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Case study 3
United States - Standards for Reformulated and
Conventional Gasoline

INTRODUCTION

On 23 January 1995, the United States received a request from Venezuela to hold consultations under Article XXII:1 of the General Agreement on Tariffs and Trade 1994 ("General Agreement"), Article 14.1 of the Agreement on Technical Barriers to Trade ("TBT Agreement") and Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), on the rule issued by the Environmental Protection Agency on 15 December 1993, entitled "Regulation of Fuels and Fuel Additives - Standards for Reformulated and Conventional Gasoline" (WT/DS2/1).

The consultations between Venezuela and the United States took place on 24 February 1995. As they did not result in a satisfactory solution of the matter, Venezuela, in a communication dated 25 March 1995, requested the Dispute Settlement Body ("DSB") to establish a panel to examine the matter under Article XXIII:2 of the General Agreement and Article 6 of the DSU (WT/DS2/2). On 10 April 1995, the DSB established a panel in accordance with the request made by Venezuela. On 28 April 1995, the parties to the dispute agreed that the Panel should have standard terms of reference (DSU, Art. 7) and agreed on the composition of the Panel. On 31 May 1995, the DSB established a Panel in accordance with the request made by Brazil.

Australia, Canada, the European Communities and Norway reserved their rights to participate in the Panel proceedings as third parties. Only the European Communities and Norway presented arguments to the Panel.

The Panel met with the parties to the dispute from 10 to 12 July 1995 and from 13 to 15 September 1995. It met with the interested third parties on 11 July 1995.

The Panel issued its interim report to the parties on 11 December 1995. Following a request made by the United States pursuant to Article 15.2 of the DSU, the Panel held a further meeting with the parties on 3 January 1996. The Panel issued its final report to the parties to the dispute on 17 January 1996.

FACTUAL ASPECTS

This case is on the issue of American environmental protection law named The Clean Air Act (CAA清洁空气法) originally enacted in 1963, aims at preventing and controlling air pollution in the United States. In a 1990 amendment to the CAA, Congress directed the Environmental Protection Agency ("EPA"环境保护局) to promulgate new regulations on the composition and emissions effects of gasoline in order to improve air quality in the most polluted areas of the country by reducing vehicle emissions of toxic air pollutants and ozone-forming volatile organic compounds. These new regulations apply to US refiners, blenders and importers.

The establishment of Baseline (基准线)

The CAA directed EPA to determine the quality of 1990 gasoline, and these determinations are known as "baselines". EPA set historic baselines for individual entities(企业单独基准), and established a statutory baseline (法定基准), intended to reflect average US 1990 gasoline quality, which would be used for those entities who were determined to be lacking adequate and reliable data regarding the quality of the gasoline they produced in 1990.

Gasoline Rule(汽油规则)

EPA's Gasoline Rule requires any domestic refiner, which was in operation for at least 6 months in 1990, to establish an individual refinery baseline, which represents the quality of gasoline produced by that refiner in 1990. Domestic refiners are not permitted to choose the statutory baseline.

An importer which is also a foreign refiner must determine its individual baseline using Methods for domestic refiners if it imported at least 75 percent, by volume, of the gasoline produced at its foreign refinery in 1990 into the United States in 1990 (the so-called "75 % rule").

Certain entities are, however, automatically assigned to the statutory baseline. Firstly, refineries which began operation after 1990 or were in operation...
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