RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/80
26 June 2000
(00-2593)
Dispute Settlement Body
18 May 2000
MINUTES OF MEETING
Held in the Centre William Rappard
on 18 May 2000
Chairman:  Mr. Stuart Harbinson (Hong Kong, China)
Prior to the adoption of the agenda, the representative of the European Communities
requested that the DSB agree to withdraw from th e agenda the item concerning the adoption of the
Panel Report on "United States - Anti-Dumping Ac t of 1916" (WT/DS136/R and Corr.1).  The EC
stated that the same matter was currently under examination by another panel established at the
request of Japan (WT/DS162) and its report would be circulated shortly. Therefore, in case there was
an appeal, it would be preferable to postpone consid eration of this matter.  The EC would request  a
special meeting for the adoption of the Report at the latest on 30 May 2000:  i.e. the deadline foradoption of the Report.  The representative of the United States said that her country would appeal the
case.
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB.........................2
(a) European Communities - Regime for the importation, sale and distribution of
bananas:  Status report by  the European Communities...............................................................2
(b) Japan - Measures affecting agricultural products:  Status report by Japan.................................5
2. Nicaragua - Measures affecting imports from Honduras and Colombia ............................6
(a) Request for the establishmen t of a panel by  Colombia...............................................................6
3. European Communities - Regime for the importation, sale and distribution of
bananas ........................................................................................................................ ..............9
(a) Recourse to Article 22.7 of the DSU by Ecuador.......................................................................9
4. United States – Transitional safeguar d measure on combed cotton yarn from
Pakistan....................................................................................................................... .............11
(a) Request for the establishmen t of a panel by  Pakistan...............................................................11
5. Proposed nomination for the indicative list of governmental and
non-governmental panelists ...................................................................................................12
6. Australia – Measures affecting importation of salmon .......................................................13
(a) Statements by Canada and Australia.........................................................................................1 3WT/DSB/M/80
Page 2
1. Surveillance of implementation of recommendations adopted by the DSB
(a) European Communities - Regime for the importation, sale and distribution of bananas:  Status
report by the European Communities (WT/DS27/51/Add.8)
(b) Japan - Measures affecting agricultural products:  Status report by Japan
(WT/DS76/11/Add.4)
1. The Chairman recalled that Article 21.6 of the DSU required that "unless the DSB decides
otherwise, the issue of implementation of the recommendations or rulings shall be placed on the
agenda of the DSB meeting after six months following the date of establishment of the reasonable
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is
resolved."  He proposed that the two sub-items be considered separately.
(a) European Communities - Regime for the importation, sale and distribution of bananas:  Status
report by the European Communities
2. The Chairman drew attention to document WT/DS27/51/Add.8 which contained the status
report by the European Communities on its progress in the implementation of the DSB's
recommendations concerning its banana import regime.
3. The representative of the European Communities said that the EC continued its bilateral
discussions with the parties concerned.  On 5 May 2000, the EC Trade Commissioner had had a
useful discussion with the Minister of Foreign Affairs of Ecuador.  The EC thanked Ecuador for its
constructive approach with regard to this comple x matter.  Both parties had concluded that their
positions on the proposed modifications to the banana regime were very close.  The EC wished to finda solution which would bring its banana regime into conformity with the WTO rules.  The Bananas
dispute involved many stakeholders but, thus far, it had not been possible to breach the very divergent
positions of the parties concerned.  The most difficult issue concerned the distribution of licences in
case of a tariff-rate quota system.  No concrete results had followed as a result of the EC's discussions
with the United States.
4. The representative of Ecuador said that, as on previous occasions, the status report by the EC
reflected its failure to meet its WTO obligations.  It was necessary, each time a status report was
presented, to have the possibility to verify the EC's progress in implementation.  He reiterated his
country's position that the EC could start to modify its regime immediately by removing the
inconsistencies related to administrative decisions.  He regretted that the EC did not seem to proceed
in this way, nor to demonstrate its intention to re solve the dispute.  Furthermore, the EC continued to
state that the lack of agreement between the complaining parties was making it impossible to resolvethe problem.  This was merely an excuse because the differences between the complainants were not
so great and it was not necessary for the positions to be the same in order to enable the EC to bring its
banana import regime into conformity with WTO obligations.
5. Furthermore, the EC continued to state that due to the lack of agreement between the
complaining parties, it would have to propose a tariff-only system.  Such a statement was no morethan a meaningless warning since the EC did not need the approval of the complaining parties to do so
but the approval of its member States.  The real cause of the problem and the reason for the EC's
failure to meet its legal obligations was the lack of will of the EC member States to comply with their
WTO obligations.  The positions of the EC member States were different and the majority of them
wished to resolve the dispute.  However, those member States were blocked by the inability of all15 member States to agree among themselves and not by the fact that the complaining parties could
not agree.  The situation was made worse as there was no proposal from the EC as to how to resolve
the problem.  This outcome was economically prejudicial to several developing countries and thusWT/DSB/M/80
Page 3
losses were not just limited to those suffered by large companies trading in bananas.  The real damage
was caused to banana producers, which meant that several million people who relied on this
agricultural activity were being driven deeper into poverty by illegal protectionist policies.  The EC
and its member States, who continued to present status reports containing nothing new, were
responsible for this situation.
