RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/72
11 January 2000
(00-0094)
Dispute Settlement Body
9 December 1999
MINUTES OF MEETING
Held in the Centre William Rappard
on 9 December 1999
Chairman:  Mr. Kåre Bryn (Norway)
Prior to adoption of the Agenda, the Chairman informed the DSB that on 26 November 1999,
the United States had notified the DSB of its decision to appeal the Panel Report on "United States -Tax Treatment for Foreign Sales Corporations".  Therefore, pursuant to Article 16.4 of the DSU, the
Panel Report could not be considered for adoption by the DSB until after completion of the appeal.
He proposed that the above-mentioned item not be included on the Agenda of the meeting.
The DSB so agreed.
Subjects discussed: Page
1. Brazil - Export financin g programme for aircraft ................................................................1
(a) Recourse to Article 21.5 of the DSU by Canada ........................................................................1
2. Canada - Measures affecting the export of civilian aircraft .................................................2
(a) Recourse to Article 21.5 of the DSU by Brazil...........................................................................2
3. Withdrawal of an appeal under Rule 30 of the Working Procedures for
Appellate Review............................................................................................................... ........3
(a) Statement by India .......................................................................................................... ............3
4. Review of the Dispute Settlement Understanding..................................................................4
(a) Statement by Uruguay........................................................................................................ .........4
1. Brazil - Export financing programme for aircraft
(a) Recourse to Article 21.5 of the DSU by Canada (WT/DS46/13)
The Chairman drew attention to the communi cation from Canada contained in document
WT/DS46/13.
The representative of Canada said that, as set forth in document WT/DS46/13, his country
was requesting the establishment of a panel under Article 21.5 of the DSU to examine the consistency
of measures taken by Brazil regarding financing for regional aircraft with the SCM Agreement andthe DSB's recommendation.  The measures announced by Brazil were still not consistent with the
SCM Agreement.  In Canada's view, the Brazilian measures did not constitute withdrawal of PROEX
export subsidies in the regional aircraft sector within the meaning of Article 4.7 of the SCM
Agreement.  Canada, therefore, was requesting that the matter be referred to the original Panel,
pursuant to Article 21.5 of the DSU.  Canada also noted the agreement reached with Brazil regardingWT/DSB/M/72
Page 2
the procedures to be applied in this case pursuant to Articles 21 and 22 of the DSU and Article 4 of
the SCM Agreement, as attached to its request.
The representative of Brazil said that at the 19 November DSB meeting, his delegation had
read out a letter addressed to the DSB Chairman which had been sent to him that same day.  In that
letter, Brazil had informed the DSB of the measures adopted by his country to fully implement the
decisions of the DSB concerning the dispute under co nsideration.  That letter had been circulated as
document WT/DS46/12 on 24 November 1999.  At the present meeting, he did not wish to repeat the
points raised in that letter in which Brazil had indicated the changes in domestic legislation that made
operations under the PROEX programme compatible with the conditions prevailing in the
international financial market, and, therefore, fully consistent with the disciplines of the SCM
Agreement.  Brazil was disappointed that Canada had requested that the matter be referred to theoriginal Panel pursuant to Article 21.5.  On 23 November 1999, Brazil and Canada had reached a
bilateral agreement concerning the procedures to be applicable in this case with regard to Articles 21
and 22 of the DSU and Article 4 of the SCM Agreement.  That agreement was reproduced in
documents WT/DS70/9 and WT/DS46/13, dated 23 and 26 November 1999 respectively.  Thus, in
line with the terms of the cited bilateral agreement, Brazil did not object to the establishment of thereview panel requested by Canada at the present meeting.  However, Brazil wished to reserve its
rights to appeal the report to be issued by that Panel.
The DSB took note of the statements and agreed
 to refer to the original Panel pursuant to
Article 21.5 of the DSU the matter raised by Canada in document WT/DS46/13.  The Panel would
have standard terms of reference.
The representatives of the European Communities and the United States , reserved their third-
party rights to participate in the Panel's proceedings.
