which have been raised by the Developing country Members in the course of the dispute settlement procedures.
 
10
Article 24 Clause 1. At all stages of the determination of the cause of a dispute and of dispute settlement procedures involving a Least-Developed country Member, particular consideration shall be given to the special situation of Least-Developed country Members. Article 24 Clause 2 In dispute settlement cases involving a Least-Developed country Member, where a satisfactory solution has not been found in the course of consultations the Director-General or the Chairman of the DSB shall, upon request by a Least-Developed country Member offer their good offices, conciliation and mediation with a view to assisting the parties to settle the dispute, before a request for a panel is made…. For detail reference, see the Article.
 
11
Article 27 Responsibilities of the Secretariat.
 
12
Japan Taxes on Alcoholic Beverages, WT/DS8/AB/R WT/DS10/AB/R and/DS11/AB/R, A.B interpretation on the status of adopted panel reports, pp. 12–13.
 
13
DSU Article 23 cl(1) When Members seek the redress of a violation of obligations or other nullification or impairment of benefits under the covered agreements or an impediment to the attainment of any objective of the covered agreements, they shall have recourse to, and abide by, the rules and procedures of this Understanding.
 
14
Right to seek information under Article 13cl (1) Each panel shall have the right to seek information and technical advice from any individual or body which it deems appropriate. However, before a panel seeks such information or advice from any individual or body within the jurisdiction of a Member it shall inform the authorities of that Member…. For detail reference, see the article.
 
15
Bossche (2008), p. 192.
 
16
Bossche (2008), p. 193.
 
17
Article 17 cl (9) Working procedures shall be drawn up by the Appellate Body in consultation with the Chairman of the DSB and the Director-General, and communicated to the Members for their information.
 
18
In the interests of fairness and orderly procedure in the conduct of an appeal, where a procedural question arises that is not covered by these rules, a division may adopt an appropriate procedure for the purposes of that appeal only, provided that it is not inconsistent with the DSU, the other covered agreements and these rules. Where such a procedure is adopted, the division shall immediately notify the parties to the dispute, participants, third parties and third participants as well as the other Members of the Appellate Body.
 
19
Article 4.11 of the DSU Whenever a Member other than the consulting Member considers that it has a substantial trade interest in consultations being held pursuant to paragraph 1 of Article XXII of GATT 1994, paragraph 1 of Article XXII of GATS, or the corresponding provisions in other covered agreements, such Member may notify the consulting Members and the DSB, within 10 days after the date of the circulation of the request for consultation under said Article, of its desire to be joined in the consultations.
 
20
Article 10.2 of the DSU Any Member having a substantial interest in a matter before a panel and having notified its interest to the DSB (referred to in this Understanding as a third party) shall have an opportunity to be heard by the panel and to make written submissions to the panel. These submissions shall also be given to the parties to the dispute and shall be reflected in the panel report.
 
21
In the case of Canada-Measures Affecting the Export of Civilian Aircraft , WT/DS70/R. In this dispute between Canada and Brazil, the U.S acting as a third party gave significant submissions before the Panel Body. When the U.S requested before the Panel Body to withdraw its submissions, See footnote 496 WT/DS70/R Brazil submitted a letter requesting the Panel to decline the request of the United States, in view of practical and substantive concerns over the request. In Brazil’s view, complete deletion of the US submissions would pose logistical problems in these time-constrained proceedings, as both the section containing the US submissions, and all references in the parties’ arguments to those submissions, would need to be removed. Substantively, Brazil states that such deletion would prejudice the rights of the parties, because parties (and all Members) have an interest in preserving an accurate and complete record of the proceedings; and because parties may have either developed or foregone particular lines of argument in response to arguments made by the United States. In Brazil’s view, granting the request would prejudice these interests, and would be contrary to the twin goals of “security and predictability” identified by Article 3.2 of the DSU as central to the WTO dispute settlement system. Brazil believes that the Panel does not have the authority to fulfill the US request, in view of the provision of Article 10.2 of the DSU that third party submissions ‘shall be reflected in the panel report’ (emphasis added by Brazil), and the provision of Rule XXV (2) of the Working Procedures for Appellate Review that third party written submissions, recorded oral statements and written answers to questions are part of the record of the panel proceedings. The Panel, in view of the practical difficulties of removing the US submissions and all references thereto from this report, in view of the strong opposition of one of the parties, and in view of the fact that the Panel had asked the parties to submit comments on specific aspects of the US submissions, declined the United States’ request.
 
