RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/121
3 April 2002
(02-1687)
Dispute Settlement Body
8 March 2002
MINUTES OF MEETING
Held in the Centre William Rappard
on 8 March 2002
Chairman:  Mr. Carlos Pérez del Castillo (Uruguay)
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB.........................1
(a) United States – Section 110(5) of the US Copyright Act:  Status report by the United
States......................................................................................................................... ..................2
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States.......................2
(c) Argentina – Measures affecting the export of bovine hides and the import of finished
leather:  Agreement between the EC and Argentina concerning procedures under
Articles 21 and 22 of the DSU.................................................................................................. ..3
2. Canada – Export credits and loan guarantees for regional aircraft ....................................4
(a) Implementation of the reco mmendations of the DSB.................................................................4
3. Mexico – Measures affecting te lecommunications  services...................................................5
(a) Request for the establishment of  a panel by the United States ...................................................5
4. Argentina – Definitive anti-dumping duties on poultry from Brazil ...................................6
(a) Request for the establishm ent of a panel by Brazil.....................................................................6
5. United States – Definitive safeguard measures on imports of circular welded
carbon quality line pi pe from Korea.......................................................................................6
(a) Report of the Appellate Body and Report of the Panel...............................................................6
6. Proposed nominations for the indicative list of governmental and
non-governmental panelists ...................................................................................................10
1. Surveillance of implementation of recommendations adopted by the DSB
(a) United States – Section 110(5) of the US Copy right Act:  Status report by the United States
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States(c) Argentina – Measures affecting the export of bovine hides and the import of finished leather:
Agreement between the EC and Argentina concerning procedures under Articles 21 and 22 of
the DSUWT/DSB/M/121
Page 2
1. The Chairman recalled that Article 21.6 of the DSU required that "unless the DSB decides
otherwise, the issue of implementation of the recommendations or rulings shall be placed on the
agenda of the DSB meeting after six months following the date of establishment of the reasonable
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is
resolved".  He proposed that the three sub-items to which he had just referred be consideredseparately.
(a) United States – Section 110(5) of the US Copyri ght Act:  Status report by the United States
(WT/DS160/18/Add.2)
2. The Chairman drew attention to document WT/DS160/18/Add.2 which contained the status
report by the United States on progress in the implementation of the DSB's recommendations in the
case concerning Section 110(5) of the US Copyright Act.
3. The representative of the United States said that on 25 February 2002, in accordance with
Article 21.6 of the DSU, her country had provided an additional status report pertaining to this
dispute.  As noted in the report, the United States had been engaged in discussions with the EC in an
effort to find a positive and mutually acceptable solution to this dispute.  In light of those discussions,
the parties to the dispute had jointly requested that the arbitration proceedings in this case be
suspended in order to facilitate efforts to reach a positive resolution.
4. The representative of the European Communities said that the EC and its member States
noted that the United States had not made progress towards compliance with its obligations under the
TRIPS Agreement.  This was confirmed by the most recent status report submitted by the United
States.  The EC was engaged in constructive discussions with the United States, but this was without
prejudice to continuous efforts to ensure compliance with WTO obligations.
5. The representative of Australia said that at previous DSB meetings, his country had registered
its concern about the delay in the US implementation of the DSB's recommendations and rulings in
this dispute, and the apparent discriminatory nature of the proposed compensation arrangements that,
as Australia understood, had been agreed between the United States and the EC.  Australia wished to
take this opportunity to raise its concerns once again and to register its expectation that anycompensation arrangement reached in this case would be applied on a non-discriminatory basis.
6. The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States
(WT/DS136/14/Add.2 – WT/DS162/17/Add.2)
7. The Chairman drew attention to docume nt WT/DS136/14/Add.2 – WT/DS162/17/Add.2
which contained the status report by the United States on progress in the implementation of the DSB's
recommendations in the case concerning the US Anti-Dumping Act of 1916.
