RESTRICTED
WORLD TRADE WT/DSB/M/37
4November 1997
ORGANIZATION(97-4811)
Dispute Settlement Body
25September 1997
MINUTES OFMEETING
Held intheCentre William Rappard
25September 1997
Chairman: Mr.Wade Armstrong (New Zealand)
Subjects discussed: Page
1. Surveillance ofimplementation ofrecommendations adopted bytheDSB ........2
(i) United States -Standards forreformulated andconventional gasoline -
Statements byBrazil andVenezuela concerning thestatus report bytheUnited
States .............................................2
(ii) Japan -Taxes onalcoholic beverages: Status report byJapan ..........4
2. Korea -Taxes onalcoholic beverages ..............................6
(i) Request fortheestablishment ofapanel bytheEuropean Communities ....6
(ii) Request fortheestablishment ofapanel bytheUnited States ..........6
3. India -Patent protection forpharmaceutical andagricultural chemical products ....7
- Request fortheestablishment ofapanel bytheEuropean Communities ....7
4. Argentina -Measures affecting textiles, clothing andfootwear ...............10
- Request fortheestablishment ofapanel bytheEuropean Communities ....10
5. European Communities -Regime fortheimportation, saleanddistribution of
bananas .................................................14
- Report oftheAppellate Body andReports ofthePanel ..............14
6. Proposed nominations fortheindicative listofgovernmental andnon-governmental
panelists .................................................26
7. Canada -Certain measures concerning periodicals ......................26
- Statement byCanada ....................................26
8. Letter fromtheWorld Wide Fund forNature tothechairman ofthepanel on"United
States -Import Prohibition ofCertain Shrimp andShrimp Products" ...........27
- Statement byBrazil .....................................27
9. Application ofArticle 4.11oftheDSU .............................29
- Statement bytheUnited States ..............................29WT/DSB/M/37
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Prior toadoption oftheagenda, theitemconcerning "European Communities -Measures
Concerning Meat andMeat Products (Hormones) -Reports ofthePanel" (WT/DS/26/R/USA;
WT/DS48/R/CAN) wasremoved fromtheproposed agenda asaresult oftheCommunities 'decision
toappeal theReports.
1. Surveillance ofimplementation ofrecommendations adopted bytheDSB
(i) United States -Standards forreformulated andconventional gasoline -Statements by
Brazil and Venezuela concerning thestatus report bytheUnited States
(WT/DS2/10/Add.7)
(ii) Japan -Taxes onalcoholic beverages: Status report byJapan (WT/DS8/18,
WT/DS10/18, WT/DS11/16)
TheChairman recalled thatunder Article 21.6oftheDSU, "unless theDSBdecides otherwise,
theissue ofimplementation oftherecommendations orrulings shallbeplaced ontheagenda ofthe
DSBmeeting aftersixmonths following thedateofestablishment ofthereasonable period oftime
pursuant toparagraph 3andshallremain ontheDSB'sagenda untiltheissueisresolved". Heproposed
thatthetwosub-items beconsidered separately.
(i) United States -Standards forreformulated andconventional gasoline -Statements by
Brazil and Venezuela concerning thestatus report bytheUnited States
(WT/DS2/10/Add.7)
Therepresentative ofBrazil saidthathiscountry welcomed thepublication ofthefinalrule
amending therequirements forimported gasoline asnotified bytheUnited States inisstatus report
pursuant toArticle 21.6oftheDSU. These amendments were complex anddetailed andwere now
being carefully examined byhisauthorities andtheBrazilian company Petrobrás directly involved
inthismatter. Article 21.6oftheDSUprovided that,anissuesubject tosurveillance ofimplementation
oftherecommendations shallremain ontheagenda oftheDSB meeting untilitsresolution. Asa
Member directly affected bytheGasoline Ruleandaparty tothedispute, Brazil hadamajor interest
inresolving thismatter. However, sincetheexamination oftheamendments hadnotyetbeenconcluded,
Brazil wasnotinaposition toindicate whether theamended Gasoline Rulewasinconformity with
therecommendations ofthePanel andtheAppellate Body. Hetherefore reserved hisGovernment 's
righttorevert tothisissue.
Therepresentative ofVenezuela saidthathisdelegation hadrequested theinclusion ofthis
itemontheagendapursuanttoArticle21.6oftheDSUinordertoaddresstherecentlyamendedGasoline
Rulepublished bytheEnvironmental Protection Agency (EPA). Asindicated intheUSstatus report,
theEPA'sAdministrator hadsigned theamendments totheGasoline Ruleon19August 1997. In
Venezuela 'sview, theseamendments hadnotmodified thetreatment ofimported reformulated gasoline
which would remain subject tothemore stringent requirement ofthestatutory baseline until1January
1998.Withregardtoconventionalgasoline,theamendmentsprovidedthepossibilityforforeignrefiners
tochoose their ownindividual baseline. However, thiswassubject toanumber ofdifferent
requirements, theimplications ofwhich werecurrently being evaluated byhisGovernment. TheEPA's
regulationrequiredthoroughanalysisasitaffectedasectorofmajorimportanceforVenezuela'seconomy
andbecause itcould indirectly affect othersectors aswell. Itcould alsohaveinternational implications.
Therefore, pursuant toArticle 21.6oftheDSU, Venezuela reserved itsrighttorevert tothismatter
onconclusionofitsexaminationoftheregulation.HisGovernmentwaspreparedtocontinuecooperating
withtheresponsible USagencies inorder toensure thattheregulation wasfullyconsistent withthe
DSB'srecommendations.WT/DSB/M/37
Page3
Therepresentative oftheUnited States saidthathisdelegation waspleased toreport thaton
19August 1997, theEPA'sAdministrator hadsigned afinalregulation amending theGasoline Rule.
Thisregulation fulfilled thecommitment made bytheUnited States attheDSBmeeting inJune1996,
thatitwould meet itsWTO obligations withregard tothismatter. Hisdelegation hadmade the
regulation available through theSecretariat andontheInternet andhadtransmitted copies tointerested
parties. Theregulation wasfullyconsistent withtheUnited States 'commitment tofullprotection of
public health andtheenvironment. Asithadbeenagreed withVenezuela, theUnited States had
completed theimplementation process in15months. Hisdelegation believed thatadoption ofthese
implementation measures bytheUnited States hadclosed therequirements under Article 21.6ofthe
DSU withregard toreporting andconsideration ofthismatter asanautomatic agenda itemateach
DSBmeeting. Accordingly, thefinalstatus report hadbeensubmitted totheDSBbytheUnited States
on20August.
Heacknowledged that,asprovided forintheDSU, theDSBhadasurveillance function with
respect tocompleted disputes andthatanyMember might raisetheissue ofimplementation ofthe
recommendations orrulings intheDSBatanytimefollowing adoption. TheUnited States fullyintended
toraise issues related toimplementation withrespect toother disputes atanytimeafteradoption,
particularly, those inwhich ithadbeenacomplaining party. AnyDSBmember hadarighttoplace
anissueontheagenda, andtherights ofcomplaining parties remained fullyprotected under Article 21.5
oftheDSU. However, intheviewoftheUnited States, thespecific requirements outlined inthethird
andfourth sentences ofArticle 21.6oftheDSU, nolonger existed when aMember, obligated to
implement recommendations, hadnotified theDSBthattheimplementation hadbeencompleted.
AsindicatedbyVenezuela,thefewbaselineprovisionsoftheEPA'sregulationsforreformulated
gasoline thatrelied onindividual baselines weretemporary andwould beterminated attheendof1997.
Atthatpoint, domestic andimported gasoline would besubject tothesamerequirements. Initsproposed
rule,theEPAhadrequestedcommentsonwhethertheregulationcouldallowindividualrefinerybaselines
tobeusedforthereformulated gasoline requirements ifaforeign refiner obtained anindividual baseline
before January 1998. Theonlycomments made totheEPAonthisissue hadbeenthatthere would
beinsufficient timebefore January 1998 tojustify theuseofindividual baselines forreformulated
gasoline. Norequest hadbeenmade forthisruletoapply toreformulated gasoline. Thislackofinterest
inindividual baselines forreformulated gasoline wasprobably duetotheshort timeleftbefore the
baseline requirements would expire attheendof1997 making itunlikely thatthetimeandexpense
ofpreparing abaseline petition would yield anyeconomic benefit toforeign refiners.
Therepresentative ofNorway saidthathiscountry, asathird-party inthisdispute, hadfollowed
thematter closely. Atthepresent meeting, hewished toinform theDSBthattheNorwegian company
directly involved inthismatter hadparticipated inahearing andhadestablished aconstructive dialogue
withtheEPA. Asaresult, thecompany hadmade certain legalandtechnical modifications which
hadpermitted ittoresume itsactivities intheUSmarket. Intheviewofhisdelegation thiswasan
example oftheutility ofthedispute settlement mechanism.
Therepresentative ofBrazil saidthathisdelegation reserved itsrighttorevert tothismatter
inorder todiscuss theprocedural issues raised bytheUnited States.
Therepresentative oftheEuropean Communities saidthat,likeNorway, theCommunities
asathird party hadfollowed thismatter verycarefully andbelieved thatitshould continue tobe
discussed. TheCommunities appreciated theEPA'sthorough work inrevising therequirements of
theGasoline Ruleforimported conventional gasoline. They welcomed thebasic change made bythe
EPAwhich putdomestic andforeign refiners onanequal footing interms ofbaselines. They also
welcomed that,initsfinalrule,theEPAhadrendered some ofthemonitoring requirements onimports
lessburdensome. Whether alltheadditional import requirements were necessary continued tobeaWT/DSB/M/37
Page4
matter fordebate. What mattered most totheCommunities wasthatthenewsystem operated ina
satisfactory manner. Inother words, imports ofconventional gasoline, whether based onanindividual
orstatutory baseline could, andwould takeplacewithout undue hinderance andcosts. Thefuture would
show whether thiswould bethecase.
TheDSBtooknoteofthestatements andagreed torevert tothismatter.
(ii) Japan -Taxes onalcoholic beverages: Status report byJapan (WT/DS8/18,
WT/DS10/18, WT/DS11/16)
TheChairman drewattention tothefirststatus report submitted totheDSBbyJapan withregard
toitsprogress ontheimplementation oftheDSB'srecommendations.
Therepresentative ofJapan saidthatpursuant toArticle 21.6oftheDSU, hisGovernment
hadsubmitted itsfirststatus report withregard toitsprogress intheimplementation oftheDSB's
recommendations. Herecalled thaton1November 1996, theDSBhadadopted theAppellate Body
Report andthePanel Report on"Japan -Taxes onAlcoholic Beverages". On20November 1996,
Japan hadinformed theDSB ofitsintentions withrespect totheimplementation oftheDSB's
recommendations. Ithadindicated thatareasonable period oftimewould berequired tocomply with
these recommendations. Since then, aseries ofconsultations hadbeenheldwithalltheparties tothe
dispute onthemeasures tobetaken withregard totheimplementation oftheDSB'srecommendations
andatime-period forsuchimplementation.
Theadjustment oftheliquor taxrates, necessary toimplement theDSB'srecommendations,
required anamendment totheLiquor TaxLaw. However, anyamendment tothetaxsystem foreach
fiscal yearcould onlybedecided intheformoflegislation atthesame timeastheannual budget, and
thecontent ofthedraftamendment ofthetaxlegislation hadtobedecided bymid-December. After
examining theresults oftheconsultations withtheparties tothedispute andtaking intoaccount the
relevant aspects ofitsdomestic situation, Japan haddrawn upaplanofreform fortheliquor taxsystem.
On31January 1997, ithadsubmitted totheDietthedraftamendment totheLiquor TaxLawtobe
enacted atthenextfiscal yeartaxlegislation withaviewtoensuring theearliest possible implementation
oftheDSB'srecommendations. Onthesame date,theEuropean Communities andJapan hadreached
amutually acceptable solution inaccordance withtheabove-mentioned draftamendment asnotified
totheDSBon15July1997.1Thedraftamendment totheLiquor TaxLawhadbeenconsidered and
approved bybothchambers oftheDietwithout modifications andon31March 1997 ithadbeen
promulgated.2
Asaresult, on1October 1997, thetaxratesonwhisky/brandy would bereduced bythree-
quarters ofthetotalreduction. ThetaxratesonShochu Awould beincreased byhalfofthetotal
increase andthetaxratesonShochu Bwould beincreased byone-third ofthetotalincrease. With
regard tothetaxratesonShochu A,thetaxadjustment would becompleted by1October 1998. On
thatdate,thetaxdifferential interms oftaxrateperdegree ofalcohol content withregard toShochu
A,spirits, liqueurs andwhisky/brandy would bedissolved. Thetaxincreases onShochu Bwould be
implemented inthree stages andasof1October 2001 thetaxdifferential withregard toShochu B,
spirits, liqueurs andwhisky/brandy, interms oftaxrates perdegree ofalcohol content, would be
dissolved. Thisadditional period forShochu Bwasnecessary inviewoftheeffects ofthetaxincrease
by2.4times onconsumers andproducers. Inaddition totheamendment totheLiquor TaxLaw, Japan,
upontheCommunities 'request, would alsocarryoutascompensation, autonomous reductions ofimport
1(WT/DS8/17, WT/DS10/17, WT/DS11/15).
2LawNo.21,1997.WT/DSB/M/37
Page5
duties onwhisky/brandy. These reductions would beequivalent tothatofthetaxdifferential which
would remain onShochu Bduring theperiod 1October 1998 -1October 2001. With thismeasure,
adverse effects onimported whisky/brandy duetothetaxdifferential would effectively bedissolved.
Herecalled thaton24December 1996, theUnited States hadrequested thatareasonable period
oftimebedetermined through binding arbitration pursuant toArticle 21.3(c) oftheDSU. On
14February 1997, thearbitrator determined thatareasonable period oftimeinthiscasewould be
15months. Japan hadbeenseriously examining possible andpractical responses tothisissue. At
thesame time, hisGovernment hadheldaseries ofconsultations withtheUnited States withaview
tofinding amutually acceptable solution withregard tomodalities fortheimplementation oftheDSB's
recommendations.
Therepresentative oftheUnited States recalled thaton20November 1996, Japan hadinformed
theDSBofitsintentions tofullycomply withtheDSB'srecommendations pursuant tothePanel and
theAppellate Body Reports on"Japan -Taxes onAlcoholic Beverages", adopted on1November 1996.