6. The representative of Panama said that his country's position on the EC's attitude with regard
to the implementation of the DSB's recommendations was well-known.  It was difficult to make the
EC understand that its attitude had caused and continued to cause damage to Panama and other Latin
American banana-producing countries.  Many months had passed since the EC's banana regime had
been ruled to be inconsistent with WTO rules and principles.  On many occasions, his delegation had
indicated that the EC had to meet its multilateral obligations with the same sense of urgency with
which other Members were required to do so.  On numerous occasions, and at all levels, hisGovernment had tried to work constructively with the EC authorities in the search for acceptable
options for all the interested parties.  Many times the views expressed by Panama had not been taken
into account by the EC and, he believed, other delegations had had exactly the same experience.
7. Thus far, the EC had not met its obligations.  He asked how much longer the injured parties
would have to wait?  The numerous status reports presented thus far had given no indication withregard to this question.  According to international press reports, the EC continued to maintain that
discussions were being held with the interested parties.  He noted that Panama had not been joined, in
any capacity, in the discussions and negotiations conducted by the EC over the past few months.
Most of Panama's contacts, either bilateral or plurilateral, had been made on its own initiative.
Panama, like some other countries, had been relegated to the position of an observer of thediscussions held by the EC with the United States and, more recently, to those held with Ecuador.
8. Panama believed that it was the EC's policy not to take affected countries into account unless
they requested authorization to suspend concessions.  Panama had indicated its commitment to
achieving a WTO-consistent solution, which would be satisfactory to all concerned.  It believed that
the multilateral trading system would allow it to hold constructive discussions with the EC withoutfurther recourse to dispute settlement procedures, in particular since the Bananas dispute had already
been the subject of a number of DSB rulings.
9. As he had just indicated, Panama had not been included by the EC in its substantive
discussions with the United States and Ecuador.  It had been made clear to his country that the EC had
nothing to negotiate with Panama and, like other Members, it had been accused of intransigence and
of preventing the EC from meeting its obligations.  He reiterated that the EC had an obligation to
make its regime WTO-consistent.  At present, the situation was difficult as a result of twoauthorizations of retaliatory measures.  The EC could only blame its own delay and not the victims of
its illegal regime.  The more time the EC took, the more complicated this situation would become and
for this too the EC must shoulder the blame.  However, as indicated in the status report at the present
meeting as well as in previous reports, the EC continued to deny everything and to blame the banana-
producing countries of Latin America instead.  It was hard to believe that his country was being
accused of intransigence while it had made constructive efforts, had sent Ministers, Vice-Ministers,
Ambassadors and negotiators and had devoted its scarce resources only to be told that the EC had
nothing to negotiate with Panama.
10. He reiterated that his Government remained de termined to seek a consensus-based solution,
which would guarantee to all the interested parties, real, effective, improved access as well asconsistency with the DSB's recommendations.  Howe ver, the EC should show a greater willingness
for dialogue.  A lot of difficult work had to be done and Panama had shown its willingness to hold
negotiations.  The solution to this problem would not be found by negotiating behind closed doors
with the United States and now Ecuador.  Other pa rties were involved and solutions could only beWT/DSB/M/80
Page 4
found by holding discussions with all parties involved  in the dispute.  A policy of silence did nothing
to improve trading relations between Members, nor to resolve disputes.  Thus far, the EC in the
Bananas dispute had simply not lived up to the DSB's objectives.
11. The representative of Honduras said that since 25 September 1997 his country had continued
to reiterate its view that the EC did not wish to  comply with the DSB's recommendations to bring its
banana regime into conformity with the WTO rule s.  In Honduras' view, that lack of willingness
demonstrated the EC's disregard of the multilatera l trading system.  Countries like Honduras, seeking
to apply the DSU rules in the firm belief that their rights would be restored, were confronted with big
trading partners such as the EC who evaded their responsibilities.  If the situation was reversed, either
Honduras would have come into compliance or the EC would have found a way to make Honduras
comply.  He wished to know how much longer his country had to wait for the EC to comply.  He was
concerned that the EC had decided not to comply.  He recalled the statement made by Honduras at the
7 April DSB meeting in which a reference had been made to an initiative which could place countries
such as Honduras at a disadvantage as steps were  taken to evade the responsibilities resulting from
DSB's recommendations.  Such attempts should not be allowed.  He noted that no consultations had
taken place between his country and the EC with a view to seeking a solution to the banana problem.
12. The representative of the United States considered that the EC's status report was a non-
report.  It contained the same information which had been submitted over a considerable period of
time. The US position with regard to the EC's lack of compliance was well-known.  The United States
regretted that the EC continued to blame other Members for its failure to comply while it was in fact
disagreement among its member States and not among the complaining parties that was preventing
the EC from complying.  The United States had met with the EC and subsequently had informed allthe parties of those discussions.  She noted that in the course of those discussions the EC's position
had moved backward.  The EC had an obligation to comply with the WTO rules.  Like previous
speakers, the United States continued to hope that the EC would stop blaming others for its failure to
comply with the WTO obligations.