8. The representative of the United States said that on 18 February 2002, in accordance with
Article 21.6 of the DSU, her country had provided an additional status report in this dispute.  As noted
in that report, on 20 December 2001 the proposed legislation H.R. 3557 had been introduced in the
US Congress, which would repeal the 1916 Act and provide that no judgments pursuant to actionsunder such Act shall be entered on or after 26 September 2000, that are inconsistent with the
legislation.  The United States was continuing to work with the EC to find a mutually satisfactory
solution to this dispute.
9. The representative of the European Communities said that it was clear that compliance would
only be achieved in this case once the law had effectively been repealed and pending casesWT/DSB/M/121
Page 3
terminated.  The United States had taken a first step towards compliance by introducing in the US
Congress a law to repeal the 1916 Act and to terminate judicial cases.  As a consequence of this
legislative proposal, judicial cases brought under the Act thus far had been suspended.  In view of
these circumstances, the EC had agreed to request the Arbitrator to suspend its work.  The EC
expected that the proposal introduced in the US Congress would be adopted before the agreed date forthe reactivation of the arbitration proceedings and that the Judge in charge of the Iowa case involving
two European companies would not decide to resume proceedings.
10. The representative of Japan said that his delegation had noted the status report by the United
States.  As stated at the 1 February DSB meeting, Japan's ultimate goal was to secure prompt
compliance by the United States.  In light of the fact that the United States had shown a willingness to
complete its implementation of the DSB's recommendations and rulings as soon as possible, Japan
had requested the Arbitrator to suspend the arbitration proceedings.  The communication from theArbitrator suspending the proceeding had been circ ulated in document WT/DS162/21.  However, the
arbitration proceedings might be reactivated at the request of either party after 30 June 2002, if no
substantial progress had been made in repealing the 1916 Act thereby resolving this dispute.
Therefore, Japan again urged the United States to comply with the DSB's recommendations and
rulings as promptly as possible.  Since at the present meeting the United States had not referred toJapan's participation in the consultations on this matter, he underlined that Japan also wished to
consult with the United States in order to find a mutually acceptable solution.
11. The representative of Mexico said that his country had participated as a third party in this
dispute and hoped that any solution found in this case would be applied on an MFN basis.
12. The DSB took note of the statements and agreed  to revert to this matter at its next regular
meeting.
(c) Argentina – Measures affecting the export of bovine hides and the import of finished leather:
Agreement between the EC and Argentina concerning procedures under Articles 21 and 22 of
the DSU (WT/DS155/12)
13. The Chairman drew attention to document WT /DS155/12 which contained the text of the
agreement between the EC and Argentina concerning procedures under Articles 21 and 22 of the
DSU.
14. The representative of Argentina said that pursuant to Article 21.6 of the DSU, his country
wished to inform the DSB of the procedural agreement reached with the EC concerning the
implementation of the DSB's recommendations in the case under consideration.  He noted that the
reasonable period of time for compliance in this case had expired on 28 February 2002.  The
procedural agreement, contained in document WT/DS155/12, outlined the measures taken byArgentina to comply with the DSB's recommendati ons and rulings regarding the customs procedures
applicable to the export of bovine hides, and the changes to the regulations governing the system of
levies in respect of the value-added tax.  The operative portion of the agreement between Argentina
and the EC provided that:  "In view of the c oncrete action undertaken by Argentina during the
reasonable period of time in this dispute, and in the light of the exceptional difficulties that Argentinais currently facing, the EC and Argentina have agr eed on the following procedures in the follow-up to
this dispute:  (i) the EC and Argentina would pursue their discussions on compliance by Argentina
with the DSB's recommendations and rulings.  The DSB will be kept informed of the achievements
made in the implementation;  and (ii) if at any time after the expiry of the reasonable period of time
the EC decided to make a request for authorization to suspend concessions or other obligations underthe DSU, Argentina will not assert that the EC was precluded from obtaining the DSB's authorization
because the EC's request has been made outside the 30 day time-period specified in the first sentence
of Article 22.6 of the DSU  However, the EC's resort to the DSU for the purposes of suspension of
concessions or other obligations may take place only after completion of proceedings underWT/DSB/M/121
Page 4
Article 21.5 of the DSU."  Finally, he expressed Argentina's appreciation of the EC's positive
consideration regarding this matter.
