RESTRICTEDWORLD TRADE
ORGANIZATIONTN/DS/M/1
12 June 2002
(02-3247)
Special Session of the Dispute Settlement Body
16 April 2002
MINUTES OF MEETING
Held in the Centre William Rappard
on 16 April 2002
Chairman:  Mr. Péter Balás (Hungary)
Subjects discussed: Page
1. Confirmation of Chairman ..................................................................................................... .1
2. Adoption of agenda........................................................................................................... ........1
3. Open-ended discussion ........................................................................................................ .....1
4. Discussion of proposals submitted by delegations ...............................................................16
5. Other business............................................................................................................... ..........27
(a) Participants and observer s in the nego tiations ..........................................................................27
(b) Scheduling of meetings...................................................................................................... .......28
1. Confirmation of Chairman
1. The Special Session of Dispute Settlement Body confirmed Ambassador Péter Balás of
Hungary as Chairman of the body.
2. Adoption of agenda
2. The Chairman drew attention to the proposed agenda contained in document TN/DS/W/4 and
said that two substantive items had been proposed fo r consideration at the present meeting:  (i) open-
ended discussion;  and (ii) discussion of proposals submitted by delegations.  He said that these two
items reflected the two-track approach under which initial informal consultations had been held.  This
approach involved a general discussion of the issues under Track I and a discussion of specific
proposals submitted by delegations under Track II.  He further stated that he would take up two issuesunder "Other Business":  (i) participation and observership in the negotiations;  and (ii) schedule of
meetings.  He then proposed that the Special Session of the DSB agree to adopt the agenda contained
in document TN/DS/W/4.
3. It was so agreed.
3. Open-ended discussion
4. The Chairman recalled that the objective of the two-track approach was to enable delegations
to have broad-ranging discussions on general issues concerning the goals and scope of the DSU
negotiations under the existing mandate.  These discussions should give greater clarity to whichTN/DS/M/1
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rubrics or issue-areas negotiating proposals submitted by participants would fall under.  It was his
expectation that work under Track I would gradually be overtaken by discussions of specific
proposals under Track II.  At the present meeting, he wished to invite delegations to provide
preliminary views on these general questions.  He recalled that the discussion under Track I, which
had taken place in informal meetings held in March 2002, had already provided some indicationsregarding perceived goals of the negotiations.  However, a number of delegations had not yet fully
elaborated on their approach.  Therefore, the present meeting would provide an opportunity for
delegations both to confirm and to further clarify their positions on the approaches and goals of the
negotiations.  Time was of the essence and Members would need to work diligently and efficiently to
meet the May 2003 deadline.  He then invited delegations to provide their views on whether general
discussions under Track I would be necessary in the future.
5. The representative of Canada said that his country agreed with the Chairman's suggestion as
to the conduct of the negotiations, namely, to proceed along two tracks.  Track I being reserved for a
general discussion of the issues and Track II dedicated to specific proposals.  Canada expected these
two Tracks to proceed simultaneously and believed that the general discussion envisaged under
Track I would help build the consensus needed to move forward on specific proposals under Track II.
6. He recalled that during informal meetings, Canada had provided an early indication of its
views on priority issues for the negotiations.  While not wishing to repeat that list, Canada wished to
highlight at the present meeting some key aspects of it.  The list was neither definitive nor exhaustive.
An important priority for Canada in the negotiations was to enhance the implementation and
compliance with the DSB's recommendations and rulings.  It was necessary for the dispute settlement
mechanism to offer greater incentives to use compensation and other alternatives to retaliation.Canada also wished to develop procedures for the lifting of retaliatory measures, including clear
procedures for resolving any disputes concerning compliance with the DSB's recommendations.
Canada also attached priority to the sequencing issue and would like it to be resolved during the
negotiations.  He noted that the informal DSB meeting held on 14 March 2002 had demonstrated that
this issue remained a high priority for a large number of delegations.  Since 1999 Members had madesignificant efforts to settle this issue and they should capitalize on this earlier work and come up with
a text-based solution to this problem.
7. In previous meetings, Canada had outlined issues that could be addressed to make the dispute
settlement process more fair and efficient, including streamlining the front end of the dispute
settlement process, enhancing consultations, consolidating the oral hearing process, providing remand
authority to the Appellate Body and developing meaningful procedures to provide for expedited
dispute settlement in urgent cases.  It had also indicated that it was willing to consider proposals fromother Members to establish a permanent or semi-permanent Panel body, and to increase the size of the
Appellate Body.  Enhancing the transparency of the dispute settlement process was also a priority for
Canada.  It supported refinements to the DSU provisions to ensure that submissions to panels and the
Appellate Body were available to the public and was in favour of more open panel proceedings.
However, initiatives to be undertaken had to ensure effective protection for business confidentialinformation.  A number of delegations had noted  that the WTO dispute settlement system was
working well.  Canada shared that assessment, but experience demonstrated that certain aspects of the
system should be improved.  His country looked forward to workin g closely with other Members to
effect these improvements so that the system would continue to serve all well.
8. The representative of Japan said that his country supported the Chairman's proposal to pursue
a two-track approach, namely, general discussions on the issues of interest to Members under Track I
and more focused discussions on specific proposals in parallel under Track II.  Japan believed that, in
due course, there would be a gradual shift from Track I to Track II, especially in light of the limited
period of time for the completion of negotiations.  In this regard, it was encouraging that specific
proposals had already been submitted by the EC, Thailand and the Philippines.  Japan was workingwith other countries to put forward, in the very near future, a proposal focussing mainly on the issueTN/DS/M/1
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of sequencing.  Japan believed that the issue of sequencing was one of the priorities to be addressed in
the DSU negotiations.  It shared the commitment of Members to achieve improvements and
clarifications in this area and intended to engage in active and open dialogue on this issue in close
cooperation with other Members.  However, at the same time, this did not, in any way, preclude the
possibility of submitting proposals on other issues, either individually or collectively.  Japan wasready to discuss specific proposals already made or to be made by other Members so that the DSU
negotiations could cover a wide range of issues on which consensus could be reached.
9. He noted that among the issues raised in the past, compliance seemed to be an area where an
improvement of the DSU was most urgently needed.  In Japan's view, efforts should be focused on the
relevant provisions of the DSU dealing with compliance.  In the past seven years of the functioning of
the DSU many difficult cases involving Article 21.5 panels had reached the stage of the last resort;
i.e. the suspension of concessions.  Therefore, an improvement of the relevant provisions wouldcontribute to rectifying the existing deficiency.  It was Japan's preliminary view that such an
improvement could be achieved to a considerable extent by pursuing two goals:  (i) increasing the
quality of the panel proceedings and of panel reports;  and (ii) strengthening the surveillance of
compliance.  With regard to the first goal, he noted that developing-country Members had now
become frequent users of the dispute settlement system.  This was a welcome development but, as aresult, the number of cases to be examined by panels had increased.  Findings made in such cases
formed by accumulation important jurisprudence.  This meant that the professionalization of panels
was needed.  This would enhance the capacity of panels to assess facts and the credibility of panel
reports.  In this respect, the proposal by the EC for the establishment of permanent panelists was
welcome.  Japan believed that that the EC proposal on this issue merited careful consideration.
10. With regard to the second goal, he noted that Article 22.2 of the DSU provided that, where a
Member concerned was unable to comply with the DSB's recommendations within the reasonable
period of time and if the complaining party so requested, negotiations on compensation had to start
prior to the expiry of the reasonable period of time.  However, it was rare that such negotiations took
place.  This was because the Member concerned would not disclose details of its implementingmeasure until the last moment.  In some cases, compliance was only evident when the reasonable
period of time had expired.  In such cases no room was left for negotiations on compensation and the
complaining party was often forced to request the suspension of concessions.  Therefore,
strengthening the surveillance of compliance within the reasonable period of time would encourage
Members to enter into negotiations on compensation within that period of time, as envisaged in
Article 22.2 of the DSU.  In Japan's view, compensation was preferable to the imposition of trade-
restrictive countermeasures.  To that end, Japan would continue to contribute to the negotiations bysubmitting concrete proposals.
11. In order to ensure adequate time for discussions, Japan supported the Chairman's suggestion
that proposals should be submitted before the Summer break to enable the negotiations to move to
another level, where there would be concrete and in-depth discussions of the submitted negotiating
proposals.  This would be desirable considering the short time-frame for concluding the negotiations.Proposals submitted after the Summer break should, however, be considered on an equal basis.
Discussions on proposals should take place as soon as they were submitted and, to the maximum
extent possible, well before the Summer break with a view to identifying as soon as possible the
degree of consensus that each proposal might attract.
12. In general, Japan, like many other countries, considered that the current DSU had been
functioning well and had played a significant role in resolving many disputes.  He recalled that the
Chairman had requested Members submitting their proposals to specify four points;  i.e., "what, why,
how and when".  Japan supported this, and in partic ular the specification with regard to "why".  In
Japan's view, Members proposing to amend the DSU should demonstrate that serious problems had
been caused by the current provisions of the DSU that made amendments indispensable.  JapanTN/DS/M/1
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believed that it was important to approach the negotiations with a spirit of pragmatism and to agree on
improvements by consensus within the time-limit set by Ministers in Doha.
13. The representative of Korea said that his country supported the two-track approach suggested
by the Chairman.  The two tracks were complimentary in the sense that if Members were to encounter
problems with discussions under Track II, they could resort to Track I to seek a breakthrough.  Koreawelcomed the proposals submitted by the EC, Thailand and the Philippines.  In general, the current
dispute settlement system was working very well up to the stage of the adoption of panel and
Appellate Body reports.  Problems had been encountered at the stage following the adoption of
reports starting with the reasonable period of time for implementation of the DSB's recommendations
and rulings up to the controversy over hasty retaliation.  Korea believed that the post-adoption dispute
settlement procedures should be improved, includin g with regard to the sequencing issue.  The Doha
Ministerial mandate to improve and clarify the DSU was self-evident, but at the same time veryimportant.  Any proposal which woul d weaken, or have the effect of weakening, the effectiveness of
the dispute settlement system, as it currently stood, should be rejected.  Korea would give further
consideration to issues of interest to it and would elaborate on them at the next meeting.
14. The representative of Brazil said that two elem ents had to be kept in mind.  First, the DSU
negotiations should be completed by May 2003.  Second, there was a need to decide whether the
scope of the negotiations should be broad or narrow.  Brazil believed that, at this stage, it would not
be easy to reach a consensus on this matter.  If one were to devote too much time to this issue, it could
become a trap for the negotiations.  A more pragmatic approach would be required, in particular in
light of the unsuccessful attempts to review the DSU in the past.  Consequently, as proposed by the
Chairman, Members should focus on Track II relating to the submission and discussion of specificproposals.  This should not prevent discussions of a more general nature.  On the contrary, general
discussions would evolve more easily and more point edly as soon as discussions of proposals began
to take place.  Thus, the two Tracks should not be understood as being carried out in parallel, but as
overlapping from time to time.  Brazil neither supported a narrow nor a broad scope but rather a
limited one that would be compatible with the short time-frame available and which would take intoaccount major issues of interest to Members.  Consensus could be reached by focusing, among other
things, on some of the core issues contained in the original proposal submitted by the co-sponsors and
some new elements contained in the EC proposal.  Consideration should also be given to issues that
had already been raised and those that might be raised in the near future.  However, academic debates
should be avoided, otherwise there was a risk that the task could not accomplished by the May 2003
deadline.
15. The Chairman reiterated that under Track I a more general approach was foreseen with a view
to gradually moving towards Track II, namely, specific proposals.
16. The representative of Costa Rica said that hi s country attached the highest priority to the
negotiations and would work with other Members with a view to reaching a successful outcome.  In
the informal consultations on 14 March 2002, his delegation had raised some issues that it considered
to be of fundamental importance to the functioning of the process.  Costa Rica supported theChairman's proposal to conduct this process under two parallel tracks.  In the view of Costa Rica, the
sequencing issue was one of the most important issues and his country hoped to be able to continue
working on it.  The issue of third-party rights was also very important.  Under the current DSU
provisions, third-parties were given limited rights in the dispute settlement proceedings, including
where they had a direct interest in a specific case.  Costa Rica intended to submit a proposal on thisissue in the near future.
