RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/128
20 August 2002
(02-4487)
Dispute Settlement Body
24 June 2002
MINUTES OF MEETING
Held in the Centre William Rappard
on 24 June 2002
Chairman:  Mr. Carlos Pérez del Castillo (Uruguay)
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB.........................4
(a) United States – Section 110(5) of the US Copyright Act:  Status report by the United
States......................................................................................................................... ..................4
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States.......................5
2. United States – Rules of origin for textiles and apparel products ........................................6
(a) Request for the establishm ent of a panel by India ......................................................................6
3. United States - Definitive safeguard measures on imports of certain steel
products ....................................................................................................................... ..............7
(a) Request for the establishm ent of a panel by China.....................................................................7
(b) Request for the establishmen t of a panel by  Switzerland ...........................................................7
(c) Request for the establishm ent of a panel by Norway..................................................................7
4. Turkey – Certain import procedures for fresh fruit .............................................................9
(a) Request for the establishmen t of a panel by Ecuador .................................................................9
5. Peru – Tax treatment on certain imported products...........................................................10
(a) Request for the establishm ent of a pane l by Ch ile....................................................................10
6. Canada - Export credits and loan guarantees for regional aircraft...................................11
(a) Recourse by Brazil to Article 4.10 of the SCM Agreement and Article 22.2 of the
DSU ............................................................................................................................ ..............11
7. Proposed nominations for the indicative list of governmental and
non-governmental panelists ...................................................................................................15
8. Argentina – Certain measures on the protection of patents and test data ........................15
(a) Statement by the United States .............................................................................................. ...15WT/DSB/M/128
Page 2
Prior to adoption of the agenda
The Chairman said that over the weekend he had received a letter from Canada related to item
6 of the agenda, namely, "Canada – Export Credits and Loan Guarantees for Regional Aircraft:
Recourse by Brazil to Article 4.10 of the SCM Agreement and Article 22.2 of the DSU".  He said thatthat letter had been circulated in document WT/DS222/8 in the course of the morning.  He then
invited Canada to make a statement.
The representative of Canada said that, on 21 June 2002, his country had submitted a letter to
the Chairman and had had an opportunity to discuss it with him.  He said that Canada believed that
the issue of retaliation in terms of the options and the calculations of the figures submitted by Brazil
were inappropriately placed before the DSB at the present meeting.  These issues had been discussedwith Brazil and were explained in the letter addressed to the Chairman.  Since in its letter, Canada
referred to the appropriate Articles, he did not wish to go into detail at this time, but reiterated that
Brazil's request was inappropriately before the DSB and sought the Chairman's judgment on this
issue.
The representative of Brazil said that his country had noted Canada's request to modify the
agenda by removing Brazil's request for suspension of concessions.  In Brazil's view, Canada's request
was unfounded.  He then proceeded to an examination of the grounds for Canada's request.  First,
Canada claimed that "the situation described in Article 22.2 of the DSU has not occurred".  According
to Canada, "the situation described in Article 22.2 ... [is] a necessary precondition for the operation of
Article 22.6".  Moreover, Canada claimed that "the DSB has no authority to consider the authorization
requested by Brazil".  Canada explained that the "reason for this is that Brazil's request is based ... on
an allegation that Canada ... has failed to withdraw subsidies in respect of ... aircraft options in a
transaction considered by the Panel in this dispute".  Brazil disagreed with Canada's presentation of
the facts and with Canada's interpretation of the relevant WTO provisions.  Canada incorrectlyclaimed that Brazil's request was based on Canada's failure to withdraw subsidies with respect to
options.  This was not accurate.  Brazil had never made this linkage, neither in the DSB nor to Canada
in bilateral discussions.  Rather, Brazil based its request on the fact acknowledged by Canada, both to
the DSB at its meeting on 22 May 2002 and to Brazil, that it had taken no measures whatsoever to
comply with the DSB's recommendations and rulings.  Canada had taken no measures at all since the
adoption of the Panel Report, which had recommended that Canada withdraw, without delay, the
subsidies found to be inconsistent with the SCM Agreement.  Canada recognized that it had notwithdrawn the subsidies found to be inconsistent wi th its obligations under the SCM Agreement.  The
parties did not disagree that the subsidies, which had been found inconsistent with the
SCM Agreement, had not been withdrawn during the reasonable period of time.  According to
Article 22.2 of the DSU, if a Member (Canada in this  case) either:  (a) "fails to bring the measure ...
into compliance" with the covered agreement - a condition the parties agree has been met in this case;or (b) "fails to comply with the recommendations and rulings within the reasonable period of time", a
condition that also had been satisfied in this case, the complaining Member (Brazil in this case) could
"request authorization from the DSB to suspend the application of concessions or other obligations
under the covered agreements".
He underlined that Brazil was not making a unilateral determination of non-compliance.
Brazil had always opposed such a course of action, as Members were aware through Brazil's
unequivocal statements before the DSB and before all other WTO bodies in which the issue had been
raised.  In the case under consideration, the two parties were in agreement that Canada had failed to
withdraw subsidies found to be inconsistent with the SCM Agreement.  The two parties agreed that
Canada had taken no action whatsoever following the adoption of the Panel Report.  The two parties
were in agreement that Canada was not in compliance with its WTO obligations.  Brazil, therefore,
was entitled to request authorization to suspend concessions pursuant to Article 22.2 of the DSU and
the DSB had to authorize Brazil's request, pursuant to Article 22.6 of the DSU, unless Canada
objected to the amount proposed by Brazil.  Thus far, Brazil had responded to the grounds raised inCanada's letter.  Not surprisingly that letter ignored the fact that this case concerned prohibitedWT/DSB/M/128
Page 3
subsidies;  export subsidies governed by Part III of the SCM Agreement.  As provided for in
Article 4.10 of that Agreement, "In the event the recommendation of the DSB is not followed within
the time-period specified by the panel ... the DSB shall grant authorization to the complaining
Member to take appropriate countermeasures, unless the DSB decides by consensus to reject the
request."  Brazil and Canada agreed that the DSB's recommendations and rulings had not beencomplied with within the reasonable period of time.  It followed that the DSB shall grant such
authorization, unless, as stated in Article 4.11 of the DSU, a party to the dispute requested arbitration
under Article 22.6 of the DSU.  He stressed that, according to Article 4.11 of the DSU, the arbitrators
would "determine whether the countermeasures are appropriate".  Thus, if Canada contested the
appropriateness of the countermeasures Brazil intended to apply – which seemed to be the case – this
issue should be decided by the arbitrators, not by  the DSB.  The questions of how Brazil based its
request to adopt countermeasures and how Brazil assessed the appropriateness of the countermeasureswould have to be addressed by the arbitrators, not by the DSB.  In concluding, he made the following
points.  First, this was not a sequencing question.  As he had pointed out earlier, this case was distinct
from previous proceedings that involved the sequencing issue because Canada had taken no action to
comply with the DSB's recommendations and rulings and admitted that no action had been taken.
