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RESTRICTEDWORLDTRADEWT/DS2/R29January1996ORGANIZATION(96-0326)UnitedStates-StandardsforReformulatedandConventionalGasolineReportofthePanelI.INTRODUCTION1.1On23January1995,theUnitedStatesreceivedarequestfromVenezuelatoholdconsultationsunderArticleXXII:1oftheGeneralAgreementonTariffsandTrade1994(GeneralAgreement),Article14.1oftheAgreementonTechnicalBarrierstoTrade(TBTAgreement)andArticle4oftheUnderstandingonRulesandProceduresGoverningtheSettlementofDisputes(DSU),ontheruleissuedbytheEnvironmentalProtectionAgencyon15December1993,entitledRegulationofFuelsandFuelAdditives-StandardsforReformulatedandConventionalGasoline(WT/DS2/1).TheconsultationsbetweenVenezuelaandtheUnitedStatestookplaceon24February1995.Astheydidnotresultinasatisfactorysolutionofthematter,Venezuela,inacommunicationdated25March1995,requestedtheDisputeSettlementBody(DSB)toestablishapaneltoexaminethematterunderArticleXXIII:2oftheGeneralAgreementandArticle6oftheDSU(WT/DS2/2).On10April1995,theDSBestablishedapanelinaccordancewiththerequestmadebyVenezuela.On28April1995,thepartiestothedisputeagreedthatthePanelshouldhavestandardtermsofreference(DSU,Art.7)andagreedonthecompositionofthePanelasfollows:Chairman:Mr.JosephWongMembers:Mr.CrawfordFalconerMr.KimLuotonen1.2On10April1995,BrazilrequestedtheUnitedStatestoholdconsultationsunderArticleXXII:1oftheGeneralAgreement,Article14.1oftheTBTAgreementandArticle4oftheDSUontheruleissuedbytheEnvironmentalProtectionAgencyon15December1993entitledRegulationonFuelsandFuelAdditives-StandardsforReformulatedandConventionalGasoline(WT/DS4/1).ConsultationsbetweenBrazilandtheUnitedStateswereheldon1May1995withoutresultinginasatisfactorysolutionofthematter.Inacommunicationdated19May1995,BrazilrequestedtheDSBtoestablishapaneltoexaminethematterpursuanttoArticleXXIIIoftheGeneralAgreement,Article14oftheAgreementonTechnicalBarrierstoTradeandArticle6oftheDSU.On31May1995,theDSBestablishedaPanelinaccordancewiththerequestmadebyBrazil.1.3On31May1995,pursuanttoArticle9oftheDSUinrespectofmultiplecomplainants,theDSBdecided,withtheagreementofalltheparties,thatforpracticalreasonsthismatterbeexaminedbythePanelalreadyestablishedattherequestofVenezuelaon10April1995.ThedateoftheconstitutionofthePanel,namely28April1995,remainedunchanged.1.4DuetotheadditionaltaskgiventothePanel,theDSBagreedupon,atthesamemeeting,thefollowingtermsofreference:Toexamine,inthelightoftherelevantprovisionsofthecoveredagreementscitedbyVenezuelaindocumentWT/DS2/2andbyBrazilindocumentWT/DS4/2,themattersreferredtotheDSBbyVenezuelaandBrazilinthosedocumentsandtomakesuchfindingsaswillassisttheDSBinmakingtherecommendationsoringivingtherulingsprovidedforinthoseagreements.1.5TheChairmanoftheDSBrecalledArticle9.2oftheDSUwhichprovidesthattherightswhichthepartiestothedisputewouldhaveenjoyedhadseparatepanelsexaminedthecomplaintsareinnowayimpaired.1.6Australia,Canada,theEuropeanCommunitiesandNorwayreservedtheirrightstoparticipateinthePanelproceedingsasthirdparties.OnlytheEuropeanCommunitiesandNorwaypresentedargumentstothePanel.1.7ThePanelmetwiththepartiestothedisputefrom10to12July1995andfrom13to15September1995.Itmetwiththeinterestedthirdpartieson11July1995.1.8On21September1995,theChairmanofthePanelinformedtheDSBthatthePanelwouldnotbeabletoissueitsreportwithinsixmonths.ThereasonsforthatdelayarestatedindocumentWT/DS2/5.1..9ThePanelissueditsinterimreporttothepartieson11December1995.FollowingarequestmadebytheUnitedStatespursuanttoArticle15.2oftheDSU,thePanelheldafurthermeetingwiththepartieson3January1996.1.10ThePanelissueditsfinalreporttothepartiestothedisputeon17January1996.II.FACTUALASPECTSA.TheCleanAirAct2.1TheCleanAirAct(CAA),originallyenactedin1963,aimsatpreventingandcontrollingairpollutionintheUnitedStates.Ina1990amendmenttotheCAA1,CongressdirectedtheEnvironmentalProtectionAgency(EPA)topromulgatenewregulationsonthecompositionandemissionseffectsofgasolineinordertoimproveairqualityinthemostpollutedareasofthecountrybyreducingvehicleemissionsoftoxicairpollutantsandozone-formingvolatileorganiccompounds.ThesenewregulationsapplytoUSrefiners,blendersandimporters.2.2Section211(k)oftheCAAdividesthemarketforsaleofgasolineintheUnitedStatesintotwoparts.Thefirstpart,whichcoversapproximately30percentofgasolinemarketedintheUnitedStates,consistsoftheninelargemetropolitanareasthatexperiencedtheworstsummertimeozonepollutionduringtheperiod1987-1989,plusanyareasthatdonotmeetnationalozonerequirementsandareaddedattherequestofthegovernorofthestate.Theseareasarereferredtoasozonenonattainmentareas,andinthispartoftheUnitedStatesonlyreformulatedgasolinemaybesoldtoconsumers.IntherestoftheUnitedStates,conventionalgasolinemaybesoldtoconsumers.2.3Section211(k)(2)-(3)oftheCAAestablishedcertaincompositionalandperformancespecificationsforreformulatedgasoline.Theoxygencontentmustnotbelessthan2.0percentbyweight,thebenzenecontentmustnotexceed1.0percentbyvolumeandthegasolinemustbefreeofheavymetals,includingleadormanganese.TheperformancespecificationsoftheCAArequirea15percentreductionintheemissionsofbothvolatileorganiccompou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