17. The representative of Chile said that his country had a systemic interest in the proper
functioning of the dispute settlement mechanism.   Since 1995 that mechanism had evolved and had
undergone many changes in practice, both positive and negative.  It was now time to examine these
changes in order to rectify them, where necessary.  Many changes had resulted from ad hocTN/DS/M/1
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agreements between disputing parties and had required some flexibility on their part.  Chile hoped
that the process mandated by Ministers in Doha would proceed in the right direction, namely, that it
would strengthen the dispute settlement mechanism.  Chile was not a frequent user of the dispute
settlement mechanism although in the past year it had become more involved as a third party and, on
several occasions, it had provided its views on procedural issues.
18. The short time-frame for the DSU negotiations im plied that the scope had to be limited to a
few issues that Members wished to resolve urgently and with regard to which discussions had already
taken place and concrete proposals had been submitted.  In this regard, Chile believed that the issue of
sequencing deserved particular and urgent attention.  Chile was committed to the core elements with
regard to the issue of sequencing, as outlined in the proposal that it had co-sponsored in 2000.  Some
few additional issues could also be included in the limited mandate such as the legal status of the
Appellate Body members.  In this regard, Chile s upported the proposal to modify the current status of
the Appellate Body members and to offer them full-time positions.  It was a matter of justice and
recognition of the current practice.
19. Chile supported some issues contained in the proposal submitted by the EC, which provided
the pace and tone of the discussions.  However, some elements of that proposal could fundamentally
modify the dispute settlement mechanism.  Members would have the opportunity to discuss thoseissues and analyze them carefully with a view to assessing their implications.  The EC proposal
corresponded to the two-track approach suggested by the Chairman.  Members could, on the one
hand, discuss specific and concrete proposals to amend the DSU to a limited extent, and to resolve
urgent matters within the deadline agreed by Ministers in Doha.  On the other hand, a parallel and
profound discussion could take place on some important issues such as those raised by the EC in itsproposal with a view to requesting the Fifth Ministerial Conference to provide a mandate for a
broader review of the current dispute settlement mechanism, which due to systemic implications
would have to be part of the single undertaking.  The mandate to review the DSU given by Ministers
was limited.  Only issues recognized to be issues of urgency which had already been discussed such
as the issue of sequencing or issues relating to the Appellate Body should be taken into consideration.At the same time, discussions should be held on other issues with broader systemic implications, in
particular with regard to their impact on the functioning of  the WTO and the balance of rights and
obligations.  Such discussions would require more time and could become part of negotiations under
the single undertaking.  Chile would be engaged in both tracks with an open mind.
20. Chile believed that it was important to comply with the May 2003 deadline.  Members should
have a focused approach and realistic ideas.  He  noted that the comments made by Brazil in this
regard were pertinent.  The short deadline implied that only some of the issues could be considered.Thus it was important to set priorities.  The issue of sequencing was the most urgent one to be
resolved and some constructive ideas in this regard had already been presented.  It was important to
focus on resolving current problems on which consensus could be reached.  One should envisage
agreement on a realistic package by May 2003 to be implemented shortly thereafter.  He questioned
whether it was appropriate to consider making substantial changes suggested by the EC and otherdelegations.  It was clear that not all the issues co uld be included in the package.  For example, the
issue related to transparency needed a fundamental rethinking.  The current system was not a proper
tribunal but a mechanism to solve disputes.  Therefore, it was necessary to preserve its diplomatic
character and that would always require some degree of confidentiality.  At this stage, Members were
not ready to modify the nature of the system.  Chile was neither against nor in favour of transparency.However, it believed that it would not be possible to reach consensus on this matter.  Chile noted that
some of the proposals did not intend to improve the current system but rather to change it
fundamentally.
21. Chile considered the following issues to be of interest to it.  First, the establishment of a
system of permanent panelists.  This could lead to greater professionalism.  However, the financialimplications of introducing such a system, including salaries, would require some financial analysis.TN/DS/M/1
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One could consider a partial implementation of this proposal.  Second, the enlargement of the
Appellate Body.  In the past few months, the Appe llate Body had not been required to examine any
case and this was likely to continue for some time.  The issue of enlargement of the Appellate Body
had been discussed at the time when the Appellate Body had a very heavy workload.  Therefore, this
issue would have to be reassessed in light of the circumstances.  In this regard, Members couldconsider the possibility of appointing Appellate Body members on a full-time basis.  Third, tighter
deadlines in urgent cases as mentioned by Canada.  Chile was ready to consider any new ideas, but
cautioned that these ideas had to be realistic and relevant.  At the Fifth Ministerial Conference,
Ministers could be informed that a broader mandate with a longer time-frame was required to consider
other issues that necessitated more time and detailed analysis.  Chile suggested that a list of issues
arising from the discussions could be drawn up in order to have a clear idea of what might be included
in the package.
22. The representative of Ecuador said that it was his country's understanding that the mandate
for the DSU negotiations, as set forth in paragraph 30 of the Doha Declaration, constituted a
recognition by Ministers of the need to engage fairly promptly and efficiently in a process of
modifying the DSU, based on the work done in recent years.  Ecuador noted the statement made by
Brazil and agreed that the scope of the negotiations should be limited and that it was necessary tocomplete this task by the May 2003 deadline.  Ecuador also agreed with those delegations which had
stated that there were two reasons as to why the negotiations should be completed by May 2003.
First, there was a need to ensure that work focused on issues which had been identified by Members
as matters of priority, and on which a consensus could be reached within the established time-frame.
In Ecuador's view, the existence of the deadline necessarily limited the scope of the negotiations.Second, as a result of this relatively tight deadline Ministers had clearly intended to dissociate the
DSU negotiations from other negotiations, and in particular from the "single undertaking" governing
the other parts of the work programme adopted in Doha.  These two basic premises should be kept in
mind in order to ensure that the negotiations did not prove inconclusive, as was the case in 1999.
Ecuador considered that the Chairman's suggestion to adopt a two-track approach was an appropriateway to proceed.  Members should maintain a concep tual discussion on possible changes to the DSU
while at the same time they should discuss specific proposals.  It was important to bear in mind,
however, that the bulk of work should focus on examining and discussing proposals on which a
consensus could be reached.  Although some delegations might voice their legitimate aspirations,
proposals would have to address those issues on which a consensus could be achieved.  Ecuador
believed that it was necessary to take a practical and realistic view as to what could be achieved.
23. The work would become more intense as proposals continued to be submitted and the number
of meetings increased.  The schedule proposed by the Chairman appeared to be suitable, despite the
fact that it implied a very heavy workload, especially for small delegations.  Ecuador hoped that in
convening meetings the constraints faced by these delegations would be taken into account.  His
delegation attached particular importance to the records of meetings and the principles and practices
for the negotiations endorsed by the TNC with regard to the preparation and circulation of the minutesof meetings.  Records of meetings should be prepared in a timely manner.
24. Ecuador, together with other countries, had co-sponsored the proposal to amend the DSU
which had been submitted to the General Council and to the Ministerial Conference.  The primary
purpose of this proposal was to clarify the relationship between Articles 21 and 22 of the DSU.
Ecuador's interest in the matter stemmed from its experience as a party to the first dispute that hadaddressed the problem of sequencing between Articles 21 and 22.  At that time, Ecuador had to
resolve serious systemic problems in unfavourable circumstances.  It had had to defend its interests
while ensuring that the balance between rights and obligations was preserved and thus the sequence of
these two Articles was correctly followed.  Various disputes had been initiated in recent years over the
sequencing of Articles 21 and 22 of the DSU, and now there was a general interest to see that thesequencing issue be addressed in the negotiations as a matter of priority.  Consequently, there could
be no excuse to postpone the consideration of this overriding objective.TN/DS/M/1
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25. With regard to the proposal put forward by the EC, he referred to one issue contained therein,
namely, compensation as an alternative to retaliation.  The EC had stated that  its intention was to
provide a more realistic possibility of negotiating compensation so as to avoid the withdrawal of
concessions.  Ecuador would make some comments w ith regard to its experience in order to ensure
that any progress with respect to the procedures of Article 22 of the DSU provided developingcountries with a solution that would remedy the existing imbalance in the application of these
provisions.
26. The representative of Norway said that his country believed that the dispute settlement
mechanism in general should be considered to be  a success.  It was important to safeguard the
fundamental principles of the DSU.  In Norway's view,  the work in special sessions should not be an
exercise to renegotiate the DSU.  However, like other Members, Norway considered that there was a
need to address certain weaknesses of the system by providing greater clarity in order to ensuregreater efficiency and fairness.  Rather than trying to make everything perfect, Members  should focus
their attention on a few major issues.  In Norway's vi ew,  clear priority should be given to those issues
where there was an apparent need for improvements and clarifications.  These priorities could be
grouped in four areas.
27. First, the issue of sequencing between Articles 21.5 and 22 of the DSU.  The informal
meeting held on 14 March 2002 had revealed Members' wide support on this issue.  Norway
welcomed the EC proposal on this issue and looked forward to discussions based on this and other
proposals in the coming months.  Since 1999 Norway had been engaged in joint efforts to settle this
issue and was currently working with other Members on a proposal to be submitted in the near future.
28. Second, the issues related to the streamlining of the panel process.  Many proposals had been
made on this matter.  Like other Members, Norway saw merit in the proposal to establish a system of
permanent panelists.  The most important argument in support of this proposal was that the total
time-frame of dispute settlement proceedings could be shortened, since normally there were delays in
the selection of panelists due to the discrepancy between demand and supply.  Therefore, time gained
in this area could be allocated to other stages of the dispute settlement process.  Norway believed thata system of permanent panelists on a full-time basis would contribute to shorter and more accessible
panel reports, as well as more consistent jurispruden ce that might in turn lead to fewer appeals.  A
number of other suggestions had been made on the is sue of time-frames.  Norway would not like too
much emphasis to be placed on this issue, as it could prove to be detrimental to the procedural rights
of Members, especially  small countries with limited resources.  Members should therefore carefully
consider where they would like to shorten the time-frames.
29. Third, the issue of third-party rights.  Since the need to improve access of third-parties to
consultations and to the panel process had already been mentioned, Norway did not wish to repeat the
same arguments, but only to stress that this was an area of importance to it.
30. Fourth, the issue of transparency.  A number of proposals had been made with respect to
increased transparency.  Norway was in favour of increased transparency to the greatest extent
feasible and practicable.  However, in the discussions on how to increase transparency in panel cases,it should be kept in mind that there was a need to preserve the intergovernmental character of the
WTO.  Norway fully appreciated the fact that findings of panels and of the Appellate Body might
directly influence the business environment of private companies and that such findings were of
substantial interest to the civil society.  Therefore, it was important to convey information on final
results to the outside world as soon as disputes had been resolved.  At the same time, it was crucial toensure that panels and the Appellate Body were not subjected to pressure or undue influence from
interest-groups.
31. The DSU provisions did not specify that amicus curiae  briefs should be accepted nor should
they be prohibited.  This issue needed to be addressed in order to define the framework and conditionsTN/DS/M/1
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as how to deal with such briefs.  Norway believed that such a clarification should be made by
Members and not by panels or the Appellate Body.  It was imperative for this issue to be addressed in
this forum.  As provided for in Article 13 of the DSU, a panel might seek information from any
relevant source and consult experts on certain aspects of a matter before it.  Furthermore, Appendix 4
of the DSU contained rules and procedures as how to deal with expert review groups established inaccordance with Article 13.2.  The DSU did not, however, provide any guidance on how to deal with
inputs on substantial issues from IGOs or NGOs.  Norway agreed with the EC that such information
might be valuable, but certain rules and procedures might be useful:  i.e. by building on the two-stage
approach described by the Appellate Body in 2000 in order to ensure that a submission was directly
relevant to the factual issue under consideration by a panel.  Further elaboration of the proposal to
incorporate Article 13 bis in the DSU would be required.  With regard to the issue of amicus curiae
submissions, it should be kept in mind that Article 13 of the DSU was only applicable to panels  not to
the proceedings of the Appellate Body.  In accordance with Article 17.6 of the DSU, the task of the
Appellate Body was limited to the issues of law covered in panel reports and legal interpretations
developed by panels.  In this area, it was not completely clear whether there was a need for amicus
curiae  briefs.