2. Canada - Measures affecting the export of civilian aircraft
(a) Recourse to Article 21.5 of the DSU by Brazil (WT/DS70/9)
The Chairman drew attention to the communication from Brazil contained in document
WT/DS70/9.
The representative of Brazil said that at the 19 November DSB meeting, his delegation had
pointed out that his country was not convinced that Canada had implemented the DSB's
recommendations in this case.  At that time, Braz il had also reserved its rights regarding the
provisions of Article 22.6 of the DSU.  On 23 November 1999, Brazil had sent a letter to the DSB
Chairman indicating its reasons why it believed that Canada had in effect not implemented the
recommendations of the DSB with regard to neither Canada Account nor Trade Partnerships Canada(TPC).  In that letter, Brazil had also requested a special meeting of the DSB in order to refer the
matter to the original Panel, if possible, pursuant to Article 21.5 of the DSU.  Attached to that letter
was a bilateral agreement reached by Brazil and Canada concerning the procedures to be applicable in
this case regarding Articles 21 and 22 of the DSU and Article 4 of the SCM Agreement.  That letter
and its annex were reproduced in document WT/DS70/9, dated 23 November 1999.  In line with theterms of that letter and in accordance with the bilateral agreement reached with Canada, his delegation
reaffirmed the request that the review panel under Article 21.5 of the DSU be established to consider
the implementation by Canada of the DSB's recommendations in this case.
The representative of Canada said that his country had fully implemented the DSB's
recommendations and rulings in this dispute.  The Panel and the Appellate Body had found that
certain Canadian measures, specifically the Canada Account debt financing and support by TPC asWT/DSB/M/72
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applied to the Canadian regional aircraft industry, constituted export subsidies inconsistent with
Canada's obligations under the SCM Agreement.  As Canada had indicated at the 19 November
DSB meeting, his delegation had fully implemented the ruling by re-mandating TPC and cancelling
all contractual obligations to disburse funds after 18 November 1999.  In addition, a Ministerial
guideline had been issued specifying that all transactions under Canada Account had to be inaccordance with the OECD Arrangement.  Documents relating to Canada's implementation had been
made available at the Permanent Mission of Canada.  These actions constituted full implementation of
the rulings in the Canada Aircraft case.  Canada was, therefore, disappointed that Brazil had requested
the establishment of a panel pursuant to Article 21.5 of the DSU.  Canada also noted the agreement
reached with Brazil regarding the procedures to be applied in this case pursuant to Articles 21 and 22
of the DSU and Article 4 of the SCM Agreement, as attached to its request.
The representative of India said that his delegation noted the statements made by both Brazil
and Canada and their respective agreements with regard to the procedures to be followed in the two
cases.  In India's view, these procedures were in accordance with both the letter and the spirit of the
DSU with regard to sequencing of multilateral determination and suspension of concessions.  India,
therefore, welcomed the steps taken by both parties which, it considered, were the proper steps to betaken when there was disagreement as to the consistency of implementing measures.
The DSB took note of the statements and agreed
 to refer to the original Panel pursuant to
Article 21.5 of the DSU the matter raised by Braz il in document WT/DS70/9.  The Panel would have
standard terms of reference.
The representatives of the European Communities and the United States , reserved their third-
party rights to participate in the Panel's proceedings.
3. Withdrawal of an appeal under Rule 30 of the Working Procedures for Appellate
Review
(a) Statement by India
The representative of India, speaking under "Other Business", said that in accordance with
Rule 30 of the Working Procedures for Appellate Review, the United States had withdrawn its appeal
in the case on "United States - Tax Treatment for Foreign Sales Corporations".  That withdrawal was
in line with the above-mentioned Rule and the United States had the right to do so.  However, theAppellate Body, which was required to notify the DSB of the withdrawal, had not provided such a
notification.  In accordance with Rule 30, "At any time during an appeal, the appellant may withdraw
its appeal by notifying the Appellate Body, which sh all forthwith notify the DSB".  He was concerned
that in the dispute under consideration, no reasons been given to justify the withdrawal.  If the US
withdrawal had been made for scheduling reasons, it would have been useful for the Appellate Body
to notify the DSB of such reasons.  If other reasons were involved, it was even more important for the
DSB to be informed thereof.  He also wished to draw attention to the fact that while under Rule 30
one could withdraw an appeal, no reference had been made to the effect that such an appeal could be
launched again.  One could argue that the Working Procedures were without prejudice to the right of
the appellant or any Member to make an appeal.  However, the Working Procedures referred only tothe withdrawal of an appeal and made no reference as to the conditional right to be used at any time in
future.