15. The representative of the European Communities said that the EC and Argentina had
circulated the text of their procedural agreement reached in the case under consideration.  He said that
the procedural agreement under consideration was a result of two factors.  First, during theimplementation period which had ended on 28 February 2002, Argentina had taken major steps
towards meeting its international obligations.  Second, the exceptional seriousness of the economic
crisis facing Argentina had prompted the EC to make this gesture towards the Member with whom it
had close ties.  At the present meeting, the EC wished the DSB to take note of this agreement.
16. The representative of Japan said that his country did not have a specific position with regard
to the case under consideration.  However, Japan had a systemic interest in the bilateral agreement
between the EC and Argentina as that agreement concerned sequencing procedures under Articles 21and 22 of the DSU.  In Japan's view, the fact that the two parties had to seek such an agreement
confirmed, once again, the generally shared view that the current DSU provisions should be
improved, especially with regard to the sequence between Articles 21 and 22 of the DSU.  Japan
believed that the ambiguity of the current DSU prov isions should be clarified in the context of the
DSU negotiations.
17. The DSB took note of the statements and of the agreement between the EC and Argentina
concerning procedures under Articles 21 and 22 of the DSU contained in document WT/DS155/12.
2. Canada – Export credits and loan guarantees for regional aircraft
(a) Implementation of the recommendations of the DSB
18. The Chairman recalled that in accordance with the DSU provisions, the DSB was required to
keep under surveillance the implementation of recommendations and rulings of the DSB in order to
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 of
the DSU provided that the Member concerned shall inform the DSB of its intentions in respect of
implementation of the recommendations and rulings of the DSB.  He recalled that at its meeting on
19 February 2002, the DSB had adopted the Panel Report in the case on "Canada – Export Credits andLoan Guarantees for Regional Aircraft".
19. The representative of Canada said that his country was considering its options on how best to
proceed with respect to this matter.  Substantive bilateral negotiations with Brazil had continued in
parallel with the WTO process, and the parties were scheduled to meet again in approximately one
month's time.  Canada hoped that this meeting would produce additional progress towards achieving a
mutually satisfactory solution to this dispute.
20. The representative of Brazil said that his delegation had noted the statement made by Canada
at the present meeting.  He said that Brazil would follow Canada's implementation with great interest
and a thorough evaluation of Canada's actions w ould be undertaken by the competent Brazilian
authorities.  As stated by Brazil upon the adoption of the Panel Report, this dispute had gone on for
too long.  Thus, Brazil hoped that current bilateral discussions would end this dispute.  Brazil looked
forward to continuing with those discussions and to achieving an adequate solution to this case.
21. The DSB took note of the statements and of the information provided by Canada regarding its
intentions in respect of implementation of the DSB's recommendations.WT/DSB/M/121
Page 5
3. Mexico – Measures affecting telecommunications services
(a) Request for the establishment of a panel by the United States (WT/DS204/3)
22. The Chairman drew attention to the communication from the United States contained in
document WT/DS204/3.
23. The representative of the United States said that her country was requesting the establishment
of a panel to examine Mexico's measures affecting basic telecommunications services.  The US panel
request addressed Mexico's failure to implement its GATS commitments for cross-border
telecommunications services.  Over the past few years, the United States and Mexico had worked
together to resolve concerns raised by the United St ates in its initial request for consultations filed in
August 2000.  The United States welcomed the steps taken by Mexico to address many of these
concerns relating to its domestic market, in particular the reductions in domestic interconnection rates.