32. Norway noted that the issue of compensation versus retaliation had been mentioned by a
number of delegations at previous meetings.  The ultimate goal of the dispute settlement mechanism
was to ensure that the measure which had been found to be inconsistent with WTO-rules was
withdrawn.  If this was not possible, as a temporary measure a Member could offer compensation or
as a last resort suspend concessions, as provided for in Article 3.7 of the DSU.  Norway believed that
any legal system should provide a minimum legal certainty to governments and individuals, but at thesame time it should authorize sanctions, where appropriate, to ensure prompt compliance.  A major
systemic problem with the instrument of suspension of concessions was that it often hit at random,
and could be viewed as an obstacle to trade.  Furthermore, it often negatively affected private parties
as well as governments of both parties to a dispute.  While compensation was never an alternative to
compliance, it would often give sufficient redress to Members who suffered from illegal measures,until compliance had taken place.  Therefore, the option of offering compensation should not be seen
as secondary to the suspension of concessions and should be offered in cases in which full compliance
was not immediately practicable.  He recalled that, in previous meetings, Australia had raised
concerns about the tendency to conclude bilateral compensation deals, without a timetable for
implementation which were not offered to other Members whose rights and obligations had also been
nullified and impaired.  Norway believed that this problem required to be looked at.  At the same
time, this problem was not only related to compensation but, in principle, it also concerned thesuspension of concessions, which was available only to Members who had obtained a favourable
decision by the DSB.
33. With regard to remand authority, he said that in the past the Appellate Body in certain cases,
when overturning panel findings, had been left without sufficient factual background to properly
assess all aspects of a case.  Sending the case back to the original panel for a renewed examination inlight of the guidance provided by the Appellate Body, as under domestic legal systems, would seem to
be an improvement that Members should explore further, if time permitted.
34. The Chairman said that those delegations who had expressed views on specific proposals
under this agenda item would have further opportunities to make detailed statements on this subject
under the next agenda item.
35. The representative of Venezuela said that his country supported the approach proposed by the
Chairman and underlined the need to respect the deadline.  Venezuela attached particular importance
to the DSU provisions.  Special and differential treatment provisions were referred to in the Doha
Ministerial Declaration.  He recalled that this issue had been dealt with in the Committee on Trade
and Development (the CTD).  Recently, two countries had indicated in the CTD their interest that thisissue be extended to the DSU.  The Chairman of the CTD had encouraged Members to bring theirTN/DS/M/1
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dispute settlement experts to the CTD meetings to explain how special and differential treatment
provisions could be included in the DSU and how the CTD could foster compliance with the mandate
in this regard.  He noted that various studies identified between 8 and 10 elements in relation to
special and differential treatment provisions in the DSU.  Some of them were mandatory and others
which were not could be made mandatory.  Venezuela was in the process of preparing a proposal onspecial and differential treatment.  It encouraged other Members, in particular developing and least-
developed countries,  to pay attention to special and differential treatment provisions in the DSU.
36. The Chairman said that delegations wishing to present issues related to the DSU should do so
under the aegis of the dedicated negotiations as this would help participants to have a full range of
options.
37. The representative of Uruguay said that the DSU negotiations should be completed by the
May 2003 deadline.  Members should use this short time available in the best possible way in order to
comply with the mandate contained in paragraph 30 of the Doha Ministerial Declaration.  Like other
countries, Uruguay believed that it was necessary to be realistic and pragmatic and to focus on
relevant issues in order to bring improvements and clarifications to the DSU.  Uruguay attached
importance to the dispute settlement mechanism and believed that, thus far, the system had functioned
in a satisfactory manner.  However, some clarifications and adjustments were required.  On the onehand, it was necessary to ensure that the modifications to be made to the DSU provisions should lead
to the strengthening of the multilateral trading syst em by making it more transparent and predictable
as well as less discriminatory.  On the other hand, the exercise should be completed within the
time-frame given by Ministers.  It was therefore necessary to adopt a pragmatic approach.  It was also
important to recognize that at the end of the negotiations and with the possible inclusion of new issuesinto the multilateral trading system, the DSU provisions might have to be reviewed again.
38. Like other countries, Uruguay interpreted paragraph 30 of the Ministerial Declaration in a
restrictive way in terms of the scope.  Improvements and clarifications of the DSU provisions had to
be made within a limited period of time.  Therefore, there was a need to focus on a manageable
number of proposals on which a consensus could be reached.  Uruguay was ready to consider anyother proposal in addition to the three proposals submitted before the Doha Ministerial Conference,
including the proposal on the issue of sequencing submitted by Japan and the co-sponsors.  Uruguay
attached importance to this proposal and would make comments with regard to the proposals made by
the EC and other delegations.  He reiterated th at between now and the Summer it was important to
agree on the issues on which a consensus could be reached and to define the scope of the negotiations
before the meeting scheduled in July 2002.  Proposals on which it would not be possible to reach a
consensus should be left out for the time being in order not to prevent progress on those issues onwhich a consensus could be reached and which could improve the DSU to the benefit to all Members.
Uruguay noted with interest the proposal by Chile to review this matter at the Fifth Ministerial
Conference.  However, the specific task mandated by the Doha Declaration should be completed by
May 2003.
39. The representative of Switzerland said that his delegation wished to outline the Swiss position
with regard to the scope of the negotiations.  In th e view of Switzerland, the experience of the past six
years had demonstrated that the DSU was working in a satisfactory manner and that the WTO dispute
settlement system was very effective.  However, Switzerland shared the view expressed by other
delegations that the dispute settlement system could and should be improved.  Under the Doha
Ministerial Declaration, Members had agreed on comprehensive negotiations on improvements andclarifications of the DSU based not only on "the work done thus far" but also on "any additional
proposals".  He recalled that the need for improvement of the DSU had been addressed several times
in the past two years.  For example, in the cont ext of new appointments to the Appellate Body, the
question had been raised whether the Appellate Body should be reinforced either by increasing the
number of its members or by moving to a full-time employment.  There was also the issue of amicus
curiae briefs which had been addressed in a special meeting of the General Council inTN/DS/M/1
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November 2000.  Finally, the sequencing problem had attracted a lot of attention during the past
years.  Although a consistent practice had been established by entering into bilateral understandings
on a case-by-case basis, there was a need to codify this practice and to provide legal security.
Switzerland believed that now was the time to address all these issues in the special sessions of the
DSB.  Members should start comprehensive  negotiations and it would be helpful if all proposals were
put on the table before the Summer break, after which an easily digestible menu could be put together.
40. He then listed the most important issues that should be addressed in the context of these
negotiations.  There was, as mentioned previously, the issue of sequencing.  Switzerland believed that
with regard to this issue, negotiations should be based on the work done thus far.  There were already
useful  proposals  which provided a good basis for negotiations.  Members should avoid to repeat the
exercise of the DSU reform in 1998.  With regard to remand authority, he said that  the introduction of
remand authority would improve the review process.  The Appellate Body should have the possibilityto send a case back to a panel to complete the factua l findings or the legal interpretation.  With regard
to enforcement of decisions, he noted that experience with the current system of suspension of
concessions had demonstrated that there were some shortcomings, especially from the point of view
of small and/or developing countries prevailing in a case.  Priority should be given to compensation
and the system of trade compensation should be enforced as an alternative to the suspension ofconcessions.  There was also a need to address institutional questions.  For example, whether a system
of permanent panelists or an enlargement of the Appe llate Body would be needed.  With regard to the
organization of the negotiations, he noted that th e two-track approach provided a good framework for
negotiations.  It was possible, or even necessary, to follow both tracks, which implied discussions on
the broader concept of negotiations as well as on specific proposals.  However, in view of thetime-frame and the work done thus far, the emphasis should be on the second track;  i.e. concrete
proposals submitted by delegations.
41. The representative of Australia recalled that as he had stated at the 14 March informal
meeting, his country had identified a number of areas where it considered  improvements and/or
clarifications were required.  Broadly, they were:  (i) the rights of non-parties to a dispute, particularlyin relation to compensation arrangements;  (ii) DSB surveillance of retaliation authorized under
Article 22 of the DSU;  and (iii) anomalies in DSU procedures across the WTO Agreements,
particularly time-frames for DSU action on safeguards under the various covered agreements
(safeguards, textiles and agriculture).  At that meeting he had provided comments on five issues.
42. First, he referred to compensation arrangements and rights of non-parties to a dispute.  The
DSU clearly provided that compensation arrangements were temporary measures in the event that
implementation was not achieved within a reasonable period of time (Articles 22.1 and 22.8 of theDSU).  It also provided that these compensation ar rangements had to be consistent with the covered
agreements (Article 22.1 of the DSU).  This includ ed MFN provisions.  Australia was concerned by a
recent trend toward bilateral compensation deals agreed without a timetable for implementation and
not offered to other Members whose rights and obligations had also been nullified and impaired.  If
Members were forced to initiate their own compla ints to acquire compensation rights, when it had
already been proven that the Member concerned was in breach of its WTO obligations, this would
place enormous pressure on the WTO dispute settlement system.  A clarification was needed that all
compensation arrangements had to be available to all Members on a non-discriminatory basis, and
that arbitration might be used where necessary to determine the appropriate level of nullification or
impairment.
43. With regard to DSU surveillance of retaliation, he said that clarification was needed on the
DSB surveillance of retaliation under Article 22.8 of the DSU.  Procedures should be introduced for
lifting retaliation once the implementing party had complied with the DSB's recommendations.
Procedures would also be useful on subsequent arbitration on the remaining level of nullification and
impairment in cases of partial compliance.  Procedures were also necessary to ensure that the actuallevel of retaliation imposed by a complaining party was consistent with the authorized level ofTN/DS/M/1
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retaliation.  For example, these procedures could provide that the DSB should approve the actual list
of goods or services to be subjected to punitive retaliatory measures and any variations to that list to
correct technical errors or in the event of unforeseen circumstances.
44. With regard to anomalies in procedural remedies for dispute settlement between trade
remedies agreements, he noted that some subsidies were subject to accelerated procedures (e.g.Article 4 of the SCM Agreement) but there were no special dispute settlement procedures for trade
remedies such as safeguards (both standard safeguar ds and textiles safeguards).  This was an anomaly
given that safeguards were of their nature time-limited.  Coordination with the Rules Negotiating
Group would be necessary on this issue.  As an in terim contribution, Members could agree to adopt a
practice of shorter time-frames for the consultation period (exercise of the option under Article 4.7) to
expedite establishment of a panel (i.e. on first request, available under Article 6.1) and possibly by
agreed expedited  working procedures (as provided by Article 12.1).
45. With regard to proposals for saving time on the di spute settlement procedure, he said that two
simple time-saving measures might be adopted at th e start of the DSU proce dure that would not alter
the balance of rights and obligations between comp lainants and respondents:  (i) the establishment of
a panel at first request by the complainant;  and (ii) a requirement that complainants lodge their first
submission at the time of the first panel request.  Complainants would not be disadvantaged by thischange as they had as long as they needed to prepare their submission before initiating dispute
settlement action.  It was important that time-savings should not be at the expense of due process and
procedural fairness aspects of the system.
46. With regard to sequencing and Article 21.5 issues, he noted that Members had responded to
issues surrounding the sequencing of Article 21.5 and Article 22 processes by entering into bilateralunderstandings on a case-by-case basis.  The practice developed through these understandings could
be consolidated to avoid the need for such understandings.  A further useful improvement would be to
establish practice on the need for parties to undertake consultations prior to a request for an
Article 21.5 implementation panel.  This would help clarify the questions at issue and streamline the
subsequent panel process.  Australia considered it es sential that parties retained the right to appeal an
Article 21.5 panel decision.  This provided an important safeguard and was important to the balance
of rights and obligations between complainants and respondents.  Given that this right to an appeal
already existed and was regularly exercised there was no need to include this in a consolidation of
practice.
47. In the majority of cases, the approach adopted by panels and the Appellate body to deal with
the issues placed before them had been largely consistent with the mandates provided in the DSU.
