RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/39
7 January 1998
(98-0025)
Dispute Settlement Body
18 November 1997
MINUTES OF MEETING
Held in the Centre William Rappard
18 November 1997
Chairman:  Mr. Wade Armstrong (New Zealand)
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB ........... 2
- Japan - Taxes on alcoholic beverages:  Status report by Japan .................. 2
2. Chile - Taxes on al coholic beve rages ...................................................................... 3
- Request for the establishment of a panel by the European Communities .. 3
3. India - Quantitative restrictions on imports of agricultural, textile and industrial
products ................................................................................................................... 4
- Request for the establishment of a panel by the United States ................... 4
4. Japan - Measures affectin g agricultural products .................................................... 5
- Request for the establishment of a panel by the United States ................... 5
5. United States - Imposition of anti-dumping duties on imports of colour television
receivers from Korea. .............................................................................................. 7
- Request for the establishmen t of a panel by Korea .................................... 7
6. United States - Anti-dumping duty on dynamic random access memory semiconductors 
(DRAMS) of one megabyte or above from Korea .................................................. 9
- Request for the establishmen t of a panel by Korea .................................... 9
7. European Communities - Measures  affecting butte r products ................................ 10
- Request for the establishment of a panel by New Zealand ........................ 10
8. Proposed nominations for the indicative list of governmental and non-governmental
panelists .................................................................................................................. 11
9. Adoption of the 1997 Draft Annual Report of the DSB ......................................... 11
10. European Communities - Import regime for the importation, sale and distribution of
bananas .................................................................................................................... 12
- Period of time for the implementation of the DSB's recommendations ..... 12WT/DSB/M/39
Page 2
11. European Communities - Import regime for the importation, sales and distribution of
bananas .................................................................................................................... 12
- Statement by the European Communities concerning Panama's request
for consultations ......................................................................................... 12
12. Review of the DSU ................................................................................................. 15
- Statement by th e Chairman ........................................................................ 15
1. Surveillance of implementation of recommendations adopted by the DSB
- Japan - Taxes on alcoholic beverages:  Status report by Japan
(WT/DS8/18/Add.2, WT/DS10/ 18/Add.2, WT/DS11/16/Add.2)
The Chairman said that under Article 21.6 of the DSU, "unless the DSB decides otherwise,
the issue of implementation of the recommendations or rulings shall be placed on the agenda of the
DSB meeting after six months following the date of establishment of the reasonable period of time
pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is resolved".  He drewattention to document WT/DS8/18/Add.2 - WT/DS10/18/Add.2 - WT/D S11/16/Add.2, which
contained the third status report by Japan with regard to its progress in the implementation of the
DSB's recommendations.
The representative of Japan said that pursuant to Article 21.6 of the DSU, his Government
had the obligation to inform the DSB of progress in the implementation of the DSB's
recommendations on this matter.  Japan continued examination of possible and practical responses in
order to find a mutually acceptable solution with other parties to this dispute regarding the modalities
for the implementation of the DSB's recommendations.  To this end, his country would continue
discussions with the parties to the dispute.
The representative of Canada expressed regret that Japan had not announced that it would
adhere to the 15 months found by the arbitrator to be a reasonable period of time for the
implementation of the DSB's recommendations.  Canada's preference remained that Japan take the
necessary steps to bring its internal tax system on di stilled spirits into conformity with the findings of
the panel and the Appellate Body.  He therefore urged Japan to take all necessary steps to implement
the DSB's recommendations within the specified 15-month period.
The representative of the United States expressed her country's concern with regard to Japan's
status report.  She noted that it was now three mont hs before the date set by the arbitrator for the
expiration of the reasonable period of time.  However under the existing Japanese law, the
implementation of the DSB's recommendations would not be terminated until 2001.  Therefore, Japan
would be the first Member to have failed to impl ement the DSB's recommendations before the end of
the reasonable period of time.  It would also be the first Member to trigger the application of
Article 22.2 of the DSU.  A number of times over the past months, the United States had held
consultations with Japan on this matter.  It was regrettable that Japan did not appear to appreciate the
seriousness of the situation.
She recalled that Japan had drawn up the proposal for implementing legislation in November
and December 1996.  Subsequently, in February 1997, the arbitrator had ruled on the time-period for
implementation.1  In spite of this decision, Japan had enacted its proposal unchanged.  Given the
current situation, now was Japan's last chance to av oid missing the deadline.  January would be too
                                                     
1Award of the Arbitrator is contained in document WT/DS8/15 - WT/DS10/15 - WT/DS11/13.WT/DSB/M/39
Page 3
late.  The United States hoped that Japan would avoid being the first Member to face retaliation
authorized under the dispute settlement mechanism by taking a fresh approach resulting from a
change in attitude.
The representative of Japan said that he was uncertain what the United States had meant by
stating that January would be too late.  In his view, January 1998 was not too late in terms of the
15-month deadline set by the arbitrator.  Over the past several months, his country had been sincerelyengaged in bilateral consultations with the United States and he hoped that in the next few weeks it
would be possible to find a mutually satisfactory solution.  This would enable the incorporation of any
eventual agreement into Japan's new tax system for submission to the Parliament in the beginning of
1998.  With regard to the statement made by Canada, he said that Japan had repeatedly expressed its
readiness to enter into bilateral consultations with Canada on this matter.  In the past week his
Government had made some specific offers and he hoped that this would also lead to a mutually
satisfactory solution with Canada.
The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.
2. Chile - Taxes on alcoholic beverages
- Request for the establishment of a panel by the European Communities
(WT/DS87/5)
The Chairman recalled that the DSB had considered this matter at its meeting on 16 October
and had agreed to revert to it.  He drew attention to the communication from the
European Communities contained in WT/DS87/5.