Indeed, the question before the DSB at the present meeting was whether a Member that had beenfound to provide an export subsidy, had taken no action to comply with the DSB's recommendations
and rulings and had admitted the same, could preclude the complaining Member from pursuing
retaliation under Article 22 of the DSU.  The answer to this question was "no".  Second, Brazil did not
believe that any of Canada's claims were relevant.  However, it was important that Members
understood that Canada would not lose any substantive rights, if Brazil's request remained on theagenda.  Canada might still raise the issue in the Article 22.6 proceeding, which could be addressed in
detail by the arbitrators.  In short, Canada's request to remove the item from the agenda was
groundless and Brazil would not join in any c onsensus that would approve Canada's request.
The representative of Canada said that he wished to briefly respond to the statement made by
Brazil.  He said that his delegation was very specific and the letter of 21 June to the Chairman of the
DSB that the Panel had not dealt with the issue of options.  There was no Government of Canada
decision or authority with reference to options and, therefore, Canada believed that the options were
inappropriately included in Brazil's request at the presen t meeting.  He reiterated that the letter and the
comments made by his delegation were specifically directed at options, which was different from
earlier panel decisions in relation to PROEX because Brazil's decision and authority quite explicitly
covered and incorporated the same decision to be transferred on any exercise of the options.  Canadahad raised this issue with Brazil on a number of occasions and this was one of the reasons why the
consideration of this item had been postponed to see if it was possible to obtain agreement that the
options part of this request was inappropriately before the DSB.  However, it had not been possible to
obtain such an agreement.  On the basis of the discussions with Brazil, it appeared quite clear that
Brazil wished to claim in Article 22.6 proceedings th at the options were relevant even if they had not
been subsidized because they had to be factored in some sort of harm or impairment that Brazil
claimed to have suffered as a result of Canada's subsidization of the firm orders.  Brazil was free to
make this argument, whatever its merits, in Arti cle 22.6 proceedings.  However, the methodology now
advocated by Brazil was not the one considered appropriate in respect of its non-compliance in
PROEX.  Nevertheless, in seeking confirmation from Brazil as to the basis of its claim of non-compliance, Canada sought to reassure Brazil that it was not trying to preclude such an argument.  For
that reason, Canada had made it very clear in its letter of July 2002 to Brazil that the confirmation it
sought was distinct from all the options that might relate to a calculation of appropriate
countermeasures.  Nevertheless, if Brazil really considered that the determination of non-compliance
on the options was unnecessary it should concede Canada's position that no Canadian Governmentfinancing was provided in respect of the options and that they were not the subject of the DSB's
recommendations and rulings.  If Brazil were to concede this would have no effect on its calculation
of countermeasures, if the Arbitrators accepted its methodology.  The fact that Brazil would not agree
to this, showed that, quite apart from any arguments it might wish to advance in the course of
Article 22.6 arbitration, its request for countermeasures was premised in part on the allegation thatCanada had failed to withdraw imagined subsidies on the options.  Canada, therefore, would welcomeWT/DSB/M/128
Page 4
the clarifications from Brazil that this was not the case, but, thus far, Brazil had refused to provide
one.
The Chairman noted that Canada and Brazil had presented substantive arguments on item 6 of
the agenda.  He recalled that this item had been included on the agenda at the request of Brazil and
that in accordance with the Rules of Procedure for DSB meetings, the DSB may at any time amend
the agenda.  In the absence of opposition to the adoption of the agenda, the Chairman stated that the
agenda would be adopted with all the items including item 6.  He asked if any representative wished
to add any other items to the agenda under "Other Business".  The representative of the United States
indicated that her delegation wished to make a statement under "Other Business" concerning theagreement between Argentina and the United States in the case on "Argentina – Certain Measures on
the Protection of Patents and Test Data".  The representative of Canada sought confirmation from the
Chairman as to whether the exchange of views between Brazil and Canada concerning item 6 of the
agenda would be reflected in the minutes of the present meeting.  The Chairman confirmed that the
statements made by Canada and Brazil prior to the adoption of the agenda would be duly reflected inthe minutes of the meeting.
The DSB took note of the statements and adopted
 the proposed agenda with the inclusion of
the item under "Other Business" requested by the United States.
1. Surveillance of implementation of recommendations adopted by the DSB
(a) United States – Section 110(5) of the US Copy right Act:  Status report by the United States
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States1. 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 to which he had just referred be considered separately.
(a) United States – Section 110(5) of the US Copyri ght Act:  Status report by the United States
(WT/DS160/18/Add.5)
2. The Chairman drew attention to document WT/DS160/18/Add.5 which contained the status
report by the United States on progress in the implementation of the DSB's recommendations in the
case concerning Section 110(5) of the US Copyright Act.
3. The representative of the United States said that, on 13 June 2002, in accordance with
Article 21.6 of the DSU, her country had provided an additional status report in this dispute.  As noted
in the report, the United States had been engaged in discussions with the EC to find a positive and
mutually acceptable solution to the dispute.  The Un ited States was working hard to reach a mutually
acceptable arrangement consistent with WTO rules.  Since the previous status report, the US
Administration had continued to engage actively with the US Congress on this matter and looked
forward to resolving the dispute.
4. The representative of the European Communities said that even though the EC and its
member States remained concerned about the delays in the implementation of the DSB's
recommendations and rulings in this case, they noted that the US Administration was working with
the US Congress with a view to solving the disp ute.  The EC hoped to see rapid progress in that
regard.
5. The representative of Australia said that, at a number of previous DSB meetings, his country
had registered its concern about the continued delay in the United States' implementation of the DSB'sWT/DSB/M/128
Page 5
recommendations and rulings in this dispute.  Australia had also registered its concerns about the
apparent discriminatory nature of the proposed compensation arrangements that it understood had
been agreed between the United States and the EC.  Australia noted from the most recent US status
report that the US administration was continuing to  work actively with the US Congress to implement
a mutually acceptable resolution of the dispute.  However, the report contained no information on thenature of the proposed solution.  Australia would be grateful if the United States could provide this
information to the DSB.
6. The representative of the United States said that any arrangements to be reached with the EC
would be consistent with the WTO covered agreements.
7. The representative of the European Communities said that the EC was aware of its
transparency obligations under the DSU, which it had always respected.  However, at this stage there
was no agreement to notify in the context of this dispute.
8. The DSB took note of the statements and agreed  to revert to this matter at its next regular
meeting.
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States
(WT/DS136/14/Add.5 - WT/DS162/17/Add.5)
9. The Chairman drew attention to docume nt WT/DS136/14/Add.5 – WT/DS162/17/Add.5
which contained the status report by the United States on progress in the implementation of the DSB's
recommendations in the case concerning the US Anti-Dumping Act of 1916.