However, the United States remained discouraged that Mexico had made no effort to addressimportant trade barriers in its international telecommunications market.  For instance, the current
"interconnection" rate that all Mexican carriers had to charge their foreign counterparts for connecting
their calls to Mexico was 13.5 US cents per minute.  This rate exceeded the cost of providing this
service by over 200 per cent even though Mexico had committed itself under the WTO Reference
Paper to ensure that its dominant phone company provided "interconnection" at rates that were"basadas en costos", or "based on cost".  Moreover, Mexican measures granted Mexico's dominant
phone company the exclusive authority to negotiate this cross-border "interconnection" rate.  Such
measures empowered Mexico's dominant phone company to set monopoly rates even though Mexico
had an obligation under the WTO Reference Paper to maintain measures to prevent this company
from engaging in anti-competitive practices.  Mexico 's measures also discriminated against foreign
suppliers by preventing them from sending calls into and out of Mexico over leased lines.  However,
Mexico had committed itself under the GATS to permit the supply of basic telecom services over
leased lines on a national treatment basis and committed under the GATS Telecom Annex to ensure
that foreign basic telecom service suppliers had access to and use of leased lines to provide scheduled
services.  The US discussions with Mexico over the past few years on basic telecom issues hadresulted in good progress in removing anti-competitive barriers in Mexico's domestic market.  By
contrast, despite repeated efforts to move Mexico's cross-border telecom regime in the same direction,
the United States had been unable to make headway.  As a result, the United States was compelled to
conclude that progress could now only be achieved by moving forward with its panel request.  The
United States remained open to further discussions with Mexico and hoped that both sides would
continue their efforts to resolve this matter on a mutually agreeable basis.
24. The representative of Mexico said that his country had been at the forefront of efforts to
liberalize the telecommunications sector in Latin America and Europe.  Wide-ranging structural
reforms had been pursued for over a decade, beginning with the privatization of Telmex, the
enactment of the Federal Telecommunications Act, th e establishment of the regulatory authority and
specialized regulations, and the undertaking of Specific Commitments.  These changes had ushered in
remarkable growth in the telecommunications sector in Mexico in recent years.  The share of GDPaccounted for by the telecommunications sector had moved from 1 per cent to 3 per cent in 10 years.
It grew four times faster than the rest of the ec onomy and in the last two years its rate of average
annual growth was 22.7 per cent, while investment levels had virtually trebled in comparison with the
levels recorded before the liberalization process had begun.  These figures demonstrated Mexico's
firm commitment to liberalizing the telecommunications sector, pursuant to its internationalobligations.  Since the first request for consultations on basic telecommunications, dated
17 August 2000, Mexico had sought to address the concerns of the United States, attempting to
propose a rapid settlement, including for those issues not covered under Mexico's WTO
commitments.  Mexico was, therefore, surprised that the United States had decided to reactivate a
case which had been shelved for over a year, and to submit at the present meeting the request for theestablishment of a panel.  As indicated in Article 3.2 of the DSU, the dispute settlement system "is aWT/DSB/M/121
Page 6
central element in providing security and predicta bility in the multilateral trading system".  This
system was not, and had not been intended to be, a mechanism that Members could use to help their
firms negotiate better terms for a particular trade transaction, by obliging other Members to adopt
measures for which no undertakings had been made.  The US request was obscure in several respects,
and there were several substantive and procedural violations in respect of its content.  The UnitedStates was once again attempting to invent infringeme nts of disciplines that had not been incorporated
into the WTO framework, as well as violations of commitments which Mexico had never entered into.
Mexico was still examining the US request in order to fully assess its scope and implications.  At the
present meeting, Mexico was not in a position to ag ree to the establishment of a panel to examine this
matter.
25. The DSB took note of the statements and agreed
 to revert to this matter.
4. Argentina – Definitive anti-dumping duties on poultry from Brazil
(a) Request for the establishment of a panel by Brazil (WT/DS241/3)
26. The Chairman drew attention to the communication from Brazil contained in document
WT/DS241/3.
27. The representative of Brazil recalled that on 7 December 2001 Brazil had requested
consultations with Argentina concerning the definitive anti-dumping measures on imports of poultry
from Brazil, imposed by Argentina pursuant to Resolution No. 574 of 21 July 2000.  Consultations on
this matter had been held in Geneva on 10 December 2001.  Although these consultations had enabled
the parties to have a better understanding of the case, no mutually agreed solution had been found.