The representative of the European Communities said that this was the second time that the
Communities' request for a panel was on the DSB's agenda.  Prior to the present meeting, he had
received a text of the law which had been enacted by the Chilean Congress but had had no time to
examine it.  In his understanding, consultations on this law held by the Communities with Chile had
not been fully satisfactory.  Since the Communities believed that it was not possible to find a
satisfactory solution at this stage, they wished to  maintain their request.  Following Chile's formal
notification of this new legislation, the Communities, after its examination would inform Chile oftheir intentions concerning this matter.
The representative of Chile recalled that at the October DSB meeting, his delegation had
stated that the Chilean Chamber of Deputies had approved a draft law amending the tax system on
alcoholic beverages which had been the subject of the Communities' request for consultations.
Subsequently, this draft law had been approved by the Senate and had been published in the OfficialJournal of Chile on 18 November 1997.  He underlined that this draft law had never been discussed
during the consultations held with the Communities.
The DSB took note of the statements and agreed
 to establish a panel in accordance with the
provisions of Article 6 of the DSU with standard terms of reference.
The representatives of Canada, Mexico , Peru  and the United States  reserved their third-party
rights to participate in the Panel proceedings.
The representative of Chile regretted the DSB's decision to establish a panel at the present
meeting, but understood that the DSB had to observe the DSU procedures.WT/DSB/M/39
Page 4
The representative of Peru said that in view of the fact that his country had a substantial trade
interest in this matter his delegation wished to partic ipate in this Panel as a third party.  He recalled
that Peru had also participated in the consultations held on this matter.  With the establishment of this
panel at the present meeting, the question of alcoholic beverages in Chile, in particular the so-called
"Pisco chileno" would be considered for the first time in the WTO.  Since the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS) would only enter into force in Chile and Peruin the year 2000, his delegation wished to reserve its right to invoke Article 22.1 of the TRIPS
Agreement and other provisions related thereto.  Peru believed that the denomination of origin of
Pisco was exclusively Peruvian and as such gave his country exclusive rights.
The representative of Chile  pointed out that the issues concerning the TRIPS Agreement had
never been addressed in the consultations requested by the Communities, nor had they been
mentioned in the request for a panel.  Chile reserv ed its right to decide how and when these issues
would be addressed.
The DSB took note of the statements.
3. India - Quantitative restrictions on imports of agricultural, textile and industrial products
- Request for the establishment of a panel by the United States (WT/DS90/8 and
Corr.1)
The Chairman recalled that the DSB had considered this matter at its meeting on 16 October
and had agreed to revert to it.  He drew attention to the communication from the United States
contained in document WT/DS90/8 and Corr.1.
The representative of the United States said that her country had held several consultations
with India with regard to the balance-of-payments measures which in the view of the United States
were unjustified.  Because its efforts had not produced any solution, the United States requested theestablishment of a panel to examine India's system of quantitative restrictions and non-automatic
import licensing on more than 2,700 tariff lines.  By quantitative restrictions, the United States
addressed all import prohibitions, bans, restrictions, import licenses, special import licenses and the
prohibition of non-commercial (sample) quantities as well as the procedures to implement and to
administer these measures.  The United States believed that India's system which had been in placesince the late 1940's, continued to unfairly deny its trading partners access to India's market and to
unjustifiably shield Indian industry from competition.  Her country considered that India's quantitative
restrictions on the items in question were inconsistent with its obligations under Articles XI:1 and
XVIII:11 of GATT 1994 and Article 4.2 of the Ag reement on Agriculture.  The United States also
believed that India's import licensing procedures and practices were inconsistent with the fundamentalrequirements of the WTO provided under Article XIII of GATT 1994 and Article 3 of the Agreement
on Import Licensing Procedures.
For more than 18 months -- beginning in November 1995 -- this matter had been discussed in
the Committee on Balance-of-Payments Restrictions (BOP Committee).  Both the BOP Committee
and the International Monetary Found (IMF) had concluded that India did not have a balance-of-
payments crisis and thus the use of trade measures justified on balance-of-payments grounds was not
warranted.  At the end of June, the BOP Committ ee process had concluded without a satisfactory
solution as to the phase-out of India's measures.  The United States had hoped that this matter would
be resolved in the BOP Committee.  The United States which had high regard for its relations with
India was reluctant to make this request for the establishment of a panel and her delegation continued
to consult with the Indian delegation.  She hoped that it would be possible to resolve this matter on a
mutually agreeable basis.  However, since this matter remained unresolved, the United StatesWT/DSB/M/39
Page 5
requested the establishment of a panel and looked forward to continued consultations with India in an
effort to resolve this matter.
The representative of India recognized that since the US request had been made for the
second time the panel would be established automatically at the present meeting in accordance with
the DSU provisions.  At the October DSB meeting, hi s delegation had stated that India did not believe
in procedural trifling.  However, as consultations had appeared to be at a promising stage it hadbelieved that some more time might be necessary to deal with this matter.  He noted that the
United States had reiterated its request for a panel and India had no objection with regard to this
request.  However, he wished to raise two points in connection with this matter.  First, the
United States had mentioned that India's restrictions had been in place since the 1940's, information
which was factually incorrect.  Second, the United States had also mentioned that the BOP Committee
had concluded that India did not have balance-of-p ayments problems.  In his view the BOP had not
reached such a conclusion because there had been a divergence of views on this matter.  He recalledthat the BOP Committee had submitted a factual report
2 to the General Council concerning its
consultations with India which reflected different views as required under the relevant WTO
provisions.  India accepted the United States' request and his delegation was aware that the DSB had
to establish a panel at the present meeting in accordance with the DSU provisions.  He noted that the
United States had indicated that in parallel with the proceedings of the panel it was willing to continueits consultations with India with a view to finding a mutually agreed solution.