10. The representative of the United States said that, on 13 June 2002, her country had provided
an additional status report in this dispute, in accordance with Article 21.6 of the DSU.  As noted in
that report, bills had been introduced in both the US Senate (S.2224) and the US House ofRepresentatives (H.R. 3557) which would repeal the 1916 Act and apply to all pending court cases.
The United States would continue to work for further progress in reaching a mutually satisfactory
resolution to this dispute with the EC and Japan.
11. The representative of Japan said that, as his delegation had repeatedly stated in the DSB
meetings, Japan's goal was to obtain prompt compliance by the United States.  As he had pointed out
at the 22 May DSB meeting, the communication, dated 4 March 2002 contained in WT/DS162/21
clearly stipulated that "the arbitration proceeding may be reactivated at the request of either party after
30 June 2002, if no substantial progress has been made in resolving this dispute by that date".  He
noted that 30 June 2002 was fast approaching.  Japan urged the United States to continue its best
efforts to have the Bill repealing the 1916 Act passed by the US Congress as soon as possible.
12. The representative of the European Communities said that the EC had noted, once again, that
the US Congress had still not made progress to wards implementation of the DSB's recommendations
despite the fact that a reasonable period for implementation had originally expired in July 2001, and
had been extended until the end of 2001.  This continued lack of compliance was increasingly
worrying.  It was a bad signal for all Members with regard to compliance and the priorities of the
United States in this context.  Therefore, the EC wished to impress on the US Administration the
extreme urgency of securing a repeal of the 1916 Anti-Dumping Act.
13. The representative of Mexico recalled that his country had an interest in the prompt resolution
of this dispute.
14. The DSB took note of the statements and agreed  to revert to this matter at its next regular
meeting.WT/DSB/M/128
Page 6
2. United States – Rules of origin for textiles and apparel products
(a) Request for the establishment of a panel by India (WT/DS243/5/Rev.1)
15. The Chairman recalled that the DSB had considered this matter at its meeting on
22 May 2002 and agreed to revert to it.  He drew attention to the communication from India contained
in document WT/DS243/5 and Rev.1.
16. The representative of India said that his country was requesting the establishment of a panel
to examine the WTO-consistency of the US rules of origin relating to textile and apparel products.  He
said that India had previously expressed its concern that the relevant US legislation and administrative
practices had resulted in extraordinarily complex rules of origin for textile and apparel products under
which the criteria that conferred origin varied between similar products and processing operations.
The structure of the rules of origin, their implementation and administration, the circumstances under
which they had been adopted and their effect on the conditions of competition for textiles and apparelproducts had led India to consider that the US rules of origin were being used as instruments to pursue
trade objectives, and had created restrictive, distorting and disruptive effects on international trade.  In
India's view the US rules of origin relating to te xtile and apparel products were inconsistent with its
WTO obligations.  India had held consultations with the United States on this issue.  Unfortunately,
these consultations had not resulted in a satisfactory resolution of the dispute.  India was, therefore,requesting the establishment of a panel.  Despite disagreement expressed at the 22 May DSB meeting
over a typographical error contained in the panel request, India had submitted a revised version of its
panel request.  Therefore, it was India's understanding that the panel would be established at the
present meeting.
17. The representative of the United States said that both Section 334 of the Uruguay Round
Agreements Act (1996) and Section 405 of the Trade and Development Act of 2000 were fully
consistent with the United States' obligations under the Agreement on Rules of Origin, and the United
States was confident that a panel would so agree.  The United States noted that India had submitted a
corrected version of its panel request, and recalled the statement made by the United States at the
22 May DSB meeting that the United States would accept the establishment of a panel at the firstmeeting at which the corrected request had been considered.  Therefore, while the United States
regretted that India had chosen to continue to pursue panel proceedings, it would accept the
establishment of a panel at the present meeting;  i.e. the first DSB meeting at which India's panel
request appeared on the agenda.
18. At the present meeting, the United States also wanted to take the opportunity to respond to the
Secretariat's intervention when this agenda item had been considered on 22 May 2002.  In that
statement, the Secretariat had defended the decisi on of the Translation Division to modify India's
panel request in the circulated version, without consulting either India or the United States.  The
statement of the Secretariat in no way allayed the serious concern of the United States with this
incident.  While the United States appreciated that the Secretariat played a constructive role when,
following consultations with the submitting Member, it corrected clerical errors in certain types of
documents, it must not purport to make changes to a panel request, for whatever reason.  As theUnited States had discussed at the 22 May DSB meeting, panel requests were legal documents which
established the terms of reference of panel proceedings.  These legal documents played a central role
in the arguments of the parties and the legal deliberations of the panel, and their wording and its
meaning could decide the outcome of a dispute.  The DSU authorized Members alone to submit panel
requests.  Only the original document was the legal panel request, and the Secretariat had no basis orauthority for modifying such a document.  The Secretariat's explanations for its actions only
highlighted the risks to all Members when changes were made in the circulated version of a panel
request.  For example, the Secretariat had explained that it would only alter the circulated version
when the change involved a typographical error.  However, disputes would inevitably and needlessly
arise as to whether an alteration by the Secretariat could be justified as typographical.  It was thebetter part of wisdom, not to mention the only proper exercise of its authority, for the Secretariat toWT/DSB/M/128
Page 7
circulate a panel request exactly as submitted by the complaining Member.  When, as in the case at
hand, a simple oversight required that a panel request be revised, Members, acting in good faith, could
resolve the problem.  India and the United States had been able to do so in this case, and the United
States was confident that such situations could be  resolved amicably in the future, without improper
intervention by the Secretariat.
19. The representative of the Secretariat (Legal Affairs Division) said that that he wished to make
a few comments in response to the statement made by the United States.  First, he wished to clarify
that the change made in India's panel request had not been made by the Translation Division but in
response to a question put by the Translation Divisi on in trying to translate the matter and finding that
a particular term was missing.  It was not a de cision of the Translation Division.  Second, he also
wished to clarify that, as it had been indicated previously, the practice of the Secretariat and of the
Legal Affairs Division was to check with the part ies concerned before making changes to documents
such as a request for the establishment of a panel.  This had been done consistently over time and it
had also been done in relation to documents submitted by the United States and other countries.  In
this particular case, the Secretary had not checked with the Legal Officer or India, and as had been
stated, the Secretariat regretted this incident, and it would ensure that it did not reoccur.  However,
now the United States was saying that the Secretariat was not supposed to make any changes evenafter checking with the party concerned.  In this re gard, he said that the change had been made in
relation to the request of Canada on 21 June 2002 and this was correctly reflected in the document
circulated at the present meeting.  He noted that the Secretariat was not supposed to make any clerical
changes to typographical errors, or otherwise, even if the Secretariat were to check with the Member
concerned.
20. 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.
21. The representatives of the European Communities, Pakistan  and the Philippines  reserved their
third-party rights to participate in the Panel's proceedings.