Brazil considered that the these anti-dumping measures were inconsistent with several provisions of
the Anti-Dumping Agreement and, as a result, nullified and impaired the benefits accruing to Brazilunder that Agreement.  More specifically and as detailed in Brazil's panel request, Argentina was in
violation of Articles 1, 2, 3, 4, 5, 6, 9 and 12 of th e Anti-Dumping Agreement, Annex II of the same
Agreement and Article VI of the GATT 1994.  These violations related to the application of the
domestic industry to take initiation of an investigation, to the initiation of the investigation, to the
investigation itself, to the final affirmative determination of dumping, injury and causal relationshipand to the imposition and collection of anti dumping duties.  The WTO-inconsistent anti-dumping
measures imposed by Argentina had now been in force for almost 20 months.  These measures had
significantly impacted upon Brazil's exports of poultr y to Argentina.  Therefore, Brazil had no further
alternative than to request the establishment of a pa nel to examine this matter, with standard terms of
reference.
28. The representative of Argentina said that the action taken by his country was in conformity
with Article VI of GATT 1994 and the Anti-Dumping Agreement, as explained by his delegation
during the consultations held in Geneva on 7 November 2001 as well as on other occasions.  Taking
into account the background of this case, his country could not accept the establishment of a panel at
the present meeting.  Argentina was ready to explore other options as an alternative to the panel
procedure.
29. The DSB took note of the statements and agreed  to revert to this matter.
5. United States – Definitive safeguard meas ures on imports of circular welded carbon
quality line pipe from Korea
(a) Report of the Appellate Body (WT/DS202/AB/ R) and Report of the Panel (WT/DS202/R)
30. The Chairman drew attention to the communi cation from the Appellate Body contained in
document WT/DS202/12 transmitting the Appellate Body Report in the case on "United States –WT/DSB/M/121
Page 7
Definitive Safeguard Measures on Imports of Ci rcular Welded Carbon Quality Line Pipe from
Korea", which had been circulated in document WT/DS202/AB/R, in accordance with Article 17.5 of
the DSU.  In accordance with the Decision on Procedures for the Circulation and Derestriction of
WTO Documents contained in document WT/L/160 /Rev.1, both Reports had been circulated as
unrestricted documents.  He recalled that Article 17.14 of the DSU required that:  "An Appellate Bodyreport 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 Appe llate Body report within 30 days following its
circulation to Members.  This adoption procedure is without prejudice to the right of Members to
express their views on an Appellate Body report".
31. The representative of Korea welcomed both the Panel and the Appellate Body's findings and
rulings that the US safeguard measure on line pipe was not consistent with various provisions of the
Safeguard Agreement.  Korea fully supported the adoption of the Reports of the Panel and of theAppellate Body in this regard.  Korea also looked forward to prompt compliance by the United States,
specifically by way of eliminating the existing sa feguard measures on line pipe.  At the present
meeting, Korea wished to make some additional comments on the Panel and the Appellate Body
Reports.  First, the Panel and the Appellate Body had, once again, confirmed Korea's view that a
safeguard was a derogation from Members' obligations under the WTO Agreements allowed only inan emergency situation and only when used according to strict observance of substantive and
procedural rules stipulated in the GATT 1994 and the Safeguards Agreement.  With respect to the
nature of the safeguard, previous panels and the Appellate Body had consistently held that the
Safeguards Agreement had to be read strictly in light of its object and purpose and the safeguard
measures could only be imposed in extraordinary circumstances when a country was faced with anemergency situation regarding immediate relief from an unforeseen increase in imports
(Argentina-Footwear, AB Report in paragraphs 93 through 95 and 131.  Korea-Dairy, AB Report in
paragraphs 86-89).  The Appellate Body had confirmed it again in "the Introductory Remark" when it
had stated in paragraph 80 of its Report that:  "It is useful [to recall] that safeguard measures are
extraordinary remedies to be taken only in emergency situations.  Furthermore, they were remediesthat were imposed in the form of import restrictions in the absence of any allegation of an unfair trade
practice.  In this, safeguard measures differ from, for example, anti-dumping duties and countervailing
duties to counter subsidies, which were both measures taken in response to unfair trade practices."