TheUnited States andJapan hadheldaseries ofmeetings bothprior toandafter20November 1996,
inanattempt toreach agreement onareasonable period oftimeforimplementation oftheDSB's
recommendations. During theseconsultations, ithadbecome apparent thatJapan hadnotbeenprepared
topropose animplementation period appropriate toitsstatus asamajor trading power andbearing
inmind thelong-standing nature ofthetaxdiscrimination atissue.
On24December 1996, theUnited States hadrequested thatareasonable period oftimebe
determined through binding arbitration asprovided forinArticle 21.3(c) oftheDSU. On
14February 1997, thearbitrator, Mr.J.Lacarte-Muró, haddetermined thatareasonable period of
timeforJapan tocomply withtheDSB'srecommendations was15months. Despite thearbitrator 's
ruling, anamendment totheLiquor TaxLawwhich hadbeenenacted intolawinMarch 1997 had
failed tobring Japan intocompliance within the15-month reasonable period. Thisamendment provided
fortaxchanges overafive-year period. TheUnited States andother foreign distilled spirit producers
would continue tofacediscriminatory taxratesforfiveyears afterdetermination thatthisdiscrimination
wasinviolation ofJapan'sobligations under theWTO Agreement. Thislengthy compliance period
wasnotwhatthedrafters oftheDSU hadintended. Moreover, during thearbitration process Japan
hadalready presented itsarguments withregard toalonger compliance period. Thearbitrator had
already determined thatinthiscaseJapan hadnojustification foracompliance period longer than
15months. Consultations heldoverthepastmonths, including inthepastweek, between theUnited
States andJapan hadfailed tobring amutually acceptable resolution ofthisdispute. TheUnited States
wasprepared tocontinue these efforts. Itcontinued tourgeJapan, asaleading trading partner and
beneficiary ofthemultilateral trading system todemonstrate itsleadership insupport oftheWTO and
itsdispute settlement mechanism. TheUnited States hadfullycomplied intheGasoline3casewithin
the15-month period established byagreement. ItwastimeforJapan tomake thedifficult decision
necessary tofullycomply withtheDSB'srecommendations.
Therepresentative ofCanada saidthathiscountry hadcarefully reviewed Japan'sstatus report
ontheimplementation oftheDSB'srecommendations. Although Japan hadindicated thatitintended
toimplement theDSB'srecommendations, Canada wasdisappointed andconcerned thatJapan had
apparently decided nottorespect thearbitrator 'sdecision that15months wasareasonable timeperiod
toimplement theDSBrecommendations. Hercountry agreed withtheviewthatthedispute settlement
system wasoneofthegreat successes oftheUruguay Round negotiations. However, Members were
nowatajuncture inwhich theywereabletodetermine whether thesystem wasworking asithadbeen
intended. Thismeant, notjustautomatic establishment ofpanels andadoption ofpanel andAppellate
3United States -Standards forreformulated andconventional gasoline (WT/DS2).WT/DSB/M/37
Page6
Body reports, butalsoimplementation asprovided forintheDSU, including respecting anarbitrator 's
clearandunequivocal decision astowhatconstituted areasonable period oftime. Herdelegation noted
Japan'sreference toitsmutually agreed solution withtheEuropean Communities aswellasitsongoing
discussions withtheUnited States tothiseffect. Canada, acomplainant inthisdispute, hadnotbeen
abletoreach amutually agreed solution withJapan onthismatter. Therefore, untilsuchasolution
might befound, itexpected Japan toimplement theDSB'srecommendations within the15-month period
from thedateofadoption ofthereports.
Therepresentative oftheEuropean Communities saidthatJapan'sstatus report, aswellas
itsstatement, wereaccurate andcorrect. TheCommunities hadreached anamicable settlement with
Japan, which implied alonger period forimplementation thanthatfixed bybinding arbitration.
Nevertheless, theytookthismatter seriously andnoted thatdiscussions continued between Japan and
other parties tothedispute. Herecalled thatoneofthemain objectives oftheDSU wasthatparties
should reach amicable settlements andthiswasvalidatallstages ofthedispute settlement procedures.
Inresponse tothecomments made bytherepresentative ofCanada, therepresentative ofJapan
saidthathisdelegation wasready toenter intoconsultations withCanada alsoataconvenient time.
With theCommunities, which werethelargest exporter ofdistilled liquors ontheJapanese market,
Japan hadreached amutually agreed solution consistent withtheDSU objectives, intimeforthe
enactment oftheagreed amendment forthe1997 fiscal year. Inresponse totheUScomment that
theamendment wasenacted afterthebinding arbitration, herecalled thatthearbitration wasissued
on14February 1997 andcould nothavebeenreflected inanamendment forthe1997 fiscal year.
Japan hadrepeatedly informed Canada andtheUSofthefinaldeadline fortheamendment forthe
fiscal year1997, butJapan could nothavereached agreement withthetwoparties. TheUnited States
hadmentioned thelengthy period ofimplementation inparticular withrespect toShochu Bwhich was
fiveyears. However, ashehadexplained, Japan wasfullycompensating through thereduction of
tariffs. ThiswasthebasisforJapan andtheCommunities toreach anamicable settlement. Hehoped
thatother parties tothedispute would alsotakeaflexible andpragmatic approach withregard tothe
finalsettlement tothismatter.
TheDSBtooknoteofthestatements andagreed torevert tothismatter atitsnextregular
meeting.
2. Korea -Taxes onalcoholic beverages
(i) Request fortheestablishment ofapanel bytheEuropean Communities
(WT/DS75/6)
(ii) Request fortheestablishment ofapanel bytheUnited States (WT/DS84/4)
TheChairman proposed thattheabove-mentioned sub-items beconsidered together. Hefirst
drew attention tothecommunication from theEuropean Communities contained indocument
WT/DS75/6.
Therepresentative oftheEuropean Communities saidthatthiswasalong-standing dispute
which concerned significant taxdifferences between 35percentondomestic products and50,80and
100percentonimported products. Withregard totheEducation TaxLawtherewasataxdifferential
of20percent,withdomestic spirits being taxed at10and30percent. Since theintroduction ofthe
Liquor TaxLaw,theCommunities hadrepeatedly expressed theirreservations andconcerns withregard
toKorea'staxregime.TheCommunitiesbelievedthattheirexporterswereentitledtoequitabletreatment
andfaircompetitive conditions intheKorean market. TheCommunities hadamajor economic interest
inthismatter asthespirits sector hadanemployment level ofseveral thousand ofpeople. TheWT/DSB/M/37
Page7
Communitiesweretheworld'smainproducerandexporterofspiritswithanimportantvolumeofexports
which theyhoped toincrease.
TheCommunitiessoughttoeliminateobstaclesinasectorinwhichtheywerehighlycompetitive
andbelieved thattheir producers should beallowed tocompete intheKorean market, aswellas
anywhere elseintheworld, without tradedistorting anddiscriminating measures. Inthelightofgood
trade relations withKorea andinthespirit oftheDSU, itwould havebeenpreferable tosettle this
matter bilaterally. Unfortunately, thecontacts andtheconsultations heldonthismatter hadnotbrought
asatisfactory solution. Therefore, theCommunities requested theestablishment ofapanel toexamine
thismatter.
TheChairman thendrew attention tothecommunication fromtheUnited States contained in
document WT/DS84/4.
Therepresentative oftheUnited States saidthathisdelegation requested theestablishment
ofapanel toexamine Korea 'staxesondistilled spirits. Under itsLiquor TaxLaw, Korea hadimposed
alower taxonitstraditional distilled spirit soju,thanthehightaxes itapplied onother distilled spirits
suchaswhisky, brandy, vodka, ginand"ad-mixtures". Thetaxdifferential wasmade evenmore
dramatic bytheapplication oftheEducation Tax. Thus thetaxburden onsome USdistilled spirits
could beoverfourtimes greater thanthatonsoju. TheUnited States considered thatKorea 'sinternal
taxes ondistilled spirits wereinconsistent withitsobligations under Article III:2oftheGATT 1994.
TheUnited States hadraised thismatter withKorea onmany occasions overtheyears, bothinformally
andinconsultations. Since theconsultations hadnotsettled thematter, theUnited States requested
theestablishment ofapanel.
Therepresentative ofKorea saidthathisdelegation could notagree totheestablishment of
apanel atthepresent meeting. Korea wasconvinced thatitsinternal taxsystem onalcoholic beverages
wasinconformity withitsWTO obligations. Onitspart,Korea hadmade sincere efforts toseekan
amicable andmutually agreed satisfactory solution withregard tothismatter through consultations
withtheEuropean Communities andtheUnited States, pursuant totheprovisions ofArticle 3.7of
theDSU.
Therepresentative ofMexico saidthathewished toregister hiscountry 'sinterest inthismatter.
Thisinterest wasbasically duetothefactthatMexico alsoexported alcoholic beverages, inparticular,
tequila.
TheDSBtooknoteofthestatements andagreed torevert tothismatter.
3. India -Patent protection forpharmaceutical andagricultural chemical products
- Request fortheestablishment ofapanel bytheEuropean Communities
(WT/DS79/2)
TheChairman drewattention tothecommunication fromtheEuropean Communities contained
indocument WT/DS79/2.
Therepresentative oftheEuropean Communities saidthatunder thisagenda itemhewished
tomake comments withregard tobothitem3and4oftheagenda. TheCommunities sought panels
inbothcases. However, panels onthesame matters hadalready beenestablished attherequest ofWT/DSB/M/37
Page8
another Member. InthecaseofIndia, thepanel report4hadalready beencirculated andinthecase
ofArgentina5thesubstantive work ofthepanel hadalready been completed. Inbothcases the
Communities hadbeenathird-party. However, theyhadbecome aware thattherights ofthirdparties
werenotthesameastherightofcomplaining parties withregard totheimplementation stage. Inother
words, should there beaproblem withimplementation, thirdparties didnothavethelegalrights to
beconsulted ortoenter intonegotiations withcountries concerned. TheCommunities hadtriedto
secure theirlegalrights atthisstage intheprocess andbelieved thattheyhadtherighttodoso.He
acknowledged thatthere might besome practical problems withtheestablishment ofpanels incases
inwhich suchpanels hadalready existed. However, hehoped thatthiscould bediscussed withthe
parties concerned.
TheCommunities hadalleged thatIndia wasinbreach ofitsobligations under Article 70.8
oftheAgreement onTrade-Related Aspects ofIntellectual Property Rights (TRIPS). Thiswasdue
tothefactthatIndia hadnotinstalled theso-called mailbox procedures which would allow companies
tomake applications tofilepatents. Furthermore, under Article 70.9oftheTRIPS Agreement, India
would beobliged toprovide exclusive marketing rights tocompanies thathadfiledsuchapplications.
Consultations heldonthismatter hadnotresulted inasatisfactory solution. TheCommunities had
aneconomic interest inthismatter andbelieved thattheyhadmore patent applications inthepipeline
thananyother Member, although itwasdifficult toobtain definite statistics. Thisreinforced theneed
toensure themaximum legalsecurity fortheCommunities inthesettlement ofthisdispute.
Therepresentative ofIndia saidthathewished torespond totheCommunities request forthe
establishment ofapanel toexamine thematter relating tothealleged failure ofIndia toconform to
itsobligations under theArticles 27,65and70oftheTRIPS Agreement. Herecalled thaton
20November 1996, apanel hadbeenestablished onthesamematter attherequest oftheUnited States.
Thereport ofthispanel hadbeencirculated on5September 1997 indocument WT/DS50/R andwas
nowbeing examined byhisGovernment. TheCommunities hadparticipated inthispanel asathird
party.
InIndia'sview,theprimaryinterestoftheCommunitiesinseekingtheestablishmentofa"fresh"
panel wastoacquire therightofacomplaining party. Indiahadalways believed thatdispute settlement
rights were inthenature offundamental rights andshould therefore betreated as"sacrosanct".
Therefore, India hadrecognized theaspiration aswellastheright oftheCommunities tograduate
fromthestatus ofathirdparty tothatofacomplaining party. However, thetiming oftheCommunities '
request hadraised certain issues andconcerns.
InIndia'sview, atthetimewhen theUnited States hadraised itscomplaint, theCommunities
hadthepossibility tobecome aco-complainant pursuant toArticle 9oftheDSU. However, theyhad
beensatisfied withthestatus ofathirdparty. Herecognized thatArticles 9.3and10.4oftheDSU
explicitly provided fortheestablishment ofmore thanonepanel onthesame matter. However, it
would appear thatthese twoprovisions referred onlytosituations inwhich arequest forapanel was
made while another panel proceeding onthesame matter wasstillinoperation. Neither ofthese
provisions appeared tocontemplate thepossibility ofarequest fortheestablishment ofapanel with
regard toamatter onwhich apanel hadalready ruled.
Another issue wasthattheCommunities 'request fortheestablishment ofapanel referred to
amatter which hadalready beenadjudicated uponbyanother panel andthiswasrelated totheprinciple
ofresjudicata .According tothisprinciple, amatter finally decided onitsmerits byacourtofcompetent
4WT/DS50/R.
5WT/DS56.WT/DSB/M/37
Page9
jurisdiction could notbelitigated again. Herecognized thatthisprinciple applied onlytore-litigation
between thesame parties. However, itwaspossible thatthisprinciple could alsoapply toaparty to
amultilateral agreement thathadjoined theoriginal proceedings. Herecalled thattheonlymatter
onwhich twoseparate panels hadeverruled separately hadbeentheUnited States -Tuna/Dolphin
dispute. Inthiscase, theCommunities hadbrought thematter upforasecond time.6However, it
hadbrought thiscomplaint afterithadbecome clear thatthecomplaining party would eventually
withdraw itscomplaint bynotrequesting theadoption ofthepanel report. Under thecircumstances,
theCommunities hadnoalternative buttorequest anewpanel soastoobtain abinding ruling onthis
matter. Itcould therefore bestated thatthere hadbeennoprecedent inthehistory oftheGATT and
theWTO withregard towhattheCommunities hadproposed atthepresent meeting. Hedidnotwish
toargue, thatabsence ofaprecedent, ipsofacto,made theCommunities 'request unjustified orunfair.
Thiswasastatement offact.
Hehadhighlighted certain issues arising fromtheCommunities 'request fortheestablishment
ofapanel withregard tothematter onwhich apanel hadrecently circulated itsreport onthebasis
ofasimilar complaint bytheUnited States. Hehadraised theseconcerns inorder todrawtheattention
ofDSBmembers totheissues involved therein. Itwaspossible thatduring thereview oftheDSU
in1998, Members would havetoconsider whether sucharepetitive recourse todispute settlement
mechanism onthesamesubject could beavoided without disturbing thebalance ofrights andobligations
oftheparties tothedispute.