22
Only parties to the dispute, not third parties, may appeal against a Panel Report. Third parties which have notified the DSB of a substantial interest in the matter pursuant to paragraph 2 of Article 10 may present written submissions, and be given an opportunity to be heard by the Appellate Body.
 
23
DSU Article 17 cl 4. Only parties to the dispute, not third parties, may appeal a panel report. Third parties which have notified the DSB of a substantial interest in the matter pursuant to paragraph 2 of Article 10 may make a written submissions to, and be given an opportunity to be heard by the Appellate Body.
 
24
Covered under Article 4 for Consultations, Article 6 Establishment of Panels, Article 17 for the Appellate Body and Article 21 Surveillance of Implementation of Recommendations and Rulings.
 
25
Article 3.7 of the DSU. Before bringing a case, a Member shall exercise its judgments as to whether action under these procedures would be fruitful. The aim of the dispute settlement mechanism is to secure a positive solution to a dispute.
 
26
Article 4.3 of the DSU.
 
27
Article 4.8 in cases of urgency, including those which concern perishable goods, Members shall enter into consultations within a period of no more than 10 days after the date of receipt of the request. If the consultations have failed to settle the dispute within a period of 20 days after the date of receipt of the request, the complaining party may request the establishment of a Panel.
 
28
Whenever a Member has reason to believe that a prohibited subsidy is being granted or maintained by another Member, such a Member may request consultations with the other Member.
 
29
Article 4, is further subdivided into 11 sub clauses.
 
30
See Article 7.1 of the SCM Agreement.
 
31
DS 314. The consultations started on 18th August 2004 and no Panel Body was established.
 
32
Read (2005), pp. 29–48.
 
33
DSU Article 24 Cl (1) At all stages of the determination of the causes of a dispute and dispute settlement procedures involving a Less-Developed country Member, particular consideration shall be given to the special situation of the Less-Developed country Member. In this regard, Member shall exercise due restraint in raising matters under these procedures involving a Less-Developed country Member.
 
34
Article 2 of the DSU. The Dispute Settlement Body is hereby established to administer these rules and procedures and, except as otherwise provided in a covered agreement, the consultation and dispute settlement provisions of the covered agreements. Accordingly, the DSB shall have the authority to establish Panels, adopt Panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations and authorize suspension of concessions and other obligations under the covered agreements. (for detail reference see the Article 2 of the DSU).
 
35
Bossche (2008), p. 235.
 
36
www.​wto.​org (analytical index).
 
37
The Dispute Settlement Body is hereby established to administer these rules and procedures and, except as otherwise provided in a covered agreement, the consultation and dispute settlement provisions of the covered agreements. Accordingly, the DSB shall have the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorize suspension of concessions and other obligations under the covered agreements.
 
39
Macrory et al. (2005), p. 1248.
 
40
As per Article 4.3, if no mutually agreed solution has been reached within 30 days of the request for consultations, any Member, party to such consultations may refer the matter to the Dispute Settlement Body (DSB) for the immediate establishment of a panel, unless the DSB decides by consensus not to establish a panel.
 
41
According to Article 8.5 of the DSU, panels shall be composed of three panelists unless the parties to the dispute agree, within 10 days from the establishment of the panel, to a panel composed of five panelists.
 
42
Article 6 deals with the establishment of the panels. Clause 1 of this Article states that based on the request of the complaining party, Panel shall be established.
 
43
Article 7 deals with the terms of reference. Clause 1 states that the panel shall have the following terms of reference unless the parties to the dispute agree otherwise. “To examine in the light of the relevant provisions in (name of the covered agreement(s) cited by the parties to the dispute), the matter referred to the DSB by (name of party) in the document and make such findings as will assist the DSB in making the recommendations or in giving the rulings provided in that/those agreement(s).”
 
44
Article 8 deals with the composition of the panel. Under Clause 1of this article, the Panel shall be composed of well qualified governmental and/or non-governmental individuals which includes persons who have served or presented a case before. An important condition to maintain integrity is covered in clause 3 of this Article. “Citizens of Members whose governments are parties to the dispute or third parties as defined in paragraph 2 of Article 10 shall not serve on a panel concerned with that dispute, unless the parties to the dispute agree otherwise.”
 