The representative of the United States said that his country had notified the DSB of its
withdrawal of the appeal in the dispute to which I ndia had just referred.  That notification which was
contained in document WT/DS108/6 specified that the United States was withdrawing its appeal for
scheduling reasons.  It was the United States' understanding that the Appellate Body also had to notifyWT/DSB/M/72
Page 4
the DSB of the US withdrawal.  He was not aware wh ether that had in fact taken place.  He believed
that if such a notification had not been made on the part of the Appellate Body, it could have been that
the Appellate Body had recognized that it was sufficient that the United States had notified the DSB
of its withdrawal.
The DSB took note of the statements.
4. Review of the Dispute Settlement Understanding
(a) Statement by Uruguay
The representative of Uruguay, speaking under "Other Business", said that under the
1994 Ministerial Decision, the Ministerial Conference was mandated to take a decision as to whether
to continue, modify or terminate the DSU.  However, no such a decision had been taken at the Third
Session of the Ministerial Conference held in Seattle.  Therefore, it was Uruguay's understanding that
the General Council should be in a position to decide on this matter.  He noted that the issue of the
DSU Review was not on the agenda of the General Council meeting scheduled for
17 December 1999.  He also noted that this issue was linked to the efforts to agree on modifications ofthe DSU.  Uruguay had taken part in these efforts and supported them.  However, without a decision
as mandated by the 1994 Ministerial Decision, the question would arise as to the status of the DSU.
There was no common interpretation as to what was meant by non-compliance with the
1994 Ministerial Decision.  Uruguay believed that there was a need to ensure the integrity of the DSU
as well as to comply with the 1994 Ministerial Decision.  If not, a dangerous precedent would be setto the effect that, at any time, a Ministerial Decision could be ignored.  It would therefore be
appropriate for the General Council to take a decision to continue the current DSU in accordance with
the 1994 Ministerial Decision.  At a later stage, if a consensus was reached, one could take a decision
to modify the DSU in accordance with Article X:8 of the WTO Agreement.  However, it was
important to ensure the integrity of the DSU.
The representative of the United States said that in his country's view, the Third Session of the
Ministerial Conference had been suspended not completed.  Therefore, the 1994 Ministerial Decision
had not been ignored nor was there any doubt about its current status.  A decision on the DSU Review
would have to be taken at the Ministerial Conference after the resumption of the Third Session.
The representative of the Philippines said that his country supported Uruguay that it would be
prudent for either the Ministerial Conference or the General Council to take a decision on the DSU
Review.  However, the Philippines also agreed with the United States that the Ministerial Conference
had been suspended not concluded.  Furthermore, in his country's view, if there was no consensus as
to whether to continue, modify or terminate the DSU, the current rules should continue because the
lack of decision by Ministers and the failure to reach a consensus on this matter did not in any manneraffect the DSU which prevailed over the Ministerial Decision.
The representative of the European Communities noted the statement made by Uruguay.  His
delegation would have wished to have been informed in advance that such matter would be raised at
the present meeting in order to allow for consultations among the EC member States.  He also notedthe statement made by the United States to the effect that the Third Session of the Ministerial
Conference had been suspended.  That fact shou ld reassure those Members who were concerned about
the issue.  His delegation wished to further reflect on this matter and believed that, at this stage, it was
not appropriate to take a decision thereon.
The DSB took note of the statements.
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