Atthepresent meeting, hewasinadifficult position since hewished nottodelay the
establishment ofapanel. Herecalled thatwhen theUnited States hadbrought itsrequest forapanel
onthesame matter, India hadagreed thatsuchapanel beestablished immediately atthefirstmeeting
oftheDSB. Thus, itwasobvious thatIndiadidnotbelieve inunnecessary procedural detail. However,
hisdilemma atthepresent meeting wasthathewished topreserve hisGovernment 'srights toraise
alltheissues arising fromtheCommunities 'action before thepanel, because under thecurrent dispute
settlement mechanism itwasthepanel nottheDSBwhich could decide uponsuchquestions, including
whether therequest forapanel wasvalid orfair. Therefore, hisdelegation would needmore time
toexamine whether thestandard terms ofreference were adequate inthiscaseorwhether itshould
keepopenthepossibility ofseeking preliminary rulings from thepanel. Inthiscontext, herecalled
thatnearly twoyears ago,theprevious EC'sambassador hadmade astatement intheDSBinthe
context oftheScallops panel7,thattheDSU wasasmuch about procedures asabout substance. His
delegation required more timetocarefully examine alltheissues arising from thisrequest inorder
todecide whether thestandard terms ofreference would beadequate. Hetherefore regretted that
hisdelegation could notaccept theCommunities 'request atthepresent meeting. Headded thatIndia
fullyrecognized theCommunities 'interest inwishing toacquire thestatus ofacomplaining party and
itsconcerns were essentially systemic.
Therepresentative ofArgentina saidthat,atthisstage hisdelegation wished tobeassociated
withthestatement made byIndia. Inparticular, hewished tounderline theimportance ofthetiming
oftheCommunities 'request fortheestablishment ofapanel aswellastheimportance ofresjudicata ,
andoftheprecedent referred tobyIndia. InArgentina 'sview, itwasnecessary tobearinmind what
hadbeenstated withregard totheimportance oftheprocedural andsubstantive rules ofthedispute
settlement mechanism. Hereserved hisdelegation 'srights torevert tothismatter.
TheDSBtooknoteofthestatements andagreed torevert tothismatter.
6Panel Report on"United States -Restrictions onImports ofTuna" (DS29/R).
7Panel Reports on"EC-Trade Description ofScallops" (WT/DS7/R, WT/DS12/R, WT/DS14/R).WT/DSB/M/37
Page10
4. Argentina -Measures affecting textiles, clothing andfootwear
- Request fortheestablishment ofapanel bytheEuropean Communities (WT/DS77/3)
TheChairman drewattention tothecommunication fromtheEuropean Communities contained
indocument WT/DS77/3.
Therepresentative oftheEuropean Communities saidthattheCommunities hadparticipated
asathirdparty inthepanel established onthesame matter attherequest oftheUnited States.8Much
oftheworkofthispanel hadalready beencompleted. However, hisdelegation wasunder theimpression
thatasettlement between theparties wasstillpossible andifthiswasthecase, theCommunities could
nothavethesame opportunities tonegotiate asimilar settlement. Intheirdiscussion withArgentina
foralmost oneyear, theCommunities hadexpressed theirconcerns withregard tocertain measures
which, intheirview, wereincompatible withArgentina 'sobligations under theGATT 1994 andthe
Agreement onTextiles andClothing. These measures included theimposition ofminimum specific
duties ontextiles andclothing products thathadresulted induties inexcess ofArgentina 'sbound rates.
InApril 1997, theCommunities hadrequested consultations withArgentina which hadbeenheldon
12June1997. However, these consultations hadnotproduced anysolution tothismatter. Therefore,
theCommunities hadnoother recourse thantorequest theestablishment ofapanel toexamine this
matter. Headded thattheCommunities werealsoconcerned about certain labelling requirements which
hadbeen thesubject ofconsultations heldon12June1997. However, inthelightofadditional
information, theywere stillexamining thisissue andtherefore reserved theirright toinitiate panel
proceedings onthismatter atalaterstage.
Therepresentative ofArgentina saidthathisdelegation hadtwoconcerns withregard tothis
matter. Thefirstwasthetiming oftheCommunities 'request which related tothepoint raised byIndia
under theprevious itemoftheagenda. Herecalled thathisdelegation hadrequested tobeassociated
withIndia'sstatement onthismatter andhadsupported it.Thesecond andmore important concern
wastheCommunities 'attempt toinclude intheterms ofreference ofthepanel, questions which fell
beyond those contained intheirrequest forconsultations (WT/DS77/1).
Thediscussion ontiming oftherequest fortheestablishment ofapanel, ortheimpact ofthe
conclusions onratione temporis ,might haveprocedural andsubstantive implications onthefairness
ofthedispute settlement mechanism. From theprocedural point ofview, thislaterequest forthe
establishment ofapanel could beinconflict withArticle 9.1oftheDSU which stipulated asfollows:
"Where more thanoneMember requests theestablishment ofapanel related tothesame matter, a
single panel maybeestablished toexamine these complaints ...Asingle panel should beestablished
toexamine suchcomplaints wherever feasible". Thisprovision required thataMember requesting
theestablishment ofapanel should respect thetimetable outlined inAppendix 3oftheDSU. Ifnot,
theresponding party would havetorepeat thewhole procedure before another panel which would entail
enormous financial andhuman resources bothforMembers andtheSecretariat. Furthermore, itcould
alterthebalance established intheDSUwhich ensured thattherights oftheparties werenotimpaired
during theproceedings.
Herecalled thatthismatter hadfirstbeenraised bytheUnited States on4October 1996when
ithadrequested consultations withArgentina (WT/DS56/1). Pursuant toArticle 4.11oftheDSU,
theCommunities hadrequested tobejoined intheseconsultations (WT/DS56/3). Argentina hadagreed
totheCommunities 'request inNovember 1996 (WT/DS56/4) andconsultations hadbeenheldon
12November 1996. IntheviewofArgentina, theCommunities hadnotformally objected totheresults
8Panel on"Argentina -Measures Affecting Imports ofFootwear, Textiles, Apparel andOther Items"
(WT/DS56).WT/DSB/M/37
Page11
oftheconsultations since theyhadnotraised anyspecial point andhadlimited theirparticipation to
thatofathirdparty inthepanel established attherequest oftheUnited States. On26April 1997,
afterthemembers ofthepanel hadbeenselected --on4April theworking calendar forthepanel had
beenestablished --theCommunities haddecided torequest separate consultations onthismatter. These
consultations hadbeenheldon12June1997, andinSeptember 1997 theCommunities haddecided
torequest theestablishment ofapanel. Thisdecision hadbeentaken almost ayearaftertheUnited
States hadrequested consultations inwhich theCommunities hadparticipated. Furthermore, thepanel
hadpractically reached thefinalstage ofitswork since itsconclusions would shortly becirculated
totheparties, including totheCommunities.
Hequestioned theCommunities 'reasons forrequesting anewpanel onthesamematter when,
atthisstage, theproceedings could notbecombined inaccordance withArticle 9.1oftheDSU. Bearing
inmind theDSU provisions, hequestioned theneedforanother panel toexamine thesame matter.
Under thecircumstances, hequestioned whether theCommunities hadexercised judgement regarding
thefruitfulness oftheiraction inlightofArticle 3.7oftheDSU. Hewasconcerned thatthepurpose
ofArticle 3.7oftheDSU withregard toapositive solution todisputes might beoverlooked, since
thepanel established attherequest oftheUnited States wastoruleonthismatter shortly.
Another panel onthesame subject could affect thebalance which should bemaintained under
theDSU withregard tothesubmissions bytheparties. Thiswould create aninequality andwould
unfairly favour theCommunities since theyhadalready participated asathird party inthepanel
established attherequest oftheUnited States. During theproceedings ofthispanel, theCommunities
haddiscussed themeasures inquestion withArgentina and,asathirdparty, would shortly receive
theconclusions ofthispanel. Hequestioned theneedforaMember toreiterate thearguments ithad
already presented before another panel. Inpractical terms, thisimplied thatsuchaMember hadto
defend itselftwice onthesame issuebefore twodifferent parties onlybecause thesecond complainant
hadrequired morethanayeartobring thiscasetotheDSB. Argentina recognized thattheCommunities
hadthelegal righttorequest theestablishment apanel butquestioned theirdecision andpointed to
unfairness resulting from gapsintheWTO disciplines.
Argentina believed thatthiswasnotthemainproblem oftheCommunities 'request. Thereal
problem wasthatofsubstance, namely theCommunities 'attempt toextend theterms ofreference of
itsrequest forapanel beyond theterms stipulated intherequest forconsultations (WT/DS77/1).
Thisrequest referred totheprovisions ofDecree 998/95 which hadimposed specific duties ontextiles,
clothing andfootwear products. However, theprovisions ofthatDecree withregard tofootwear had
beenrevoked byResolution 225/97 dated 14February 1997, which hadbeendulynotified totheWTO
inWT/L/204, andreferred tobytheCommunities intheirrequest forapanel. Inother words, at
thetimetheCommunities hadrequested consultations withArgentina, thespecific duties onfootwear
hadnotexisted under Argentina 'slaw.Thisfacthadbeenbothnotified totheSecretariat andexplained
totheCommunities. Heasked whether thismeant thattheCommunities wished toinclude anon-existent
measure intheterms ofreference. Hequestioned thekindofruling thatcould bemade byapanel
withregard tospecific duties which hadbeenrevoked andasked whatkindofnullification orimpairment
could theCommunities claim withregard toanon-existent measure.
Inaccordance withArticle 3.7oftheDSU, theaimofthedispute settlement mechanism was
tosecure apositive solution todisputes or,intheabsence ofamutually agreed solution tosecure the
withdrawal ofthemeasures concerned ifthese werefound tobeinconsistent withtheprovisions of
anyofthecovered agreements. Hequestioned whether themeasures indicated bytheCommunities
tobecontained inResolution 225/97 could befound consistent orinconsistent when thepurpose of
thisResolution wastorevoke themeasures, andhowapanel requested bytheCommunities could deal
withthisissue.WT/DSB/M/37
Page12
Intheirrequest forapanel, theCommunities hadalsoreferred toResolution 226/97 which
hadnotbeenincluded intheirrequest forconsultations. ThisResolution hadprovided fortheinitiation
ofasafeguard investigation andhadimposed atwohundred-day provisional measure. Therelevant
notifications hadbeensubmitted totheCommittee onSafeguards indocuments G/SG/N/6/ARG/1 and
G/SG/N/7/ARG/1. Pursuant toArticle 12.4oftheAgreement onSafeguards, Argentina hadheld
consultations onthismatter withtheCommunities which thelatter hadconsidered tobepositive.9
Henoted twolegalcontradictions intheCommunities 'approach. First, Argentina hadnever
heldconsultations under Article XXII ofGATT 1994orArticle 4oftheDSUontheabove-mentioned
safeguard measure. Thus, itwasdifficult toseehowthemeasure could beexamined byapanel. This
would notonlybeunacceptable, itwould beinclearviolation oftheletter andthespirit oftheDSU.
Apanel could notbeestablished without prior recourse toconsultations. TheCommunities 'request
forconsultations, (WT/DS77/1), contained noreference toeither Resolution 226/97 imposing the
provisional safeguard measure or,Article XIXofGATT 1994ortheAgreement onSafeguards. Sub-
paragraph (b)intherequest forapanel (WT/DS77/3) wasfarfromclear. Thesentence that,"...the
EChopes thatminimum specific duties willnotbereimposed andthatitwillnotbenecessary toinclude
them inthese proceedings" wasnotonlyconfusing butsuggested thatanytypeofspecific dutythat
Argentina might apply inthefootwear sector could beaddressed bythepanel.
Article 6.2oftheDSU stipulated thattherequest shall"...identify thespecific measures at
issueandprovide abriefsummary ofthelegalbasisofthecomplaint sufficient topresent theproblem
clearly". Assub-paragraph (b)didnotstatethefactsclearly orprovide alegal basis, Argentina could
onlyassume thattheintention wastoinclude, intheterms ofreference, matters thathadnotformed
partoftheconsultations under Article XXII ofGATT 1994. TheCommunities hadtoclarify their
position before theDSBandinArgentina 'sviewthebestwaytodosowould betodelete sub-paragraph
(b)fromtherequest forapanel ascontained inWT/DS77/3. Otherwise, theDSBwould needtotake
adecision ontheissuesince inthisexceptional caseanon-existent measure wasbeing questioned with
respect towhich noMember could claim thatitsrights wereimpaired. Ifnot,thiswould setaprecedent
forother countries totryinfuture toprotect theirexpectations byrequesting theestablishment ofa
panel inresponse toanyproposed legislation. Only when thisissue wasclarified would Argentina
beinaposition topresent itsviews onthisrequest.
Therepresentative ofUruguay wished toexpress hisdelegation 'sconcerns withregard tothe
Communities 'srequest. Uruguay didnotquestion therightofanyMember torequest theestablishment
ofapanel. However, inorder toensure abetter understanding ofthematter, thisrequest should state
thereasons forwhich theCommunities hadsought apanel. Without prejudice totheresults ofthe
consultations oranydecision tobetaken byapanel, Members should befullyinformed onthesubject
andthereasons forrequesting theestablishment ofapanel. TheCommunities 'request wasbased on
resolutions issued byArgentina, including Resolution 225/97 which hadbeenrevoked anddulynotified
totheSecretariat. Thisdidnotclarify, butfurther complicated thesubject ofthedispute. Neither
therequest forconsultations, northerequest fortheestablishment ofapanel, hadprovided aclear
account ofthelegalinstruments applied byArgentina which hadimpaired theCommunities 'rights,
inparticular withregard toResolution 226/97, which hadnotbeenthesubject oftheconsultations.
Uruguay wasalsoconcerned about thefactthatanother panel, established attherequest oftheUnited
States, wasdealing withthesame subject anditsconclusions would shortly beavailable.
Therepresentative oftheEuropean Communities saidthatinhisunderstanding Argentina could
notaccept theCommunities 'request forapanel atthepresent meeting andtherefore theDSBwould
havetorevert tothismatter. Herecognized thatthesituation wasnotclearbut,ifthesame measures
9Minutes ofmeeting oftheCommittee indocument G/SG/M/9.WT/DSB/M/37
Page13
hadbeentaken under onetitleononeoccasion andthenovertimemodified, thensubsequently converted
intoprovisional safeguard measures andlaterconfirmed, itwould bedifficult tofollow alldevelopments.