There had, however, been several cases where questions had been raised as to whether panels hadeither exceeded their mandate, or had failed to deal adequately with matters raised by the parties.
Australia considered there was a need to re-affirm the institutional role of the WTO membership in
regard to interpretations and amendments of the covered agreements and to follow the procedures of
Article IX and X of the WTO agreement in decisions on interpretations and amendments.  Australia
raised this issue at the present meeting simply to ensure that sufficient consideration would be given
to these important systemic matters during the course of the DSU negotiations.  Australia wished to
hear other Members' views on these issues.
48. Australia believed that improvements and clarifications of the DSU should be put in place
through a consolidation of agreed practice adopted by a DSB decision.  This approach had been used
for the Rules of Conduct.  Australia was concerned that a process of negotiating formal amendmentsto the DSU would be complex and confusing (and ultimately unachievable).  If necessary, the DSU
could be amended to incorporate appropriate improvements and clarifications at a later stage once
Members had experience with their operation.TN/DS/M/1
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49. The representative of Australia wished to reaffirm that Australia was ready to approach the
work on the basis that had already been agreed informally and looked forward to engaging into the
process as soon as possible.  He also wished to make a few comments in response to the comments
made by Chile and some of the other comments made by the co-sponsors.  Australia was also very
conscious of this tight timetable and that, at the end of the day, Members might not be able tosatisfactorily address all the concerns about the DSU.  However, Australia believed that, rather than to
spend further valuable time on trying to define the scope of negotiations, Members would be better off
getting all ideas out into the open as soon as possibl e.  In this context, Australia looked forward to
receiving the revised proposal that had been ment ioned on behalf of the co-sponsors.  There were
three major reasons why Members should start the negotiations with a blank page without any
preconceived ideas of the parameters of the outcome.  First, things had moved on since the co-
sponsors first came forward with an initiative prior to Seattle.  There had been many new cases whichhad thrown up, both at the Panel and the Appellate Body stage, a whole raft of new issues, including
procedures for multiple/collective retaliation, non-party rights to compensation, the adoption or non-
adoption of panel reports, judicial activism, proposals to expedite certain cases such as safeguards etc.
It was therefore appropriate that Members try to at least review and hopefully substantively address
those concerns.  Second, there was a major public debate going on at present time, about the wholeeffectiveness of the WTO and its dispute settlement procedures.  There had been in recent weeks and
months a number of academic papers and letters to the editor asking "whether it is the failure of the
legislature to devise appropriate rules or is it the judicial activism, that has led to some potential
problems?"  It was incumbent upon Members to address those issues.  Third, the mandate agreed in
Doha was not limited in any sense, and it did not give much of a steer, as to just what was the scope ofthese negotiations.  Some delegations had suggested to focus on certain issues and then make a
reassessment at the next Ministerial Conference about the prospects of broadening the negotiating
framework.  However, there was no guarantee, that it would be possible to get from Ministers at the
next Ministerial a broad mandate to negotiate again on this issue.  Therefore, Members would be
better off to starting from a blank page, encouraging everyone to come forward with proposals, asexpeditiously as possible to meet the deadline.  Then Members could see if they could address these
proposals in the period between now and the early 2003.  This was a better approach, rather than
trying to take a decision on whether or not to embark on a big exercise because it would not be
possible to finish it.  There had been many issues around for sometime now.  Therefore, it was best
for all to get these issues out in the open, have a very substantive review and then to see what could
come up with by the deadline in the Doha Declaration.
50. The Chairman said that in accordance with the mandate given by Ministers, Members should
work on the existing proposals and the equal weight should be given to new proposals.
51. The representative of Bulgaria said that his country supported the statement made by
Australia.  The mandate for the DSU negotiations was not limited and time would be lost, if one were
to try to determine the scope of the exercise.  Members had different priorities and to agree a priori on
what should be changed or clarified would detract them from substantive negotiations on those issuesin which they had an interest.  He said that as he had stated at the 14 March informal meeting, his
country had an interest in the improvements and clarifications of the DSU pursuant to the mandate
contained in the Doha Declaration.  Bulgaria did not agree with delegations which had stated that pre-
Doha proposals should have a favorable position in the current negotiations.  Delegations had
different priorities, but no consensus had been reached on those proposals.  In Bulgaria's view, theissue of independence of panelists was much more important than the issue of sequencing.  Bulgaria
could not agree that the mandate for the DSU negotiations was limited and reiterated that its position
on the issue of sequencing did not change.  The proposal by Australia for the adoption by the DSB of
consolidated practices should be further explored.  Another possibility was an interpretation under
Article IX of the Marrakesh Agreement.  In Bulgaria's view, the best way to solve the issue ofsequencing was through interpretation.  The issue of sequencing was already incorporated in the DSU.
Bulgaria did not wish to pay for sequencing by agreei ng to the shortening of time-frames.  It would be
appropriate if future proposals on the issue of sequencing were separated from the issue of shorteningTN/DS/M/1
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of time-limits.  Bulgaria believed that some flexibility was required with regard to the submission of
proposals.  It would be preferable to have all the proposals by the end of July but the possibility of
proposals being submitted at a later stage should not be pre-empted.  Bulgaria would make comments
on proposals submitted by delegations and if it deemed appropriate and necessary, it might submit its
own proposal.
52. The representative of Cuba said that her country believed that the purpose of the current
negotiations should be to improve the DSU from a lega l standpoint in order to facilitate the effective
settlement of disputes, paying particular attenti on to those provisions that would strengthen its
multilateral character.  However, there was a need to draw a distinction between the aspects which,
from a technical viewpoint, could make procedural improvements, but which could only be applied to
one particular phase or could resolve one specific issue and some other aspects with more global,
systemic and political repercussions.  Cuba believed that priority should be given to the latter.  InCuba's view, the following issues should be consider ed as priorities for the negotiations.  First, a
review of special and differential treatment provisions.  In this regard, there was a need to distinguish
between provisions containing a specific mandate but lacking effective application and those that had
no substantive effect and had to be redrafted to become binding.  Cuba supported the establishment of
a control mechanism to monitor compliance with  special and differential treatment provisions.
Second, the issue of compensation as an option to respond to a failure to comply with the DSB's
recommendations.  This would benefit developing countries which lacked the capacity to enforce
compliance with panel decisions, in particular in disputes with developed countries when, as
demonstrated in many cases, retaliation was often damaging to the country that imposed them, and
was thus impracticable.  Third, the need to deal with high cost of panel proceedings, which effectivelylimited access of developing countries to the dispute settlement mechanism.  Fourth, the issue of
sequencing between Articles 21.5 and 22 of the DSU,  which related to a very specific stage in the
proceedings, but had wider repercussions.
53. The representative of Hungary said that from the point of view of a small country it was
important to have a well-functioning dispute settlement mechanism.  Hungary regretted that the two
previous attempts aimed at improving the DSU ha d been unsuccessful.  The lack of consensus on
those narrow improvements showed that broader changes might be needed which would take into
account the interests of all Members.  Therefore, Hungary welcomed the start of these dedicated
negotiations aimed at improving and clarifying the DSU.  Hungary attached priority to the issue of
sequencing between Articles 21.5 and 22 of the DSU.   Another priority was the issue of compliance
versus retaliation.  Followed by the issue related to the functioning and membership of panels and the
Appellate Body, the improvement of trade defence mechanism and finally a balanced improvement oftransparency.  Hungary welcomed the proposals subm itted by the EC, Thailand and the Philippines as
well as the indications provided by other delegations that their proposals would be forthcoming.  She
underlined the importance of the submissions of all proposals before the Summer break.  Hungary
was ready to discuss all the suggestions and proposals for improvements and clarifications of the DSU
in a constructive manner.  It was convinced that such discussions would give greater clarity to thequestion into which issue-areas proposals would fall and to enable Members to make progress about
the scope of the negotiations so that more structured discussions could start after the Summer break.
54. The representative of Argentina said that his country considered the DSU to be one of the
main underpinnings of the multilateral trading system established at the end of the Uruguay Round.
Argentina believed that, overall, the DSU had functioned well.  This was demonstrated by thegrowing number and importance of the cases submitted by Members to the dispute settlement system
since 1995.  The improvement and clarification needed to enhance the DSU foreseen in the mandate
contained in the Doha Ministerial Declaration might call for more than an adjustment or fine tuning,
as several delegations had pointed out at the start of the DSU review process in 1998.  Nevertheless,
the improvements made to the DSU had to be examined with the greatest caution, considering that theDSU was a legal instrument of the highest importan ce.  The changes would only be positive if the
legal instrument as a whole continued to be efficient and accessible to all Members.  It was crucial toTN/DS/M/1
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have a "manageable" process to be able to deal with problems related to the main concerns of
Members under the existing DSU.  Members should not  try to create an instrument that responded to
all the concerns.  Argentina believed that that there were some inescapable problems.  These included,
among other things, the issue of sequencing between Articles 21 and 22 of the DSU and issues related
to monitoring and procedures with regard to the withdrawal of concessions or other obligations.Argentina considered that one aspect of major importance which should be taken into account was the
treatment accorded to developing countries.  Any changes to be introduced to the DSU should not
prejudice the interests of developing countries.  It would not be appropriate to conclude this exercise
with an instrument that was more difficult to use than the present DSU.  For example, time-frames
should not be shortened in a manner that would not be sustainable from the point of view of
developing countries.  Furthermore, the provisions on special and differential treatment should be
made operational.  Finally, Argentina believed that if Members wished to meet the May 2003deadline, they should move as quickly as possible into discussions on specific proposals under
Track II.  This would be more pragmatic than discussing whether the scope of the negotiations should
be broad or narrow.  Once there was a full set of proposals, Members could easily identify issues on
which consensus could be reached and hence the scope of the negotiations.
55. The representative of the United States said that his country, like others, also supported the
two-track approach outlined by the Chairman and considered that this was a productive way to move
forward.  The United States supported  proposals to improve the dispute settlement system.  While it
believed that the system had been working well to da te, it also considered that there was always room
for improvement.  In that regard, the United States supported proposals for better use of the time in
the dispute settlement process as well as for improvement of the transparency of the system.  TheUnited States had an open mind regarding proposals on sequencing and some other proposals referred
to at the present meeting and was willing to discuss other proposals which would be tabled.  The
United States also believed that the target date of having these proposals by the Summer was a
realistic one and it looked forward to working with delegations in this process.
56. The representative of Peru said that her country shared the view expressed by Brazil that the
scope of the negotiations should be limited given the short time-frame for completion.  Therefore, it
was necessary to concentrate on those subjects and proposals that enjoyed the greatest amount of
agreement among Members and to leave aside other proposals which were not yet ripe for
consideration.  Peru considered that the issue of sequencing, which had already been broadly
discussed, was a priority issue.  Several delegations, including Peru, had made a proposal which
contained useful  elements in this regard.  The EC proposal also dealt with this issue.  In general, Peru
supported the content of the EC proposal, including the possibility of moving to a system ofpermanent panelists.  However, there were some questions about the cost of such a move.  In this
regard, Peru requested the Secretariat to provide information on this subject.  Peru had an interest in
the proposal on compensation as an alternative to retaliation, which it believed could be useful for
developing countries.  Another issue of interest was the proposal to provide remand authority to the
Appellate Body.  There was a divergence of views on the proposal on transparency and Peru believed
that this proposal was not ripe for these negotiations.  It had some doubts about the proposal on the
issue of amicus curiae  briefs.  However, it would be ready to discuss these proposals in the future.