32. Second, the Appellate Body had appropriately found that the remedy had to be commensurate
with the serious injury caused by the imports alone, and should not be designed to remedy the injury
caused by other factors.  In this regard, the Appellate Body had stated in paragraph 260 of its Report
that "the phrase 'only to the extent necessary to prevent or remedy serious injury and to facilitateadjustment' in Article 5.1, first sentence, had to be read as requiring that safeguard measures may be
applied only to the extent that they address seri ous injury attributed to increased imports".  This
finding, together with Appellate Body's finding s on the non-attribution language of the second
sentence of Article 4.2(b), provided clear signals that the safeguard measures should be limited to
address the serious injury caused by increased imports alone.
33. Third, the Appellate Body had correctly reversed  the Panel's ruling on "parallelism'' and had
then found that the exclusion of Canada and Mexico, as NAFTA member countries, from the US
safeguard measure was inconsistent with the WTO Agreement.  In addition, the Appellate Body had
provided guidance to deal with possible MFN violations under Article 2.2 of the Safeguards
Agreement when it had clearly suggested that the exclusion of NAFTA countries from safeguardmeasures should be subject to Article 2.2 once the "parallelism" problem had been overcome
(paragraph 198 of the AB Report).
34. Finally, the Panel had found that the US measure on line pipe was a tariff rate quota (TRQ),
which was thus subject to Article XIII of the GATT 1994.  The United States had not appealed this
point.  This decision that the US measure, whic h was a 19 per cent duty on imports with exemption ofWT/DSB/M/121
Page 8
the first 9,000 tonnes from all exporting countries, was a TRQ was an important precedent for future
disputes in this area.
35. The representative of the United States expressed her country's regret that the Appellate Body
had affirmed the ultimate conclusion of the Panel that the US safeguard measure on imports of line
pipe was inconsistent with the Safeguards Agreement.  Nevertheless, the United States recognizedthat the Appellate Body Report would be adopted at the present meeting and wished to respond
quickly to this ruling, just as it expected its tr ading partners to respond promptly to rulings that
affected them.  However, the United States wished to offer the following comments on the reasoning
in the Appellate Body Report.  The United States recognized that Members had different views on
some of the issues under consideration in the dispute at hand, such as the ability of a Member to
exclude free trade agreement partners from safeguard measures.  However, whether a Member
concurred with or disagreed with the substantive result of the Report, all Members should bedisturbed by the analytical approach adopted by the Appellate Body.  There were many instances in
which the Appellate Body Report had disregarded the language of the covered agreements and
applied standards of its own devising to evaluate the claims against the United States.  The Appellate
Body had made factual findings, which were supposed  to be the exclusive province of panels.  The
Report had not specified the basis for concluding that the US action was inconsistent with WTO rules,leaving the United States with several questions about exactly how to implement the
recommendations of the Appellate Body Report.  The greatest concern of the United States was the
Appellate Body's growing habit of creating its own rules.  The WTO Agreement was an agreement
among sovereign states, which had undertaken certain commitments in exchange for other countries
undertaking equivalent commitments.  The text of the WTO Agreement recorded those commitments.Customary international rules for the interpretation of treaties, which were to be used for the
interpretation of the WTO Agreement, specified that the interpretation of a treaty should be based on
the text of the agreement, using the ordinary meanin g of the terms in light of their context and object
and purpose.  Under Article 1.2 of the DSU, the DSB could not, through the adoption of a panel or
Appellate Body report, add to or diminish the rights and obligations provided in the WTO Agreement.When the Appellate Body deviated from the treaty text to create its own standards it contravened
principles on which the WTO had been founded.  The Appellate Body could not create new
obligations and rights, nor could it nullify those established in the covered agreements.  To
countenance such deviations, the Appellate Body would usurp the exclusive role of the sovereign
states that had created the WTO to decide what obligations would apply among themselves.  WTO
Members placed a great deal of trust in the members of the Appellate Body to assist them in deciding
whether particular actions were consistent with their WTO obligations.  That trust should not beeroded and all Members should be concerned about these developments.  An Appellate Body that
followed its mandate would help parties resolve th eir disputes in accordance with the commitments
that they had actually undertaken.  An Appellate Body that followed its mandate would also help
claimants by ensuring that a finding in their favour, if any, would command respect and gain the
voluntary compliance of the responding party.