TheCommunities were prepared tohaveanother lookatthewaytheir request hadbeen drafted.
However, thefactwasthatspecific duties inexcess ofArgentina 'sbound rateshadbeenimposed and
were stillinforce, although theywere nowgiven different legal justification. Hebelieved thatthe
confusion withregard tothismatter wasnotlimited totheCommunities.
Therepresentative ofBrazil expressed hisdelegation 'sconcerns withregard totheprocedural
issues raised byArgentina. Brazil wasconcerned about thewording ofsub-paragraph (b)contained
indocument WT/DS77/3 which wasasfollows: "TheEChopes thatminimum specific duties willnot
bereimposed andthatitwillnotbenecessary toinclude them inthese proceedings" andthatthe
Communities 'request "...thatthepanel consider andfindthat...themeasures described inpoint (b)
above areinbreach ofArgentina 'sconcessions under Article IIofGATT 1994iftheyarereimposed".
InBrazil 'sview, thisamounted toapre-emptive panel which hadnotbeenprovided forunder theDSU
provisions.
Therepresentative ofArgentina saidthathisdelegation wasnotready topresent itsviewwith
regard totheestablishment ofapanel untilthefollowings points hadbeenclarified: (i)whether the
Communities intended toinclude inthepanel proceedings Resolution 225/97 which hadbeenrevoked
inFebruary 1997. Ifso,thisimplied thattheCommunities intended toinclude, intheterms ofreference
ofthepanel, anabstract question; (ii)didtheCommunities intend torequest thepanel toexamine
Resolution 226/97, which haddetermined theinitiation ofasafeguard investigation andhadimposed
aprovisional measure, without recourse toconsultations under Article XXII ofGATT 1994. His
delegation questioned whether thiswaspossible intheabsence ofprior consultations onthissubject.
Consultations under theDSU provisions were considered tobeinformal andnorecords were kept.
Theonlyavailable evidence todetermine whathadbeendiscussed wastheactual textoftherequest
forconsultations. TheCommunities 'srequest forconsultations inWT/DS77/1 contained noreferences
toResolution 226/97, theAgreement onSafeguards orArticle XIXofGATT 1994. Ifsuchreferences
hadbeenincluded, nodiscussion would benecessary. However, intheabsence ofsuchreferences,
Argentina considered thatthispoint required clarification; (iii)heenquired about themeaning ofthe
following sentence contained insub-paragraph (b):"The EChopes thatminimum specific duties will
notbereimposed andthatitwillnotbenecessary toinclude themintheseproceedings". Hequestioned
whether theCommunities intended, assuggested bysome delegations, toestablish asortofpreventive
panel toruleonhypothetical conduct; (i)therequest forapanel wasevenlessclearwhen thestatement
made atthepresent meeting wasconsidered, inwhich theCommunities reserved theirrights torequest
inclusion inthepanel proceedings thesubject oflabels which hadbeenexcluded from theirrequest
forapanel contained inWT/DS77/3. Intheabsence ofclarification fromtheCommunities thisrequest
forapanel wasfarfrom meeting theminimum clarity requirement under Article 6.2oftheDSU.
Onlywhen these questions hadbeenclarified would hisdelegation beabletopresent itsviews onthe
establishment ofthepanel.
TheChairman saidthatthestatements made under thisitem, aswellasitem3oftheagenda,
raised anumber ofissues which could notbeaddressed bytheDSBatthepresent meeting butwhich
could, assuggested byIndia, beconsidered during thereview oftheDSU. Withregard tothespecific
question under consideration, anumber ofconcerns hadbeenraised andtheCommunities hadindicated
thattheymight lookfurther intothenature oftheirrequest forapanel. Therefore, heproposed that
theparties tothedispute consult onthismatter.
Therepresentative ofArgentina saidthathisdelegation welcomed theCommunities 'offerto
holdconsultations regarding thedrafting ofanewdocument reformulating theparagraph under
discussion. While hisdelegation would notoppose totheChairman 'sproposal, itwished tohavetheWT/DSB/M/37
Page14
Chairman 'sinformal assistance inperforming thistask. When thisnewdocument wasready, Argentina
would beinaposition toprovide itsviews withregard totheestablishment ofapanel.
TheDSBtooknoteofthestatement andagreed torevert tothismatter.
5. European Communities -Regime fortheimportation, saleanddistribution ofbananas
- Report oftheAppellate Body (WT/DS27/AB/R) andReports ofthePanel
(WT/DS27/R/ECU,WT/DS27/R/GTM-WT/DS27/R/HND,WT/DS27/R/MEX,
WT/DS27/R/USA)
TheChairman saidthatthisitemwasontheagenda ofthepresent meeting attherequest of
Ecuador, Guatemala, Honduras, Mexico andtheUnited States. Hedrewattention tothecommunication
fromtheAppellate Body contained indocument WT/DS27/11 transmitting theAppellate Body Report
in"European Communities -Regime fortheImportation, SaleandDistribution ofBananas", which
hadbeencirculated pursuant toArticle 17.5oftheDSU. Hesaidthatinaccordance withtheDecision
onProcedures fortheCirculation andDerestriction ofWTO Documents contained inWT/L/160/Rev.1,
theAppellate Body Report andthePanel Report hadbeencirculated asunrestricted documents. He
recalled thatunder Article 17.14 oftheDSU: "AnAppellate Body report shallbeadopted bytheDSB
andunconditionally accepted bytheparties tothedispute unless theDSBdecides byconsensus not
toadopt theAppellate Body report within 30daysfollowing itscirculation totheMembers. This
adoption procedure iswithout prejudice totherightofMembers toexpress theirviews onanAppellate
Body report."
Therepresentative ofGuatemala saidthatthefivecountries which hadfiledthecomplaint on
theCommunities 'banana import regime shared acommon position onthismatter, buteachoneof
them wished toexpress theirsatisfaction attheresult ofthiscase. Hethanked themembers ofthe
Panel andtheAppellate Body who, withthesupport oftheSecretariat, hadcarried outawide-ranging
andthorough review oftheCommunities 'regime fortheimportation, saleanddistribution ofbananas.
Therulings ofthePanel andtheAppellate Body wereareflection ofadispute settlement system which
operated inanimpartial andtransparent manner. Ithadnowbeenestablished thatanyMember could
insist thatthepractices andpolicies ofother Members befullyconsistent withtheWTO Agreement.
Theadoption oftheReports atthepresent meeting andrapid implementation oftheDSB's
recommendations bytheCommunities would mean thatarule-based system which provides agenuine
legalforum wasfinally emerging. Furthermore, bydealing withthecentral aspects ofthemultilateral
trading system ofinterest toMembers, thiscasehadalsolaiddown thefoundations forafairer and
more equitable trade environment which could improve trade ingoods andservices. Itwould be
reasonable toexpect thatthesewell-reasoned Reports could beuseful infuture when dealing withother
trade disputes. Without anydoubt, theexamination ofthiscaseresulting inadecision thatwas
unprecedented inthehistory ofworld trade, contributed totheefficient andcredible functioning of
thedispute settlement mechanism.
Therepresentative oftheEuropean Communities emphasized thegreat attachment ofthe
Communities tothedispute settlement mechanism andtheirleading roleinestablishing thissystem.
Hisdelegations believed thattheDSU provisions wereattheheartofthesystem anditwasimportant
thatthissystem functioned fairly andproperly. Therefore, theCommunities, which intended towork
within theframework oftheDSU, accepted therulings ofthePanel andtheAppellate Body inthis
case. These Reports werenowbeing examined byhisauthorities. Atthenextmeeting, hisdelegation
would inform theDSB oftheCommunities 'intentions inrespect ofimplementation ofthe
recommendations inaccordance withArticle 21.3oftheDSU. TheReports, complex andrichin
interpretation required acareful study. Itwasnecessary toexamine them intheirentirety toavoid
rushing intosimplistic conclusions. Although theReports hadbeenmade available tothepublic, itWT/DSB/M/37
Page15
wasimportant tobemore careful thanjournalists whoreached quick conclusions suchas:"Thebanana
panel condemns preferential treatment toACP10suppliers."
Since allMembers, notonlytheparties tothedispute andthethirdparties, could beaffected
bycertain rulings orinterpretations contained intheReports, hewished tomake somegeneral comments
notonlylimited tothebanana import regime buttoraise points ofsystemic nature. Thedispute
settlement mechanism contained anumber ofbasicprinciples outlined inArticle 3.2oftheDSUwhich
together withArticle IXandXoftheWTO Agreement constituted abackbone ofthesystem. The
mainobjectives ofthedispute settlement system were: (i)tohelpcreate legalcertainty andpredictability
ininternational tradebystrictly respecting thelegalagreements accepted byMembers; (ii)topreserve
therights andobligations ofMembers under thecovered agreements, notonlybyensuring compliance
byMembers withtheirobligations, butalsobyupholding theirlegitimate rights ofaction against
unjustified allegations; (iii)topermit clarifications ofexisting legal provisions inaccordance with
customary rules ofinternational law,inparticular theVienna Convention ontheLawofTreaties.
However, interpretations tofillgapsandthecreation ofadditional obligations were reserved for
Members, notforpanels ortheAppellate Body.
TheCommunities believed thatforanauthoritative dispute settlement system tobeestablished
itwasnecessary forrulings tobeadopted bytheDSBautomatically, aswould bethecasewiththese
Reports. Thesystem would remain credible onlyif,andtotheextent that,itactually achieved the
above-mentioned objectives. IfMembers weretorespect dispute settlement rulings andconclusions
there mustbeconsensus onthecriteria onwhich these rulings were based andconfidence thatthese
criteria would beapplied. TheCommunities appreciated thattherulings inthiscasehadconfirmed
thelegality ofthreeofthebasicelements oftheirbanana import regime: (i)thebound tariff-rate quota;
(ii)theaidsystem fortheCommunities 'ownproducers; and(iii)theprinciple ofpreferential treatment
forACPcountries. Heconsidered theseelements tobepositive. However, theCommunities regretted
thatsome other rulings hadgiven risetocertain doubts astowhether thegeneral objectives ofthe
system would besatisfactorily met. Hethenprovided some examples tosupport this.Legal certainty
andstability would notbeachieved bytheinterpretation given intheReports regarding theAgreement
onAgriculture. IfMembers would consider thefullconsequences oftheReports theywould realize
thatmuch ofthenegotiating history oftheAgreement onAgriculture hadbeendisregarded. Inthe
viewoftheCommunities, rulings ontheinterpretation ofArticle 21oftheAgreement onAgriculture
hadexcessively limited thescope ofthisArticle. Theresult wasuncertainty regarding theoutcome
oftheUruguay Round negotiations onagriculture. Hedrewattention toparagraphs 153-158 contained
intheReport oftheAppellate Body where ithaddiscussed whether Article 21.1oftheAgreement
onAgriculture provided foraspecial relationship between theGATT 1994 andtheAgreement on
Agriculture. TheAppellate Body hadconcluded thatthiswasthecaseonlyiftherewould beaspecific
provision tothateffect. Thismeant thatintheviewoftheAppellate Body, market access concessions
andcommitments foragricultural products which inpractice hadoften taken theform oftariff-rate
quotas andcountry allocations, didnotbenefit fromanyparticular derogation fromGATT rules and
thiscould putthose techniques atriskinthefuture. Thiswasofconcern because theAppellate Body
hadrecognized thatsuchconcessions andcommitments contained inArticle 4oftheAgreement on
Agriculture were"...fundamental totheagricultural reform process ..."andthiswasthebasicobjective
oftheAgreement onAgriculture. Notonlyimporting Members suchastheCommunities inthiscase,
butalsoexporting Members wereconcerned withlegalcertainty ofagricultural schedules. More than
fiftyMembers hadnegotiated intheUruguay Round ingood faith andhadobtained access rights
embodied, interalia,intariff ratequotas andcountry allocations. Members hadbargained hardfor
theseconcessions andhadreceived concessions inreturn. IntheviewoftheCommunities, theseaccess
10African, Caribbean andPacific countries.WT/DSB/M/37
Page16
rights werenowopentoquestion andthebalance achieved inthenegotiations might beaffected. This
would notcreate stability inthissector.
TheCommunities weredisappointed withthenarrow interpretation given bythePanel tothe
Lomé Waiver11which hadbeen further restricted bytheAppellate Body. IntheCommunities '
understanding waivers asexceptions hadtoberigorously examined. However, thisinterpretation had
deviated significantly fromtheunderstanding oftheparties totheLomé Convention, bothwithrespect
totheConvention andregarding thewaiver. Thiswascontained inparagraphs 167-178 oftheAppellate
Body Report which setoutmeasures required bytheLomé Convention andthuscovered bythewaiver.
Herecalled thatwhen theparties totheLomé Convention hadobtained awaiver attheendof1994
theyhadaclearunderstanding andexpectation ofwhathadbeenrequired ofthem inorder torespect
theinternational obligations negotiated bythem under theConvention. They hadbeenentitled tothe
traditional viewthattheyalone determined whatcommitments theyundertook. Itwasnow,threeyears
later, thattheAppellate Body hadtaken adifferent definition regarding these obligations. Thiscould
mean thatother current waivers hadnolonger theeffect thathadbeenintended.
Withregard totherelationship between theGATT 1994andtheGeneral Agreement onTrade
inServices (GATS), theCommunities weresurprised bytheextent oftheoverlap thattheAppellate
Body hadfound between thetwoAgreements, thebrevity ofarguments thattheyhadadvanced insupport
oftheirfindings andthelackofoperational criteria bywhich Members could assess theirobligations.
These results would havebeenanticipated byfewofthepeople whohadparticipated intheUruguay
Round negotiations. Paragraphs 217-222 oftheAppellate Body Report contained thearguments where
theprovisions ofGATS hadbeeninterpreted. Theconclusions thatthemeasures inspecific casesmight
create overlapping obligations under boththeGATT andtheGATS created potential uncertainty. For
example, animport licensing measure under Article XIIIofGATT 1994 might create anobligation
ofnon-discriminationwhileunderArticleXVIIofGATSitmightcreateanobligationtoprovidenational
treatment. Theonlyguideline from theAppellate Body withregard towhether these Agreements
overlapped wasthatthiscould onlybedetermined onacase-by-case basis.