3. United States - Definitive safeguard meas ures on imports of certain steel products
(a) Request for the establishment of a panel by China (WT/DS252/5)
(b) Request for the establishment of a panel by Switzerland (WT/DS253/5)
(c) Request for the establishment of a panel by Norway (WT/DS254/5)
22. The Chairman recalled that, at its meeting on 7 June 2002, the DSB had considered the panel
request by China and had agreed to revert to it.  Subsequently, at its meeting on 14 June 2002, the
DSB had considered the panel requests by Switzerla nd and Norway and had agreed to revert to them.
Since these three panel requests pertained to the same matter, he proposed that they be consideredtogether.
23. The Chairman drew attention to the communication from China contained in document
WT/DS252/5.
24. The representative of China recalled that with regard to the safeguard measures imposed by
the United States on imported steel products on 20 March, at the 7 June DSB meeting, China had
lodged its first request for the establishment of a panel to determine that the US safeguard measures
were inconsistent with the provisions of the GATT 1994 and of the Agreement on Safeguards.
Unfortunately, China's request had been declined by the United States at that meeting and China had
to make the request for the establishment of a panel to examine the US safeguard measures for the
second time.  He did not wish to repeat the points made by China at the 7 June DSB meeting, butreiterated that the US safeguard measures violated the United States' obligations under the WTOWT/DSB/M/128
Page 8
Agreement.  China requested that a single panel be established to examine its complaint together with
the complaints by the EC, Japan and Korea, pursuant to Article 9.1 of the DSU.
25. The Chairman drew attention to the communi cation from Switzerland contained in document
WT/DS253/5.
26. The representative of Switzerland said that, on 3 April 2002, his country had initiated the
procedures under Article 4 of the DSU, Article XXII:1 of the GATT 1994 and Article 14 of the
Agreement on Safeguards by requesting the United States to enter into consultations.  These
consultations had been held in Geneva on 11-12 April 2002, but had failed to bring about a mutually
agreeable solution.  Switzerland considered that the US measures were inconsistent with the US
obligations under the covered agreements within the meaning of Article 1.1 of the DSU and had
resulted in nullification and impairment of benefits accruing to Switzerland directly or indirectly
under such Agreements.  Switzerland claimed that the US safeguard measures were in violation of theUS obligations under the provisions of GATT 1994 and of the Agreement on Safeguards, in
particular, because:  (i) the precondition of "unforeseen developments" laid down in Article XIX:1 of
the GATT 1994 was not satisfied;  (ii) the safeguard measures had been imposed in the absence of the
requisite increase in import volume for many of the imported products under investigation and were,
therefore, inconsistent with Articles 2.1 and 4.2 of the Agreement on Safeguards;  (iii) thedetermination of the relevant domestic industries that produced like or directly competitive products
to those allegedly being imported in increased quantities, as required by Articles 2.1 and 4 of the
Agreement on Safeguards was incorrect;  (iv) the safeguard measures were inconsistent with
Article 2.1 in conjunction with Articles 2.2 and 4. 2 of the Agreement on Safeguards.  Indeed, the
requirement of parallelism between the scope of the investigation of the injury arising from importedproducts and the scope of the safeguard measures was not met;  (v) the United States had failed to
demonstrate, as required by Articles 2.1 and 4.2(b) of the Agreement on Safeguards, causality
between the increased imports and serious injury.  The United States had also failed to ensure that
serious injury caused by factors other than increased imports was not attributed to increased imports;
(vi) the safeguard measures had exceeded the extent necessary to prevent or remedy serious injury andto facilitate adjustment, and thus were in violation of Article 5(1) of the Agreement on Safeguards.
The safeguard measures were not limited to the serious injury caused by increased imports;  (vii) the
United States violated Article 8.1 of the Agreement on Safeguards because it had failed to maintain a
substantially equivalent level of concessions and other obligations between the exporting Member and
the United States;  and (viii) neither the Report of the Investigation nor the other relevant documents
set forth adequately the findings and reasoned co nclusions on all pertinent issues of fact and law.
They had failed to outline the justification for the measures actually imposed and for all the otherelements mentioned above, as required by Articl e 3.1 of the Agreement on Safeguards.  Neither the
Report of the Investigation nor the other relevant documents provided the analysis and demonstration
required by Article 4.2(c) of the Agreement on Safeguards.  In order to solve this dispute, Switzerland
was requesting that a panel be established with regard to the definitive safeguard measures imposed
by the United States on imports of steel products.  At its meeting on 14 June 2002, the DSB haddecided that the panel established on 3 June to examine the EC's complaint would also deal with the
complaints by Japan and Korea.  It was Switzerland's understanding that a single panel would
examine all the complaints in accordance with Article 9.1 of the DSU and that the panel established
on 3 June at the request of the EC would also examine the complaint by Switzerland.
27. The Chairman drew attention to the communication from Norway contained in document
WT/DS254/5.
28. The representative of Norway said that on 14 June 2002, Norway had requested the
establishment of a panel to examine the US definitive safeguard measures on imports of certain steel
products.  As the dispute had not been solved, Norway was requesting, for the second time, that the
panel be established to examine this matter.  Norway maintained its view that the United States was inbreach of several provisions of the Agreement on Safeguards, as well as the GATT 1994.  She did not
wish to enter into detail, as the basis of Norway's complaint was outlined in its written request inWT/DSB/M/128
Page 9
document WT/DS254/5.  Norway was requesting that a panel be established in accordance with the
procedures laid out in Article 9.1 of the DSU, and that the complaint be examined by a single panel,
namely, that established at the 3 June DSB meeting at the request of the EC.
29. The representative of the United States said that it was regrettable that China, Norway and
Switzerland had chosen to challenge the US safeguard measures.  These measures were fully
consistent with the applicable portions of the Safeguards Agreement and the GATT 1994, and the
United States trusted that the dispute settlement process would ultimately reach the same conclusion.
The United States understood that a panel would be established at the present meeting.  Consistent
with Article 9.1 of the DSU, the United States believed that these requests should be referred to the
single panel already established at the request of the EC, Japan and Korea so that the single panel
would consider all six panel requests.
30. The representative of the European Communities said that the EC had taken note of the
requests for the establishment of a panel against the US steel safeguards following three additional
complaints and welcomed the application of Article 9.1 of the DSU in this case.  Thus, a panel would
be established for all the co-complainants involved in the joint consultations against the US steel
safeguards held in Geneva on 11-12 April 2002.  The EC also recalled that, on 13 June 2002,
New Zealand and Brazil had held consultations under the DSU with the United States on the samematter and on the basis of similar claims.  The EC expected that all the DSU procedures, including
those launched by New Zealand and Brazil, would proceed expeditiously.
31. The representative of Japan said that his country agreed to the establishment of a single panel
in accordance with Article 9.1 of the DSU.
32. The representative of Korea said that his country also agreed to the establishment of a single
panel in accordance with Article 9.1 of the DSU.