57. The representative of Indonesia said that his country, like others, also attached importance to
the dispute settlement mechanism and believed that, thus far, the system had worked well.  However,
certain improvements or fine-tuning might be needed without amending the basic character andstructure of that mechanism.  Indonesia noted that the current system was costly and placed a lot of
burden on developing countries when defending cases.  Therefore, any improvements should not lead
to the imposition of additional burden on developing countries.  Indonesia believed that it was
necessary to see how to ease the burden for developing countries.  It hoped that developing countries
would be able to submit their proposals in the near future.  Like previous speakers, Indonesiarecognized that the time-frame was short and, therefore, work should focus on certain issues of
interest to Members.  With regard to the scope, he  said that in order to meet the deadline, one shouldTN/DS/M/1
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set priorities and focus on elements which enjoyed broad consensus.  In the course of the discussions,
Members would submit proposals and, at some point, it would be possible to determine on which
proposals a consensus could be reached.  Indonesia was interested in discussions on implementation
of the DSB's recommendations and rulings;  i.e.  compliance, including on the issues relating to
sequencing and carousel.  It also wished to discu ss the issue of compensation as an alternative to
retaliation as well as the issue of third-party rights and special and differential treatment for
developing countries.
58. The representative of the European Communities said that the EC supported the two-track
approach proposed by the Chairman.  However, it was very important for these two tracks to merge at
some point.  The EC understood that the idea was to gradually move from Track I to Track II.
General discussions under Track I should help Members to find areas of consensus and to formulate
their proposals.  The EC had already submitted its proposal on the basis of past discussions, butunderstood that other delegations wished to have a general discussion to better discern what to submit
for negotiations.  He underlined the need to avoid discussions about the method of work or whether
the scope of the negotiations should be narrow or broad.  It was important to be pragmatic and general
discussions should encourage participants to introduce proposals.  Everything should be tabled and no
subject should be avoided.  Members should express their priorities.  The EC was ready to discuss itsown priority as well the priorities of other countries.  There was no time to negotiate on what would
be an ideal scope.  Pragmatism and realism should guide the process.  The scope should be as
ambitious as possible.  For the EC the most important issue was to move as quickly as possible to
discussions under Track II  in relation to concrete proposals.  The EC looked forward to receiving
proposals from other countries, including from the co-sponsors.  It believed that informal discussionswith a limited number of delegations should be held at some point at the initiative of the Chairman.
He noted that the discussion at the present meeting revealed that there was a broad convergence of
views, including on the issue of sequencing and on other issues on which some degree of consensus
had been reached.  There were only a few subjects on which a divergence of views persisted.
59. The representative of Malaysia said that Ministers at Doha had provided Members with the
mandate for negotiations to be completed within a limited time-frame until May 2003.  That would
mean that one had to focus on those areas in which there was a high probability of achieving
consensus.  In this regard, Malaysia urged other Members to be realistic.  In Malaysia's view the
outcome of these negotiations should preserve the intergovernmental contractual character of the
WTO.  It should not result in, or pave the way fo r an eventual system of two-tier membership within
the WTO.  This did not mean special and differential treatment, which was an entrenched principle in
the WTO.  It should retain the present system wherein the DSB was an integral part of the WTO.  Inthis regard, Malaysia once again urged other Members to be realistic and to recognize that the
mandate in paragraph 30 of the Doha Declaration clearly stated that Members should "… aim to agree
on improvements and clarifications not later than May 2003 …".  Thus as much as Malaysia respected
the right of Members to submit proposals on any subject, it believed that the subject of transparency
was clearly not a core-issue.  In Malaysia's view  the following areas should be addressed in the
negotiations:  (i) the issue of sequencing and strengthening of the multilateral trading system;
(ii) third-party rights;  (iii) special and differential treatment;  (iv) enhancing of the efficacy of the
Appellate Body;  and (v) some suggestions made by  Australia such as trade compensation.  Malaysia
would have serious difficulties with the issue of transparency.  It considered that Article 13.1 of the
DSU was already sufficiently clear on the question of amicus curiae  briefs.  There was no need to
further expand on this provision or even to clarify it.   Malaysia maintained its position that the dispute
settlement proceedings should not be open to public participation.  In fact, in the context of
discussions on enhancing transparency, Malaysia would support the idea of enhancing third-party
rights, as this would be "true transparency".  Further discussion was required on some other issues
such as the need to provide remand authority to the Appellate Body and the issue of compensation.Although compliance was always preferred, in th e absence of such compliance compensation could
be made mandatory.  Malaysia was not completely opposed to discussing the issue of shortening time-
frames under the DSU provisions.  In the past, his delegation had been in favour of shortening of theTN/DS/M/1
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dispute settlement proceedings, provided that the interest of developing countries would be taken into
account.  For example, if the 60-day consultation period would be reduced to 30 days, this would have
some implications for developing countries.  But, in principle, Malaysia was willing to discuss the
proposal on time-reductions.  He recalled that in the previous DSU review, there had been a proposal
to eliminate the panel interim review stage, which in Malaysia's view could save time.
60. The representative of New Zealand said that his country looked forward to working with
other Members to find ways to improve and clarif y the DSU.  In New Zealand's view, the DSU was
an essential aspect of the multilateral rules-based trading system.  His country believed that it was
particularly important for small players in the WTO.  While New Zealand believed that the DSU had
been functioning very well, there were some areas where improvements would be desirable.  For
example, clarifying the issue of sequencing of Articles 21.5 and 22 of the DSU would promote the
smooth operation of the DSU.  For the same reason, like others, New Zealand also had an interest inthe possibility of the DSU having a remand authority for the Appellate Body.  It continued to see
merits to pursue this further.  In addition, New Zealand looked forward to exploring the range of other
proposals that had been made or would be put forward under Track II.  New Zealand joined previous
speakers in noting that focussed, constructive and pragmatic approach would be required in order to
be able to come up with the concrete outcome within the time-frame available.
61. The Chairman said that all delegations had pointed out the difficulties involved in the DSU
negotiations due to the short time-frame given by Ministers at Doha.  It was clear that Members had to
be realistic and work in such a manner which would ensure consensus by May 2003.  It was also clear
that there was a divergence of views among delegations as to what issues were ripe for consensus and,
therefore, Track I was useful to the extent that delegations could hear views of others and understandtheir priorities.
4. Discussion of proposals submitted by delegations
62. The Chairman invited delegations which had submitted proposals to introduce and elaborate
on them.
63. The representative of the European Communities stated that the EC proposal had already been
discussed during informal meetings by delegations and, therefore, he did not wish to elaborate on its
main elements.  The purpose of the EC proposal was to encourage other delegations to submit their
own proposals bearing in mind the work that had already been undertaken and the time-frame within
which the negotiations should be completed.  It was not the objective of the EC to dominate the
negotiations nor shape them in a way which reflected only its interests.  The proposal listed the EC
priorities and what it wished to achieve during the negotiations.  There were similarities in certain
areas between the EC proposal and that of the co-sponsors.  Regarding the areas where there weredivergences, an attempt could be made to reach an understanding on both priorities and language.  He
stated in this respect that the EC would welcome any suggestions or amendments and consider other
proposals submitted by delegations.  He referred favourably to the proposals of Thailand and the
Philippines and said that he would offer some comments on them later.
64. Turning to the EC proposal, he said that the EC believed that having permanent panelists was
now much more of a necessity.  He said that the EC had taken note of the concerns expressed
regarding the cost implications and the need to be re alistic.  However, it should be borne in mind that
the workload of panelists was usually very heavy and this was bound to continue especially
considering that there would be more cases in the future which, in turn, might lead to more requests
for arbitration or review of panels' decisions under  Article 21.5 of the DSU.  Given these reasons, it
was important for further thought to be given to the idea of having permanent panelists.  This would
streamline the work of panelists and ensure their independence.  In response to the concerns raised by
Peru regarding the financial implications of having permanent panelists, he stated that the EC and its
member States had made some estimates and would share them with other delegations.  The expectedTN/DS/M/1
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increase in the budget was around 50 per cent which, in the view of the EC, was reasonable
considering the benefits to be derived from having permanent panelists.
65. He noted that the issue of sequencing had been thoroughly discussed and said that
notwithstanding the approach advocated by the EC and its member States, they were flexible on this
important issue and were prepared to consider the views of other delegations.  Resolving this issuewas of utmost priority to the EC.  Turning to transparency and amicus curiae  briefs, he said that they
were more difficult subjects underscoring the divergences in the positions of Members.  He said that
transparency was not a new issue.  It had been discussed by Members in the past and it would
continue to be discussed in the future.  While there was no disagreement about the need to preserve
the intergovernmental nature of the dispute settleme nt mechanism, the impact of the decisions of the
DSB on the general public, especially on sensitive issues such as health should be taken into account
in the debate on transparency.  In a democracy, it wa s sometimes difficult to justify the need to amend
a national statute or policy because of a decision by an international tribunal taken behind closed
doors.  Making the system more transparent would not  only ensure efficiency, but would also increase
the confidence of the general public in the system.  Regarding amicus curiae , he said that he was
aware that this issue was very sensitive for a number of delegations as was demonstrated during the
discussion of this issue in the recent past by the General Council.  What the EC and its member Stateswanted was negotiations on this issue.  It was not  their intention to impose a solution on Members.  It
was important to bear in mind that there were several ways through which powerful lobby groups
could make their views known such as publishing them in the newspapers.  Panelists and members of
the Appellate Body read these publications and could be swayed by the arguments presented therein.
It would therefore be advisable for Members to exert control over the process.  The EC hoped that thenegotiations would strike a balance between the interests of Members.  He referred to the other issues
contained in the EC proposal and said that he was ready to answer any questions that delegations
might wish to raise.
66. The representative of Bulgaria welcomed the EC proposal which, he said, contained a number
of valuable ideas.  Some of the proposals were very timely and his delegation was prepared to support
them.  The most significant of all the proposals, in Bulgaria's view, was the proposal for the
establishment of a permanent system of panelists.  This would be a major step in the development of
the dispute settlement mechanism and would lead to a greater degree of independence of panels and
thereby of the dispute settlement as a whole.  The independence of the judiciary was a fundamental
feature in all modern constitutional systems and it should be ensured at all levels of dispute settlement
in the WTO.  As things stood now, if the parties to the dispute could not agree among themselves on
the composition of a panel, panelists were appointed by the Director-General.  At the same time it wasthe Secretariat which assisted panels in the drafting of reports.  The combination of these two aspects
compromised the independence of panels.  A standing panel body with a secretariat of its own, like
that of the Appellate Body, would ensure indepe ndence.  This development would contribute to a
more favourable perception of the dispute settlement mechanism and of the WTO as a whole by the
general public, and thus enhance the acceptance of the multilateral trading system by differentconstituencies in different countries and the legitimacy of the WTO as a whole.
67. He stated that another issue which deserved consideration was the issue of sequencing and
that his delegation was prepared to support a clarification of the relevant provisions of the DSU in this
respect.  As had been repeatedly stated by his delegation, the most appropriate way to proceed was
through an interpretation of the DSU.  His delegation was, however, not prepared to "pay" forsequencing by agreeing to shorten the time-frames of panel proceedings;  i.e. shortening the time-
period for consultations or agreeing to the establishment of panels at the DSB meeting at which the
item first appeared on its agenda.  Another proposal supported by his delegation was the one relating
to the outlaw of the "carousel" practice under which Members unilaterally modified the list of
products subjected to sanctions.  His delegation was supportive of other proposals contained in thesubmission of the EC including those relating to remand authority and the increase in the number of
Appellate Body members.  Bulgaria supported the proposal to open up the dispute settlementTN/DS/M/1
Page 18
proceedings to the general public but only in those cases where the parties to the dispute consented.  It
believed that this held out the best possibility of  reaching consensus on this controversial issue.  On
the issue of amicus curiae  briefs, Bulgaria believed it might be better to try to find a balance on this
controversial issue by consensus, rather than to leave it to be decided by panels or the Appellate Body.
68. The representative of Hong Kong, China than ked the EC, Thailand and the Philippines for
their proposals.  He said that he had some preliminary comments on these proposals and that his
delegation was looking forward to hearing the views of other delegations and receiving more
proposals in the near future including the one being prepared by Japan and the co-sponsors.  He
referred to the informal meeting of 14 March at which his delegation had made preliminary comments
and observations on some of the issues covered in the EC proposal.  He did not wish to repeat that
statement but to highlight its salient elements.  On the issue of the desirability of having permanent
and full-time panelists, he said that his delegation had an open mind.  It saw some merits in such asystem.  With the increasing complexity and technicality of dispute settlement cases, permanent and
full-time panelists could ensure higher quality reports and minimize the problem of conflict of
interest.  On the other hand, there were a number of complicated practical issues that needed to be
considered in detail such as:  (i) the costs for setting up such a system and the appropriate level of
remuneration for the panelists;  (ii) whether the proposal relating to making Appellate Body membersfull-time employees should be reconsidered;  and (iii) whether the permanent panelists should be
supported by a team of dedicated lawyers like the case of the Appellate Body Secretariat.  Other
related issues such as the methods for selecting panelists and allocating panelists to hear a specific case
would also require detailed consideration.  Given the complexity of the issues involved, his delegation
doubted whether this was an area where early consensus could be reached.