13. The representative of Colombia said that his delegation supported the statements made by
previous speakers.  A solution to the Banana dispute should be found promptly.  Colombia reiterated
the need for the EC to fully and immediately implement the DSB's recommendations and rulings.
14. The representative of Guatemala said that, as indicated in the EC's status reports, no new
developments had taken place.  The lack of will on the part of the EC to modify its banana regime
continued to affect banana producers and undermined the credibility of the multilateral trading
system.  Already 32 months had passed but the EC had not yet complied with the rulings.  Guatemala,
like other small developing countries, had confidence in the multilateral trading system and believedthat the only way to preserve its rights was to respect the WTO Agreement.  She wished to know how
much longer it was necessary to wait before a WTO-consistent banana regime were to be put in place.
Guatemala hoped that a solution would be found in the very near future since other binding decisions
had to be taken which were linked to the banana problem.
15. The representative of Mexico said that his country's position on this matter was well-known.
He noted that Mexico had not been invited to participate in the consultations referred to at the present
meeting.  He reiterated that the EC did not need approval from other parties to the dispute in order to
bring its regime into conformity with the WTO rules. It should only comply with its WTO
obligations.  As already stated on previous occasions, Mexico's preference was a tariff-only system
with adequate market access.
16. The representative of Saint Lucia said that her delegation thanked the EC for its status report
and its recent consultations with Ecuador.  She recalled the statement made by her delegation at the
7 April DSB meeting (WT/DSB/M/78, para. 12).  It was her intention to reiterate the same statementWT/DSB/M/80
Page 5
at the present meeting.  She added that if all parties to the dispute were to be given what they wanted
then, as a result, all parties would lose.  While Saint Lucia hoped for a quick resolution of the dispute,
it called upon the parties to exercise a maximum of reasonableness to this end.
17. The representative of the European Communities said that his delegation noted the statements
made at the present meeting.  The EC's reports continued to be the same  because there were still great
difficulties in satisfying all the parties.  The EC was aware of its obligations and the matter was being
raised in the DSB on a monthly basis to enable dele gations to express their views.  At the time the
matter had been launched in the WTO, the complainin g parties were aware that even if they won, it
would be extremely difficult to resolve the case.  Statements had been made to the effect that the EC,
in putting in place a new regime, should favour developing countries.  He noted that one of the
original purposes of the banana regime was to favour the ACP countries.  Now, the EC was being
asked to favour both the ACP countries and the Latin and Central American countries, which meantthat it should not favour the intere st of the US multinational companies.
18. The representative of Panama referred to the statement made by the EC to the effect that
when the complaining countries had brought the case into the WTO they were aware that it would be
difficult to resolve.  In his view, the EC was su ggesting that the complaining parties should not have
even tried to restore their rights.  He hoped that the EC was not implying that such efforts should bediscouraged.
19. The representative of the United States said that, over a considerable period of time, the EC
had continued to submit the same progress reports, which had been justified on the grounds that the
complaining parties had nothing to offer.  However, it was the EC who had lost the case, not the
complaining parties and it should now come into compliance in order to meet its WTO obligations.The EC was fully aware that it was failing to meet its WTO obligations.  The United States considered
that the remarks made by the EC at the present meeting were neither appropriate nor helpful towards
further efforts aimed at reaching a solution to this dispute.
20. The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.
(b) Japan - Measures affecting agricultural products:  Status report by Japan
(WT/DS76/11/Add.4)
21. The Chairman drew attention to document WT/DS76/11/Add.4 which contained the status
report by Japan on its progress in the implementation of the DSB's recommendations with regard to its
measures affecting agricultural products.
22. The representative of Japan said that, as indicated in the status report, since the 7 April DSB
meeting, his country had held consultations with the United States in a constructive manner.
Although some progress had been made it had not been possible to conclude those consultations.
Japan hoped that the parties would be able to find a mutually satisfactory solution in the near future.
His country would make its utmost efforts towards that end.
23. The representative of the United States said that her country continued to work with Japan in
an effort to resolve the remaining technical issues on implementation.  The United States hoped to be
able to resolve those issues shortly.
24. The DSB took note of the statements and agreed  to revert to this matter at its next regular
meeting.WT/DSB/M/80
Page 6
2. Nicaragua - Measures affecting imports from Honduras and Colombia
(a) Request for the establishment of a panel by Colombia (WT/DS188/2 and Corr.1)
25. The Chairman recalled that the DSB had consid ered this matter at its meeting on 7 April and
had agreed to revert to it.  He drew attention to the communication from Colombia contained in
document WT/DS188/2 and Corr.1.
26. The representative of Colombia said that, on 17 January 2000, his country had requested
consultations with Nicaragua concerning its Law 325 and Decree 29/99 establishing a 35 per cent tax
on goods and services from Colombia and Honduras.  Since the consultations had not led to a
satisfactory settlement, on 28 March 2000, Colombia had requested the establishment of a panel to
examine this matter.  Colombia's request had been considered by the DSB at its meeting of 7 April.