The representative of the European Communities said that in the past week, the Communities
had reached a settlement with India with regard to the latter's quantitative restrictions on agricultural,
textile and industrial products which had been introduced for balance-of-payments purposes.
Following their request for consultations, the Communities had held negotiations with India on theelimination of restrictions.  These negotiations had resulted in a significant and satisfactory
improvement in the liberalization schedule.  This schedule covered a six-year period with front-
loading of the Communities' priority products.  It constituted the basis of an exchange of letters
between the Communities and India for the settlement of the dispute concerning India's quantitative
restrictions.  This exchange of letters would be notified to the Secretariat.  In his delegation'sunderstanding, other Members which had requested consultations on this matter had also reached
settlements with India, preventing the pursuit of the dispute to a panel stage.  The Communities
welcomed this outcome and hoped that discussions between India and the United States would enable
them to reach an amicable settlement without further pursuing this dispute.
The representative of Brazil said that as had been indicated by India, there had been a
divergence of views in the BOP Committee on this matter, and no conclusions had been reached.
The DSB took note of the statements and agreed  to establish a panel in accordance with the
provisions of Article 6 of the DSU with standard terms of reference.
4. Japan - Measures affecting agricultural products
- Request for the establishment of a panel by the United States (WT/DS76/2)
The Chairman said that the DSB had considered this matter at its meeting on 16 October and
had agreed to revert to it.   He drew attention to the communication from the United States contained
in document WT/DS76/2.
                                                     
2WT/BOP/R/32 .WT/DSB/M/39
Page 6
The representative of the United States said that her country requested the establishment of a
panel to examine whether the import prohibition on fruits and varietal testing requirements maintained
by Japan were inconsistent with its obligations under the Agreement on the Application of Sanitary
and Phytosanitary Measures (SPS), the GATT 1994 and the Agreement on Agriculture.  For each
agricultural product for which Japan required quarantine treatment, the importation of each variety of
that product was prohibited until the quarantine treatment had been tested for that variety, eventhough the pest was the same and the treatment had proven effective with respect to other varieties of
the same fruit.  This extra and excessive testing served as a significant barrier to market access.  Japan
had not produced any scientific evidence that the effectiveness of the quarantine treatment differed by
variety.  In addition, Japan's import prohibition and absence of published regulations for approval of
imports of fruits lacked transparency.  The United States had sincerely hoped that it could resolve this
matter without requesting a panel, but Japan had not been forthcoming in addressing this unfair
barrier or in providing meaningful access for the commodities in question.
The representative of Japan said that his country had actively sought a solution to this dispute
through consultations.  Unfortunately, the United States had not responded positively to Japan's
efforts.  After the first round of consultations held in June 1997, Japan had asked the United States,
inter alia , for specific legal reasons and basis for its request for consultations.  The United States had
not responded to Japan's enquiry and had requested the establishment of a panel which included a newelement, namely Article 7 of the SPS Agreement which had not appeared in the request for
consultations.  After the United States had made its first request for a panel at the DSB meeting in
October, Japan had  tried to settle this matter in consultations.  However, the United States had
cancelled the second round of consultations on the grounds that such consultations would be
meaningless unless Japan's offers  met the United States' request.
Japan had proposed further consultations, but the United States had imposed a precondition
for holding such consultations.  In Japan's view, the United States' approach was neither reasonable,
nor constructive.  Bilateral consultations, required to be held prior to the establishment of a panel
would lose their function and meaning by this approach.  The US attitude was not consistent with the
objectives and spirit of the DSU, namely that Members should try to reach in good faith a mutuallyacceptable solution to disputes through consultations.  Japan therefore found this situation regrettable.
It recognized that a panel would be established at the present meeting in accordance with Article 6.1
of the DSU.  However, Japan believed that the measures in question were consistent with the relevant
WTO provisions, including the SPS Agreement, and it intended to fully present its views before the
panel.  He stressed  that Japan was still prepared to hold consultations and hoped that this matter couldbe settled through consultations.
Japan would accept the standard terms of reference for the panel, provided that the
United States gave clear confirmation with regard to the following points: (i) the measures to be
examined by the panel would be the requirements  for additional testing on additional varieties of
fruits upon importation, as specified in the US request for a panel.  These measures would be limited
to apples, nectarines and cherries.  In its request for a panel, the United States had referred to Japan's
measures on the importation of agricultural products in a general manner.  However, during theconsultations, it had only addressed the measures with regard to these three products; (ii) in
accordance with Article 6.2 of the DSU, the panel should only discuss the articles of the relevant
WTO agreements that had been specifically listed a nd identified in the request for the establishment
of a  panel.  Therefore, the last sentence of the second paragraph in the US request should be revised
to read as:  "The provisions ... are the following", in stead of "... include, but not limited to".  If the
United States did not agree with the above-mentioned points, Japan would request consultations on
the terms of reference of the panel pursuant to Article 7.1 of the DSU.WT/DSB/M/39
Page 7
The representative of the United States said that her delegation could not agree to the attempt
by Japan to unilaterally reduce the scope of the US request for a panel.  Under Article 7 of the DSU,
Japan had the right to seek agreement with the United States on special terms of reference but her
country also had the right to insist on standard terms of reference.