69. Second, on the sequencing issue, his delegation supported resolving the ambiguity in the
relationship between Articles 21.5 and 22 of the DSU.  This would provide greater predictability to
the system.  Nevertheless, there were still a number of issues that required further deliberations,
including whether it was necessary to hold prior consultations, whether parties should have the right
to appeal the rulings of a compliance panel, and whether parties should have the right of secondrecourse.  His delegation would study the EC proposal together with the proposal to be submitted by
Japan and other co-sponsors and might offer comments at a future occasion.  Third, while his
delegation agreed that trade compensation was preferable to suspension of concessions as a remedy in
WTO dispute settlement, at least from the viewpoint of developing-country Members, the EC proposal
failed to show how trade compensation could be effectively enforced.  One possibility was to borrow
from the concept enshrined in Article 8 of the Safeguards Agreement which obliged non-complying
parties to offer compensation.  In the absence of an agreement on compensation, the complaining partywould be entitled to faster relief when it made a request for the suspension of concessions.  Fourth, his
delegation supported the proposal of the EC relating to  modification of suspended concessions;  i.e. the
carousel issue.  While his delegation believed that carousel was illegal under the DSU, some clarification
and certainty in this regard would be helpful.  Fifth, regarding the issue of transparency, it was clear that
Members held divergent views.  There was some concern that the presence of non-governmental bodiesmight politicise dispute settlement proceedings and put undue pressure on parties to the disputes.  His
delegation had some serious reservations against pursuing this particular proposal in the context of the
current review.  To enhance internal transparency, consideration should be given to opening up the entire
dispute settlement process to third parties and other Members of the WTO, except when business
confidential information was being considered.  Regarding the issue of amicus briefs, while his
delegation agreed that there was a need to clarify the rules concerning the treatment of such briefs, it
doubted whether adopting the cumbersome procedures developed by the Appellate Body was the
appropriate way forward.  Finally, he said that his delegation had an open mind on the proposal to give
the Appellate Body the right to remand cases to the panel.  It saw some merits in the proposal, as there
was a risk of the Appellate Body violating Article 17.6 of the DSU if it addressed issues on appealwhich had not been considered by a panel.  Remand authority would help to avoid such situations.
However, it should be borne in mind that it could add to the time-frame of the dispute settlement
mechanism.TN/DS/M/1
Page 19
70. The representative of Switzerland thanked the delegation of the EC for its substantial
contribution and said that his delegation supported a large number of the proposals tabled in the paper.
He hoped that the EC paper would energize the negoti ating process.  Turning to the substance of the
proposals, he said that there were persuasive reasons for having a system of permanent panelists.  It
would, however, be helpful if an analysis was made of the current workload of the panelists and thefinancial implications of making a switch before discussing the number of panelists that would be
required.  Consideration should also be given to the selection process which needed to be transparent
and reflective of the interests of all Members.  As an interim solution, Members might wish to
consider a mixed system of a few permanent full-time panelists and some ad-hoc  panelists.  He further
stated that his delegation saw a link between this pr oposal and the one relating to the need to increase
the membership of the Appellate Body and converting their current part-time positions into full-time
positions.  It was important that the balance of power between panels and the Appellate Body bemaintained and the reinforcement of both dispute settlement institutions be addressed at the same
time.  With regard to the sequencing issue, he stated  that his delegation attached priority to it and saw
a need to address it definitively.  He said that as a result of the last DSU review in 1998/99, there were
already very useful text proposals which could serve as a good basis for the negotiations.  His
delegation fully shared the view that trade compensation was preferable to the suspension ofconcessions, as the latter could have adverse ramifications on both the economies of the complaining
and responding Members.  While his delegation shared the view that transparency of the dispute
settlement mechanism could be improved, it doubted whether it was necessary to grant public access
to proceedings before the panel or the Appellate Body.  It was inclined to believe that improving
access to the relevant documents including the written submissions of the parties would be far moreuseful.  In that context, he pointed out that it was the prerogative of Members to decide how and when
to inform the public on the course and outcome of a proceeding.  On the issue of amicus curiae  briefs,
his delegation was of the view that Members should discuss this issue and agree on a framework for
handling such briefs.
71. The Chairman stated that he had requested the Secretariat to provide information on the
current workload of panelists and their operating costs.  He also invited the EC to share its financial
estimates of the cost for switching to a system of permanent panelists with other delegations.
72. The representative of Peru said that her delegation agreed with the statement by the
Chairman.
73. The representative of the European Communities said that it would be useful to obtain the
requested information from the Secretariat.  This could serve as a benchmark for further analysis to be
carried out by the EC.  Once such analyses were completed by the EC, they could be given to otherdelegations, provided that agreement wa s obtained from the EC member States.
74. The representative of Thailand said that the EC proposal would provide the necessary boost for
the negotiations.  Regarding the proposal to switch to  a system of permanent panelists, he agreed with
the representative of Hong Kong that the financial implications should be thoroughly discussed first.
Whereas it was relatively easy to select qualified candidates to serve as panelists, it was imperative toensure geographical balance so as to take into account different legal systems.  It was advisable in this
context for Members to learn from the experience of other judicial bodies including the International
Court of Justice and the International Tribunal for the Law of the Sea before taking a decision.  On the
issue of sequencing, he said that his delegation attached priority to it and saw a linkage between it and
the "carousel" issue.  It was Thailand's view that these two issues should be addressed at the sametime so that Members could have a clearer picture of compliance procedures under the dispute
settlement mechanism.  He further stated that his delegation was also of the view that trade
compensation was a better alternative to the susp ension of concessions.  In that context, the
suggestion that the non-complying party should be encouraged to offer to the prevailing party a
compensation package upon receipt of a request from the latter was welcomed.  His delegation sawmerit in the proposal to amend the DSU so as to allow a complaining party to have recourse toTN/DS/M/1
Page 20
arbitration to determine the level of nullification and impairment before authorization was granted by
the DSB for the suspension of concessions.  On the issue of transparency which was, in principle, a
fundamental principle of the WTO, his delegation was reluctant to open up panel and Appellate Body
proceedings to the general public given the sensitive nature of some of the disputes.  With regard to
amicus curiae  briefs, his delegation was of the view that caution should be exercised.  It was prepared
to hear more views on this issue and would be interested in knowing how much weight would be
given to amicus curiae briefs by panels and the Appellate Body.
75. The representative of Chile said that his delegation could support many of the proposals
advanced by the EC.  His comments would, how ever, concentrate on those on which Chile had some
doubts.  On the issue of moving to a permanent system of panelists, it was important to bear in mind
that the dispute settlement system could not be likened to a court of law.  His delegation doubted
whether the independence of panelists would be enhanced if they were appointed on a permanentbasis.  The fact of the matter was that panelists were now independent.  The real problem was the
workload of panelists.  Because of the sheer volume of work, government officials who were
appointed as panelists often found it difficult to fulfil their mandates.  Ultimately, the question was
what kind of service Members wished to have .  Against this background, his delegation would
advocate for a mechanism under which it would be easier to designate panelists who would be able todevote more time to cases even if it implied engaging the panelists on a permanent basis.  While
having permanent panelists could be desirable, it should be borne in mind that in certain cases, there
would be the need for panelists in specialized areas such as the Law of the Sea, Environmental Law,
Financial Services and Telecommunications.  Expertise in these areas might not be available in a
limited pool of permanent panelists.  Another approach  would be to examine the most frequent type of
cases that had been initiated by Members and select a group of panelists specialized in these areas.  A
look at the cases would reveal that a significant number had involved contingency protection
measures.  As a first step, a group of permanent panelists could be created to handle such cases.  This
would result in a reduction of the workload of panelists.  It was evident that there were many
approaches to this issue and care should be exercised in making a decision.  His delegation was inagreement with the proposal by Switzerland that there should be an experimental phase where there
would be a combination of permanent panelists and ad-hoc panelists.
76. On the issue of transparency, he reiterated his earlier statement that the dispute settlement
system of the WTO was not like a court of law.  There was the need to create space for diplomatic
action to settle disputes and allow Members to retain political control over the process.  Subjecting the
panel process to public scrutiny before decisions were made by panels could complicate the process
and make it harder for the parties to the dispute to reach mutually acceptable solutions.  The proposalson transparency were intended to benefit special interest groups whose objectives might not
necessarily coincide with the general interest of  Members.  While transparency was a fundamental
principle in the WTO system, there were also other equally important principles which needed to be
observed for the smooth functioning of the WTO.  It  would not be advisable to reduce the space that
Members had to settle disputes nor circumscribe the political control they had over the process.  Withregard  to amicus curiae  briefs, he stated that while the procedure might be satisfactory in the
domestic context, this was not the case in the WTO context.  The argument of the EC that panels and
the Appellate Body members could be influenced by publications in the newspapers was not
persuasive.  In fact, panels and the Appellate Body would only consider documents submitted during
the course of the proceedings.  With respect to compensation, he stated that while his delegationbelieved that this remedy could be improved and made more attractive, it should not be forgotten that
the primary remedy of the dispute settlement mechanism was compliance.  Efforts should be directed
at creating incentives for compliance.  There was the risk that Members might chose not to comply
with the DSB's recommendations and rulings, if they thought that they could easily offer
compensation.
77. The representative of Japan said that it was not the intention of Japan to offer detailed
comments on the various proposals submitted by the EC, but to offer preliminary views on a fewTN/DS/M/1
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points.  In relation to the sequencing issue, Japan was working with other delegations to put forward a
detailed proposal for Members' consideration.  With regard to a system of permanent panelists, Japan
was in agreement with EC that the switch could pr oduce significant benefits for the dispute settlement
system.  He stated that his delegation was concerned about the limited pool of panelists under the
current system given the power of the disputing parties to reject panelists proposed by the Secretariat.This had resulted in having a few people acting over and over as panelists.  In a way, it could be said
that there was a de facto system of permanent panelists.  The current workload of panelists was also a
source of worry.  As had been alluded to by the EC, panel work could be time-consuming and not
particularly rewarding.  If the EC proposal could effectively resolve all these problems, his delegation
was ready to support it.  There were a few things which had to be clarified before making the switch.
First, there needed to be consistency in the reports which would be produced, as panels might be
called upon to decide disparate and sometimes technical subjects.  Second, it was important to ensurethat only people with the requisite knowledge and experience were selected to decide a particular
case.  In that context the figure of 20 panelists suggested by the EC might not be adequate considering
the varying subjects which could be the subject of dispute settlement.  Third, it was necessary to
analyse the financial implications before making the switch to a system of permanent panelists.  In
that context, his delegation would welcome the circulation of the financial estimates prepared by theEC.  Fourth, consideration should be given to the question as how to select this group of permanent
panelists.  On the basis of the Appellate Body's experience it would be a difficult exercise.  Turning to
compensation, he said that his delegation shared th e view of the EC that retaliatory measures were
fairly restrictive and that compensation could have a more positive impact on global trade
liberalization.  He stressed, however, that the primary remedy of the dispute settlement mechanismwas compliance.  There was the risk that excessive recourse to compensation could undermine the
effectiveness of the dispute settlement mechanism.  He urged caution as far as the proposal relating to
compensation was concerned.  Regarding the proposal relating to suspension and adjustment of the
level of retaliation, he said that while his delegation was sympathetic to this proposal, it had some
doubts about the method used to calculate nullification and impairment of benefits under the coveredagreements.  The proposal to modulate the level of retaliatory measures could have the unintended
effect of encouraging the partial implementation of the DSB's recommendations and rulings which
would not be positive for the dispute settlement mech anism.  With regard to transparency, he stated
that his delegation had listened with interest to the views expressed by other delegations.  He
reminded delegations that there were two types of transparency, namely internal and external
transparency and that it was imperative to ensure a balance between the two.  With respect to amicus
curiae  briefs, he said that the position of his delegation was well-known.  It was prepared to
contemplate the acceptance of these briefs by panels and the Appellate Body if certain conditions
were satisfied including that the briefs should not delay the panel procedures and they should not
impose an extra burden on the parties to the dispute.