However, it had not been possible to establish a panel at that meeting because Nicaragua had objected
to Colombia's request.  Therefore, his country wa s requesting the establishment of the panel for the
second time.  In accordance with Article 6.1 of the DSU such a panel would have to be established at
the present meeting.
27. The representative of Nicaragua said that his country recognized Colombia's right to request
the establishment of a panel.  At the present meeting, his delegation wished to raise two issues of
fundamental importance for the dispute settlement system.  The first issue related to the proceduresfor the establishment of panels and the second concerned the institutional aspect of the WTO.
Nicaragua considered that Colombia's panel request contained some procedural and substantive
defects and did not meet the requirements of Article 6.2 of the DSU.  First, Colombia's request at the
present meeting was different from that submitted at the 7 April DSB meeting.  Therefore, the present
meeting constituted the first consideration of Colombia's request.  Accordingly, he requested that theestablishment of a panel be deferred until the next meeting.
28. Second, in its panel request, Colombia based its claim on certain provisions which had not
been referred to during the consultations.  Therefore, Nicaragua considered that a panel should
examine Law No. 325 and its regulations only in the light of the provisions of Article I and II of
GATT 1994, as indicated in document WT/DS188/ 1.  In document WT/DS188/2/Corr.1, Colombia
was requesting that the panel should have the standard terms of reference set out in Article 7 of the
DSU.  Nicaragua's position was that the provisions of Article XXI of GATT 1994, which confirmed
the inherent right of a State to protect its security and constituted an exception to the multilateral trade
rules, could not be subjected to an examination by a panel.  That principle had been endorsed by
GATT practice and was enshrined in the Decision of 30 November 1982 by the CONTRACTING
PARTIES concerning Article XXI of the General Agreement. The Understanding reached by the
Council on 10 October 1985 that the Panel could not examine or judge the validity of, or the reasons,for the invocation by the United States of Article XXI(b)(iii) should be considered as normative since
that decision had been endorsed by the CONTRACTING PARTIES.
29. Article XVI:1 of the WTO Agreement and Article 1(b)(iv) of Annex 1A thereof incorporated
the past legal experience acquired under the GATT 1947 into the WTO in such a way as to guarantee
continuity and coherence in a smooth transition from the GATT 1947 system.  In this way, theimportance of the experience acquired by the CONTRACTING PARTIES for the WTO had been
confirmed and recognized.  The Decision of 30 No vember 1982 concerning Article XXI of the GATT
recognized the exclusive authority of the CONTRACTING PARTIES to interpret Article XXI of the
GATT, as reaffirmed in Article IX:2 of the WTO Agreement which provided that "The Ministerial
Conference and the General Council shall have the ex clusive authority to adopt interpretations of this
Agreement and of the Multilateral Trade Agreements."  That Article also provided that such decisions
"shall be taken by a three-fourths majority of the Members".  The fact that the WTO Agreement hadWT/DSB/M/80
Page 7
specifically established this "exclusive author ity" to interpret the Agreement was sufficient to
conclude that this authority had not been given implicitly or inadvertently to any other Body.
30. Therefore, unless and until there was a formal interpretation of Article XXI of GATT which
would invalidate the understanding reached by the Council in October 1985, the standard terms of
reference provided for in Article 7 of the DSU w ould have to exclude the possibility of examining
and/or judging the validity of, or the reasons for, Nicaragua's resort to Article XXI(b)(iii) of GATT.
Nicaragua was requesting that the panel should not be established at the present meeting and that the
terms of reference should prevent it from examining and/or judging the validity of, or the reasons for,
the resort by Nicaragua to Article XXI(b)(iii) of the GATT 1994.  His country was also requesting
that its statement made at the 7 April DSB meeting be circulated as a WTO document together with
the text of the statement made at the present meeting.
31. The representative of the United States said that in her delegation's view, Article 6.1 of the
DSU required the DSB to accept a panel request that appeared on the DSB agenda for the second
time.  Such a request, however, should be the same each time.  It was the US understanding that
although Colombia had a right to a panel, its request before the DSB at the present meeting was not
the same as the one which had been considered for the first time.  Therefore, it would be appropriate
for the DSB not to establish a panel at the present meeting.  The parties to the dispute could use thisadditional time to try to solve the dispute.
32. The representative of Japan said that that Members should be extremely cautious with regard
to any measure justified under Article XXI of GATT 1994.  A dispute of political nature could
seriously compromise the credibility of the dispute settlement system. Japan, therefore, strongly urged
the parties to seek any possible means in an effort to  settle this dispute in other fora outside of the
WTO.
33. The representative of Canada said that her delegation wished to echo the position expressed
by Japan.  Canada had no views on the specific matter in the dispute and she did not wish to comment
on the argument with regard to Article 6.1 of the DSU.   Canada supported the view that issues related
to national security should be addressed with great caution and, like Japan, also called upon theparties to resolve the matter through other means.  In  this respect, she noted that a reference had been
made that if a panel were to be established such a panel might have special terms of reference. In her
view, that could be a way of dealing with this important issue.