The representative of Japan reiterated that his delegation could not accept standard terms of
reference for the reasons stated above, in particul ar with regard to the two points.  He therefore
requested consultations with the United States to seek agreement on the terms of reference for the
panel within the next 20 days in accordance with Article 7.1 of the DSU.  He believed that not only
his delegation but also some other delegations had a similar problem regarding the terms of reference
proposed by the United States.  He expressed concern that often terms of reference were broad,
instead of listing laws, regulations or measures.  There was also a tendency to include the wording
"but not limited to" which in practice meant that the United States could introduce other additional
elements.  In his view, this was a serious problem affecting the functioning of the dispute settlementmechanism.  Japan had already presented its arguments with regard to this procedural matter in
another dispute, currently under examination by a panel, and he hoped that a sound ruling on this
matter would be given by that panel and that this practice would not be repeated in future.
The Chairman proposed to invite the parties to the dispute to consult on the terms of reference
for the panel in accordance with Article 7.1 of the DSU.
The DSB took note of the statements and agreed  to establish a panel in accordance with the
provisions of Article 6 of the DSU.  The DSB also agreed that as proposed by the Chairman, the
parties to the dispute consult on the terms of reference for the Panel in accordance with Article 7.1 of
the DSU.
The representatives of the European Communities and Hungary  reserved their third-party
rights to participate in the Panel proceedings.3
5. United States - Imposition of anti-dumping duties on imports of colour television
receivers from Korea.
- Request for the establishment of a panel by Korea (WT/DS89/7)
The Chairman drew attention to the communi cation from Korea contained in WT/DS89/7.
The representative of Korea recalled that on 30 April 1984, the United States had imposed
anti-dumping duties on colour television receivers (CTVs) from Korea.  Samsung Electronics Co. Ltd.
was one of the Korean producers affected by this anti-dumping duty order which still remained in
force.  Since then, the United States had determined that Samsung Electronics had not sold CTVs in
the United States at dumped prices from 1 April 1985 to 31 March 1991.  Since 1 April 1991, theKorean company had ceased to export CTVs to the United States.  Thus, the United States had
maintained the anti-dumping duty order on CTVs with respect to Samsung Electronics for the past
twelve years, despite the absence of dumping and the absence of exports.  The United States had
never examined whether the continued imposition of the duty was necessary to offset dumping,
whether the injury would be likely to continue or recur if the duty were removed or varied, or both.
Based on its history of no dumping through four separate administrative review requests, the Korean
company had repeatedly requested the revocation of measures.  But these requests had been rejectedon procedural rather than substantive grounds.  Most recently, Samsung had requested revocation on
20 July 1995.  The United States had eventually decided to initiate a review on 24 June 1996.
                                                     
3After the meeting Brazil reserved its third-party rights.WT/DSB/M/39
Page 8
However, a preliminary decision for revocation had still not been taken.  Before initiating this review,
the United States had initiated an anti-circumvention investigation on 19 January 1996, only five
months after receiving a petition by several labour unions.  No determination in this anti-
circumvention investigation had yet been made while the United States took a position that the review
determination had to await the outcome of the anti -circumvention investigation.  All these actions or
inactions by the United States were inconsistent with its obligations under the GATT 1994 and theAnti-Dumping Agreement and thus nullified or impaired Korea's benefits under these Agreements.
On 10 July 1997, Korea had requested consultations with the United States on this matter.  Two
rounds of consultations had been held on 7 August and 8 October 1997, but no mutually satisfactory
solution had been found.  Korea, therefore, requested the establishment of a panel with standard terms
of reference to examine this matter in accordance with Article 6.1 of the DSU.
The representative of the United States said that her country was not in a position to consent
to the establishment of a panel at the present mee ting.  However she wished to make a few comments
regarding Korea's request for a panel.  Although the United States did not agree with many points
raised by this request for a panel, it would not address each and every point at this stage, but would
stress the concerns raised by this request.  First, the United States believed that Korea's request for the
establishment of a panel was premature.  The US agency proceedings challenged by Korea had not
even reached the preliminary stage of decision by the United States.  While these proceedings were inprogress, no anti-dumping duties were being collected on imports of Samsung's CTVs into the United
States from Korea, Mexico or Thailand.  Therefore, it was regrettable, that Korea had chosen to
burden the dispute settlement system with this matter at this early stage.  Korea had not exhausted
administrative remedies and the case was not ripe for a panel.  Second, as with most legal
proceedings, the facts of this dispute were complicated.  However, the United States was concernedabout Korea's presentation of the facts of this case.  Therefore, at the present meeting her delegation
wished to ensure that Members were fully apprised of the relevant facts.
Her delegation was concerned that Korea's panel request suggested that the United States had
inappropriately maintained the anti-dumping duty order with respect to Samsung long after the
company should have been eligible for revocation.  This was misleading.  The United States had notdelayed a proper review for revocation for Samsung.  The fact of the matter was that the primary
causes of delay had been: (i) the lengthy litigation in this case, which had been pursued by Samsung
and had been resolved favourably for Samsung; and (ii) Samsung's failure to follow the most basic
procedural standards for revocation.  Due to the lengthy litigation and appeals in this case, Samsung's
potential eligibility for revocation had only become evident to the US Department of Commerce afterthe resolution of that litigation and the application of court decisions in December 1995.  Moreover,
because Samsung had failed to follow the most basic procedures established by the US law to obtain
revocation of the order, the US Department of Commerce had not been able to consider revocation in
the context of its annual administrative reviews conducted in 1995.  Instead, despite Samsung's failure
to follow minimal procedures established in US law to preserve the rights of all parties, the US
Department of Commerce had taken the unusual step of initiating a special review for Samsung to
ensure that the issue of revocation had been properly considered and addressed.  Thus, the UnitedStates was presently conducting a proceeding to address the very issue that Korea raised with its panel
request at the present meeting.  Furthermore, the United States fundamentally disagreed with Korea
on whether anti-circumvention determinations were appropriate and permissable under the WTO
Agreement.  The GATT 1994 and the Anti-Dumping Agreement recognized the right of all Members
to impose anti-dumping duties to counteract dumping.  The authority to address circumvention of ananti-dumping duty order was integral to each Memb ers' ability to enforce its right to counteract
dumping.  It was imperative that the authority to impose duties include the ability to enforce orders --
otherwise that authority would be meaningless.