45
WT/DS178/AB/R The legal question mainly concerned the safeguard measures imposed by the U.S through the Agreement on Safeguard of the WTO. The Agreement on Safeguard sets forth the rules for application of safeguard measures pursuant to Article XIX of GATT 1994. Safeguard Measures are defined as “emergency” actions with respect to increased imports of particular products, where such imports have caused or threaten to cause serious injury to the importing Member’s domestic industry. Para 103, 104, 105 of the A.B Report on this case, the A.B stated that the Panel was entitled to review whether the competent authorities had evaluated all the factors and whether the authorities had provided a reasoned and adequate explanation about the conclusions drawn. The A.B further added that this in brief involved taking into account, both the formal substantive aspect in order to make it an objective assessment and give a comprehensive picture of the issue.
 
46
Article 13 clause 1, Each panel shall have the right to seek information and technical advice from any individual or body which it deems appropriate. However, before a panel seeks such information or advice from any individual or body within the jurisdiction of a Member it shall inform the authorities of that member.
 
47
Kazeri (2009), p. 1031.
 
48
Appendix 4 of the DSU Clause 1. Expert review groups are under the Panel’s authority. Their terms of reference and detailed working procedure shall be decided by the Panel, and they shall report to the Panel. Clause 2 Participation in expert review groups shall be restricted to persons of professional standing and experience in the field of question.
 
49
Article 4.5 of the SCM Agreement.
 
50
Article 4.8 of the SCM Agreement.
 
51
Article 7.6 of the SCM Agreement.
 
52
Article 17.1 and 2 of the DSU.
 
53
Article 17 Clause 1 states that a standing Appellate Body established by the DSB shall hear appeals from the panel cases. Article 17 Clause 6 An appeal shall be limited to issues of law covered in the Panel Report and legal interpretations developed by the Panel. Article 17 clause 9 Working procedure shall be drawn up by the Appellate Body in consultation with the Chairman of the DSB and the Director-General, and communicated to the Members for their information. Article 17 clause 13 The Appellate Body may uphold, modify or reverse the legal findings and conclusions of the Panel.
 
54
Article 17 cl 1. A standing Appellate Body shall be established by the DSB. The Appellate Body shall hear appeals from panel cases. It shall be composed of seven persons, three of whom shall serve on any one case. Persons serving on the Appellate Body shall serve in rotation. Such rotation shall be determined in the working procedures of the Appellate Body.
 
55
From the beginning.
 
56
Mitchell (2005), p. 197.
 
57
WT/DS141/R India is the complainant and the EC is respondent. India requested for the establishment of the Panel Body, as the countervailing duties were imposed by the European communities on the cotton type bed linen from India. See para 1.1 and 2.1 of the WT/DS141/R.
 
58
Article 15, It is recognized that special regard must be given by the Developed country Members to the special situation of Developing country Members when considering the application of anti-dumping measures under the Agreement.
 
59
See para 6.227 of the WT/DS141/R Based on the foregoing understanding of Article 15 of the AD Agreement, we consider the issue before us in this case is, whether the EC authorities actively considered with an open mind the possibilities of price undertakings with Indian exporters prior to the imposition of final anti-dumping measures in the bed linen investigation.
 
60
Para 6.228 India stresses that the Indian exporters and Texprocil made numerous arguments and submissions concerning the Developing country status of India, and the importance of the bed linen proceeding for Indian interests. India appears to be dissatisfied as a general matter with the European Communities failure to address these arguments in the various public notices, but makes no specific claims in this regard…. For detail reference see, the para in the details of the case.
 
61
The decision on whether or not to impose an anti-dumping duty in cases where all requirements for the imposition have been fulfilled, and the decision whether the amount of the anti-dumping duty to be imposed shall be the full margin of dumping or less, are decisions to be made by the authorities of the importing Member.
 
62
See WT/DS141/R, para 6.228.
 
63
See WT/DS141/R, para 6.229. Wolfrum et al. (2008), p. 192.
 
64
Article 20. Time frame for DSB Decisions. Unless otherwise agreed to the parties to the dispute, the period from the date of establishment of the panel by the DSB until the date DSB considers the panel or appellate report for adoption shall as a general rule not exceed 9 months where the panel report is not appealed or 12 months where the report is appealed. Where either the panel or the Appellate Body has acted, pursuant to paragraph 9 of Article 12 or paragraph 5 of 17, to extend the time for providing its report, the additional time shall be added to the above period.
 