78. The representative of Malaysia referred to his statement made at the 14 March meeting in
which he had indicated the changes that his delegation wished to have in the DSU.  At the present
meeting, he did not intend to re-state all of them but to confine himself only to a few preliminary
remarks on the EC proposal.  Regarding the possibility to provide remand authority to the Appellate
Body, it was his delegation's view that it was an interesting proposal which deserved further
consideration.  With respect to switching to a permanent system of panelists, it was necessary to
consider the financial implications which were likely to be profound as they would cover pensionpayments and other allowances to permanent panelists.  This could represent an increase in Members'
annual contribution to the WTO's budget.  It was doubtful whether a permanent system of panelists
would necessarily enhance their independence more than was the case presently.  One limitation was
that it would be extremely difficult, if not impossible to find experts in all areas that could be the
subject of adjudication.  Notwithstanding these shortcomings, the proposal merited furtherconsideration.  There was the need for a free and frank exchange on the shortcomings of the current
system and an examination of the possible benefits of the new system to determine if they outweighed
the costs.  Consideration could be given to the approach taken under the Agreement on Subsidies and
Countervailing Measures where a Permanent Group of Experts had been established with a view toTN/DS/M/1
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assisting in the settlement of disputes.  These experts who could be called upon to settle disputes,
were not necessarily residing in Geneva and were not entitled to receive pension payments thus
reducing the cost for their engagement.  The current system of selecting panelists could possibly be
continued but with the chairperson being selected from the  Permanent Group of Experts.  It was
probably not feasible to have a Permanent Group of  Experts under every WTO Agreement.  Withregard to transparency, he stated that his delegation had serious concerns and it was his wish that
other delegations would appreciate their position.  Admission of amicus curiae  briefs would place an
intolerable burden on developing countries most of which were capacity-constrained.  The
development of guidelines for the admission of such briefs would not ease the problems of developing
countries, as they would be obliged to examine each submission and prepare their responses.  This
would be time-consuming.  With respect to opening up the dispute settlement process to the general
public, he stated that his delegation also had some serious concerns.  They were of the view that theintergovernmental and contractual nature of the WTO should be preserved.  The positions taken by
governments at the WTO were shaped by differing interests and it was up to firms and other interested
groups to get their views to be taken into account at the domestic level.  The protection of business
secrets would be difficult if the process was opened up to the general public.  Opening up the process
to the general public for a limited duration could have negative ramifications if it was realized thatwas done for publicity purposes.
79. The representative of Ecuador said that, at this stage, he would offer only preliminary
comments on certain elements of the EC proposal.  The first was about the revision of time-frame
under the DSU.  The EC proposal was very ambitious and would have significant implications for
developing countries.  As had been previously noted, his delegation was not against the revision of
some of the deadlines in the DSU insofar as th ey would not prejudice the position of developing
countries and prevent them from participating actively and equitably in the dispute settlement process.
In relation to switching to a permanent system of panelists, he said that this was probably the most
ambitious of all the proposals made by the EC.  Given the concerns raised earlier, his delegation
wanted to give further thought to this proposal.  It was important to keep in mind the positive aspectsof the present system including flexibility in the selection of qualified people to serve as panelists in
highly technical and complex cases.  In relation to the participation of third parties in the dispute
settlement process, he stated that his delegation was in  favour of extending their participation in all
phases of the process.  They should be entitled  to receive all documents including the working
procedures adopted by each panel.  In relation to transparency, two issues were of concern to his
delegation.  The first was how to deal with amicus curiae  briefs.  It was Ecuador's view that
negotiations on this issue should not be based only on the EC proposal or other proposals to besubmitted by other delegations but also on the discussions which had taken place in the General
Council on this issue.  A number of delegations had expressed strong opposition to their admission in
the dispute settlement process and these should not be ignored.  Establishing guidelines for their
acceptance would widen the present imbalance in the participation of developing and developed
countries in the dispute settlement mechanism of the WTO.  On the opening up of the process to thegeneral public, his delegation was of the view that this would fundamentally distort the structure of
the DSU and allow some private companies and non-governmental organizations greater participation
in the system than many developing countries.  It was imperative that the intergovernmental character
of the WTO be preserved.  In relation to sequencing, he stated that his delegation was working with
other delegations to submit a proposal on this issue.  Work in this regard was in the final stages and itwas their intention to hold consultations on it with interested delegations very soon.  On
compensation, he said that Ecuador supported the suggestions made by the EC and was in the process
of preparing a paper on this issue for circulation to Members.  Their basic objective was to improve
the possibilities of negotiating compensation in the event of non-compliance by the responding
Member.  Compensation should not been seen as a substitute for implementation but rather as apreferred alternative to the suspension of concessions or other obligations which was not
advantageous for the system, particularly for developing countries.TN/DS/M/1
Page 23
80. The representative of Korea said that his authorities were carefully examining the proposal
submitted by the EC.  At this stage, he wanted only to offer a few comments on the issue of
compensation.  Compensation and retaliation were temporary measures which could be resorted to
only when it was not possible to comply with th e DSB's recommendations and rulings.  Compensation
was preferable to retaliation, as the latter increased trade barriers and affected many innocent victims.He reiterated that the primary goal of WTO dispute settlement system was compliance and that
neither compensation nor retaliation should be seen as an alternative to it.  He cautioned against the
extensive use of compensation and said that it could compromise the integrity of the dispute
settlement mechanism.  A mechanism was needed to ensure that Members which offered
compensation did not keep their WTO-inconsistent measures for a long period of time.
81. The representative of Hungary said that her delegation supported the basic thrust of the EC
proposal.  Hungary was concerned about the implementation phase of the dispute settlement process
and would like it to be addressed thoroughly in the negotiations, as it could undermine the credibility
of the whole system.  On the issue of "carousel sanctions", she stated that her delegation was in
agreement with the EC that a Member could not unila terally modify the list of suspended concessions.
Her delegation was of the view that there was the necessity to resolve the issue of sequencing the
procedures in Articles 21.5 and 22 of the DSU.  This would ensure legal certainty and provide greaterpredictability to the system than the current practice of reaching bilateral agreements between the
parties in each case.  Hungary was of the view that it was necessary for consultations to be held before
recourse could be made to Article 21.5 of the DSU and that parties should also have the right of
appeal.  On the issue of compensation and suspension of concessions, his delegation was of the view
that the former was preferable.  While it was true that Members had generally shown a preference forthe suspension of concessions, it should be remembered that it was the remedy of last resort.  There
was possible scope for improvement in the remedies provided under the WTO dispute settlement
mechanism.  Regarding the proposal for a system of permanent and full-time panelists, it was her
delegation's view that it would increase efficiency and improve on the quality of the panel reports.
The increased number of cases and the complexity of the issues raised by some of them hadsubstantially increased the workload of panelists.  A system of permanent panelists could ensure
greater expertise and minimise the problem of conflict of interest.  The group of panelists that would
be selected should be broadly representative of the membership of the WTO.  She further stated that
her delegation supported initiatives to enhance the transparency of the dispute settlement mechanism
and also to strengthen third-party rights.  The proposal by the EC in this area represented a middle
ground between the present practice and the most ambitious suggestions.  On the issue of amicus
curiae  briefs, it was her delegation's view that there was the need to clarify the framework and
conditions under which they could be accepted.
82. The representative of Norway said that the time-frame for completing the negotiations was
short and that it was necessary to focus on the important issues to be addressed in these negotiations.
He referred to the proposal by the EC and said that there appeared to be convergence of views in six
main areas.  The first was on the issue of sequencing.  He said that his delegation was co-sponsoring apaper on this issue which should be circulated shortly.  The second was on the issue of streamlining
the panel process.  It appeared that almost all delegations which had spoken on this subject were in
favour of switching to a system of permanent panelists, although Japan and some other delegations
had pointed to some difficulties in this regard.  The third issue on which there was broad consensus
was the proposal to grant remand authority to the Appellate Body.  There were some few points whichmerited further consideration.  The fourth, and perhaps the most thorny issue, was the issue of
transparency.  Members had expressed divergent views on the issue of amicus curiae  which
underscored the necessity for further discussions.  However, at this stage he did not wish to comment
on this issue.  He encouraged delegations with opposing views to present their proposals in writing so
that there could be an informed discussion on this issue at the next meeting of the Special Session.The fifth issue was compensation.  He stated that he was again not going to offer any comments on
the EC proposal until such time there had been more textual proposals by other delegations.  The last
issue was the participation of third parties in the dispute settlement process.  He noted that this issueTN/DS/M/1
Page 24
had initially been raised by Norway and was later supported by a number of delegations including
Ecuador, Hungary and Hong Kong, China.  The ideas presented in the EC proposal were useful and
could form the basis of an agreement.
83. The representative of Venezuela said that his authorities were carefully examining the EC
proposal to determine which elements it could support.  The idea of having a system of permanent
panelists was not new.  The Andean Community of which Venezuela was a member had a Court of
Justice whose judges were engaged on a permanent basis.  Given its experience with the proposed
system at the sub-regional level, Venezuela was studying with great interest the proposal by the EC to
have such a system at the multilateral level.  His delegation supported the statement by Thailand that
it would be worthwhile to learn from the experien ce of other international tribunals, including the
International Court of Justice and the Law of the Sea Tribunal.  While their jurisdiction might be
different, what could be interesting in the WTO context was that they were standing  judicial bodies.It would be extremely useful if the Secretariat could provide information  on how these tribunals
operated in practice and circulate it to Members.  With regard to sequencing, he stated that his
delegation together with some other delegations were in the process of drafting a proposal on this
issue, which would be circulated to delegations as soon as possible.
84. The representative of India said that his delegation had a number of questions in writing
aimed at achieving a better understanding of the EC proposals.  He stated that the questions had been
provided to the Secretariat with the request that they be circulated to Members.  His delegation wished
that the EC provided answers to these questions in writing and circulated its responses to Members.
The list of questions was not exhaustive and India retained its right to ask further questions.  He
indicated that India would be submitting its proposals in due course.  With regard to amicus curiae
briefs, he said that Members were familiar with India's position on this issue.  India's views had been
articulated in its interventions in the DSB, especially in the Shrimps/Turtle  and the British Steel  cases
and also at the Special General Council meeting of 22 November 2000 in connection with the
Appellate Body’s proposals for admission and consideration of amicus  briefs in the Asbestos  case.
With regard to the present proposal of the EC, India reiterated that acceptance of such briefs would be
tantamount to giving rights to private entities, which otherwise had no standing before the WTO.