36. The representative of the European Communities said that the EC welcomed the Reports of
the Panel and the Appellate Body in this case as they had confirmed, in line with previous reports, that
safeguard measures were exceptional remedies which could only be applied when very strict
conditions were met.  In particular, for the first tim e, the Appellate Body had ruled on the substance of
Article 5.1 of the Safeguards Agreement, making clear that safeguard measures could not be used
beyond the extent necessary to prevent or remedy the injury caused by increased imports.  In this
connection, the EC welcomed the fact that the Appe llate Body had emphasized that a failure to ensure
that the injury caused by other factors had not been attributed to increased imports amounted to a
prima facie case of disproportionate safeguard measures.  Of course there were more findings, but he
did not wish to refer to them at the present meeting.  The EC hoped that the United States wouldproceed rapidly to eliminate the illegal safeguard action.  Moreover, the EC noted with concern that
under the Presidential Proclamation of 5 March 2002, the United States had adopted new safeguard
measures on certain steel products which repeated violations of WTO commitments similar to thoseWT/DSB/M/121
Page 9
condemned by this and prior Appellate Body reports.  He noted that the United States had found
increased imports although import trends did not show a sudden, recent, sharp and significant
increase, as required by the Appellate Body Report in the case on Argentina-Footwear.  In addition, in
breach of the obligation that had just been underlined, the United States appeared to use safeguard
measures to cure the injurious effect of non-import factors.  Indeed, once again the United States hadfailed to asses the nature and extent of the injurious effect of internal factors, as separated and
distinguished from the injury caused by imports.  As a consequence, there was a prima facie case of
disproportionate safeguard measures.
37. The representative of Mexico said that her country had participated as a third party in the
proceedings of this case due to its trade and systemic interests.  At the present meeting, Mexico
wished to comment on two points.  First, the Appe llate Body, in reversing the Panel's findings on the
exclusion of Mexico and Canada from the application of the safeguard measure, had decided onceagain to reserve judgment on the question of whether Article XXIV of GATT 1994 allowed the
exclusion of imports originating from a member of a free-trade area.  In Mexico's view, the Panel was
correct, in the sense that the United States was entitled to invoke Article XXIV of GATT 1994 as a
defence against Korea's claims.  Nonetheless, Mexico welcomed the Appellate Body's finding with
respect to the conditions for invoking Article XXIV of GATT 1994.  Mexico hoped that furtherchallenges to the legitimacy of free-trade areas would be avoided, as this had nothing to do with
specific safeguard measures like those at issue in this case.  Second, she wished to draw attention to
the fact that, without Mexico's express authorization, the Panel had attached as an integral part of its
Report the oral statement by Mexico as well as the responses submitted during the proceedings.  In
Mexico's view, this was not only in violation of Article 18.2 of the DSU, it had also renderedirrelevant the new undertaking by parties and third parties to submit executive summaries, which
facilitated inclusion in the descriptive part of the Report.  Mexico would continue to ensure that due
attention was paid to its rights under the international agreements to which it was a party.
38. The representative of Canada said that, as a third party in this dispute, his country welcomed
the opportunity to comment briefly on the Appellate Body Report.  Canada was disappointed that the
Appellate Body did not believe it was necessary to make a determination on the GATT Article XXIV
issue in this case.  This issue had been argued extensively by the parties, and there was ample scope
for the Appellate Body to make a finding on this point.  Canada believed that the Panel was correct in
its finding that the United States was entitled to rely on Article XXIV as a defence to Korea's claims.
It was important to note, however, that the Appella te Body in no way prejudged the issue of whether
Article 2.2 of the Agreement on Safeguards permitted a Member to exclude imports originating in
member States of a free-trade area from the scope of a safeguard measure.  Canada remained firmly ofthe view that Article XXIV was a valid basis on which a party to a free-trade area might exclude its
free-trade partners from the application of a safeguard measure.