33. The DSB took note of the statements and agreed  that the requests by China, Switzerland and
Norway for the establishment of a panel with standard terms of reference are accepted.  The DSB
further agreed that, as provided for in Article 9.1 of the DSU in respect of multiple complainants, the
Panel established at the 3 June DSB meeting to examine the complaint by the European Communities
contained in document WT/DS248/12, which pursuant to the DSB's decision on 14 June 2002 had
also been requested to examine the complaint by  Japan contained in document WT/DS249/6 and the
complaint by Korea contained in document WT/D S251/7, would also examine China's complaint
contained in document WT/DS252/5, Switzerland's complaint contained in document WT/DS253/5
and Norway's complaint contai ned in document WT/DS254/5.
34. The Chairman said that those delegations who had reserved their third-party rights to
participate in the proceedings of the Panel established at the 3 June and then subsequently on
14 June 2002 DSB meetings shall be considered as third parties in the Panel established at the present
meeting.
35. The representative of Cuba reserved third-party rights to participate in the Panel's
proceedings.
4. Turkey – Certain import procedures for fresh fruit
(a) Request for the establishment of a panel by Ecuador (WT/DS237/3)
36. The Chairman drew attention to the communication from Ecuador contained in document
WT/DS237/3.
37. The representative of Ecuador said that as outlined in document WT/DS237/3, Ecuador was
requesting the DSB to establish a panel in order to settle the dispute concerning the application ofWT/DSB/M/128
Page 10
Turkey's current procedures for the import of bananas.  He recalled that Ecuador had entered into
consultations with Turkey on this matter more than 20 months ago, under the Committee on Sanitary
and Phytosanitary Measures.  These consultations had been held on 17 September 2001, within the
framework of the dispute settlement system.  Unfortunately, neither at the bilateral meetings, nor in its
replies to the questions posed by Ecuador at the Committee on Sanitary and Phytosanitary Measures,or in the course of the consultations, had Turkey b een able to justify the procedures that it applied to
its system of Control Certificates for imports of fresh fruit and, specifically bananas as
WTO-consistent.  In document WT/DS237/3, Ecuador explained in detail the basis for its claim.  It
considered that Turkey applied its Control Certificate system in a manner that constituted a disguised
restriction on imports of bananas inconsistent with WTO rules.  Ecuador considered in particular that:
(i) the quantitative limitations on the importation of bananas made effective through the Control
Certificates were inconsistent with Article 4.2 of the Agreement on Agriculture and Article XI:1 ofthe GATT 1994;  (ii) the administration of the Control Certificate system – in particular the delays in
issuing such Certificates, the lack of predictability as to the quantities and the time-periods for which
Certificates were issued and the requirement that a Certificate must have been used before a new one
was issued – could not be reconciled with the requirements set out in Articles 1.2, 1.3 and 1.6 of the
Agreement on Import Licensing Procedures and in Article 2.3 of the SPS Agreement including therequirement that the procedures for the application of import licenses shall be "as simple as possible"
and that sanitary and phytosanitary measures shall not be "applied in a manner which would constitute
a disguised restriction on international trade";  (iii) Turkey's failure to apply to domestic bananas a
testing and certification procedure equivalent to that applied to bananas from other Members and to
allocate access to its laboratory capacity appropriately between importers and domestic producers wasinconsistent with its obligation under Article 8 and paragraph 1 of Annex C of the SPS Agreement
and Article III:4 of the GATT 1994;  and (iv) Turkey's failure to publish the quantities of domestic
and imported bananas that its laboratories accept for inspection and for which Control Certificates
were issued violated Turkey's obligations under Article 7 and paragraph 1 of Annex B of the
SPS Agreement.  Ecuador was, therefore, requesting the DSB to establish a panel at the presentmeeting to settle this dispute.
38. The representative of Turkey expressed his country's regret that Ecuador had chosen to
request the establishment of a panel to examine this issue.  Although the Turkish legislation and the
application procedures that had been called into question were compatible with WTO rules, Turkey
was open to finding a solution through bilateral consultations.  Consequently, Turkey was not
prepared to accept the establishment of a panel at the present meeting.
39. The DSB took note of the statements and agreed  to revert to this matter.
5. Peru – Tax treatment on certain imported products
(a) Request for the establishment of a panel by Chile (WT/DS255/3)
40. The Chairman drew attention to the communication from Chile contained in document
WT/DS255/3.
41. The representative of Chile said that on 29 December 2001 Peru had amended the tax regime
applicable to a long list of products, including fish, milk, fruit and vegetables and tea.  Sales within
the country as well as imports of these products had, until then, been exempted from the General Sales
Tax.  From that date onwards, only domestic sales had been exempted.  Consequently, the import of
these goods had become subject to the General Sales Tax, which was fixed at 18 per cent.  On
22 April 2002, Chile had requested consultations with Peru, which had been held in Lima on 9 May.Although the parties had had the opportunity to gain a better understanding of their respective
positions, they were unfortunately unable to reach a mutually satisfactory solution.  Chile considered
that the exemption from the General Sales Tax only of sales in Peru of certain products but not of
imports was inconsistent with Article III of the GATT 1994.  This discrimination affected Chilean
exports of various products, in particular – but not exclusively – apples, table grapes and peaches.WT/DSB/M/128
Page 11
Consequently, Chile was obliged to request the establishment of a panel, with the standard terms of
reference set out in Article 7 of the DSU.  Throughout this dispute, Chile had invoked the rules on
cases of urgency concerning perishable goods which were set out in Article 4 of the DSU.  It was
worth noting that these rules were applicable during the panel stage.  Finally, Chile was still open to
finding a bilateral solution that was compatible with the WTO Agreements.
42. The representative of Peru said that as soon as her country had become aware of the concerns
raised by Chile about Law 27.614 of 28 December 20 01 amending the Single Codified Text of the
Law on the General Sales Tax and Selective Consumption Tax (TUO), it had agreed to hold
consultations with Chile on this matter.  During the consultations, which had been held in Lima on
9 May 2002, a very positive exchange of information had taken place between the competent
authorities of both countries, regarding the grounds for Chile's concerns.  The meeting in Lima was
intended to dispel these concerns as swiftly as possible.  On numerous occasions, Peru had made itclear that it was taking a constructive approach to wards reaching a mutually acceptable solution in the
shortest possible time and was working to this end.  Under these circumstances, Peru considered
Chile's decision to request the establishment of a panel to be hasty and, therefore, could not agree to
the establishment of a panel at the present meeting.
43. The DSB took note of the statements and agreed
 to revert to this matter.
6. Canada - Export credits and loan guarantees for regional aircraft
(a) Recourse by Brazil to Article 4.10 of the SCM Agreement and Article 22.2 of the DSU
(WT/DS222/7 and Corr.1)
44. The Chairman recalled that at its meeting on 3 June 2002, the DSB had agreed to defer
consideration of this item until 24 June 2002.  He  drew attention to the communication from Brazil
contained in document WT/DS222/7 and Corr.1.  He also recalled that at the outset of the meeting an
exchange of views had taken place between the parties to the dispute.  To this end, substantive
arguments had been made which would be reflected in the minutes of the meeting.