The representative of Thailand said that her country had participated in the consultations
requested by Korea with the United States since part of the US action was the initiation of theWT/DSB/M/39
Page 9
anti-circumvention investigation on the same product exported by Thailand.  During the consultations,
her country had raised its concerns with respect to the US action.  The United States had indicated that
it would be in a position to announce the outcome of the investigation by the end of October 1997.
However, the absence of such an announcement had caused uncertainties to Thai exporters.  The
Decision on Anti-Circumvention had recognized that the negotiations on this matter during the
Uruguay Round had not been successful and had referred the matter to the Committee on Anti-Dumping Practices for resolution.  This matter was presently under consideration in the Informal
Group on Anti-Circumvention.  This meant that at present no multilateral rules existed which applied
to alleged anti-dumping circumvention.  Therefore, Members could not take such an action.  Thailand
wished to reserve its third-party rights to participate in a panel, if and when established, and to pursue
the matter further in the DSB if the United St ates decided to take anti-circumvention action.
The representative of Mexico said that her country had an interest in this matter.  Mexico had
participated in the consultations and would continue to follow closely developments concerning this
matter.
The DSB took note of the statements and agreed  to revert to this matter.
6. United States - Anti-dumping duty on dynamic random access memory semiconductors
(DRAMS) of one megabyte or above from Korea
- Request for the establishment of a panel by Korea (WT/DS99/2)
The Chairman drew attention to the communication from Korea contained in document
WT/DS99/2.
The representative of Korea said that on 16 July 1997, the United States had made a final
decision not to revoke the anti-dumping duty on dynamic random access memory semiconductors
(DRAMS) of one megabyte or above originating in Ko rea.  His country believed that the US decision
and other measures at issue were inconsistent with the United States' obligations under the WTO
agreements, in particular the GATT 1994 and the Anti-Dumping Agreement, and thus nullified or
impaired Korea's benefits under these agreements.  On 14 August 1997, Korea had requested
consultations with the United States on this matter.  The consultations had been held on
9 October 1997, but had failed to settle the matter in a mutually satisfactory manner.  There had beenno indications to suggest that further consultations would be productive.  Therefore, Korea requested
that a panel with standard terms of reference be established to examine this matter.
The representative of the United States said that her country was not in a position to consent
to the establishment of a panel at the present mee ting.  However, she wished to make a few comments
regarding Korea's request for a panel.  First, the United States was concerned that Korea's request didnot comply with the requirements under Article 6.2 of  the DSU.  For example, Korea had identified as
one of the measures at issue "the US Tariff Act of  1930, as amended (19 U.S.C. 1673 et seq.)".  Since
this reference encompassed the entire US anti-dumping law, the United States was not in a position to
determine which particular section or sub-section of that law in the view of Korea was inconsistent
with the GATT 1994 or the Anti-Dumping Agreement.  Should a panel be established based on this
request, the United States intended to bring these defects to the attention of the panel.
Second, Korea appeared to be making claims that  were not related to the anti-dumping order
on DRAMS from Korea.  For example, it claimed that de minimis standard used by the United States
in administrative review proceedings was inconsistent with Article 5.8 of the Anti-Dumping
Agreement.  While the United States disagreed with Korea's contention, she noted that the standard
applied by the US Department of Commerce had resu lted in a finding that the Korean producers hadWT/DSB/M/39
Page 10
de minimis dumping margins.  Therefore, Korea was not affected.  In so far as the anti-dumping order
on DRAMS was concerned, the WTO consistency of the US de minimis standard was a "moot" issue.
Thus, Korea regrettably appeared to have chosen to burden the dispute settlement system with an
issue that was not relevant to the dispute over th e continued existence of the US anti-dumping order
on DRAMS from Korea.
The representative of Japan recalled the discussion on the terms of reference for the panel
under item 4 of the agenda.  The United States had raised its concerns with regard to the broad terms
of reference specified by Korea in its request for a panel.  In particular, the United States believed that
this request did not contain specific references as to which sections of law or which measures created
problems.  Similar concerns had often been raised by Japan on other occasions.  He noted certain
inconsistency regarding specification of  terms of reference.  In other words, when a country was the
complainant it presented terms of reference which were very general and when on the defence, the
same country insisted on specific terms of reference.  In his view this should be considered during thereview of the DSU or it should be decided by the Panel or the Appellate Body.
The DSB took note of the statements and agreed
 to revert to this matter.
7. European Communities - Measures affecting butter products
- Request for the establishment of a panel by New Zealand (WT/DS72/2)
The Chairman drew attention to the co mmunication from New Zealand contained in
document WT/DS72/2.