34. The representative of Honduras said that, like Japan, his country believed that Members
should be cautious when invoking security provisions because such actions might undermine the
multilateral trading system and could be viewed as unilateral.  Honduras believed that Colombia was
within its rights in requesting that a panel be esta blished at the present meeting, as provided for in
Article 6.1 of the DSU.
35. The representative of the European Communities sa id that the argument had been made to the
effect that Colombia's request at the present meeting was not the same as the one considered for the
first time and, therefore, the present meeting did not constitute the second consideration of that
request.  In his view, this was not a strong argument.  The corrigendum to the panel request, whichhad been circulated at a  later stage, referred to two elements.  The first element concerned a factual
issue and the second one did not alter the basis of the legal complaint.  It would be preferable to
establish a panel at the present meeting and the parties could continue to seek a solution. Matters
related to national security issues were sensitive,  but there was nothing in the DSU to the effect that
such issues were exempt from dispute settlement proceedings.  In the EC's view, the panel could
examine the facts to determine whether the matter at hand concerned a national security issue or
whether the measure in question constituted a trade policy measure.  There were some precedents and
one well-known case which had been launched in 1997 had been examined by a panel but had beenWT/DSB/M/80
Page 8
resolved by the parties before the panel had started its deliberations.  He believed that the case to
which he had just referred constituted a good precedent.
36. The representative of United States said that the corrigendum to Colombia's request was not
only factual since it had modified the measures to be examined by the panel.
37. The representative of Colombia said that the corrigendum had been circulated following the
request by Nicaragua.  That corrigendum narrowed  the scope of the panel request in WT/DS188/2,
which had already been considered by the DSB at its previous meeting.
38. The representative of Nicaragua said that, on 14 April 2000, her country had sent a letter to
Colombia indicating that its panel request contained some procedural defects:  i.e. the scope of the
request was broader and covered the issue which had not been raised in the consultations.  In other
words, its legal basis were different.  For example, Colombia had requested that the measure be
examined in the light of the GATS while no refere nce had been made to that Agreement during the
consultations.  Colombia's request was before the DSB for the first time because that request was
different from the one submitted at the 7 April DSB meeting:  i.e. it referred to different measures and
its scope was broader than the scope of consultations.  There was a distinction between procedural
issues for consideration by the DSB and substantive issues for examination by the panel.  Nicaragua
could not accept two different requests, namely one referring to two regulations and the other
referring to just one regulation.
39. The Chairman said that the issue at hand was very sensitive.  Some procedural points which
had substantive implications had been raised by Nicaragua, and had received a degree of support.  The
DSB could only be guided by Article 6.1 of the DSU which read as follows:  "If the complaining
party so requests, a panel shall be established at the latest at the DSB meeting following that at whichthe request first appears as an item on the DSB agenda, unless at that meeting the DSB decides by
consensus not to establish a panel."  It was his understanding that, at the present meeting, there was no
consensus not to establish a panel.  As indicated on previous occasions, a complainant had the right to
have a panel established upon the second consideration by the DSB.  He was not sure that there was a
consensus that the issue of the corrigendum would be sufficient to undermine that right when the
matter was on the agenda for the second time.  There were also other procedural issues with
substantive implications which had been raised by Nicaragua.  For example, whether or not all of the
points raised in  the panel request had been covered in consultations.  It was not the first time that
such problems had been raised before the DSB and the normal procedure on those occasions had been
to indicate that it would be for the panel to decide whether all the matters raised had been properly put
before it.  In this particular context, it would be for a panel, when established, to decide whether the
issues raised by Colombia had been properly consulted upon.  He proposed that the DSB take note ofthe statements and agree to establish a panel in accordance with the provisions of Article 6 of the
DSU.
40. The DSB so agreed.
41. The Chairman said that the other important issues which had been raised by Nicaragua related
to the terms of reference of the panel.  A number of delegations had expressed views on this matter.
He drew attention to Article 7.3 of the DSU which read  as follows:  "In establishing a panel, the DSB
may authorize its Chairman to draw up the terms of reference of the panel in consultation with the
parties to the dispute, subject to the provisions of paragraph 1".  Therefore, one possible course of
action would be for the DSB to authorize him as Chairman of the DSB to take action under Article 7.3
of the DSU.  It was clear that that procedure was subject to paragraph 1 which read that "panels willhave the standard terms of reference unless the parties to the dispute agree otherwise within 20 days
from the establishment of a panel".  It was necessary to read those two provisions together.  This was
just one possible way of trying to move forward and it was not his intention to impose this course ofWT/DSB/M/80
Page 9
action on the parties.  He proposed that the DSB authorize the Chairman to draw up the terms of
reference of the panel in consultation with the pa rties to the dispute subject to the provisions of
Article 7.1 of the DSU.
42. The DSB so agreed.
43. The representative of the European Communities drew attention to the last sentence of
Article 7.3 of the DSU which read as follows:  "If other than standard terms of reference are agreed
upon, any Member may raise any point relating thereto in the DSB."  The EC wished to reserve the
right to make use of that provision, if necessary.