65
Article 21cl 1.Prompt compliance with recommendations or rulings of the DSB is essential in order to ensure an effective resolution of disputes to the benefit of all Members.
 
66
Article 17 cl 14. An Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the Appellate Body report within 30 days following its circulation to the Members. This adoption procedure is without prejudice to the right of Members to express their views on an Appellate Body.
 
67
Article 21.3 DSU, at a DSB meeting held within 30 days after the date of adoption of the panel or Appellate Body report, the Member concerned shall inform the DSB of its intentions in respect of implementation of the recommendations and rulings of the DSB. If it is impracticable to comply immediately with the recommendations and rulings, the member concerned shall have a reasonable period of time in which to do so.
 
68
Article 4.4 of the SCM Agreement.
 
69
See Article 4.6 of the SCM Agreement.
 
70
Article 4.9 of the SCM Agreement.
 
71
For reference, see Article 7.2 of the SCM Agreement.
 
72
See Article 7.6 of the SCM Agreement.
 
73
See Article 7.7 of the SCM Agreement.
 
74
Macrory et al. (2005), pp. 703–704. Also see Article7.9 of the SCM Agreement.
 
75
Article 10 of the SCM Agreement, Application of Article VI of GATT 1994.
 
76
Bossche (2008), p. 585.
 
77
Article 11.2 of the SCM Agreement. An application under para1 shall include sufficient evidence of the existence of (a) a subsidy and, if possible, its amount (b) injury within the meaning of Article VI of GATT 1994 as interpreted by this Agreement, and (c) a causal link between subsidised imports and the alleged injury.
 
78
Part V of the SCM Agreement.
 
79
Article 11 of the SCM Agreement.
 
80
Article 12 ″.
 
81
Article 13 ″.
 
82
Article 14 ″.
 
83
Article 15 ″.
 
84
Article 17 ″.
 
85
Article 18 ″.
 
86
Article 19 of the SCM Agreement.
 
87
Article 11.1 “Except as provided in paragraph 6, an investigation to determine the existence, degree and effect of any alleged subsidy shall be initiated upon a written application by or on behalf of the domestic industry.”
 
88
An application under paragraph1 shall be rejected and an investigation shall be terminated promptly as soon as the authorities concerned are satisfied that there is in sufficient evidence of either subsidization or of injury to justify proceeding with the case. There shall be immediate termination in cases where the amount of a subsidy is de minimis, or where the volume of subsidised imports, actual or potential, or the injury, is negligible. For the purpose of this paragraph, the amount of subsidy shall be considered to be de minimis if the subsidy is less than 1 percent ad-valorem.
 
89
Article 15.1 of the SCM Agreement “A determination of injury for purposes of Article VI of GATT 1994 shall be based on positive evidence and involve an objective examination of both (a) the volume of the subsidised imports and the effect of the subsidised imports on prices in the domestic market for like products and (b) the consequent impact of these imports on domestic producers of such products.”
 
90
Article 1.6 of the SCM Agreement allows the investigating authorities to initiate an investigation without receiving an application on behalf of the domestic industry, in circumstances in which they have sufficient evidence of the existence of a subsidy and the injury to the trade benefits because of it.
 
91
Article 18 of the SCM Agreement.
 
92
Article 19 of the SCM Agreement, Imposition and Collection of Countervailing Duties.
 
93
No specific action against a subsidy of another Member can be taken except in accordance with the provisions of GATT 1994 as interpreted by this Agreement.
 
94
WT/DS217/62.
 
95
United States-Definitive Anti-Dumping and Countervailing Duties On Certain Products From China, WT/DS379/AB/R.
 
96
Article 5.
 
97
WT/DS379/R and WT/DS379/AB/R.
 
98
USDOC, United States Department of Commerce.
 
99
WT/DS379/R, para 2.1.
 
100
See WT/DS379/R, para 2.1.
 
101
See WT/DS379/R, para 1, The consultations concerned definitive anti-dumping and countervailing duties imposed by the United States on imports of four products from China (circular welded carbon quality steel pipe, pneumatic of-the-road tires, light walled rectangular pipe and tube, laminated woven sacks. China and the United States held consultations on 14th November 2008. These consultations failed to resolve the dispute. The definitive anti-dumping and countervailing duties were imposed by the United States on four products (1) Circular Welded Carbon quality Steel pipe (CWP) (2) Certain New Pneumatic off-the Road Tires (OTR) (3) Light-Walled Rectangular Pipe and Tube (LWR) (4) Laminated Woven Sacks (LWS).
 