The representative of New Zealand said that the EC Commission had decided that
New Zealand butter manufactured by the Ammix and spreadable butter-making processes was not
"manufactured directly from milk or cream" and had excluded such butter from eligibility for entry
into the European Communities under New Zealand's country-specific tariff quota established by theEC's Schedule.  New Zealand considered that as a result of their decision, the Communities had
nullified or impaired benefits accruing to New Zealand within the meaning of Article XXIII:1(a) of
GATT 1994, by failing to carry out their obligations under the GATT 1994, the Agreement on
Technical Barriers to Trade, and the Agreement on Import Licensing Procedures.  New Zealand also
considered that these decisions and related actions had otherwise nullified or impaired benefitsaccruing to New Zealand directly or indirectly under the WTO Agreement pursuant to
Article XXIII:1(b) of GATT 1994.  In a communica tion dated 3 April 1997 contained in WT/DS72/1,
New Zealand had requested consultations with the Communities pursuant to Article XXII:1 of GATT
1994 and related provisions in other relevant covered agreements.  Consultations had been held on
29 April 1997 but had not resulted in a resolution of the dispute.  He emphasized that since hisGovernment had become aware of the Communities' decision in 1996, there had been extensive
bilateral consultations, including a dialogue between New Zealand and the EC Ministers, in an effort
to resolve the dispute in a cooperative manner that was a traditional feature of its trading relationship
with the Communities.  Unfortunately, this had no t resolved the dispute either.  Accordingly, as
outlined in its request, New Zealand requested the establishment of a panel with the standard terms of
reference as set out in Article 7 of the DSU.
The representative of the European Communitie s said that in the view of the Communities
this request concerned technical matters.  He recalled the discussion under the previous item of the
agenda with regard to the specificity of the terms of reference for panels.  In this case, annexes
described the Ammix butter-making process and the spreadable butter-making process.  The
Communities regretted that during tariff negotiations and in the process of granting tariff concessions
frequently the Communities had one view about what should be covered and their partners hadanother.  He noted that New Zealand had invoke d both Article XXIII:1(a) and XXIII:1(b) of GATTWT/DSB/M/39
Page 11
1994 which was a policy to insure that, whether the Communities were in violation with the WTO or
not, New Zealand would have a case.  The Communities accepted the establishment of a panel at the
present meeting since in practice no other solution to this problem was possible.
The DSB took note of the statements and agreed  to establish a panel in accordance with the
provisions of Article 6 of the DSU with standard terms of reference.
The representative of the United States reserved her Government's third-party rights to
participate in the Panel proceedings.
8. Proposed nominations for the indicative list of governmental and non-governmental panelists
(WT/DSB/65 and 67)
The Chairman drew attention to docume nts WT/DSB/W/65 and 67 which contained
additional names proposed for inclusion on the indicative list in accordance with Article 8.4 of the
DSU.  He proposed that the DSB approve the names contained in the above-mentioned documents.
The DSB so agreed.
The Chairman said that the Secretariat had been expected to circulate an updated list of
governmental and non-governmental panelists at the end of September 1997, on the basis of updated
curricula vitae to be submitted by delegations.  Due to a delay in the submission of such updated
curricula vitae, the Secretariat had not been able to circulate on time an update of the list of panelists,
and at this stage a number of delegations had not yet submitted updated curricula vitae of panelists.The Secretariat had therefore circulated a preliminary update of the list of panelists in documents
WT/DSB/W/66 and Add.1  He urged delegations which had not yet sent updated curricula vitae to do
so by 1 December 1997.  After that deadline, the Secretariat would circulate the final version of the
updated list of panelists.  The names for which updated curricula vitae had not been submitted by
1 December 1997 would not appear in the list.
The DSB took note of this information.
9. Adoption of the 1997 Draft Annual Repo rt of the DSB (WT/DSB/W/64 and Corr.1)
The Chairman said that in pursuance of th e Procedures for an Annual Overview of WTO
Activities and for Reporting under the WTO contained in document WT/L/105, he was submitting for
adoption a draft text of the 1997 Annual Report of the DSB in document WT/DSB/W/64 and Corr.1.
This report covered the work of the DSB since 20 November 1996.  It had been prepared in
accordance with the structure of the 1996 Annual Report.  He proposed that following its adoption,
the Secretariat be authorized to update the Annua l Report under its own responsibility in order to
include the actions taken by the DSB at the present meeting.  The updated Annual Report of the DSB
would then be circulated on 28 November and submitted for consideration by the General Council atits meeting on 10 December.  In his view this document constituted a very useful compendium of
information.WT/DSB/M/39
Page 12
The DSB adopted its Annual Report contained in  WT/DSB/W/64 and Corr.1 on the understanding
that it would be further updated by the Secretariat as proposed by the Chairman.4
10. European Communities - Import regime for the importation, sale and distribution of bananas
- Period of time for the implementation of the DSB's recommendations
The representative of the European Communities, speaking under "Other Business ", raised
the question of the reasonable period of time to be agreed upon for the implementation by the
Communities of the DSB's recommendations.  Origina lly, he had intended to inform the DSB that no
agreement had been reached on this issue in discussions with the parties to the dispute.  However, the
day before the meeting, the Communities had received a joint letter from Ecuador, Guatemala,
Honduras, Mexico and the United States5  in which they had stated that they had felt compelled to
request that a reasonable period of time be determined through binding arbitration.  He had no
objections to the procedures invoked by the complainants since this option was provided under
Article 21.3(c) of the DSU.  He was surprised by this letter because after several discussions andexchanges with the parties to the dispute, it was his impression that there had been no disagreement
about the period of time required by the Communities.  Since new regulations usually entered into
force on 1 January, the Communities had asked for 15 months plus one week for the DSB's
recommendations to be implemented by 1 January 1999.  He believed that the time period proposed
by the Communities had not been contested.  The Communities had explained in considerable detailthe process and procedures required internally in the Council of Ministers and in the European
Parliament, which made it clear that this period of time would be necessary in order to amend their
banana import regime.  It was therefore surprising that despite the fact that there had been no
disagreement on the period of time, the complainants had taken recourse to arbitration.  He questioned
what would be the subject of arbitration.  He believed that what lay behind this request was a semanticdiscussion which concerned whether the Communities had stated their intentions with regard to
implementation of the DSB's recommendations within the meaning of Article 21.3 of the DSU or
whether in slightly different terms used by the Communities which amounted to the same thing.  In
his view, this should not lead to any delay by asking the arbitrator to consider a subject on which there
was no disagreement.  He therefore clarified that there was no disagreement with regard to the periodof time proposed by the Communities, but on another matter which did not require arbitration
pursuant to Article 21.3(c) of the DSU.  At this stage, he was not in a position to state that the
Communities could accept this procedure.  He wished to have the possibility to further consider and
discuss this matter with the complainants since it a ppeared that their course of action would be futile.
