RESTRICTED
WORLD TRADE WT/DSB/M/21
5August 1996
ORGANIZATION(96-3097)
DISPUTE SETTLEMENT BODY
15and16July1996
MINUTES OFMEETING
Held intheCentre William Rappard
on15and16July1996
Chairman: Mr.Celso Lafer (Brazil)
Subjects discussed: Page
1. United States -Tariff increases onproducts from theEuropean Communities 1
- Request bytheEuropean Communities fortheestablishment ofapanel 1
2. Pakistan -Patent Protection forPharmaceutical andAgricultural Chemical
Products 3
- Request bytheUnited States fortheestablishment ofapanel 3
3. Proposed nominations fortheindicative listofgovernmental andnon-governmental
panelists 4
4. Poland -Import Régime forAutomobiles 5
- Mutually agreed solution 5
5. Report onprogress ofpreparatory work fortheSingapore Ministerial Conference 5
- Announcement bytheChairman 5
1. United States -Tariff increases onproducts from theEuropean Communities
- Request bytheEuropean Communities fortheestablishment ofapanel (WT/DS39/2)
TheChairman recalled thattheDSBhadconsidered thismatter atitsmeeting on5Julyand
hadagreed torevert toitatthepresent meeting. Hedrew attention tothecommunication from the
European Communities contained inWT/DS39/2.
Therepresentative oftheEuropean Communities recalled theorigin oftherequest forthe
establishment ofapanel i.e.,prohibitive tariffs applied unilaterally bytheUnited States forthepast
nineyears toarange ofexport products from theCommunities valued atmore thanUS$90million.
Hesaidthatanewdevelopment which might affect theCommunities 'position withregard tothe
establishment ofthepanel hadtaken place thatmorning. According totheinformation provided by
theUnited States, itappeared thattheapplication oftheabove-mentioned measures hadbeenterminatedWT/DSB/M/21
Page2
on15July1996. TheCommunities werecurrently seeking confirmation ofthiswelcome news and
therefore requested thattheDSBsuspend theconsideration ofthisAgenda itemforthenexttwenty-four
hours.
Following aprocedural discussion onthisrequest, theDSBsuspended theconsideration of
thisitemandagreed toresume itsconsideration on16July.
Uponresumingthemeetingon16July,therepresentativeoftheEuropeanCommunitiesrequested
theUnited States toconfirm andexplain thelegalsituation, andifpossible, toprovide some indications
ofthepractical implications withrespect totheimposition ofduties onexports fromtheCommunities.
Therepresentative oftheUnited States assured theCommunities, andother Members, that
theinformation alluded tobytheCommunities on15Julywasaccurate i.e.,effective 12.01 a.m.,
15July1996(6.01a.m.Genevatime)theUSGovernmenthadterminatedtheapplicationoftheincreased
duties oncertain products from theCommunities under thePresidential Proclamation No.5759 of
24December 1987, andpresently applied them.f.n. ratesonthose products.
Thedetermination toterminate theapplication oftheseincreased duties wastaken bytheUnited
States Trade Representative andhadbeensenttotheUSofficial journal, theFederal Register, which
would publish itinduecourse. Publication ofthedetermination wasnotaprecondition toits
effectiveness. Asstated inthedetermination, theincreased tariffs hadbeenterminated. Acopy of
thedetermination hadbeenprovided totheCommunities on15July1996. Copies would alsobemade
available tointerested delegations. Inaccordance withthedetermination, "thetermination ofincreased
duties iseffective withrespect toarticles entered, orwithdrawn from warehouse forconsumption,
onorafter12.01 a.m.15July1996". Headded thatItalian exporters currently intheprocess of
exporting canned tomatoes confirmed thattheirexports would entertheUnited States atthem.f.n rate
ofduty.
TheUnited States, amajor proponent intheUruguay Round forimproved rulesandprocedures
forthesettlement ofdisputes, hadshown, through itsactions, theconfidence inthemultilateral dispute
settlement system embodied intheDSU. Atpresent, withasystem inwhich aMember could not
denyothers effective legalrecourse, theUnited States hadbeenusing thatsystem andwasaccepting
itsresults. Ithadchosen tofileacomplaint against theCommunities 'hormone directive requesting
theestablishment ofapanel. Interminating themeasures thattheCommunities 'actions hadprovoked,
hisauthorities hadplaced theirconfidence andtrustintheWTO dispute settlement system. Hebelieved
thatitwasneither necessary norappropriate fortheCommunities tomaintain theirrequest forthe
establishment ofapanel sincethemeasure under consideration hadbeenterminated. TheUnited States
urged theCommunities toreconsider theneedforanother meeting oftheDSB.