44. The DSB took note of the statement.
45. Canada, Costa Rica , European Communities  and Honduras  reserved their third-party rights to
participate in the Panel's proceedings.
46. The Chairman said that, at the request of th e European Communities, he wished to propose
that the item concerning Ecuador's recourse to Ar ticle 22.7 of the DSU be considered first. He said
that under Rule 7 of the Rules of Procedure, the DSB could agree to change the order of business at
any time, if necessary.  He therefore asked if any delegation would object to the proposed order of
business.
47. The DSB agreed to the proposed order of business.
3. European Communities - Regime for the importation, sale and distribution of bananas
(a) Recourse to Article 22.7 of the DSU by Ecuador (WT/DS27/54)
48. The Chairman invited Mr. K. Bryn, Chairman of the General Council, to preside over of the
proceeding of item 3.  The Chairman of the General Council recalled that at the DSB meeting on
19 November 1999, Ecuador had requested authorization from the DSB to suspend the application to
the European Communities and its member States of tariff concessions or other related obligations
under the TRIPS, GATS and, contingently, under the GATT.  At that meeting, the EC had objected to
Ecuador's request and had requested that the matter be referred to arbitration pursuant to Article 22.6
of the DSU.  He drew attention to document WT/DS27/ARB/ECU which contained the Arbitrators'
decision on this matter as well as to the communication from Ecuador contained in documentWT/DS27/54.
49. The representative of Ecuador said that, in accordance with Article 22.7 of the DSU, his
country was requesting authorization from the DSB to suspend concessions or other obligations to the
EC.  On 17 March 2000, the Arbitrators had determined, on the basis of Ecuador's initial request
(WT/DS27/52), that the nullification or impairment of benefits suffered by Ecuador as a result of the
EC's application of its illegal banana regime amounted to US$201.6 million per year.  The Arbitrators'
decision had been circulated on 25 March 2000 in document WT/DS27/ARB/ECU.  In accordancewith Article 22.7, Ecuador had brought its initial request into conformity with the Arbitrators'
conclusions and recommendations.  The new request had been circulated on 8 May 2000 in document
WT/DS27/54.  Article 22.7 of the DSU provided tha t:  "The parties shall accept the arbitrator's
decisions as final and the parties concerned shall not seek a second arbitration."  That Article further
stipulated that the DSB "shall upon request, grant authorization to suspend concessions or otherobligations where the request is consistent with the decision of the arbitrator, unless the DSB decides
by consensus to reject the request".  Since Ecuador would not join in a consensus to reject its request,
the DSB would have to grant authorization to suspend concessions.WT/DSB/M/80
Page 10
50. At the 7 April DSB meeting, Ecuador had made a statement with regard to the scope of the
Arbitrators' decision concerning the EC's failure to comply with its obligations.  At the present
meeting, he wished to draw attention to that st atement contained in WT/DSB/M/78.  He also wished
to draw attention to the statement made by the EC at the 7 April DSB meeting that "the EC
recognized, in particular, that Ecuador, unlike other Members, had followed all the correct steps underthe DSU in order to defend its rights".  In commenting on the Arbitrators' decision, the EC had also
pointed out that Ecuador had "correctly recalled some of the problems involved in this complex case",
adding that, while Ecuador "had not yet applied any measures it had the right to do so.  The EC was
not questioning that right".
51. Ecuador, which closely followed the DSU procedures, had accurately incorporated the criteria
contained in the Arbitrators' decision.  Furthermore, in suspending concessions it would take into
account the terms contained therein, namely, the amount of  US$201.6 million in the sectors indicatedin its request.  Ecuador was willing to continue to  negotiate with the EC the terms for the application
of a new banana regime.  He also wished to reaffirm his country's position already stated during the
discussions with the EC at the beginning of May that it would prefer compensation over retaliation.
He reiterated that at the present meeting, Ecuador was requesting authorization from the DSB to
suspend concessions or other obligations in accordance with the terms set out in documentWT/DS27/54.
52. The representative of the European Communities said that the situation faced by the EC was
not satisfactory and raised some serious systemic problems.  The EC had held discussions with
Ecuador and had taken the position that it would not oppose the request although it would have
strongly preferred to have had further opportunity to review the facts and the measures to be taken byEcuador.  However, the case at hand should not become a precedent.  He drew attention to
paragraph 171 of the Arbitrators' report which read as follows:  "… Ecuador's request under Art. 22.2
…. has not followed … the principles and procedures set forth in Art. 22.3, especially regarding the
suspension of concessions with respect to goods destined for final consumption.  Moreover, the level
of suspension requested by Ecuador exceeds the level of nullification and impairment suffered by it... ."  Subsequently, in paragraph 172 of the report, the Arbitrators quoted Article 22.7 of the DSU,
namely, that the DSB "… shall grant authorization to suspend concessions where the request is
consistent with the decision of the arbitrator".  In paragraph 173 of the report, the Arbitrators stated
the following: "Consequently, … we suggest to Ecuador to submit another request ... consistent with
our conclusions set out in the following paragraphs:  (a) Ecuador may request … and obtain
authorization by the DSB to suspend concessions ... at a level not exceeding US$201.6 million per
year ...;  (b) Ecuador may request ... and obtain etc. ... on certain categories of goods;  (c) Ecuadormay request ... and obtain authorization by DSB ... to suspend commitments under GATS;  and (d) to
the extent that suspension requested under the GATT and the GATS .... is insufficient to reach the
level … indicated … Ecuador may request … and obtain authorization by the DSB … to suspend
obligations under the TRIPS Agreement ... ."  On the basis of the above paragraphs, the EC retained
that:  (i) the original Ecuador request was not correct in its form, and that the DSB should authorize adifferent request as long as it was consistent with the Arbitrator's conclusions;  (ii) the present revised
request was thus different and, in this sense, constituted a new request;  and (iii) Ecuador was clearly
under an obligation to limit the effect of any measures that might be taken up to US$201.6 million.