The DSB took note of the statement.
11. European Communities - Import Regime for the importation, sales and distribution of bananas
- Statement by the European Communities concerning Panama's request for
consultations
The representative of the European Communities, speaking under "Other Business ", drew
attention to the request for consultations by Panama concerning the European Communities' banana
                                                     
4Subsequently circulated in WT/DSB/10 and Corr.1.
5Subsequently circulated in WT/DS27/13.WT/DSB/M/39
Page 13
import regime.6  The subject of consultations appeared to be identical to that already examined by the
panel and the Appellate Body.7  The Communities accepted Panama's request  and were now in the
process of fixing an acceptable date for holding consultations.  However, a large number of other
interested parties had asked to be joined in these consultations, including those that had participated in
the proceedings of the panel and the Appellate Body.  This had not been foreseen in the DSU.
Although it was not possible to foresee all innovative initiatives that delegations would take, hebelieved that this matter raised a systemic issue which had already been apparent in other cases.  In
his view, this request for consultations would not ha ve created any problems if only Article XXII had
been invoked.  However, these consultations were also under the DSU procedures and therefore could
lead to further stages.  The question was, what would happen if Panama requested the establishment
of a panel.  A new panel would effectively re-open the proceedings of the previous panel  and the
Appellate Body.  One could envisage various soluti ons to this problem.  For example, the matter
would remain at the stage of consultations and Panama would be given assurances as to how itsinterest would be taken into account during the implementation of the findings of the present panel.
He only wished to draw attention to this systemic issue and proposed that the Chairman hold informal
consultations with interested parties on what would be the best way forward to avoid these systemic
difficulties.  He believed that all Members would have an interest in avoiding these problems which
could raise difficulties.
The representative of India  noted that the representative of the Communities recognized the
systemic difficulties involved in this matter and hoped that in other similar cases he would also
recognize the same difficulties.
The representative of Panama said that his delegation was aware of the Communities'
concerns and had noted their comments in that respect.  He clarified that Panama had no intention of
re-opening this matter through its request for consultations.  The reports of the panel and the
Appellate Body had been adopted by the DSB and Panama did not wish to modify  any decisions
contained therein.  However, as one of the main suppliers of bananas to the Communities, Panama
had to defend its rights and its considerable trade interest in this matter.  The Communities had
accepted the panel and the Appellate Body reports.  Panama, the most recent Member of the WTO,had certain rights regardless of whether or not it had participated in the consultations, the presentation
of arguments and the appeals procedure.  Panama had not been previously included among the parties
to the dispute.  Thus, it was not clear that all of the recommendations would be implemented to the
advantage of his country.  It was also not certain that if Panama did not act independently, it would
have the right to request full benefits.  Thus, by submitting a request for consultations, Panama hadsought to protect its interests as far as possible and thereby to enhance its control over, and its
involvement in, this case.  Panama was doing nothing more nor less than what the Communities had
done in the past when they had requested the establishment of panels to examine the matters already
addressed by other panels.  He believed that Panama's request for consultations was even more
justified and necessary than the Communities' reque sts.  The Communities had decided to participate
as a third party in some cases only to discover af terwards that they would have preferred to become
complainants and subsequently had tried to rectify this situation.  Panama could not participate in theearlier banana proceedings since it was not yet a Member of the WTO.  While Panama was aware of
the concerns expressed by the Communities, it would vigorously defend its right and the benefits
accruing to it under the WTO Agreement.  If his country considered that those rights and benefits
were being impaired or infringed as a result of  measures taken or not taken by the Communities in
implementing the recommendations of the panel, Panama would take appropriate steps.
                                                     
6WT/DS105/1.
7WT/DS27.WT/DSB/M/39
Page 14
The Chairman recalled that in accordance with the rules of procedure for DSB meetings,  the
representatives should avoid unduly long debates and discussions on substantive issues under "Other
Business".  The DSB should limit itself to taking note of the statements made and of any reactions to
such statements by other delegations directly concerned.   He requested that substantive discussions
should be avoided at the present meeting.
The representative of the European Communities said that he wished to make two comments.
First, in response to India, he clarified that he had alluded to the fact that systemic difficulties had
become obvious over time and had raised some of these problems even at the time when the
Communities had requested the establishment of a panel with regard to the case concerning India.  His
suggestion that there could be other solutions available to both parties  also included India's case.  In
other words, there was no lack of coherence and it would be better for the system if a solution was
found  which would avoid any risk of a panel re-opening the cases which had already been concluded.
Second, he clarified that he was not in any way denying the right of Panama to invoke the DSUprovisions.  He only wished to draw attention to the systemic problem which could arise but Members
had the right to request consultations if they so wished.
The representative of Argentina fully shared the Chairman's concerns and wished to point out
that under "Other Business" substantive matters coul d not be discussed, in particular such as the
subject under consideration.  At present, the DSU provided Members with rights and obligationswhich could not be extended nor reduced in  their scope.  Any systemic problems could be taken up in
the context of the DSU review.