Finally, itseemed thatclearer working procedures forpanels andmore transparent andprecise
criteriafortheselectionofpanelistswouldbenecessary,whichhadalsobeenrecognizedbytheAppellate
Body inparagraph 144ofitsReport. Clear procedures would guarantee fairtreatment andwould
enhance thepossibilities thattheresults ofthedispute settlement procedures would bemore predictable
andinaccordance towell-understood criteria. Forexample, adefinition ofrigorous criteria regarding
legalstanding ofcomplainants would benecessary toavoid undesirable multiplication ofdisputes and
theriskthatsuchdisputes beusedforrenegotiating current agreements. IntheviewoftheCommunities,
thequestions ofprocedures andtheworking methods ofpanels werepriority questions fordiscussion
inthereview oftheDSUin1998. Theexperience ofthisandother cases haddemonstrated thatArticles
8and12oftheDSUanditsAppendix 3could notsecure inasatisfactory manner thegrowing concerns
ofMembers.
TheCommunities werecommitted tocontinue supporting theirbanana producers inthefuture,
anaspect thathadnotbeenconsidered outofconformity. TheCommunities weredeeply concerned
about thenegative political, economic andsocial consequences ofsome ofthefindings oftheAppellate
Body foranumber ofACP countries which depended onproduction andexports ofbananas. Inthe
view oftheCommunities, these implications hadnotbeen sufficiently taken intoaccount. The
Communities reiterated thattheywould stand bytheirinternational obligations andbytheprinciples
oftheirowndevelopment policy aimed atproviding economic andsocial stability totheACPcountries.
Hereiterated thattheCommunities werecommitted torespect theirWTO obligations. Hisdelegation
11EC-Lomé IV(WT/L/186)WT/DSB/M/37
Page17
expected thattheDSBwould adopt these Reports atthepresent meeting andwasready tojointhe
consensus infavour oftheadoption.
TherepresentativeofEcuadorsaidthatthehistoryofthiscaseandthevariouseventsthatmarked
itsdevelopment hadrevealed abroad range ofactions bytheCommunities inorder topreserve, as
longaspossible, theirillegal anddiscriminatory banana import regime thathaddamaged Ecuador,
theworld 'slargest banana exporter. Overtheyears, theCommunities hadengaged indelaying tactics
byblocking theadoption ofthereports ofthetwoearlier panels12which hadalsocondemned the
Communities 'regime. Atpresent, duetothechanges inthedispute settlement system, consideration
oftheReports bytheDSBatthepresent meeting would result intheiradoption, notonlyforthesake
ofthereputation ofthemultilateral trading system, butalsobecause failure todosocould leadto
misgivings about amechanism thatwasthemost effective inensuring thedefence oftheirrights.
Herecalled thatinFebruary 1996, Ecuador, Guatemala, Honduras, Mexico andtheUnited
States hadformally submitted theircomplaint withregard totheCommunities 'banana import regime.
Ecuador asadeveloping country hadbased itsdevelopment onbanana exports, which accounted for
28percentofitsoverall export earnings. Banana production wasentirely inthehands ofEcuadorians,
withmorethan4,500smallandmedium-scaleproducers,andmorethan1,200,000inhabitantsdependent
onthebanana industry, including theexport anddistribution ofbananas inEurope. Ecuador 'seconomy
washighly sensitive tochanges incompetitive conditions inthebanana market. Anydiscriminatory
measureimposedbyoneoftheworld'smajorbananaconsumingmarketswouldinevitablyhaveaserious
impact onEcuador 'seconomy anditspopulation. Anychange inthecompetitive conditions inthe
European market which would beinconsistent withtheWTO Agreement would deprive Ecuador of
theprofits itwould haveearned intheabsence ofsuchdistortions. TheCommunities 'discriminatory
regime, which toalarge extent hadfavoured European companies, affected Ecuadorian companies
thathadtraditionally beenresponsible foralargeshare oftheEuropean trade. Thus, itwasnosurprise
thatevenbefore itsaccession totheWTO Ecuador hadfirmly opposed thisrestrictive anddiscriminatory
banana import regime byparticipating directly, andindirectly, indispute settlement proceedings
concerning thisregime under theGATT andnowintheWTO.
TheReports submitted forconsideration bytheDSB atthepresent meeting hadsupported
Ecuador 'scomplaint. Before itsaccession totheWTO, Ecuador hadbeenrequired toreform certain
aspects ofitstrade regime tobring itintoconformity withtheWTO Agreement. Because ofthis,
andinviewofthefindings ofthePanel andtheAppellate Body, hiscountry feltthatitwasjustified
torequest theCommunities toimplement therecommendations contained inthese Reports assoonas
possible. Ecuador andtheACPcountries, aswellascountries thathadsigned theBanana Framework
Agreement (BFA) which exported bananas totheEuropean market, weredeveloping countries. The
benefitsgrantedbytheCommunitiestotheACPcountrieshadtobeconsistentwiththeWTOAgreement,
asstipulated inparagraph 8.3ofthePanel Reports: "...thesystem isflexible enough toallow, through
WTO-consistent trade andnon-trade measures, appropriate policy responses inthewide variety of
circumstances across countries, including countries thatareapparently heavily dependent onthe
production andcommercialization ofbananas".
Ecuador 'sposition anditslegalclaims hadbeenupheld inthiscase. Theillegalities ofthe
Communities banana import regime hadbeenclearly established bythePanel andtheAppellate Body,
andconsequently thenecessary modifications tothatregime would havetobeintroduced assoonas
possible inorder toremove thedamage ithadbeencausing toEcuador 'sbanana exports. Rapid
implementation oftheDSB'srecommendations bytheCommunities would strengthen thedispute
12Panel Report on"EEC -Member States 'Import Regime forBananas" (WT/DS32/R); Panel Report on
"EEC -Import Regime forBananas" (WT/DS38/R).WT/DSB/M/37
Page18
settlement mechanism andwould constitute onemore steptowards transparency intherulesgoverning
international trade, inparticular trade inbananas andagricultural products.
Therepresentative ofMexico thanked themembers ofthePanel andtheAppellate Body for
theprofessionalism withwhich theyhadexamined thismatter aswellastheSecretariat fortheirefforts.
Thehistory ofthiscasehadbegun longbefore theentry intoforce oftheWTO. TheGATT 1947
hadaddressed thisdispute ontwodifferent occasions andhaddecided infavour ofthosewhohadclaimed
thattheCommunities 'banana regime wasinconsistent withtheGATT obligations. Unfortunately,
under theprevious system, therulings ofpanels wereeasily blocked bythecontracting party thathad
lostthedispute. Duetotheimprovements inthedispute settlement system itwasnolonger possible
toblock thepanel reports asarbitrarily asunder GATT 1947. Atpresent, whether Members lostor
wontheirdisputes, thereports ofpanels ortheAppellate Body hadtobeadopted. Mexico believed
thatthiswould strengthen confidence inthenewdispute settlement system andthatintheendallwould
gain.
However, theadoption ofthereports wasonlyafirststepinsolving tradeproblems. Inorder
forthedispute settlement mechanism tobecredible, theparty thatwasrequired toimplement theDSB's
recommendations, inthiscasetheCommunities, would havetocomply withthose recommendations
promptly andinfull. Failure toimplement therecommendations ortocompensate would notonly
becontrary totheletter andthespirit oftheDSU, butwould alsobea"severe blow" tothose who
considered thatrules hadbeen made tobecomplied with rather thantoextract payment for
non-compliance. Mexico hoped thattheCommunities would inform theDSBoftheirintentions with
regard totherecommendations asquickly aspossible. Inaccordance withitsposition taken during
theproceedings withregard totheinterests oftheACPcountries, including itsCaribbean neighbours,
Mexico hadfullysupported paragraph 8.3ofthePanel Report which reaffirmed that:"...thesystem
isflexible enough toallow, through WTO-consistent tradeandnon-trade measures, appropriate policy
responses inthewidevariety ofcircumstances across countries, including countries thatarecurrently
heavily dependent ontheproduction andcommercialization ofbananas".
Therepresentative ofCôted'Ivoire saidthatthecirculation oftheReports ofthePanel and
theAppellate Body hadmarked theendofalongprocess. While hiscountry accepted therulings,
thecomplexity oftheconclusions andtheproblems ofinterpretation regarding theseconclusions would
require anin-depth examination. TheCommunities hadstated thattherulings could upset theeconomic
andsocial balance ofmany ACP countries, including Côted'Ivoire. Indeed, hiscountry wasoneof
therareAfrican countries thathadmanaged economic growth anddevelopment ofitsagricultural
potential. Thepolicy ofdiversified agricultural production hadmade itpossible todevelop, interalia,
suchnewcrops asoil-palm, cotton, sugar cane, coconut palm, rubber, pineapple andbananas. Since
1975, itsbanana sector, which haddeveloped inperfect synergy withthepineapple sector, hadbecome
oneofthecornerstones ofhiscountry 'sstrategy ofdiversifying agricultural production. With a
production of200,000 tonnes in1996, thebanana sector hadbeencrucial tothesupport anddevelopment
oftheproduction andexports oftropical fruits, which hadbenefited fromwhatwasleftfromahealthy,
strong andcompetitive banana business. Inother words, interms ofthemulti-product synergies
developed inconnection withproduction, outlets, maritime transport andforeign marketing circuits,
theCommunities 'support intheframework ofthecommon organization ofthebanana market benefited
theentire growing fruitsector ofhiscountry. Thus, Côted'Ivoire could notisolate thebanana sector
fromitsimportant fruitsector. Onthecontrary, bananas hadaccounted for2.53percentoftheGDP
in1993-1994 while providing employment formore than30,000 persons. Bananas wereattheheart
notonlyofagricultural diversification strategy, butalsoofhiscountry 'sdevelopment oftropical fruit
exports.
Thechallenge tothecommon organization ofthebanana market hadthreatened hiscountry 's
future fruitproduction andhadcompromised chances ofCôted'Ivoire, intheprocess ofadjustment,WT/DSB/M/37
Page19
foritseconomic recovery. Theimmediate consequences could bethedisappearance of25,000 hectares
ofcrops andtheelimination ofmore than30,000 direct jobs, casting doubt onfuture development
ofthefruitsector andseriously compromising thehorizontal agricultural diversification policy ofhis
country. Furthermore, entire regions which weremainly banana andpineapple producing areas would
become disaster areas inwhich theruralpopulation estimated atmore than300,000 could bereduced
topoverty. Because ofthisleading rôleofthebanana tradeandforthesakeofsocial stability inCôte
d'Ivoire andtheACP banana-producing countries, hiscountry expected theCommunities torespect
theircommitments under theLomé Convention. Hisdelegation therefore supported thestatement made
bytheCommunities atthepresent meeting. Since theCommunities haddeclared theircommitments
totheproper functioning oftheWTO andtothecollectively accepted rules, theyhadnochoice but
toaccept theDSB'sdecision atthepresent meeting which could notbesubject toappeal. However,
certain steps anddiscussions would beneeded inorder todetermine what newmeasures would be
required,andinthisconnectionatime-periodforimplementationoftherecommendationswasimportant.
Hisdelegation hoped thateveryone would contribute tohelping theCommunities tostrike abalance
between theirconcerns andthose oftheirACP partners.
Therepresentative ofJamaica saidthatArticle 3.2oftheDSUstated that:"Recommendations
andrulings oftheDSBcannot addtoordiminish therights andobligations provided inthecovered
agreements." Article 3.9oftheDSU stated thattheprovisions oftheDSU "...arewithout prejudice
totherightsofMemberstoseekauthoritativeinterpretationofprovisionsofacoveredagreementthrough
decision-making under theWTO Agreement ...".However, thiscould notbeautomatically understood
tomean thatanyinterpretation byapanel, ortheAppellate Body, could beconsidered tobean
authoritative interpretation oftheprovisions ofthatcovered agreement. Otherwise itwould make Article
3.2oftheDSU superfluous. Some delegations hadearlier indicated thatthirdparties didnothave
certain rights andwould havetobecome parties tobeassociated withtheimplementation ofthefindings
andrecommendations ofpanels andtheAppellate Body. Although Article 17.14 oftheDSUstipulated
thatthereports hadtobeaccepted unconditionally, hequestioned whether Jamaica could ingood
conscience statethatitjoined inaconsensus fortheautomatic adoption oftheReports. Hiscountry
believed thattheDSUwasapositive contribution tostrengthening thecredibility andthepredictability
oftheWTO system. Smaller trading countries needed credible andpredictable rules butfairrules
andprocedures hadtobesuchastosecure equal opportunities forthem topursue theirinterests.
Twoother important matters wereattheheartoftherights andobligations ofMembers. One
wasdescribed intheAppellate Body Report asprocedural. TheAppellate Body hadnotbeenable
toaddress procedural violations, which inJamaica 'sview hadadverse effects onthewayinwhich
third parties could present theircasebefore thePanel. Furthermore, theAppellate Body hadnot
addressed thisissueonthegrounds thatnoappeal hadbeenfiledonthismatter. However, thirdparties
hadnorighttoappeal apanel report. Hence, these defects remained uncured. Indealing withthe
Lomé Convention which brought sovereign States together inlegally binding commitments prior to
theWTO, theAppellate Body, likethePanel, hadinterpreted andreversed theclear intentions of
theparties totheConvention. Hereferred tothe20thcentury jurist, Prof. Lauterpacht, andquoted
that:"Every treaty contains rulesgoverning theinternational conduct ofthesignatory states andevery
treaty, law-making ornotlaw-making, isasource ofinternational lawforthecontracting parties -
andfornooneelse." Hewondered howitcould bepossible thatthreemembers ofthePanel andthree
members oftheAppellate Body determine inregard totheLomé Convention, whatwas"foreseen"
asdistinguished fromwhatwas"required", whatwas"mandatory" fromwhatwas"notmandatory",
andatthesame timedisregard theclear, explicit intent ofsovereign States toenter intothose treaties
withreciprocal rights andobligations applicable tothose States.
TheCommunities hadindicated theirviewwithregard totheconclusions ontheGATT and
theGATS. Jamaica agreed thatanyruling which created anoverlap between theGATT andtheGATS
hadnotbeenintended bytheUruguay Round negotiators norfounded onlogic. Sucharuling wouldWT/DSB/M/37
Page20
create difficulties forMembers inthefuture. Withregard tothenextstageimplied bycertain delegations
thefollowing options were open. FirstthattheCommunities 'regime bemodified inlinewiththe
findings oftheAppellate Body. Butatpresent itwasdifficult toseehowtherecould beanymodification
inlinewiththerecommendations oftheAppellate Body without achange intheLomé Convention
obligations which would require fullcompliance andthefullreview byparties totheConvention.