53. Furthermore, Ecuador had to take measures affecting first consumer goods, and then its
GATS commitments, and to suspend TRIPS obligations only if the first two kinds of measures werenot sufficient.  This was a very important condition in the Arbitrator's conclusions.  The EC
considered a number of difficulties arising from the very imprecise nature of Ecuador's current
request.  For example, the original request, considered by the Arbitrator to be excessive, had been
totally maintained, in its entirety, and the suspension of concessions on certain goods had been added
to that.  That meant that the current request was still excessive, and that the only way that EcuadorWT/DSB/M/80
Page 11
could remain within the ceiling of US$201.6 million would be to apply measures with great care to
ensure that they remained below that level.
54. Another example was that the current request provided no indication of the level of extra
duties that might be applied.  In the absence of such indications there was no way that the DSB or the
EC could calculate, with any certainty, the impact of measures to be taken.  The third example wasthat the value assigned to suspension of concessions on goods was based on Ecuador's own data
provided to the Arbitrator and on the single year 1999, whereas the EC had provided data showing
imports much higher than that and believed that such calculations should, according to earlier
precedents, be based on a three-year average.
55. He regretted that the revised request by Ecuador did not enable the EC, nor the DSB, to reach
a conclusion as to whether the requirement that the request be consistent with the Arbitrator's report
had been met.  This created a serious systemic problem since there would be no chance of anymultilateral control or verification of the measures to be taken which was out of line with the intention
of Article 22 of DSU.  That represented another defect in the DSU rules in cases where a first request
under Article 22.6 went to arbitration and following that it was revised and represented in a manner
which did not allow a proper verification of the facts.  In the case under consideration, the EC would
have expected that Ecuador would have been willing to join in an exercise of verification of the data.He regretted that the EC's efforts to seek Ecuador's cooperation in this sense had been denied.
56. In this case it was impossible for the DSB to know the value to be assigned to any measures
that Ecuador might take on consumer goods.  In addition, the value to be assigned to any measures
under GATS was notoriously difficult to calculate, and in consequence the need for any measures to
be taken under TRIPS was impossible to estimate.  If in doubt, Ecuador should abstain from suchmeasures.  He underlined that the fact that this request would be approved by the DSB at the present
meeting should not be interpreted as a recognition or an acceptance that it was consistent with the
Arbitrator's conclusions.
57. The EC reserved its rights to monitor the impact  of any measures that might be taken once the
DSB had authorized such action, and to challenge such measures if it appeared that they wereexcessive in relation to the figure established by the Arbitrators.  He wished to make his statement for
the record since the EC did not wish that this case create a precedent for future cases.  The EC
understood that there had been problems in terms of the Arbitrator recommending a different
approach to the original request and the EC did not wish this case to become an example which leaves
the parties affected unable to see what the impact of the measures envisaged would be.
58. The DSB took note of the statements and, pursuant to Ecuador's request under Article 22.7 of
the DSU, as revised in the light of the Arbitrators' decision, agreed to grant authorization to suspend
the application to the European Communities and its member States of tariff concessions or other
related obligations consistent with the Arbitrators' decision contained in document
WT/DS27/ARB/ECU.
4. United States – Transitional safeguard meas ure on combed cotton yarn from Pakistan
(a) Request for the establishment of a panel by Pakistan (WT/DS192/1)
59. The Chairman drew attention to the communi cation from Pakistan contained in document
WT/DS192/1.
60. The representative of Pakistan said that since his country's request for a panel was contained
in document WT/DS192/1, he did not need to go into details thereof at the present meeting.  He
recalled that in December 1998, the United States had requested consultations with Pakistan, pursuantWT/DSB/M/80
Page 12
to Article 6.7 of the ATC concerning a restraint on imports of combed cotton yarn - category 301 -
from Pakistan.  These consultations, however, had not resulted in a mutually satisfactory solution.  To
Pakistan's regret, the United States had decided unilaterally to impose a restraint, effective from
17 March 1999.  In accordance with the requirements of the Agreement on Textiles and Clothing
(ATC), the Textiles Monitoring Body (TMB) had ex amined the restraint and had concluded that:  "the
United States had not demonstrated successfully that combed cotton yarn was being imported into its
territory in such increased quantities as to cause serious damage, or actual threat thereof, to its
domestic industry producing like and/or directly competitive products".  The TMB had therefore
recommended that the United States withdraw its restraint.  The United States, however, had not
accepted the TMB's recommendation and had informed it accordingly.  Consequently, the TMB had
examined the reasons given by the United States for its inability to comply with the TMB's
recommendation.  Following the re-examination of the case, the TMB had again recommended thatthe United States rescind the restriction forthwith.