The Chairman said that the Communities had made a proposal which in his understanding
concerned the question of how Members should pr oceed when a new dispute settlement procedure
was invoked on a dispute on which a panel or the Appellate Body had already reached a decision.The circumstances might differ but in a number of instances this systemic concern had risen.  He
asked whether it would not be desirable for him to consult on the question of holding informal
consultations on the systemic issue raised by the Communities, namely, how to proceed when a new
dispute settlement procedure was invoked on a dispute on which a panel and the Appellate Body had
already reached a decision.  It should be clearly understood that in raising this question withdelegations, any such informal consultations would be on the systemic issue and not on any particular
case and would not infringe on the rights and obligations of Members.  If Members agreed, he would
be ready to consult with them to see if there is a consensus in favour of informal consultations on the
systemic issue.
The representative of Jamaica said that listening to the discussion he had the impression that
he might have had a completely different point of view concerning the rights and obligations of
Members with regard to decisions by panels and the Appellate Body.  He recalled that Jamaica had
indicated that it was not the panel or the Appellate Body but the appropriate body which could amend
or change the rules, thereby changing the rights  and obligations of Members.  The Chairman had
proposed that consultations be held on a systemic issue.  In his view, no systemic issue had arisen
with respect of the right of a Member to raise at any point a matter when it believed that its interests
were adversely affected by the action of another Member.  He therefore asked the Chairman toreformulate his proposal.
The Chairman proposed to consult with dele gations after the meeting on the Communities'
proposal, namely that informal consultations be held on the systemic question raised by the
Communities as to how to proceed when a new dispute settlement procedure was invoked with regard
to a dispute on which a panel or the Appellate Body had already reached a decision.  That was hisunderstanding of the issue raised by the Communities and his proposal was that he would simplyWT/DSB/M/39
Page 15
onsult with delegations as to whether they would wish the Chairman to hold informal consultations on
this issue.  He did not seek delegations' reactions at the present meeting.
The representative of Jamaica said that the consultations by the Chairman should also include
situations where the implementation of the DSB's recommendations was in progress.  It was his
understanding that the Communities' proposal concerne d the decision that had been taken but had not
yet been implemented, and Panama had indicated that it wished to ensure that in the implementationits rights would be preserved.
The Chairman said that before the initiation of any consultations, he would clarify the point
raised by the Communities.  During his first informal consultations with Members, it would be
possible for delegations to clarify with the Chairman their understanding of the issue raised.  At this
stage, he only sought indication that Members wo uld wish the Chairman  to take up this issue.
The representative of Argentina said that over the past two years, Members had acquired
certain experience in the application of the DSU in relation not only to the point raised by the
Communities but also with regard to other matters, for example the application of Article 6.2 of the
DSU.  All these matters could be taken up in due time in the context of the review of the DSU.  If the
informal consultations would address the definition of the issue, Argentina believed that this would be
appropriate, otherwise one particular issue should not be considered separately.  His delegation was
prepared to react to the Chairman's proposal.
The representative of India said that his delegations had no problem with any proposal by the
Chairman to hold consultations.  He supported the statement by Argentina.  At the outset of the
meeting, the Chairman had indicated that he woul d make a statement concerning the review of the
DSU.  There was a number of systemic issues which had been identified regarding the operation of
the DSU.  He recalled that India had raised one systemic issue in the past which the Communities hadreferred to at the present meeting.  Another issue related to the question of terms of reference
mentioned by the United States and Japan.  He thought  that it would be useful to consider these issues
in a comprehensive manner during the review of the DSU.  It might be difficult to isolate and deal
with only one issue even though the issue under consideration was of great importance to India.
Therefore, India had no objections with regard to the proposal by the Chairman to hold consultationson this matter, but it would be appropriate to consider all the issues in a comprehensive manner during
the review of the DSU in 1998.
The representative of Uruguay said that his delegation had no objections with regard to the
Chairman's proposal to hold consultations on whether to consult or not on this matter.  However, there
was a number of systemic issues which should be considered during the DSU review.
The Chairman noted that there was no consensus on the proposal to hold consultations on the
matter at hand.
The DSB took note of the statements.
12. Review of the DSU
- Statement by the Chairman
The Chairman, speaking under "Other Business ", raised the question of the review of the
DSU.  He noted that on different occasions several delegations had identified issues which, dependingWT/DSB/M/39
Page 16
on the views of Members, might be matters for consideration in the context of that review.  He
recalled that the Ministerial Decision on the Application and Review of the Understanding on the
Rules and Procedures Governing the Settlement of Disputes invited the Ministerial Conference to
complete a full review of dispute settlement rules and procedures within four years after entry into
force of the WTO Agreement and to "take a decision on the occasion of the first meeting after the
completion of the review whether to continue, modify  or terminate such dispute settlement rules and
procedures".  That Decision had indicated that the review should be completed by January 1999 - four
years after entry into force of the WTO - with a view to a decision at the subsequent Ministerial
Conference which might take place in 1999.  There was a number of questions -- procedural in the
first instance -- to which the Ministerial Decision gave rise, for example:  (i) where the review would
be undertaken;  (ii) when it might be initiated;  (i ii) the procedures which might be followed in terms
of seeking the view of Members and whether there were any other elements such as the Appellate
Body from which inputs should be sought.  He believed that it would be timely to initiateconsideration of these procedural matters on which it would be helpful to achieve some measure of
understanding before embarking next year on the su bstance of the review.  Rather than enter into
discussion at the present meeting on these procedural issues, he invited delegations to put forward
their views to him which would form a basis for informal consultations with a view to reporting back
to the DSB early next year.
The DSB took note of the statement.