Thesecond option concerned compensation. Forsome complaining parties, compensation wasnot
aviable option since theydidnotexport bananas andthisshould beclarified. Thethirdoption alluded
toamodification oftheLomé waiver. Thisshould bethesubject offurther discussion andclarification.
Although hehadnotmentioned thesocial andeconomic consequences, thisshould notbetaken as
adisregard totheimportance ofthese consequences forfarmers andtraders inACP countries. He
hadonlymentioned thelegal aspects since theDSBwasanappropriate forum todealwithspecific
systemic matters related totheGATT 1994, theGATS andtheDSU.
Therepresentative ofHonduras thanked themembers ofthePanel andtheAppellate Body
aswellastheSecretariat fortheirwork. Hisdelegation wished tobeassociated withthecomplaints
andthelegal arguments ofthecountries which, together withHonduras, hadfiledthiscomplaint.
IntheviewofHonduras, theCommunities 'banana import regime asdemonstrated bythePanel and
theAppellate Body, hadrepresented theveryantithesis ofthebasic principles offairandequitable
trade capable ofpromoting growth anddevelopment onthebasis ofequality ofopportunities, rights
andobligations. Heexpressed hiscountry 'ssatisfaction withtheresults ofitsfirsttrade dispute and
reiterated Honduras 'confidence andfullsupport oflegal regulations andprocedures ofthedispute
settlement mechanism andoftheWTO asauniversal forum forcountries suchasHonduras, toexercise
theirrights regardless oftheirshare inworld trade. Honduras wassatisfied withtheoutcome ofthis
casebecause ithaddemonstrated thatmultilateral commitments prevailed overunilateral decisions
aimed atbenefiting certain countries attheexpense ofothers. Hiscountry wasconfident thatwith
theadoption ofthePanel andtheAppellate Body Reports itwould bepossible toendthiscontroversial
chapter without falling intothepattern ofwinners laying claims onlosers andhoped thatthe
Communities 'would findappropriate means consistent withtheWTO Agreement, tocontinue tofulfil
theirobligations under theLomé Convention.
Inorder toexplain Honduras 'reasons forwelcoming theoutcome ofitsfirsttrade dispute
submitted tothedispute settlement system, heoutlined some ofthenegative economic andsocial
consequences suffered byhiscountry asaresult oftheintroduction bytheCommunities 'oftheirregime
fortheimportation ofbananas. Asaresult oftheapplication ofthisregime, thevolume ofhiscountry 's
banana exports totheCommunities, which between 1990and1993hadgrown by34percentannually,
hadshrunk bymore than90percentintheperiod 1993-1994, while itsoverall banana exports had
shrunk bymore than30percent. Theeffect wasdevastating forhiscountry 'seconomy, since almost
50percentofitsexport earnings hadcome from exports ofbananas. Finally, Honduras hoped that
asaresult oftheadoption oftheReports atthepresent meeting itwould bepossible toensure, inter
alia: (i)thatevery Member would renew itscommitment toafairandequitable rule-based trading
system;and(ii)thatthedisputesettlementsystemwouldconstitutealegitimate,appropriateandeffective
means ofensuring fullrespect ofrights within themultilateral trading system.
Therepresentative ofNicaragua saidthatsince hercountry considered thatoneofthemost
important achievements oftheUruguay Round regarding stability ofthemultilateral trading system
wasthestrengthening ofthedispute settlement mechanism, itwished tobeassociated withtheconsensus
fortheadoption oftheReports atthepresent meeting. However, itwasconcerned withthepossible
impact oftheconclusions ofthePanel andtheAppellate Body. From thelegal point ofview, the
conclusions oftheReports might affect thebalance ofrights andobligations ofsmall countries with
littlediversification ofproducts, suchasNicaragua. Theconclusions ofthisnature might encourage
some countries notsatisfied withtheconcessions theyhadalready obtained toseekcertain revision.
Thiscreated uncertainty. From asocial andeconomic point ofview, theconclusions oftheReportsWT/DSB/M/37
Page21
could affect theeconomies ofasignificant number ofcountries. InthecaseofNicaragua, theBFA
hadadecisive effect ontherecovery ofitsbanana industry. Without astable market, anenormous
investment required inthissector intheearly '90swould nothavebeenpossible. Hercountry noted
theCommunities 'statement withregard totheneedtostudy in-depth thecomplex nature oftheReports
aswellastheCommunities 'intention withregard totheimplementation oftheDSB'srecommendations.
Nicaragua believed thatthrough consultations withtheparties, which would takeintoaccount the
concerns expressed atthepresent meeting, itwould bepossible toobtain better results interms of
implementation. Hercountry wasready toparticipate actively inthese consultations.
Therepresentative ofSenegal expressed hisdelegation 'ssatisfaction withtheconclusions of
theAppellate Body, despite theirtroubling nature. Bystating publicly theirfirmintention torespect
theircommitments towards theACP countries, theCommunities haddemonstrated agreat sense of
responsibility andthishadnotcome asasurprise. Hisdelegation 'sreaction totheconclusions and
recommendationsoftheAppellateBodyhadbeenamixtureofresignationandfear.Resignation,because
foryears thestructure oftheCommunities 'trade withtheACP countries, inparticular withrespect
tobananas, hadbeensubject torepeated attacks. Fear, because ofthemanner inwhich thedispute
settlement system hadbeenusedinthiscase. Iftheprimary objective wasnottopunish acountry
oragroup ofcountries breaking therules, butrather tore-establish abalance which hadsupposedly
beenupset, itwould benecessary tolookbeyond simple trade relations. Thiswould havehelped to
understand thattheagreements between theCommunities andtheACPcountries hadbeenconcluded
onthebasisofashared conviction thatefficient economic cooperation between countries withdifferent
levels ofdevelopment should bebased onastrong sense ofsolidarity, anditwasthissolidarity which
explained theprivileges granted bytheCommunities andrejected bytheAppellate Body.
Without doubt, these agreements wereefficient instruments thathadcontributed toimproving
thestandardoflivinganddevelopmentoftheACPcountries,includingmanyLDCs.Whilethechallenge
tothepreferential regime enjoyed bycertain ACPbanana-producing countries would constitute aserious
setback andcause disruptions inthecountries concerned, ithadnotbeenestablished thatthemaintenance
oftheseprivileges hadcaused similar disruptions forother parties. Several years ago,theWorld Bank
andtheFAOhadcarried outsimulations oftheimpact ofdismantling ofthepreferential regime granted
totheACP countries andhadreached thesame conclusion, i.e.,thatthedismantling oftheregime
would generate adjustment costs beyond what thecountries concerned could support. Heaffirmed
thathiscountry 'scommitment tothedispute settlement system remained intact. However, Senegal
wasconcerned withthetendency, asreflected inthiscase, tobetoorestrictive intheinterpretation
ofagreements governing Members relations within theframework oftheWTO.
Therepresentative ofCosta RicasaidhisGovernment hadexamined theReports ofthePanel
andtheAppellate Body andhadacknowledged theirresults since Costa Ricaconsidered thedispute
settlement mechanism tobeacornerstone ofthemultilateral trading system. Nevertheless, hewished
tocomment onsome conclusions oftheReports which might affect thesystem asawhole. Inparticular,
hiscountry wasconcerned thattheAgreement onAgriculture hadnotprevailed overother general
regulationsonmarketaccessconcessionscontainedintheSchedulesnegotiatedandagreedintheUruguay
Round.Inthosenegotiationsitwasagreedthatintheagriculturalsectorthesystempreviouslydominated
bynon-tariff measures would bereplaced byatariffsystem. Inthiscontext, many Members hadbeen
obliged toaccept tarifflevels thathadgonebeyond theirprevious bindings. Inorder tomaintain market
access opportunities, theyhadmade commitments with respect toquotas --theCommunities '
commitments being onlyoneexample --many ofwhich could nowbequestioned inasimilar way
withrespect tothegeneral regulations ofGATT 1994. Although during thenegotiations ithadbeen
understood thatthefundamental transformation ofthesystem required exceptions, theReports had
rejected thisview infavour ofalimited interpretation ofArticles 21and4.1oftheAgreement on
Agriculture. Thisinterpretation threatened thebalance oftheUruguay Round results which hadbeen
painstakingly achieved. Theconcessions contained intheSchedules reflected theoutcome ofadifficultWT/DSB/M/37
Page22
process ofnegotiations inwhich theparties hadbeenabletostrike anacceptable balance. Moreover,
thecross-concessions between theparticipants resulting fromthesingle undertaking principle hadmeant
thatduring thenegotiations, sectors asdifferent asagriculture andtheTRIPS Agreement hadbeen
linked. Thismade itpossible tostrike abalance inthediversity oftrade interests among participants
andtoarrive atthewide-ranging results oftheUruguay Round. Unfortunately, thisbalance wasupset
bythefinding oftheReports thatthemarket access concessions intheAgreement onAgriculture might
bereviewed. Finally, hesaidthatthere wasanumber ofpositive elements including thefactthat
although theCommunities 'Schedule hadbeen submitted forreview under GATT 1994, certain
concessions contained therein hadbeenrecognized aslegitimate, including thespecific quotas allocated
toCosta RicaandColombia.
Therepresentative ofColombia saidthathercountry which hadparticipated inthiscaseas
athirdparty, wished tojoinintheconsensus ontheadoption oftheReports. Colombia believed that
themultilateral dispute settlement mechanism wasacornerstone oftheWTO system. Therulings had
recognized thevalidity ofthereference period usedbytheCommunities incalculating thedistribution
oftariff quotas forimports ofbananas aswellasColombia 'sstatus asasupplier having asubstantial
interest withtheright toatariff quota. However, Colombia wasconcerned about implications for
thesystem ofsome conclusions. ThePanel hadstated that"...thetariff ratesspecified intheEC's
Uruguay Round Schedule arevalidECtariffbindings inrespect ofbananas".13ThePanel hadconsidered
thatalthough thesaidtariffrateswereinconsistent withArticle IIoftheGATT 1994, thisinconsistency
hadbeencured bytheirinclusion intheUruguay Round Schedule. Thisreasoning hadignored the
understanding thattheSchedules ofconcessions under GATT 1947 hadbeen incorporated into
GATT 1994. Moreover, ithadimplied thatanytariffinrespect ofmanufactured oragricultural goods
thathadbeenbound atahigher levelthantheprevious GATT 1947 binding became consistent with
theobligations ofArticle IIoftheGATT 1994 without being renegotiated under Article XXVIII.
Theconclusions concerning Article XIIIoftheGATT 1994, invalidated theGATT practice
ofallocating country quotas toallthose having asubstantial interest andtocertain small suppliers,
leaving aresidual quota forothers. Inaccordance withtheconclusions, thispractice wasincompatible
withArticle XIII,evenifevery oneoftheallocations, including theresidual quota, wasinconformity
withthemarket distribution existing inagiven representative period. Furthermore, theconclusions
concerning Article XIIIhadappeared tobecontradictory. Ontheonehand, thePanel hadconcluded
thatMembers should berequired touseageneral category forallsuppliers other thanMembers with
asubstantial interest14since: "When asignificant share ofatariff quota isassigned toothers ’,the
import market willevolve withtheminimum amount ofdistortion."15Atthesame time, thePanel
andtheAppellate Body hadconcluded thattheallocation ofshares tosome Members nothaving a
substantial interest butnottootherMembers inasimilar situation wasinconsistent withArticle XIII:1.16
Colombia therefore questioned whatwasincompatible withArticle XIII,theallocation ofcountry quotas
tosmall suppliers ortheallocation ofcountry quotas tosome small suppliers andnottoothers?
With regard totheconclusions concerning Article 4.1oftheAgreement onAgriculture, she
recalled thegeneral ruleofinterpretation invoked inthepastbytheAppellate Body, according towhich
"...interpretation mustgivemeaning andeffect toalltheterms ofatreaty. Aninterpreter isnotfree
toadopt areading thatwould result inreducing whole clauses orparagraphs ofatreaty toredundancy
13WT/DS27/R/GTM andHND, paragraph 7.139.
14WT/DS27/R/USA, para. 7.75.
15WT/DS27/R/USA, para. 7.76.
16WT/DS27/R/USA, para. 7.90.WT/DSB/M/37
Page23
orinutility".17However, thishadnotbeentaken intoaccount. Ontheonehand, thePanel hadconcluded
thatArticle 4.1"...isnotasubstantive provision, butastatement ofwhere market access commitments
canbefound".18Ontheother hand, theAppellate Body hadrecognized theexistence andvalidity
ofthe"other market access commitments" negotiated during theUruguay Round, buthadomitted to
mention therights andobligations arising fromArticle 4.1.Thisomission would seemtosuggest that
theAppellate Body hadalsoconsidered thatArticle 4.1didnothavelegalstatus. Consequently, it
could beunderstood thatArticle 4.1didnotprovide alegal basis fortariff increases negotiated for
agricultural products. Norwasitalegalbasis forthedistribution oftariff quotas negotiated withthe
tariff increase, which wasgoverned byArticle XIIIoftheGATT 1994. Inother words, Article 4.1
wasnotnecessary inthefirstcase, andwasredundant inthesecond case. Shereiterated Colombia 's
interest incontributing totheintroduction andimplementation ofthebanana import regime inclose
cooperation withtheCommunities, bearing inmindtheneedtofindsolutions which would avoid market
manipulation andwhich, byproviding market stability, would haveabeneficial impact ontheearnings
ofbanana producers.
Therepresentative ofJapan saidthathisdelegation hadaninterest incertain interpretation
oftheDSU provisions. AsthePanel haderred initsinterpretation ofArticle 6.2oftheDSU, Japan
hadjoined theAppellate Body procedures asathirdparty andhadpresented itsviews. Although the
Report oftheAppellate Body hadmade correct andimportant modifications, ithadbasically agreed
withthePanel'sfindings. Ifthefinding ofthePanel andtheAppellate Body setaprecedent forthe
interpretations ofArticle 6.2oftheDSU, thatwould invite abuse ofthedispute settlement mechanism
andwould adversely affect thesystem. Hestressed thatwhether ornotarequest fortheestablishment
ofapanel satisfied therequirements ofArticle 6.2oftheDSU, itshould bedecided onacase-by-case
basis, fullytaking intoaccount thefactual andlegalcontext ofeachcase.