61. Unfortunately, despite the TMB's recommendations on two occasions, the United States
continued to maintain its unilateral restriction on combed cotton yarn from Pakistan.  The matter
remained unresolved.  Therefore, Pakistan was obliged to request a panel to examine the matter.  His
country believed that the restraint imposed by the United States on imports of combed cotton yarnfrom Pakistan was inconsistent with United States' obligations under the ATC;  i.e. it was inconsistent
with Article 2.4 of the ATC, and was not justified under Article 6 thereof as it did not meet the
requirements for transitional safeguards set out in paragraphs 2, 3, 4 and 7 of Article 6 of the ATC.
He requested that the DSB establish a panel at the present meeting.
62. The representative of the United States said that her delegation noted the statement made by
Pakistan at the present meeting.  However, the United States would not be in a position to join in the
consensus to establish a panel at the present meeting.
63. The representative of Pakistan said that his country respected its WTO rights and obligations
and had due regard to the rights of other Members.  It was in this spirit that Pakistan recognized that
the United States had a right to block the establishment of a panel upon the first consideration of thepanel request.  However, his delegation was disappointed that the United States had not provided any
sound reason for its decision and believed that there was none.  His country's disappointment resulted
from the fact that its exports continued to remain under restriction.  As a result, the benefits accruing
to Pakistan under the WTO Agreement were being nullified or impaired.  He said that Pakistan's
request for a panel would be included on the agenda of the next DSB meeting and that a panel would
be established at that meeting.
64. The DSB took note of the statements and agreed
 to revert to this matter.
5. Proposed nomination for the indicative list of governmental and non-governmental
panelists (WT/DSB/W/130)
65. The Chairman drew attention to document WT/DSB/W/130 which contained an additional
name proposed for inclusion on the indicative list in accordance with Article 8.4 of the DSU.  Unless
there was any objection, he proposed that th e DSB approve the name contained in document
WT/DSB/W/130.
66. The DSB so agreed.WT/DSB/M/80
Page 13
6. Australia – Measures affecting importation of salmon
(a) Statements by Canada and Australia
67. The representative of Canada, speaking under "Other Business", said that his country was
pleased to announce that it had concluded an agreement with Australia to resolve this long-standing
dispute.  The text of the agreement was in plain language and in the form of an exchange of twoletters between the parties.  The agreement boded well not only for this important sector of Canada's
economy, but also for its relationship with Australia.  Canada would monitor closely Australia's
commitment to implement the agreement by 1 June 2000.  It also hoped that shortly thereafter the
parties would be in a position to notify the DSB of a mutually agreed solution.
68. The representative of Australia said that his country wished to confirm that on, 16 May 2000,
it had reached a mutually agreed solution with Canada on the implementation by Australia of the
conclusions and recommendations adopted by the DSB in the dispute on "Australia - MeasuresAffecting the Importation of Salmon" (WT/DS18).  The text of the agreed solution - in the form of an
exchange of letters - was publicly available and would be formally notified to the DSB.  The letters
had been signed on 16 May 2000.  On 17 May 2000, Australia had introduced amendments to its
quarantine policies on fresh, chilled or frozen salmon, with effect from 1 June 2000.  The relevant
document, the Animal Quarantine Policy Memorandum, dated 17 May 2000, was also publiclyavailable.  Australia had, therefore, given effect to the terms of the mutually agreed solution within
one day of confirmation of the terms of the agreement.  The amendments in question implemented the
DSB's  recommendations and rulings on the "consumer-ready requirements", consistent with the terms
agreed by Canada.  These amendments were fully consistent with the covered agreements.  Canada
and all other salmon exporters could avail themselves of the new arrangements now in place.
69. The representative of the United States said that her country welcomed the agreement
between Canada and Australia.  The United States also welcomed the statement that the improved
access to the Australian market would be available to all Members.  The United States had
participated as a third party in the case under consideration and had requested a panel on the same
matter (WT/DS21).  Subsequently, the work of that panel had been suspended.  The United Stateslooked forward to further information and details regarding the above-mentioned market access.  It
would examine the matter carefully with a view to  taking  a decision on how to proceed in the
suspended case.  The United States hoped that the dispute in question would serve as a good example
of how the dispute settlement system could ensure compliance with the WTO rules.
70. The delegation of Norway said that his country, which had participated as a third party to this
dispute, welcomed the agreement on implementation reached by Canada and Australia.  Norway was
pleased that Australia had modified its quarantine policy and hoped that the changes made wereconsistent with the Panel's recommendations.  Norway had not had the opportunity to examine the
agreement and the changes to the Australian quarantine policy.  Norway looked forward to a
notification from the parties in this respect and commended the parties for resolving their differences.
71. The DSB took note of the statements.
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