45. The representative of Brazil said that the Panel in the case on:  "Canada - Export Credits and
Loan Guarantees for Regional Aircraft" had found that  a number of transactions concerning Canadian
exports of regional aircraft were inconsistent with Article 3.1(a) of the Subsidies Agreement.  The
Report of that Panel had been adopted by the DSB on 19 February 2002.  The corresponding DSB's
recommendations had established that Canada had to withdraw the identified prohibited subsidies
within 90 days.  He noted that the 90-day period had expired on 20 May 2002.  At the 22 May DSB
meeting Canada had informed Members that it had not taken action with regard to any of the
transactions found to be inconsistent with its obligations under the SCM Agreement.  Canada had not
complied with the DSB's recommendations within the time-period specified by the Panel and theDSB, pursuant to Article 4.10 of the SCM Agreement and Article 22.2 of the DSU.  Therefore, on
23 May 2002, Brazil had submitted its request for the DSB's authorization to take appropriate
countermeasures.  Since the matter had been deferred to the present meeting, Brazil was requesting
that, pursuant to Article 22.2 of the DSU and Article 4.10 of the SCM Agreement, the DSB grant
authorization to Brazil to take appropriate counter measures, in the form set out in Brazil's request
contained in WT/DS222/7 and Corr.1 in the amount of US$3.36 billion.
46. The representative of Canada said that in response to Brazil he wished to make four principal
points.  First, as Members were aware, in its letter to the Chairman, dated 21 June 2002, Canada was
requesting that this item be removed from the agenda, because Brazil had not met the legal
preconditions to having its request considered by the DSB.  This continued and remained to beCanada's view.  Therefore, at the present meeting, he wished to take the opportunity to explain
Canada's position.  He recalled that Article 3.7 of the DSU stated that the suspension of concessions
or other obligations was a remedy of "last resort".  It was therefore incumbent on the DSB, in
considering retaliation requests, to ensure that the complaining party had satisfied the preconditions toWT/DSB/M/128
Page 12
the invocation of these provisions.  Brazil had invoked Article 22.2 of the DSU and Article 4.10 of the
SCM Agreement in requesting authorization to take "appropriate countermeasures" against Canada in
the amount of US$3.36 billion.  Article 22.6 provided that the DSB would grant authorization for
retaliation, or the matter would be referred to arbitration, provided that "the situation described in
paragraph 2 occurs".  Article 22.2 – the precondition cited in Article 22.6 – referred in part to theMember concerned having failed to comply with the DSB's recommendations and rulings.  Such a
precondition had not been fully met in this case, because Brazil's request to take countermeasures was
based, in part, on Brazil's allegation that Canada had failed to withdraw subsidies in respect of certain
aircraft options in a transaction considered by the panel in this dispute.  However, neither the panel
nor the DSB had found that these options were being subsidized, and, in fact, they were not being
subsidized.  Therefore, as far as this part of Brazil's claim was concerned, there were no subsidies for
Canada to withdraw, and no DSB recommendations or rulings with which Canada was required tocomply.  As he had already stated, Brazil sought authorization to take countermeasures of
US$3.36 billion.  Brazil had arrived at this figure by taking the announced sales value of one of the
transactions at issue in this dispute, the Air Wisconsin transaction, and had multiplied it by two.  Why
had Brazil multiplied the announced sales value by two?  Because the contract for the sale of aircraft
to Air Wisconsin provided that in addition to its firm order for up to 75 aircraft, Air Wisconsin couldexercise options on another 75 aircraft.  However, the subsidy Canada had been asked to withdraw in
the Air Wisconsin transaction involved only the Canada Account financing for the firm orders.  That
financing was what the panel, and subsequently the DSB, had identified as a prohibited export
subsidy.  Neither the panel nor the DSB had made any finding with respect to Canada Account
financing for the options because there was no Canada Account financing for the options.  Therefore,to the extent that Brazil's request involved a situation that had not occurred as described in
Article 22.2 of the DSU, Canada believed that Brazil's request was not properly before the DSB, but
respected the Chairman's decision.  Brazil was not entitled to make a request for countermeasures on
the basis of Canada's alleged failure to withdraw subsidies that did not exist, that had not been found
to exist, and in respect of which neither the pane l nor the DSB had made any recommendation.  In an
effort to avoid the problem like the one before the DSB at the present meeting, Canada repeatedly
sought assurances from Brazil over the past two weeks that it was not alleging non-compliance by
Canada in respect of these options.  Unfortunately, Brazil had refused to provide any such assurances.
For example, on 11 July 2002, Canada had sent a letter to Brazil seeking confirmation that there was
no issue of non-compliance in respect of the options themselves, as distinct from how the options
might relate to a calculation of appropriate countermeasures.  Brazil would not provide such
confirmation.
47. In an e-mail exchange that had followed, Canada had again asked Brazil to acknowledge that
the Panel's findings and the DSB's recommendations with respect to the Canada Account financing to
Air Wisconsin related only to the up to 75 aircraft and that the DSB had made no recommendation
with respect to the options.  Brazil had replied that it would not acknowledge this.  The clear
implication of Brazil's refusal was that Brazil's request was indeed based, in part, on an allegation thatCanada had failed to withdraw non-existent subsidies, in respect of which the DSB had made no
recommendation.  Second, Canada was concerned that Brazil had sought to proceed directly to
Article 22 retaliation without seeking an Article 21.5 "compliance panel" on the options issue.  Even
if the DSB could consider a request for countermeasures based, in part, on something that was not
found to be inconsistent with a covered agreement, Brazil's insistence on doing so resulted, at aminimum, in a disagreement between the parties as to whether or not Canada had complied with the
DSB's recommendations and rulings.  Therefore, Brazil had to take this issue to an Article 21.5 panel.
Indeed Canada had proposed such a course to Brazil, but Brazil had rejected this suggestion.  Even if
an Article 22.6 arbitration could be established on the basis of Brazil's request, in order to preserve the
important limitation that Members could not unilaterally determine the non-compliance of otherMembers, it would have to be suspended until Brazil had obtained a multilateral determination as to
Canada's compliance in respect of the alleged financing of the optioned aircraft.  Thus, on the one
hand, Brazil had made Canada's alleged failure to withdraw subsidies in respect of the options part of
its justification for seeking countermeasures.  On the other hand, although Canada denied that there
was any recommendation to withdraw such subsidies and denied that such subsidies even existed,WT/DSB/M/128
Page 13
Brazil had refused to refer the matter to a compliance panel.  He was certain that Members would
agree that it was not for Brazil – or any other complaining party – to determine unilaterally that
another Member had not complied with a DSB recommendation in a dispute.  Indeed, he recalled
what Brazil had stated in the DSB in early 1999, in the context of the Banana dispute.  According to
the minutes of that DSB meeting, contained in document WT/DSB/M/54, Brazil had stated asfollows:  "In the absence of a DSB's recommendation on compliance there was a risk that the DSB
would become an instrument for Members to take  decisions regarding suspension of concessions.