Therepresentative oftheEuropean Communities saidthathisdelegation wasgrateful forthe
clear confirmation onthetermination ofthese measures andlooked forward toanearly publication
intheFederal Register. Inthelightofthestatement andtheconfirmation given, hisdelegation wished
toreserve itsrights toreconvene, ifnecessary, afurther meeting oftheDSBatanearly date.
TheDSBtooknoteofthestatements.WT/DSB/M/21
Page3
2. Pakistan -Patent Protection forPharmaceutical andAgricultural Chemical Products
- Request bytheUnited States fortheestablishment ofapanel (WT/DS36/3)
TheChairmandrewattentiontothecommunicationfromtheUnitedStatescontainedindocument
WT/DS36/3.
Therepresentative oftheUnited States saidthaton30April 1996, hiscountry hadrequested
Pakistan toholdconsultations withregard tothefailure ofPakistan either toprovide patent protection
forpharmaceutical andagricultural products ortocomply withtheobligations under Articles 70.8
and70.9oftheAgreement onTrade-Related Aspects ofIntellectual Property Rights (TRIPS). As
adeveloping country, Pakistan wasentitled under thetransitional provisions contained inArticle 65
oftheTRIPSAgreementtodelaymodifyingitspatentsystemtomakeproductpatentprotectionconsistent
withArticle 27oftheTRIPS Agreement. However, since Pakistan didnotprovide patent protection
forpharmaceutical andagricultural chemical products on1January 1995, itwasobliged tocomply
withArticles 70.8and70.9oftheTRIPS Agreement asofthatdate.
Article 70.8oftheTRIPS Agreement required Pakistan toestablish procedures topermit entities
tofileproduct patent applications, referred toas"mailbox" applications, drawn topharmaceutical and
agricultural chemical inventions. Italsorequired Pakistan toensure thatwhen itprovided patent
protection forpharmaceutical andagricultural chemical products, all"mailbox" applications would
bepromptly examined based ontheirpriority date,andpatents would begranted based onthestandards
establishedintheTRIPSAgreement.Article70.9oftheTRIPSAgreementrequiredPakistantoestablish
asystem toprovide exclusive marketing rights inproducts thatwere thesubject ofa"mailbox"
application, where theproduct hadbeenpatented andgranted marketing approval inanother Member
andhadbeengranted marketing approval inPakistan. Although morethannineteen months hadelapsed
since January 1995, Pakistan hadnotmade thenecessary changes toitslawstomeetitsobligations.
Theconsultations requested bytheUnited States withPakistan toresolve thismatter hadnotproduced
amutually acceptable solution. Accordingly, theUnited States requested theestablishment ofapanel
toexamine thismatter.
Therepresentative ofPakistan saidthathiscountry respected therightofaMember torequest
theestablishment ofapanel aftertheconsultations hadfailed tosettle adispute. Hiscountry was
however disappointed withtheUnited States 'decision toproceed tothepanel stage though Pakistan,
stillengaged intheprocess ofconsultations, hadassured theUnited States ofitssincere efforts tofulfil
itsobligations under theTRIPS Agreement. Heconfirmed that,asstated inWT/DS36/3, theUnited
States hadrequested Pakistan toholdconsultations pursuant toArticle XXII ofGATT 1994andArticle
4oftheDSU. Hiscountry hadresponded positively andhadinvited theUnited States toholdthe
consultations inIslamabad inthethirdweekofJune. Ithadproposed thesearrangements duetofinancial
difficulties tobring representatives toGeneva, andalsoduetotheirinvolvement inthepreparation
oftheannual budget andintrade policy matters.
Hisdelegation regretted thattheUnited States hadnotaccepted Pakistan 'sgenuine request
andhadinsisted toenter intoconsultations inGeneva within 30daysoftherequest although Article
4.3oftheDSUstipulated apossibility toenterintoconsultations within another mutually agreed period.
Asaresult, hisdelegation hadheldaround ofconsultations inGeneva on30May1996, within the
30-day period. During these consultations, Pakistan hadassured theUnited States, andtheEuropean
Communities which hadjoined theconsultations, thatitwascommitted tofulfilling itsobligations under
theTRIPS Agreement, andthatthebilltoamend itsPatents andDesigns Acttoprovide fortheso-called
"mailbox system" hadbeenbefore theParliament andwasexpected tobeshortly enacted intolaw.
Furthermore, hiscountry hadformally confirmed thisposition totheGeneral Council andtheCouncil
forTRIPS.WT/DSB/M/21
Page4
During theconsultations, theUnited States hadprovided aseries ofwritten questions which
included questions notdirectly relevant totheissueof"mailbox system". Forexample, onequestion
was"when didPakistan expect toprovide patent protection forpharmaceutical andagricultural chemical
products?" Herecalled thattheTRIPS Agreement provided foratransitional period oftenyears for
developing countries likePakistan toextend patent protection tosuchproducts. Other questions related
toprovisionsoftheTRIPSAgreementforwhichPakistanhadanotherthreeyearstoimplement.Pakistan
hadnevertheless responded totheUnited States 'concerns positively andingoodfaith, andhadinformed
theUnited States inwriting thatthebilltoamend itsPatents andDesigns Actwasalready before the
Parliament andwasexpected tobeenacted intolawfollowing thecompletion oftheparliamentary
process. Three daysafterthese assurances, theUnited States hadproceeded withitsrequest forthe
establishment ofapanel.