Therepresentative oftheUnited States saidtheReports submitted foradoption atthepresent
meeting haddemonstrated howwellthedispute settlement process could work inproviding clarity
inorder toresolve difficult disputes. Hetherefore expressed hiscountry 'sappreciation forthework
ofthePanel andtheSecretariat inexamining theCommunities 'banana import regime andforthelarge
number ofissues presented. TheUnited States appreciated thespeed andcarewithwhich theAppellate
Body hadensured aresult thatwasconsistent withtheWTO Agreement. Itwasgratified thatboth
thePanel andtheAppellate Body hadconfirmed thebroad scope oftheAgreement onImport Licensing
Procedures andtheGATS. Ashadbeenagreed inMarrakesh, theWTO agreements wereaimed at
"...theelimination ofdiscriminatory trade treatment ininternational trade relations". ThePanel and
theAppellate Body hadnowconfirmed thattheCommunities 'banana import regime wasuniquely
andextraordinarily discriminatory against theUnited States andother foreign banana wholesale
distributors andcertain banana exporters. TheUnited States wasencouraged bythepublic statements
made recently bytrade officials oftheCommunities recognizing theweight ofthese Reports and
expressing confidence inthedispute settlement mechanism. Asithadbeenindicated, theCommunities
would inform theDSBoftheirintentions inrespect ofimplementation oftheDSB'srecommendations.
TheUnited States hoped thattheCommunities would make adefinite andclear statement thatthey
intended tocomply withtheDSB'srecommendations andrulings. Hisdelegation looked forward to
working withtheCommunities toforge amutually satisfactory solution tothislong-standing dispute.
With respect tothecomments made bysome delegations, thePanel andtheAppellate Body
Reports hadfullysupported theACPtariff preferences overexports fromLatin American countries.
However, asthePanel hadfound, alotmore wasinvolved intheCommunities 'banana import regime
17WT/DS2/AB/R, p.23.
18WT/DS27/R/USA, para. 7.124.WT/DSB/M/37
Page24
thanhelping Caribbean banana producers through tariff preferences. ThePanel hadfound thatthe
regime included anumber ofWTO-inconsistent ways ofprotecting Communities 'banana producers
anddistribution companies andmany burdensome anddiscriminatory licensing procedures onimports
fromLatin American countries. TheUnited States hadexpressed itscommitment toaWTO-consistent
solution thatwould enable Caribbean countries tocontinue exporting bananas totheCommunities.
Inparticular, theUnited States wassatisfied withthePanel'sanalysis concerning theGATS.
In1993, when theCommunities hadintroduced theirbanana regime, ithadbeenwellknown thatthe
regime'shighlyunusual,orunprecedented,structurehadbeendesignedtotransferbusinessopportunities
from Latin American andUSdistribution companies todomestically-owned distribution companies.
ThePanel andtheAppellate Body hadfound thatGATS non-discrimination commitments covered all
measures thatdistorted competitive conditions infavour ofdomestic services orservice companies.
Thisinterpretation wasnotonlyrequired under theGATS butwasnotdifferent tohowtheGATT
hadbeenhistorically interpreted since the1950s withregard totrade ingoods. Specifically, inorder
toensure effective non-discrimination, Article IIIofGATT 1994 hadbeeninterpreted tocover all
measures thatalterthecompetitive environment infavour ofdomestic goods. Inthiscase, thePanel
andtheAppellateBodyhadrejectedanarrowinterpretationofGATSthatwouldhavepermittedMembers
toevade their services commitments atwill, forexample byrestricting access offoreign service
companies, butnotdomestic service firms, tothegoods needed tosupply aservice. Inother words,
Members continued tobefreeunder GATS toregulate theirgoods markets. However, theymight
notusetheso-called goods measures asameans todiscriminate against foreign services companies
inscheduled sectors. Thisresult should besupported byallthose whofavoured theelimination of
discrimination intrade inservices.
TheCommunities hadurged amore careful interpretation ofthePanel andtheAppellate Body
findings thangiven byjournalists. Thiswaspositive. However, theyhadexpressed anumber of
unfoundedconcernswithrespecttogeneralizedimplicationsforMembersinconnectionwiththeReports.
Forexample, theCommunities hadraised concerns withregard totheinterpretation ofwaivers. But,
upon review oftherelevant paragraphs referred tobytheCommunities, onecould findnothing more
nefarious thanareasoned analysis oftheprecise terms oftheLomé waiver. Thewaiver waslimited
tocertain preferential treatment forACP products asrequired bytheLomé Convention. ThePanel
andtheAppellate Body hadreasonably addressed twoquestions: (i)whatwasrequired bytheLomé
Convention, and(ii)whatwascovered bytheLomé Convention. Hebelieved thatMembers should
notfearaprocess ofinterpretation ofwaivers based onsound methodology indeveloping thewaiver.
Inaddition, withregard totheanalysis ofthePanel andtheAppellate Body ofthescope oftheLomé
waiver, inlightoftheparties 'intentions, hisdelegation hadparticipated actively inthenegotiation
ofthetextofthewaiver withtheCommunities, theACP countries, andother interested GATT
contracting parties. Onthebasis ofthisexperience heassured allMembers thattheanalysis ofthe
scope ofthewaiver hadconformed completely withtheintentions ofthose whohadnegotiated the
waiver.
Therepresentative ofPanama saidthathiscountry wished tojoindelegations supporting the
adoption oftheReports. Panama hadbecome aMember oftheWTO onlyrecently. Otherwise, it
would havejoined theproceedings ofthePanel. Nevertheless, ithadclosely followed thiscaseand
withgreat interest, bothintheWTO andinother fora. Onthebasis ofthestatistics contained inthe
Panel Report itcould beseenthatthecurrent banana regime oftheCommunities hadanegative impact
onPanama 'stradeinterests. Hiscountry wasoneofthemainexporters ofbananas totheCommunities '
market. Theexistence ofthousands ofPanamanians hadbeendirectly linked tothesaleofbananas
onworld markets, including theCommunities 'market which wasoneofthemostimportant. Reduced
access tothatmarket inevitably hadanimmediate andtangible effect ontheirlives.WT/DSB/M/37
Page25
Heregretted thatthesettlement ofthisdispute hadoften taken theform ofaconfrontation
between richcountries ormultinational companies anddeveloping countries whose economic survival
wasatstake. Itwasclearthatonbothsidesofthisdispute, thelivesofcitizens ofdeveloping countries
hadbeenaffected. Itcould onlybehoped thatinfulfilling trade obligations, itwould bepossible to
findasolution tothisdispute. Following anexchange ofcommunications between Panama andthe
Communities during itsprocess ofaccession, Panama would soonconsult theCommunities withregard
toitsfuture participation inanyevents concerning thismatter. AsanewMember andaninterested
party withasubstantial interest inthiscase, Panama urged theDSBtoadopt therulings ofthePanel
andtorequest theCommunities tobring theirmeasures thathadbeenfound inconsistent withGATT
1994 andtheGATS intoconformity withtheirobligations under these Agreements.
Therepresentative ofArgentina saidhisdelegation wished toexpress itsviews withregard
totheadoption oftheReports pursuant toArticle 16.4oftheDSU. Paragraph 256oftheReport of
theAppellate Body stated thattheReport leftintact thefindings andconclusions ofthePanel thatwere
notthesubject ofthisappeal. ThePanel findings, inparticular those indocuments WT/DS27/R/GTM -
WT/D27/R/HND, included anendorsement, inparagraph 7.138, ofthesecond banana panel report19
which hadnotbeenadopted under theGATT system. IntheviewofArgentina theendorsement by
theAppellate Body ofaGATT panel could notbegiven thesamelegalstatus astheadoption ofareport
byapanel ortheAppellate Body within theframework oftheWTO. InArgentina 'sviewthefindings
contained indocument DS38/R, referred tointhePanel Reports should beconsidered inthelightof
theprinciple laiddown bytheAppellate Body inthecase"Japan -Taxes onAlcoholic Beverages"20
according towhich unadopted panel reports hadnolegalstatus intheGATT orWTO system since
theyhadnotbeenendorsed through decisions bytheGATT CONTRACTING PARTIES orMembers
oftheWTO.
Therepresentative ofAustralia saidthathiscountry appreciated andrecognized theimportant
anddiverse trade anddevelopment interests involved inthiscase, andthedegree ofpublic attention
ithadattracted. Australia hadconsistently expressed itsexpectation thatasolution could befound
thatwould accommodate theinterests ofallcountries involved. Ithadcontinued tobeitsexpectation
thatitshould bepossible fortheCommunities toredesign itsbanana regime tocomply fullywiththeir
WTO obligations while alsoaddressing theimportant concerns ofallinterested parties. Australia hoped
thatthisobjectivecouldbeadvancedthroughdiscussionsbetweentheCommunitiesandinterestedtrading
parties including theACP countries. Thescope ofissues considered inthePanel andtheAppellate
Body Reports wasbroad. Many oftheissues addressed wereclearly complex. Australia would be
carefully examining thePanel findings andconclusions asupheld, modified orreversed bytheAppellate
Body. Thefindings andconclusions, however, referred toaspecific situation andnopremature
conclusions should bedrawn about anypossible implications forother situations andcircumstances.
TheDSBtooknoteofthestatements21andadoptedtheAppellateBodyReportinWT/DS27/AB/R
andthePanelReportsinWT/DS27/R/ECU,WT/DS27/R/GTM-WT/DS27/R/HND,WT/DS27/R/MEX,
WT/DS27/R/USA, asmodified bytheAppellate Body Report.
19DS38/R.
20Appellate Body Report (WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R).
21Including astatement bySaint Lucia which wasmade available intheroom intheabsence ofthatdelegation.
Thisstatement wassubsequently circulated inWT/DSB/COM/3.WT/DSB/M/37
Page26
6. Proposed nominations fortheindicative listofgovernmental andnon-governmental panelists
(WT/DSB/W/60)
TheChairman drew attention todocument WT/DSB/W/60 which contained additional names
proposed forinclusion ontheindicative listinaccordance withArticle 8.4oftheDSU. Heproposed
thattheDSBapprove thenames contained therein.
TheDSBsoagreed.
TheChairman saidthattheSecretariat wasexpected toupdate theindicative listbytheend
ofSeptember onthebasis ofupdated curricula vitae tobesubmitted bydelegations. Ashadbeen
indicated attheprevious meeting oftheDSB, thenames notreconfirmed would notappear onthe
indicative list. Theprocedure forsubmission fortheupdated indicative listhadbeenoutlined in
document WT/DSB/W/58. Delegations whohadnotyetdone so,were invited tosubmit updated
curricula vitaeinaccordance withtheprocedures outlined inthatdocument assoonaspossible.
TheDSBtooknoteofthisinformation.
7. Canada -Certain measures concerning periodicals
- Statement byCanada
Therepresentative ofCanada, speaking under "Other Business", saidthaton29August 1997
inaletter22transmitted totheChairman, Canada hadinformed theDSBofitsintention tomeet its
WTO obligations withregard totheDSB'srecommendations onthismatter23andthatitwould require
areasonable period oftimeinorder todoso.Shewaspleased toannounce thattheUnited States
andCanada hadagreed, pursuant toArticle 21.3(b) oftheDSU, thatareasonable period oftimefor
Canada tobring itsmeasures intocompliance withtherecommendations ofthepanel andtheAppellate
Body would be15months, beginning from 30July1997, thedateoftheadoption ofthereports by
theDSB.
Therepresentative oftheUnited States confirmed thestatement made byCanada onbehalf
oftheUnited States, totheeffect thattheparties tothedispute hadagreed pursuant toArticle 21.3(b)
oftheDSU thatthereasonable period oftimeforCanada tobring itsmeasures intocompliance with
therecommendations ofthepanel asmodified bytheAppellate Body would be15months from
30July1997, thedateoftheadoption ofthereports. TheUnited States intended tomonitor closely
Canada 'scompliance withthepanel andtheAppellate Body reports. Itwastheexpectation ofthe
United States thatastatus report tobesubmitted byCanada totheDSBpursuant toArticle 21.6of
theDSU, would indicate progress towards fullimplementation.
TheDSBtooknoteofthestatements.
22WT/DS31/8.
23Atitsmeeting on30July1997, theDSB adopted theAppellate Body Report (WT/DS31/AB/R) andthe
Panel Report (WT/DS31/R andCorr.1) asmodified bytheAppellate Body Report.WT/DSB/M/37
Page27
8. Letter fromtheWorld Wide Fund forNature tothechairman ofthepanel on"United States-
Import Prohibition ofCertain Shrimp andShrimp Products"
- Statement byBrazil
Therepresentative ofBrazil, speaking under "Other Business", saidthaton15September 1997,
hisdelegation hadreceived aletter from theWorld Wide Fund forNature (WWF). Inthisletter,
addressed totheambassadors andthepermanent representatives totheWTO inGeneva, theWWF
hadenclosed acopyofthe"amicus brief" forthepanel on"United States Import Prohibition ofCertain
Shrimp andShrimp Products" (Panel). Thisletter hadindicated thatthebriefhadrecently beensent
tothechairman ofthePanel andthefiveparties tothedispute. Furthermore, theWWF would also
distribute thisbrieftootherrelevant governmental bodies andnon-governmental organizations (NGOs)
atthenational andinternational level.
Hisdelegation wasbothsurprised andconcerned about theimplications ofthisinitiative. In
accordance withArticle 13oftheDSU, apanel hadtherighttoseekinformation andtechnical advice
fromsources other thantheparties tothedispute. Thuspanels could seekinformation butnottoreceive
unsought information from outside sources. Furthermore, theDSU Appendix 4laiddown specific
provisions withregard tothesubmission oftechnical information. TheDSU didnotprovide forany
actio popularis oramicus curiae .Herecalled thatthebasic concern ofMembers participating in
consultations heldin1996withregard tothescope oftheAgreement oncooperation between theWTO
andtheInternational Monetary Fund (IMF) hadbeenwhether toallow theIMFtoprovide directly
topanels written information which hadnotbeensought. Members believed thatprovision ofsuch
information circumvented theruleslaiddown inArticle 13oftheDSUanditsAppendix 4.Herecalled
thateveninthecaseofanintergovernmental organization offundamental relevance totheWTO 's
work, adecision oftheGeneral Council adopted inNovember 1996 hadbeenreached afterlongand
difficult negotiations. Thefunctioning oftheworld trading system would beadversely affected, if
Members accepted theinitiative ofanon-governmental organization toprovide apanel directly with
unsought information asafaitaccompli .Hereiterated thattheDSU didnotprovide foranamicus
curiae andtherefore thePanel should notaccept theso-called amicus briefwhich hadnotbeenrequested.