The principle of automaticity and the negative consensus rule would cease to be viewed as an
improvement to the dispute settlement mechanism.  It would cause grave concern."  Canada agreed
entirely with this statement.  In the present ca se, Brazil was seeking to have the DSB serve as an
instrument for Brazil's own unilateral decision to suspend concessions, despite the disagreement
between Canada and Brazil on the issue of options.  Just as Brazil had stated in 1999, this indeed"causes us grave concern".  Brazil could not have it both ways.  Canada was asking Brazil to limit its
request for countermeasures to recommendations in respect of which Canada had not contested its
non-compliance.  If Brazil did that, then an Article 22.6 arbitration could proceed on that basis.
However, so long as there remained a disagreement between the parties as to the extent of Canada's
non-compliance, Brazil could not make unilateral determinations.  It should and must go to anArticle 21.5 panel.  Canada would have greatly pref erred to avoid the procedural problems faced by
Members at the present meeting.  All it would have taken – all it still would take – was a simple
acknowledgement by Brazil that Canada was not required to comply by withdrawing subsidies that
did not exist.  Alternatively, Brazil could refer this matter to an Article 21.5 panel.  Therefore, Canada
awaited Brazil's response.  Third, he wished to put Brazil's request into some perspective.  He recalledthat there had been no fewer than five separate rulings against Brazil's programme PROEX:  twice by
the original Panel, twice by the A ppellate Body and once by arbitration.  As a result of Brazil's failure
to withdraw its illegal PROEX export subsidies on regional aircraft, the DSB had granted Canada
authorization to take countermeasures against Brazil in the amount of Can$344.2 million per annum.
That was an historically large retaliation figure, but the arbitrators based it on Brazil's failure towithdraw its subsidies on 1118 aircraft.  Now, in respect of approximately one-tenth that number of
aircraft, Brazil was asking for authorization to take approximately fifteen times the level of
countermeasures.  And more than half of the aircraft covered by Brazil's request were the options that
were not being subsidized.  Even if the options were included – and Canada's position on this issue
was clear – the dollar figure cited by Brazil in its request was ridiculously high.  If this matter reached
an Article 22.6 arbitration, Canada was confident that the arbitrators would agree with Canada's
position in this regard.  Finally, to end on a more positive note, he reminded Members that Canadahad not implemented its authorized countermeasures.  Moreover, as Canada had described at previous
DSB meetings it was working with Brazil toward a re solution of the aircraft dispute, one that would
encompass both Canadian and Brazilian programmes.  The most recent round of negotiations had
been ongoing since November 2001, and the next meetings were scheduled for the week of 8 July in
Ottawa.  Canada believed that the broader ongoing discussions between the parties were a healthyturn of events in this long-standing dispute between the two countries.  Despite the procedural
problem that Brazil had brought upon the DSB at the present meeting, Canada continued to hope that
the two countries could soon agree to a satisfactor y and  forward-looking solution to this dispute.
48. The representative of Brazil said that despite his earlier clarifications concerning the grounds
of Brazil's request for authorization to adopt countermeasures, Canada insisted on making a linkage
between the request circulated by Brazil and the issue of options.  At this point in time, he wished to
recall two points that had already been made.  One that Brazil had never made the linkage between the
subsidies granted to options and countermeasures suggested by Brazil.  Two, all the issues raised by
Canada at the present meeting were the issues that had to be addressed by the arbitrators not by the
DSB.  As it had been mentioned with regard to the question of unilateral determination of compliance,he reiterated that Brazil was not making any unilateral determination of non-compliance because
Brazil had always opposed such a course of action as all Members were aware from Brazil's
unequivocal statement before the DSB.  The two parties agreed that Canada had failed to withdraw
the subsidies found to be inconsistent with the SCM Agreement and they agreed that Canada had
taken no action following the adoption of the Panel Report.  Furthermore, the parties agreed thatWT/DSB/M/128
Page 14
Canada was not in compliance with its obligations and therefore Brazil had the right to request
authorization to suspend concessions pursuant to  Article 22.2 of the DSU and the DSB would have to
authorize Brazil's request.  Therefore, at the present meeting, Brazil would not engage in a discussion
that did not belong to the DSB.  He recalled that  Brazil's request to adopt countermeasures stood and
that this request would have to be approved by the DSB unless Canada requested arbitration underArticle 22.6 of the DSU.
49. The representative of the European Communities said that the EC had noted carefully the
statements made by both parties, in particular prior to the adoption of the agenda.  It seemed,
however, that there was a divergence of views between the two parties as to the extent of compliance
or non-compliance.  This case raised a difficult sy stemic question regarding the relationship between
Articles 21 and 22 of the DSU.  Therefore, the way in which the DSB would address this issue should
be without precedent for future cases.  In any event there were two fundamental principles that shouldbe respected:  Article 22 arbitration might only be established to the extent that the defendant, in this
case Canada, accepted that it had not complied with the Panel's recommendations.  The mandate of
the arbitrators should be limited to establish a level of nullification and impairment in relation to
measures for which Canada had accepted non-compliance.  Arbitrators might not seek to resolve a
dispute among the parties as to the extent of compliance.  Furthermore, if there was a dispute as toextent of compliance it would be appropriate to refer such an issue to a compliance panel.
50. The representative of the United States said that she first wished to make a statement with
regard to the discussion that had taken place prior to the adoption of the agenda and then she would
pose some questions to Canada and Brazil.  The US position on the authority of an Article 22
arbitrator was long-standing and well-known.  As pr evious arbitrators and the Panel in "United States
– Import Measures" had correctly concluded, part of the mandate of the arbitrator was to determine
the level of nullification or impairment as the first step in determining whether this level was
equivalent to the proposed level of the suspension proposed.  The Article 22 arbitrator could
undertake and had, in the past, undertaken such an examination.  Likewise an arbitrator would
necessarily determine the level of nullification or impairment based on an examination of the effectsof the measure which was the subject of the DSB's recommendations and rulings.  To the extent that
there was a disagreement on whether certain effects in fact resulted from that or some other measure,
the arbitrator had to, in order to determine the level of nullification or impairment, resolve that
disagreement.  This differed little, if at all from the types of issues Article 22 arbitrators had
considered in the past in attempting to reconcile conflicting assumptions and calculations of the
parties regarding the level of nullification or impairment.