102
Article 19.3 “When a countervailing duty is imposed in respect of any product, such a countervailing duty shall be levied, on the appropriate amounts in each case, on a non-discriminatory basis on imports of such product from all sources found to be subsidized and causing injury, except as to imports from those sources which have renounced any subsidies in question or from which undertakings under the terms of this Agreement has been accepted.”
 
103
See para 14.113 WT/DS379/R.
 
104
See para 14.114.
 
105
See para 14.117.
 
106
See para 14.119.
 
107
See para1 and para7 of WT/DS379/AB/R.
 
108
See para 541 WT/DS379/AB/R.
 
109
See 542, 543 WT/DS379/AB/R.
 
110
See para 543 WT/DS 379/AB/R.
 
111
See para 543 WT/DS 379/AB/R.
 
112
WT/DS379/AB/R, para 540 of the A.B report. China appeals this findings and requests us to (1) find that the Panel erred in its interpretation and application of Article 10, 19.3 ,19.4 and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994 (2) reverses the Panel’s finding that China did not establish that the United States had acted inconsistently with its obligations under these provisions by imposing anti-dumping duties calculated under its NME methodology concurrently with the imposition of countervailing duties on the same products, without taking steps to avoid offsetting the same subsidies twice; and (3) complete the analysis and conclude that USDOC acted inconsistently with the obligations of the United States under Article 10, 19.3, 19.4 and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994, in all of the investigations at issue, by failing to take steps to avoid offsetting the same subsidies twice.
 
113
Article VI.5 of the GATT “No product of the territory of any contracting party imported into the territory of any contracting party shall be subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidization.”
 
114
See AB report, para 568.
 
115
See WT/DS379/AB/R, para 583.
 
116
Article 25 of the DSU covers the procedure concerning the Arbitration. Article 25 cl (1) Expeditious arbitration within the WTO as an alternative means of dispute settlement can facilitate the solution of certain disputes that concern issues that are clearly defined by both parties.
 
117
European Communities-Regime for the Importation, WT/DS27/15, the European Communities requested for the consultations with the complaining parties in this case Ecuador, Guatemala, Honduras, Mexico and the United States. As both sides could not reach agreement, the complaining parties requested on 17th November 1997, for arbitration in order to resolve the matter that is implementation of the DSB decision within the reasonable time set. (See Introduction WT/DS27/15). The Arbitrator was appointed to find the solution. The complaining party stated before the arbitrator that to discover whether the EC intended to implement the recommendations of the DSB within the reasonable time period. Finally, the arbitrator in the context of Article 21.3(c) suggested a reasonable period time for the EC to implement the recommendations and rulings of the DSB. The time period assigned was from 25th September 1997 to 1st January 1999.
 
118
Article 22.6, Article 22.7 of the DSU.
 
Literature
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go back to reference Canada-Measures Affecting the Export of Civilian Aircraft WT/DS70/R Canada-Measures Affecting the Export of Civilian Aircraft WT/DS70/R
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go back to reference Japan-Taxes on Alcoholic Beverages WT/DS8/AB/R Japan-Taxes on Alcoholic Beverages WT/DS8/AB/R
go back to reference Japan-Taxes on Alcoholic Beverages WT/DS11/R Japan-Taxes on Alcoholic Beverages WT/DS11/R
go back to reference Mexico-Provisional Countervailing Measures on Olive Oil from the European Communities DS314 Mexico-Provisional Countervailing Measures on Olive Oil from the European Communities DS314
go back to reference United States-Continued Dumping and Offset Act of 2000 WT/DS217/AB/R United States-Continued Dumping and Offset Act of 2000 WT/DS217/AB/R
go back to reference United States-Definitive Anti-Dumping and Countervailing Duties On Certain Products from China WT/DS379/AB/R United States-Definitive Anti-Dumping and Countervailing Duties On Certain Products from China WT/DS379/AB/R
go back to reference United States-Safeguard Measures on Imports of Fresh Chilled or Frozen Lamb Meat from New Zealand and Australia WT/DS178/AB/R United States-Safeguard Measures on Imports of Fresh Chilled or Frozen Lamb Meat from New Zealand and Australia WT/DS178/AB/R
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Metadata
Title
Remedies: The Procedural Measures
Author
Gurwinder Singh
Copyright Year
2017
DOI
https://doi.org/10.1007/978-3-319-62422-8_7