Hethensought clarification from theChairman withregard tothestatus oftheWWF 'sletter tothe
Panel, andwithregard toanysubsequent action taken thereon.
Therepresentative ofThailand, speaking onbehalf ofASEAN countries, saidthatthematter
raised byBrazil wasrelevant andcould havesignificant implications forthework ofpanels. The
obligations ofparties tothedispute andother parties outside thisdispute hadbeenclearly defined and
theprocedures, time-periods, andchannels ofcommunication hadbeenestablished inorder toensure
proper proceedings. Herecognized thatinsome cases, panels might seekexpert advice inaccordance
withtherelevant DSU provisions. However, inthiscase, thepanel hadnotsought anyinformation.
Henoted thatthePanel hadearlier rejected certain information which hadnotbeenrequested. His
delegation wasconcerned about inputs notsolicited bythepanel andwithout dueregard totheDSU
provisions. IntheviewoftheASEAN countries thisdocument hadnolegalstatus.
Therepresentative oftheUnited States supported Brazil 'sstatement withregard tothefact
thattheDSU provisions didnotgivetheWWF orother organizations anyright tomake sucha
submission toapanel aswellastheconcerns ofMembers withregard tothescope oftheAgreement
withtheIMFandtheneedtoobserve theDSU provisions. However, panels werecomposed ofwell-
qualified governmental andnon-governmental individuals which hadawidespectrum ofexperience
andenjoyed independence intheirwork. Theydidnotneedtobesheltered frominformation submitted
byanon-party. Panels were made ofintelligent individuals andhisdelegation believed thatpanels
could beentrusted todetermine whatweight should begiven tosuchkindofinformation.WT/DSB/M/37
Page28
TherepresentativeofArgentinasaidthattheproceduresforpanelistswerecontainedinArticle13
oftheDSUanditsAppendix 4.Hebelieved thatthework ofpanels hadtobecarried outinaccordance
withthese provisions. Anyaction outside thespirit oftheabove-mentioned procedures would fall
beyond theDSU.
Therepresentative ofJapan saidthathisdelegation shared theviews expressed byBrazil. He
recalled thatduring theUruguay Round negotiations oftheDSU, some delegations hadtriedtoinclude
atextwhich could allow theNGOs andother bodies tosubmit theirviews directly topanels. However,
thisproposal hadbeenrejected bythemajority ofdelegations. Thefinalresult wasnowcontained
inArticle 13oftheDSU anditsAppendixes. Therefore, inthelightofthenegotiating history of
Article 13oftheDSUanditsliteral interpretation hisdelegation supported Brazil 'sstatement. Japan
alsosought clarification withregard tothestatus ofthisletter submitted tothechairman ofthePanel.
Hebelieved thatthisletter wasnotrelevant forthePanel'sproceedings andhadnoweight within the
meaning referred tobytheUnited States. TheUSrepresentative hadstated thatitwasuptothepanelists
todetermine what weight should begiven tothisletter. Hebelieved thatthisletter hadnoweight
andshould havenoplace inthePanel'sproceedings. However, hisdelegation wasnotconcerned as
longasthese proceedings wereconducted inaccordance withtheDSUprovisions andthePanel would
make itsindependent judgement without being politically influenced.
Therepresentative ofThailand clarified thattheinformation thathadbeenrejected bythePanel
although confidential wasavailable ontheInternet.
Therepresentative ofIndia associated hisdelegation withBrazil 'sstatement andenquired on
thepossible action regarding thisletter. Hereferred tothestatement byThailand concerning
confidentiality ofdispute settlement proceedings andexpressed hisconcern withregard totheavailability
ofconfidential information ontheInternet.
Therepresentative ofVenezuela saidthathisdelegation supported Brazil 'sstatement. Pursuant
totheDSU procedures, panelists hadanoption toseekadditional information from other sources, if
necessary.However,thisdidnotimplythatoutsidesourcescouldprovideinformationdirectlytopanels.
Hisdelegation considered thatthequestion wasnotonlywhether apanel could accept theinformation
fromanoutside source butoftransparency forthose Members notinvolved inthepanel proceedings.
Therepresentative oftheEuropean Communities saidthatinhisdelegation 'sviewpanelists
wereindividuals ofintegrity andMembers relied onthem. TheCommunities wereconcerned about
thismanoeuvre because itdistracted theattention ofthework ofthepanel fromtaskssuchasevaluating
factual andscientific evidence ithadrequested fromtheparties thatwereallowed tosubmit information.
Heenquired whether theChairman hadanyinformation fromthechairman ofthePanel onthismatter.
TherepresentativeofMexicosaidthathisdelegationsupportedtheconcernsexpressedbyBrazil,
Thailand, India, Japan andtosome extent theEuropean Communities. Since itwasafactthatthe
Panel hadnotrequested theinformation itwasoutside thescope ofArticle 13oftheDSU although
theWWF hadstated thatthisbriefhadbeensubmitted onthebasisofthisArticle. Panels could request
information ortechnical assistance under Article 13oftheDSU. However, thisletter contained legal
arguments which hadnotbeenrequested andwasoutside thetypeofinformation thatmight berequested
under Article 13oftheDSU. Furthermore, theDSBshould determine whether thismatter wasin
linewiththeDSU. Itwould beunfair toleave thisissuetothepanelists. Itshould notbelefttothem
tomake suchanimportant decision butrather totheDSB.
TheChairman saidthathehadconsidered therequest made byBrazil concerning apossible
action withregard tothismatter. However, because oftheconfidentiality ofpanel proceedings, neither
henortheSecretariat could comment onthestatus oftheWWF 'sletter oronanyaction which theWT/DSB/M/37
Page29
Panel hadorhadnottaken withregard toit.However, thestatements made atthepresent meeting
hadbeentoalarge extent self-explanatory andhewould propose, ifitwasgenerally acceptable, to
transmit therecord ofthismeeting tothechairman ofthePanel. Hebelieved thatthiswould bean
appropriate waytodealwiththismatter. Heasked whether hisproposal would begenerally accepted
byMembers.
Therepresentative ofJamaica saidthatBrazil 'spoints wereclearandcomprehensive, buthe
wasconcerned thatasBrazil hadraised thisasasystemic issue related toaspecific panel without
consideration andduedeliberation oftheparties concerned, anydecision taken bytheDSBmight be
considered tobeifnotaprecedent, thenaguide toadhocdecisions andinterventions oftheDSB.
Herecalled thatinthecaseoftheBanana panel certain difficulties hadbeenraised intheDSBand
consultations hadbeenrequested inorder tohaveduedeliberations. Hequestioned adecision bythe
DSBonthematter which hadbeenraised under "Other Business". Hismainconcern wasthereaction
ofthePanel concerning thisinformation rather thanthefactthatithadreceived it.Hebelieved that
thiswasapoint raised byMexico andwished tohaveother views onthismatter.
Therepresentative ofMexico expressed concern withregard totheChairman 'sproposal to
sendareport tothePanel because thiswould create thesame problem astheonewiththeWWF 's
letter. ThePanel hadnotrequested thisopinion andMembers were notproviding technical advice
onthecontent oftheletter. Hisdelegation fullytrusted thatthepanelists knew howtointerpret Article
13oftheDSU.
Therepresentative oftheUnited States saidthatinthelightofthecomments justmade and
thefactthatthismatter wasraised under "Other Business" itwould beadvisable toholdconsultations
onthismatter before taking adecision and,atthisstage, toavoid sending acommunication tothePanel.
TheDSBtooknoteofthestatements.
9. Application ofArticle 4.11oftheDSU
- Statement bytheUnited States
TherepresentativeoftheUnitedStates,speakingunder"OtherBusiness",saidthathisdelegation
wished toaddress aprocedural issueconcerning theapplication ofArticle 4.11oftheDSU. Thisissue
hadbeenraised recently during theconsultations heldbetween Indiaanditstrading partners withregard
toIndia'swell-known import restrictions orprohibitions onover2,700 tariff lines. Herecalled that
theUnited States, theEuropean Communities, Canada, Australia andNewZealand hadrequested
consultations withIndia under Article XXII:1 ofGATT 1994.24TheUnited States, likeother
complaining parties, hadrequested tobejoined inalltheconsultations under Article 4.11oftheDSU,
onthebasisofadocumented claim ofsubstantial tradeinterest inthismatter. Article 4.11oftheDSU
provided thataMember making sucharequest "shall bejoined" iftheMember towhich therequest
forconsultations hadbeenaddressed would agree thattheclaim ofsubstantial trade interest waswell
founded. Inthiscase,Indiahadrejected theUSrequest andthose ofother complaining parties without
providing anylegitimate grounds forthisrejection. Atthesametime, ithadaccepted theArticle 4.11
request ofJapan.
Under Article 4.11oftheDSU, theonlyground provided forrejecting arequest tobejoined
inconsultations wastheabsence ofasubstantial trade interest. India hadnotasserted thattheUnited
24WT/DS90/1 (US), WT/DS96/1 (EC), WT/DS92/1 (Canada), WT/DS91/1 (Australia), WT/DS93/1 (New
Zealand).WT/DSB/M/37
Page30
States lacked asubstantial trade interest inthismatter. Intheconsultations heldunder Article XXII,
Indiahadagreed thathiscountry hadasubstantial tradeinterest. Indiahadalsorejected theArticle 4.11
request oftheEuropean Communities, itsleading trade partner. TheUnited States hadnolessa
substantial tradeinterest thanJapan, which Indiahadpermitted tojoinintheconsultations. TheUnited
States wasdisappointed thattheIndian delegation wasusing suchprocedural trifling. Inspiteofthe
handicaps imposed byeconomic autarky andarestrictive import policy, India hadbeenaleader in
favour oftrade expansion anddevelopment during the50years oftheGATT. Invoking procedural
technicalities would notchange theoutcome ofthedispute concerning India'squantitative restrictions
andprohibitions onimports. Itwould onlycreate disrespect forthedispute settlement process.
TherepresentativeofIndiasaidthathisdelegationdidnotwishtorespondtotheviewsexpressed
bytheUnited States regarding India'seconomic policies, suchasthe"handicaps imposed byeconomic
autarky", since thisshould beaddressed intheappropriate forum, namely theTrade Policy Review
Body. With regard tothelegal position, India wasconvinced thatonce aMember 'srequest for
consultations wasaccepted --thisMember being the"consulting Member"-- there wasnolegal
requirement topermit theconsulting Member tojoinintheconsultations heldwithother consulting
Members. Thelogic wasasfollows: thefirstsentence ofArticle 4.11oftheDSU began withthe
expression: "Whenever aMember other thantheconsulting Members considers ...". Itwasclear
thatthere could bemore thanoneconsulting Member, since theexpression usedwas"consulting
Members". Therefore, theUnited States wasaconsulting Member inthiscase. Itwasclear from
Article 4.11oftheDSU thatarequest tobejoined intheconsultations hadtobemade byaMember
other thanaconsulting Member. Therefore, aconsulting Member could notmake arequest tobe
joined intheconsultations ofanother consulting Member. There wasalsonomandatory provision
inArticle 4.11oftheDSU thatjointconsultations should beheldwithallconsulting Members.
Therefore, inIndia'sview, theUnited States could neither insist onjointconsultations intheabsence
ofanymandatory provisions tothateffect norcould itvalidly make arequest tobejoined inthe
consultations heldbyIndia withother consulting Members.
InIndia'sview, thisinterpretation wasreinforced bythesentence inArticle 4.11oftheDSU
which stated thatifarequest tobejoined intheconsultations wasnotaccepted, theapplicant Member
wasfreetorequest consultations under Article XXII:1. Inother words, itwasclear thatarequest
forjoining intheconsultations hadtobemade byaMember which hadnotalready requested
consultations under Article XXII:1. Furthermore, itwasclearthatadirect request forconsultations
under Article XXII:1 andarequest forjoining intheconsultations under Article 4.11oftheDSUheld
withanother Member should betreated asmutually exclusive. Ifnot,itwaspossible foraMember
torequest consultations withIndia, which thelatter could notrefuse andinsist onbeing allowed to
joinintheconsultations India might holdwithevery other consulting Member. Thiswould amount
toharassment. Another issue related tothemanner inwhich Japan'srequest forjoining inthe
consultations should havebeentreated byIndia. Thedifference between Japan andother Members
wasthatJapan hadnotrequested consultations pursuant toArticle XXII:1. Therefore, ithadbeen
allowed tojoinintheconsultations heldbyIndia withsome ofitstrading partners.
Therepresentative ofCanada saidthatherdelegation shared theconcerns expressed bythe
United States withregard toIndia'sapplication ofArticle 4.11oftheDSU andthatthismeeting had
notbeenthefirsttimethatIndiahadprovided itsexplanation concerning itsapplication ofArticle 4.11
oftheDSU. Onseveral occasions, Canada hadmade itsviews known toIndia which were similar
tothose justexpressed bytheUnited States. Sheregretted thatafterIndia'sexplanation itwasstill
unclear whyitcontinued toapply Article 4.11oftheDSU inthismanner.
Therepresentative ofNewZealand saidthatliketheUnited States andCanada, hisdelegation
shared theconcerns expressed onIndia'sapplication ofArticle 4.11oftheDSU. NewZealand believed
thatanycountry thathadawell-founded claim ofasubstantial tradeinterest withregard tothesubjectWT/DSB/M/37
Page31
ofArticle XXII:1 consultations wasentitled tobejoined inthose consultations whether ornotit
requested itsownconsultations. Therefusal ofwell-founded requests tobejoined inconsultations
wasnotintheviewofNewZealand conducive toanefficient functioning ofthedispute settlement
mechanism. Although hisdelegation hadnoted thepoints made byIndiainsupport ofitsinterpretation,
itconsidered thattheobject andpurpose oftheDSU would support aninterpretation along thelines
proposed bytheUnited States.
Therepresentative ofHong Kong, China, saidthatthepartofArticle 4.11which theUnited
States hadquoted referred to"substantial interest" andnotto"substantial trade interest". Hewished
toraisethispointbecause Members thatmight nothaveasubstantial tradeinterest inquantifiable terms
might nevertheless, inhisdelegation 'sview, stillhaveasubstantial interest inthematter atissue.
Therepresentative ofAustralia saidthathisdelegation wasalsoconcerned about India's
application ofArticle 4.11oftheDSU. Itfailed tounderstand India'sreasoning given Australia 's
andother interested parties 'substantial trade interests. Australia hadalready made itsviews known
toIndia during theconsultations heldunder Article XXII:1.
TheDSBtooknoteofthestatements.