51. The United States recalled the statement made by the Chairman at the 3 June DSB meeting
concerning the extension of the deadlines in the dispute under consideration.  The United States
would first like to reaffirm that it supported the ab ility of parties to reach agreements, such as that
between Canada and Brazil, which provided additional time to allow parties to a dispute to reach a
mutually satisfactory solution.  At the 3 June 2 002 DSB meeting the Chairman had stated that:  "Any
time-periods that may apply to this request [of Brazil] and its approval by the DSB are extendedaccordingly."  There were two issues raised in the Chairman's statement that might benefit from
clarification.  First, with respect to extending the deadlines, the United States noted that footnote 6 of
the SCM Agreement authorized the parties to extend "any time-periods mentioned in this Article" by
"mutual agreement".  Accordingly, the United States considered that footnote 6 authorized the parties
to extend these deadlines without requiring action by the DSB.  The United States understood that inthis instance Brazil had already reached agreement with Canada to extend the deadlines.  She asked
the representatives of Brazil and Canada to confirm that they did not intend the Chairman's statement
to set a precedent under which action by the DSB was necessary to extend the deadlines mentioned in
Article 4 of the SCM Agreement.  In other words, was this a situation specific to this particular
dispute and not intended to be a precedent for any other dispute?  Second, she asked Brazil andCanada to clarify that the time-period at issue in the Chairman's statement was the time-period in
Article 22.6 of the DSU for the DSB to grant a request for authorization to suspend concessions.WT/DSB/M/128
Page 15
52. The representative of Canada, in response to the questions raised by the United States,
recalled that as indicated at the 3 June DSB meeting, the parties to the dispute had entered into the
agreement in order to gain additional time to cont inue discussions with a view to resolving some
procedural questions in this dispute.  This was intended as a case-specific solution, without intending
to set a precedent for future cases.  Also, Cana da wished to confirm its understanding that the
reference to time-periods in the Chairman's statem ent was to the time-period in Article 22.6 of the
DSU for the DSB to grant a request for authorization to suspend concessions.  This was without
prejudice to Canada's position on the broader question of the application of the time-period set out in
the first sentence of paragraph 6 of Article 22.  In addition, Canada had clearly stated in its letter of
21 June 2002 in the final paragraph that if this issue remained on the agenda and indeed it remained,
that in accordance with Article 22.6 of the DSU and Article 4.11 of the SCM Agreement, the matter
would be referred to arbitration.
53. The representative of Brazil said that his country was in agreement with the statement made
by Canada with regard to the two questions raised by the United States and that this was without
prejudice to Brazil's position on the broader question of the application of the time-periods set out in
the first sentence of paragraph 6 of Article 22 of the DSU.
54. The Chairman said that on the one hand Brazil had asked the DSB to suspend concessions
and on the other hand there was Canada's request contained in document WT/DS222/8 that the matter
be referred to arbitration.  In light of this, he proposed that the matter raised by Canada in document
WT/DS222/8 be referred to arbitration.
55. The DSB took note of the statements and it was agreed  that the matter raised by Canada in
document WT/DS222/8 is referred to arbitration, in accordance with Article 22.6 of the DSU.
7. Proposed nominations for the indicative list of governmental and non-governmental
panelists (WT/DSB/W/196)
56. The Chairman drew attention to document WT/DSB/W/196 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 document WT/DSB/W/196.
57. The DSB so agreed.
8. Argentina – Certain measures on the protection of patents and test data
(a) Statement by the United States
58. The representative of the United States said that on 31 May 2002, her country and Argentina
had jointly notified the DSB of an agreement reached in April 2002 in Buenos Aires, in which most of
the claims in the dispute under consideration had been resolved (WT/DS196/4).  This agreement
reflected a commitment on both sides to use creative approaches in solving vexing trade issues.  Itwas a culmination of three years of consultations, and had allowed the two countries to realize the
progress that had been made during this period.  In the joint notification to the WTO, Argentina had
clarified how certain aspects of its intellectual pr operty regime operated so as to conform with the
obligations of the TRIPS Agreement.  For instan ce, Argentina had clarified that its competition
authority had to first make a finding of violation under its competition law before a practice could beconsidered anti-competitive under its patent law.  It also clarified that its patent law did not permit the
importation of patented products by unauthorized third parties.  Likewise, it had clarified that only
third parties who had completed investments in preparation for using a patented invention prior to
1 January 1995, could continue to use the invention upon payment of fair and reasonable
remuneration to the patent holder.  In addition, Argentina had agreed to submit to the Congress anamendment to its patent law related to issues such as product by process patent protection,
preliminary injunctions, and the shifting of the burden of proof in process patent infringement cases.WT/DSB/M/128
Page 16
The United States appreciated the cooperative spirit in which the consultations to date had been
conducted.  The United States hoped this spirit would carry forward in the consultations to resolve the
remaining issues in the dispute according to the modalities agreed upon in the agreement that the
parties had notified to the DSB.  In this regard , the United States noted with concern that the
Argentine Supreme Court had recently overturned an appeals court decision that would havepermitted adding product claims to pending process patent applications.  The United States hoped to
resume the consultations as quickly as possible to address this issue.
59. The representative of Argentina said that on 31 May 2002, the United States and Argentina
had jointly notified the DSB of an agreement reached in April 2002 in Buenos Aires, in which most of
the claims in the dispute had been resolved.  This agreement reflected a commitment on both sides to
use creative approaches in solving complex legal and trade issues.  As the United States had stated,
the agreement was the culmination of three years of intensive consultations.  In the joint notificationto the WTO, Argentina had clarified how certain aspects of its intellectual property regime operated
so as to conform with the obligations of the TRIPS Agreement.  The United States recognized that the
Argentine Intellectual Property Legislation on compulsory licenses (Article 31(k), exclusive
marketing rights (Articles 70.8 and 70.9), import restrictions (Articles 6 and 28.1) and certain aspects
of the transitional patents legislation (Article 70.4) were consistent with Argentina's obligations underthe TRIPS Agreement.  Argentina did not consider it necessary to add any further clarification to the
text of the Agreement notified, which spoke for itself and represented the complete expression of the
common understanding reached by both Parties.  In addition, Argentina had agreed to submit to its
National Congress an amendment to its Patent Law in connection to product by process patent
protection, preliminary injunctions and the shifting of the burden of proof in process patentinfringement cases.  Argentina and the United States had agreed that the matters related to certain
aspects of transitional patents and to the protection of test data against unfair commercial use shall be
subject to the conditions set forth in the respectiv e paragraphs of the Agreement.  In particular,
concerning transitional patents (obligations under Article 70.7 of the TRIPS Agreement), both Parties
had agreed that Argentina would meet its WTO obligations on this matter through its legal system andpractices, including decisions of the Supreme Court of Justice, an independent branch of government
according to its constitutional system.  The decision by the Supreme Court mentioned by United
States had addressed this issue.  Argentina appreciated the cooperative spirit in which the
consultations had been conducted.  It hoped that this spirit would continue to prevail during the next
phase leading to the implementation of the mutually  agreed solution, according to the conditions set
forth in the notification circulated to DSB.
60. The DSB took note of the statements.
__________