39. The representative of Hong Kong, China said that while his delegation was not a user of
safeguard measures, it maintained a long-standing systemic interest on trade remedies such as
safeguards.  Hong Kong, China noted that the number of safeguard cases had been on the risecontinuously since 1995 when the Sa feguards Agreement had come into effect.  To guard against any
possible abuses, it was important to ensure that relevant rules on safeguards were strictly followed.
Against this background, Hong Kong, China welcomed the rulings of the Appellate Body in the case
under consideration and wished to make a few observations.  First, the Appellate Body had reaffirmed
the need to ensure "parallelism" between the investigation and the application of a safeguard measure.In paragraph 176 of its Report, the Appellate Body had pointed out that the US International Trade
Commission (ITC) considered imports from all sources, including imports from Canada and Mexico,
in its investigation.  Nevertheless, exports from Canada and Mexico had been excluded from the
safeguard measure at issue.  The Appellate Body had, therefore, concluded that there was a gap
between imports covered under the investigation pe rformed by the USITC and imports falling within
the scope of the measure.  Hong Kong, China welcomed the Appellate Body's reconfirmation of this
legal point.  Second, he noted that in paragraph 217 of its Report, the Appellate Body had consideredWT/DSB/M/121
Page 10
that Article 4.2(b) of the Safeguards Agreement required the concerned authorities to establish
explicitly, through a reasoned and adequate explanation, that injury caused by factors other than
increased imports was not attributed to increased imports.  Such an explanation had to be clear and
unambiguous, and should not merely imply or suggest  an explanation.  Hong Kong, China welcomed
this ruling which helped clarify the requirements imposed on safeguard authorities during theinvestigation stage.
40. The representative of Japan said that his country had participated as a third party in this case
and generally supported the conclusions of the Appellate Body Report.  Japan expected the United
States to take necessary actions to secure the consistency of the application of the safeguard measure
concerned with the DSB's recommendations and rulings.  The Appellate Body Report had rightly
pointed out that safeguard measures were extraordinary remedies.  Japan shared the Appellate Body's
view that safeguard measures were temporary and exceptional, and could only be taken in cases ofemergency and in strict compliance with the relevant provisions.  Therefore, Japan wished to express
its concern about the US safeguard measures repeatedly found to be inconsistent with the relevant
WTO Agreements.
41. The representative of Chile said that his delegation wished to refer to the issue of parallelism
or exclusion of imports from members of free-trade agreements.  Chile was still in the process of
examining the Reports and wished to reserve its ri ghts to revert to this issue at a later stage.
42. The representative of Australia said that his country welcomed the adoption of the Appellate
Body Report in the case under consideration.  Australia was satisfied that many of its concerns had
been addressed.  This was not the first time that Australia had cause to raise concerns about the
WTO-consistency of US safeguards legislation and its application.  The line pipe ruling was the thirdsuccessive case of a US safeguard action being found to be inconsistent with the WTO provisions.
Despite these clear and unequivocal rulings, Australia had not seen any evidence that the United
States had taken any action to correct the inconsistencies in the application of its safeguard laws.  This
problem was magnified and exacerbated by the recent decision taken by the United States to impose
safeguard measures on a wide range of steel products.  This recent decision raised the same concernsabout the United States' approach to its obligations under the Safeguards Agreement and the
GATT 1994.  From the examination of the US measure on steel, it was difficult, to say the least, to
see how the United States met its WTO obligations in this instance.  Australia urged the United States
to take immediate action to correct the deficiencies in its safeguards law and its application.
43. The DSB took note of the statements, and adopted
 the Appellate Body Report in
WT/DS202/AB/R and the Panel Repo rt in WT/DS202/R, as modified by the Appellate Body Report.
6. Proposed nominations for the indicative list of governmental and non-governmental
panelists (WT/DSB/W/187)
44. The Chairman drew attention to document WT/DSB/W/187 which contained additional
names proposed for inclusion on the indicative list  of governmental and non-governmental panelists,
in accordance with Article 8.4 of the DSU.  He proposed that the DSB approve the names contained
in document WT/DSB/W/187.
45. The DSB so agreed.
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