Article 3.7oftheDSU contained important principles withregard tothegeneral provisions
forsettlementofdisputes.Itstipulatedthatbeforebringingacase,aMembershallexerciseitsjudgement
astowhether action under theDSU procedures would befruitful, andthattheaimofthedispute
settlement mechanism istosecure apositive solution toadispute. Pakistan which hadentered into
consultations withtheUnited States inapositive spirit hadassured theUnited States ofitsresolve
tofulfilitscommitmentsincludingthatwithrespecttothe"mailboxsystem"undertheTRIPSAgreement,
andhadconfirmed theintroduction ofanamendment billtothateffect intheParliament. Hetherefore
expressed disappointment thattheUnited States haddecided torequest theestablishment ofapanel
andquestioned whether thiswasthemost fruitful recourse totheDSU procedures.
Thisexperience raised important questions inrelation totheDSUsuchas:(i)therealdifficulties
faced bydeveloping countries ontheinsistence byadeveloped country thatconsultations beheldonly
inGeneva; (ii)themeaning andsignificance oftheconsultations stage; (iii)whether aMember could
decide unilaterally thatconsultations hadbeenconcluded inparticular since Article 12.10 oftheDSU
providedthat"inthecontextofconsultationsinvolvingameasuretakenbyadevelopingcountryMember,
theparties mayagree toextend theperiod established inparagraphs 7and8ofArticle 4.If,after
therelevant period haselapsed, theconsulting parties cannot agree thattheconsultations haveconcluded,
theChairman oftheDSBshalldecide, afterconsultations withtheparties, whether toextend therelevant
period, andifso,forhowlong." Forallthese reasons, Pakistan could notagree totheestablishment
ofapanel requested bytheUnited States. Hisdelegation hoped thattheUnited States would reconsider
andexplore theconsultations further.
Therepresentative oftheUnited States regretted Pakistan 'sdecision todelay theestablishment
ofapanel. Inpursuance ofArticle 6oftheDSU, hisdelegation noted thefactthatthepanel toexamine
thismatterwouldbeestablishedwhentherequestwouldreappearontheagendaofthenextDSBmeeting.
TheDSBtooknoteofthestatements andagreed torevert tothismatter atafuture meeting.
3. Proposed nominations fortheindicative listofgovernmental andnon-governmental panelists
(WT/DSB/W/33)
TheChairmandrewattentiontodocumentWT/DSB/W/33containingadditionalnamesproposed
byMembers forinclusion ontheindicative listofgovernmental andnon-governmental panelists in
accordance withArticle 8.4oftheDSU. Heproposed thattheDSBapprove thenames contained in
WT/DSB/W/33.
TheDSBsoagreed.WT/DSB/M/21
Page5
4. Poland -Import Régime forAutomobiles
- Mutually agreed solution
Therepresentative ofIndia, speaking under "Other Business", saidthatinpursuance ofthe
request byIndia toholdconsultations withPoland under Article 4oftheDSU andArticle XXIII:1
ofGATT 1994contained inWT/DS19/1 anddated 18October 1995, IndiaandPoland hadheldseveral
rounds ofconsultations onmatters related toPoland 'simport régime onpassenger cars. Asaresult
ofthese consultations, India andPoland hadarrived atamutually agreed solution. Bythisagreement,
theauthorities ofIndia andPoland wished toinform theDSB thattheyhadeffectively andfinally
terminated thedispute settlement proceedings resulting fromthecomplaint made byIndiaagainst Poland
contained inWT/DS19/1. TheDSBwould benotified ofthedetails oftheagreement intheverynear
future.
Therepresentative ofPoland saidthathisauthorities confirmed thestatement made byIndia.
TheDSBtooknoteoftheinformation.
5. Report onprogress ofpreparatory work fortheSingapore Ministerial Conference
- Announcement bytheChairman
TheChairman, speaking under "Other Business", announced thatatthemeeting oftheGeneral
Council scheduled for18July1996, theChairman intended toinvite Chairpersons topresent anoral
reportontheprogressofpreparatoryworkfortheMinisterialConferenceinSingaporeintheirrespective
bodies. These reports would bepresented under theresponsibility ofeachChairperson. Hetherefore
proposed topresent ashort, factual oralreport under itsownresponsibility ontheactivities oftheDSB
thusfarthisyear, inimplementing theprovisions oftheDSU.
TheDSBtooknoteofthisinformation.