This would undermine the inter-governmental character of the WTO dispute settlement system and
place considerable burden on governments, especially developing-country Members if they had to
respond to these claims.  It would also delay the panel process.  It should be borne in mind that
ultimately it was governments which had to comp ly with the DSB's recommendations and rulings and
not private parties or non-governmental organizations.  It should further be borne in mind that
governmental positions in disputes were arrived at after consultations with all domestic stakeholders.If governments knew that their non-governmental agencies had a further chance to influence the
dispute settlement mechanism, they might take more time to finalize their positions.  There could even
be implications for compliance by  governments themselves.  There was the additional issue as to who
should verify that the information submitted by non-governmental entities was correct and truthful or
should it be assumed to be correct and truthful in good faith?  There were a lot of unansweredquestions including:  (i) whether new claims and new arguments not raised by the parties to the
dispute could be raised in such briefs?;  (ii) w ould the parties to the dispute have an opportunity to
seek clarifications on the amicus curiae  submissions?;  (iii) who would determine whether an entity
had a direct interest in the factual or legal issues raised in the dispute?;  (iv) what parameters should
be used to determine whether an entity had demonstrated such a direct interest?;  (v) could any of theparties or the third parties to the dispute adduce evidence and object to the fact that the entity had not
demonstrated such a direct interest?;  and (vi) w ould the panel/Appellate Body be required to give a
reasoned explanation of why certain submissions or parts thereof were addressed in its report to the
exclusion of other submission or parts thereof?  In  its proposal, the EC sought to distinguish between
the submission and consideration of amicus curiae  briefs and the right of any WTO Member to
participate in dispute settlement proceedings as a third party.  India asked the EC to elaborate on this
distinction.  With regard to the proposal on switching to a system of permanent panelists, the EC
stressed prior experience being an important factor in the selection of panelists.  India did not shareTN/DS/M/1
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this view, as prior experience did not mean that a panelist could not commit errors.  He referred to
EC-Computers, EC -Asbestos and Guatemala Cement1  where virtually all the findings of the panel
had been reversed by the Appellate Body, even though some of the panelists had served as panelists in
previous cases.  The financial implications of the EC proposal on permanent panelists also needed to
be examined.  In respect of the EC proposal to make trade compensation a realistic alternative tosuspension of concessions, he stated that there was the risk that it could encourage Members to
maintain inconsistent measures for a longer period of time.  This could militate against the interests of
Members not parties to the dispute and would be against the key objective of the dispute settlement
mechanism, which was to secure the withdrawal of WTO-inconsistent measures.
85. The representative of Singapore said that her delegation had a number of comments on some
of the elements contained in the EC proposal.  While the proposal relating to switching to a system of
permanent panelists was interesting, further thought should be given to its possible implications.  Itwas doubtful whether it would address the problem of finding qualified panelists in highly complex
and technical cases.  There was also the issue of financial implications if the change was effected.
Her delegation was looking forward to receiving the relevant data in that respect.  Further thought
should be given to how to ensure the independence of panelists and the prevention of conflict of
interest.  To deal with the recurring problem of parties to a dispute blocking the selection of panelists,it might be a good idea to examine the possibility of choosing panelists on a random basis and
encouraging prospective panelists from disqualifying themselves if there was the possibility of a
conflict of interest.  On amicus curiae  briefs, it was her delegation's view that it was only parties and
third parties to the dispute which had the standing to participate in the proceedings.  On transparency,
there was the need to preserve the intergovernmental nature of the WTO.  Disputes were betweengovernments and this should remain the case.  It was doubtful whether opening up the process to the
general public would be beneficial for the system.  On the contrary, there was the risk that it could
create unnecessary pressures and work against the speedy resolution of disputes.  Further thought
should be given to enhancing internal transparency by increasing the rights of third parties to the
dispute.  On sequencing, her delegation could support the views that had been expressed by otherdelegations.
86. The representative of Cuba said that her authorities were studying the EC proposal and
therefore at the present meeting she would only make preliminary comments on a few issues.
Concerning transparency, her delegation supported th e views expressed by Chile and Malaysia that it
would not be advisable to open up the process to th e general public.  The inter-governmental nature of
the system should be preserved in order to prevent the process from being hijacked by private parties
and non-governmental institutions.  Transparency should exist at three levels, namely at the level ofthe parties to the dispute and third parties, Members that were not participants and the public at large.
A careful assessment of the implications of opening up the process to each category was required.
Cuba was convinced that opening up the process to the public at large was not the right solution.  On
amicus curiae  briefs, Cuba agreed with the EC that it was necessary to agree on a framework and
conditions for authorizing amicus cuiae  submissions.  Cuba was of the view that these submissions
could be very helpful to panels since they could shed some light on certain complex and technical
issues.  Only solicited information should be accepted by panels.
87. The representative of Indonesia stated that his delegation could support a number of elements
in the EC proposal especially those relating to the implementation phase of the dispute settlement
process.  On sequencing, Indonesia believed that while Members were resolving the problem throughbilateral agreements, it would be better to have a multilateral solution as that would promote certainty
and predictability.  On compensation, his delegation was in agreement with other delegations that it
was preferable to suspension of concessions.  However, he cautioned that the primary remedy of the
dispute settlement system of the WTO was the withdrawal of the inconsistent measure.  His
delegation was appreciative of the point made by India relating to the implications for third parties.On the issue of switching to a system of permanent panelists, his delegation was of the view that it
could improve the system, but like other delegations , it wished to give it a further thought.  TheTN/DS/M/1
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current dispute settlement system was not fully a judicial process.  Having a system of permanent
panelists might make it more judicial and this could fundamentally alter the structure of the DSU.
The issue of flexibility was also important.  Under the current system, it was possible to find experts
in various areas to serve as panelists.  This might not be the case when a switch was made to a system
of permanent panelists.  Furthermore, under the present system, it was possible for a party to a disputeto either accept or reject a proposed panelist.  This prerogative might be lost under the proposed
system.  How to select the group of permanent panelists also deserved further consideration.  On
transparency, he said the issue could not be considered in isolation and that it should be seen as part of
the broader debate in the WTO about internal and external transparency.  Indonesia's priority at this
stage was to improve internal transparency in  the sense of keeping all Members abreast of
developments on issues of interest to them.  In relation to the proposal to open up the process to the
general public, Indonesia did not see the need for it.  It was the task of each government to coordinateand inform its citizens and other interested groups about developments or progress on each case.
Likewise it was their responsibility to explain the full implications of a decision handed down by a
panel or the Appellate Body.  The WTO's dispute settlement mechanism combined diplomatic and
judicial elements and as such it was necessary to maintain space for diplomatic and political solutions
to be explored.  On amicus curiae  submissions, his delegation did not see the need for them.  If
accepted, they could place a substantial burden on developing countries, as they would be obliged to
examine and respond to them where necessary.
88. The representative of the United States said that as the EC proposal was likely to be the basis
for much of the discussions that would take place,  his delegation had a number of questions aimed at
clarifying some of the proposals.  His authorities were reviewing the paper but he had some questionswhich he would like to pose to the EC.  On the i ssue of permanent panelists, he wished to know what
criteria would be used in selecting panelists.  He noted that some of the best panelists at present were
in government service.  It appeared that the criteria in the EC proposal differed from the criteria
spelled out in the DSU.  The United States was also interested in finding out more about the budgetary
implications and whether the flexibility under the curr ent DSU in terms of the ability to select highly
specialised panelists to hear technical and complex cases would be affected.  With respect to remand
authority, his delegation had a number of questions:  (i) whether it would affect the overall timing of
the dispute settlement process?;  (ii) who would decide whether to pursue a remand?;  and (iii) would
there be the opportunity for multiple remands betw een the Appellate Body and the Panel?  With
respect to compensation, he wondered how the proposal s of the EC would fit into the overall dispute
settlement procedure.  With respect to mutually agreed solutions, clarification of the term "subject to
the disciplines of a covered agreement" would be extremely helpful.
89. The representative of the European Commun ities said that the detailed comments and
questions raised at the present meeting underscored the seriousness that Members attached to the EC
proposal.  He sensed that there was an eagerness on the part of all delegations to engage and that was
very welcomed.  As pointed out by Norway, there appeared to be a growing consensus on a number of
elements.  There was still a lot of work ahead and it was likely that other proposals would besubmitted in due course by other delegations.  He said that he was not in a position to respond to all
comments and questions that had been raised by delegations, but he would like to respond to some of
them.  With regard to the suggestion by Hong, Kong, China concerning compensation and the idea of
borrowing from Article 8 of the Safeguard Agreement, he expressed some doubts about its viability,
but said that a further thought would be given to it.  On the issue of permanent panelists, he said thathe had noted with interest the proposal by Switzerland and other delegations that consideration should
be given to having in the initial phase a mixed system of permanent panelists and ad-hoc panelists.
This would guarantee the flexibility under the present system in terms of being able to appoint
panelists with expertise in highly complex and technical cases.  It was obvious that from a pool of 20
panelists, it might not always be possible to have the required expertise.  With regard to budgetaryimplications, the EC and its member States would do their best to come up with some estimates.  In
relation to the comment by Japan on compensation, he said that compensation should generally have
the same impact as suspension of concessions in inducing compliance.  The trade effect of eitherTN/DS/M/1
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measure should be the same as in both cases the Arbitrator would have to determine the level of
impairment and give the necessary figure.  The only difference between the two measures was that
compensation had to be given on a non-discriminatory basis, while suspension of concessions was on
a selective basis.  Given the changing pattern of the global economy, especially the interdependence
between countries, it was difficult to target the exports of the responding Member without injuring orcausing collateral damage to the importing countr y's interests.  On the issue of transparency,
particularly amicus curiae  submissions, he said that he had noted the divergences in the views of
Members, but wished to stress that the EC was intere sted at this stage in opening a discussion on this
issue.  Given the engagement of Members, the EC  hoped that a solution would be found with regard
to this matter.  It was not the intention of the EC  to impair the intergovernmental character of the
dispute settlement system nor did it wish to incr ease the burden on Members, in particular developing
countries.  There was a need to have a regulatory framework which would be of benefit to allMembers, in particular developing countries.  The EC was willing to discuss openly and freely with
those who were favourable to greater transparency, as well as with those delegations which were still
cautious on this issue.  The EC was convinced that eventually a solution would be found.  He said that
the EC would do its best to respond to India's questions in writing and encouraged other delegations
to submit any questions they might have on the EC proposal in writing.
90. The Chairman said that there had been a lively discussion of the EC proposal and that it was
his intention to give further opportunities to delegations to comment on all the proposals on the table
and react to the views expressed by the proponents.  Turning to future work, he said that due to time
constraints, the proposal of Thailand (TN/DS/W/2) and the joint proposal of Philippines and Thailand
(TN/DS/W/3) would be taken up at the next meeting of the Special Session in May after their formalsubmission by the these countries.  To facilitate the preparations for the May meeting, he enquired if
any delegation was considering submitting a proposal.  He reminded delegations that there would be
no meeting in June and that the next meeting after the May meeting would take place in July.  He
encouraged delegations to submit all their proposals before the summer break.  He warned that failure
to do so could create problems considering the time-period within which the negotiations would haveto be completed.
5. Other business
(a) Participants and observers in the negotiations
91. The Chairman said that he wished to addre ss briefly the issue of participants in the
negotiations and observership for intergovernmental organizations and to take stock of the ongoing
work of the TNC in this regard.  He recalled that under the terms of Paragraph 48 of the Doha
Ministerial, acceding countries were participants in the negotiations.  On this issue, there appeared to
be an emerging consensus that this would involve attendance at formal and informal meetings and the
ability to submit proposals.  However, such delegations could not participate in decision-making.  In
addition, under the terms of Annex 3 paragraph 3 of the Rules of Procedure of the General Council,
which were also reflected in the Rules of Procedure of the DSB, requests for observer status from
organizations shall not be considered for meetings of  the DSB.  The only exceptions foreseen were in
favour of the World Bank and the IMF, in accordance with the agreements concluded between them
and the WTO.  As Members were aware, the  Director-General, in his capacity of Chairman of the
TNC, had been conducting consultations relating to the issues of participation and observership in
negotiating bodies.  He would be pursuing these consultations until 24 April when the next formal
meeting of the TNC would take place.  An  informal consultation on this matter would also be held on
17 April 2002.  In light of these ongoing consultations, he wished to propose that the Special Session
of the DSB take note of this ongoing work and agree to revert to the matter once it had been clarified
and discussed in the context of the TNC.
92. It was so agreed.TN/DS/M/1
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(b) Scheduling of meetings
93. The Chairman recalled that, with regard to the organization of meetings, he had followed the
guidelines on the scheduling of meetings, and in particular that two negotiating bodies should not
meet at the same time.  In light of this and other concerns expressed by  some delegations that
meetings should not be too frequent so that they could be effectively attended, he had aimed toschedule approximately one meeting per month until the end of this year, with the exception of the
month of June.  The final calendar of special sessions fixed for the rest of the year was as follows:
16 April, 21 May, 15 and 16 July, 10 and 11 September, 14 October, 13, 14 and 15 November and 16,
17 and 18 December.  He said that he had endeavoured to organize these special sessions as much as
possible back-to-back or nearly back-to-back with regular DSB meetings.  However, this had not
always been possible due to the very strict rules governing the scheduling of simultaneous meetings.
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