RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/164 
12 March 2004 
 (04-1088) 
Dispute Settlement Body 
26 January 2004  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 26 January 2004  
 
Chairman:  Mr. Shotaro Oshima (Japan) 
 
 
1. United States – Continued Dumping and Subsidy Offset Act of 2000 
(a) Recourse to Article 22.2 of the DSU by Chile (WT/DS217/21) 
(b) Recourse to Article 22.2 of the DSU by the European Communities (WT/DS217/22) 
(c) Recourse to Article 22.2 of the DSU by India (WT/DS217/23) 
(d) Recourse to Article 22.2 of the DSU by Japan (WT/DS217/24) 
(e) Recourse to Article 22.2 of the DSU by Korea (WT/DS217/25) 
(f) Recourse to Article 22.2 of the DSU by Canada (WT/DS234/25) 
(g) Recourse to Article 22 of the DSU by Mexico (WT/DS234/26) 
(h) Recourse to Article 22.2 of the DSU by Brazil (WT/DS217/20) 
1. The Chairman  proposed that the DSB take up the eight sub-items together since they 
pertained to the same matter.  First, he drew at tention to the communication from Chile contained in 
document WT/DS217/21. 
2. The representative of Chile  said that a year ago the DSB had adopted the Reports of the 
Appellate Body and the Panel concerning this disput e.  Those Reports had concluded that the Byrd 
Amendment was a non-permissible specific ac tion against dumping or a subsidy contrary, inter alia,  
to the Anti-Dumping and the SCM Agreements.  Si nce the Amendment was inconsistent with those 
Agreements, it nullified or impaired  benefits accruing to Chile in these areas.  The DSB had not only 
recommended that the United States bring the Continued Dumping and Subsidy Offset Act of 2000 
(the CDSOA) into conformity with its WTO obligat ions, but had also noted that the Panel had found 
difficult to conceive of any more appropriate and/or  effective way for the United States to bring the 
Byrd Amendment into conformity than to repeal it.   Indeed, at the DSB meeting on 23 January 2004, 
the United States had reiterated its administration's position that the means of complying was to terminate the Byrd Amendment.  The reasonable period of time granted to the United States to 
comply with the DSB's recommendations and ruli ngs had expired on 27 De cember 2003.  To date, 
however, the United States had not brought the CDSOA into conformity with the covered 
Agreements, nor had it complied with the DSB's re commendations and rulings within the reasonable WT/DSB/M/164 
Page 2  
 
 period of time.  Even though the Appellate Body  had concluded that there was no need for an 
economic assessment of the implications of th e Byrd Amendment on the conditions of competition 
under which domestic products and du mped/subsidized imports competed in order to define what 
constituted a measure against dumpi ng or a subsidy, it noted that the Amendment "has an adverse 
bearing on the foreign producers/exporters in that the imports into the United States of the dumped or 
subsidized products (besides being subject to an ti-dumping or countervailing duties) result in the 
financing of United States competitors – producers of  like products – through the transfer to the latter 
of the duties collected on those exports".  The a bove had led Chile to conc lude that the level of 
nullification or impairment suffered by Chile was e quivalent to the financing of US producers of like 
products to those produced in Chile, and in the amount of the anti-dumping or countervailing duties 
applied and collected on Chilean products.  That amount was known only each year, when the US 
authorities, on the basis of th e duties assessed and the amounts requ ested by the US companies, 
determined how much was to be transferred to each company. In the light of the above, Chile 
requested the DSB's authorization to su spend concessions or other obligations vis-à-vis  the United 
States in an amount equivalent to the level of nullif ication or impairment suffered. That level would 
be determined each year according to the offset pa yments made to the affected US producers, in the 
most recent annual distribution of anti-dumping or countervailing duties collected and assessed on 
products from Chile under the CDSOA.  That susp ension would be achieved by applying, on an 
annual basis, an additional tariff on products from the United States. 
3. The Chairman
 drew attention to the communica tion from the European Communities 
contained in document WT/DS217/22. 
4. The representative of the European Communities  said that the EC, like most of the 
complainants in this case, had requested the authori zation of the DSB to suspend the application to the 
United States of tariff concessions.  The details of  the EC's request were contained in document 
WT/DS217/22.  The EC had been informed, on 23 January 2004, that the United States had requested arbitration proceedings on this matter, pursuant to Article 22.6 of the DSU.  The EC considered that 
its request was equivalent to the level of nullifica tion caused by the US inconsistent measures and that 
it was in line with the proviso of Article 22.3 of the DSU.  The EC would strongly defend its position 
before the Arbitrators. 
5. The Chairman
 drew attention to the communication from India contained in document 
WT/DS217/23. 
6. The representative of India  said that, through a binding arbitration in this dispute, it had been 
determined that the reasonable peri od of time required for the United States to bring its measure into 
compliance had ended on 27 December 2003.  The Unite d States had already indicated that the repeal 
of the Byrd Amendment was the correct way to implement the DSB's recommendations and rulings.  
It was a matter of considerable concern that the Byrd Amendment had still not been repealed.  The 
DSU was the central element in providing security  and predictability to the multilateral trading 
system.  Failure by countries to implement the DSB' s decisions within the r easonable period of time 
not only perpetuated the adverse trade effects ca used by the inconsistent measure, but also 
undermined the dispute settlement mechanism. 
7. Distributions under the Byrd Amendment to the US producers amounted to US$231 million 
in 2001 and US$330 million in 2002.  The total di sbursements for 2003 were estimated to be 
US$245 million.  These disbursements had given a "doubl e hit" to India's exporters thereby affording 
double protection to the US industry. The US  companies that supported anti-dumping and 
countervailing duty investigations against competing imports not on ly benefitted from the imposition 
of anti-dumping and countervailing duties, but also from the disbursements under the Byrd Amendment.  These payments were not consistent  with the obligations of the United States under 
WTO Agreements and had caused widespread concer ns among WTO membership.  It was crucial that  WT/DSB/M/164 
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 the United States comply with its obligations withou t further delay.  In order to preserve its rights 
under the DSU in this dispute, India sought author ization from the DSB to suspend concessions or 
other obligations against the United States, in the form of imposition of add itional import duties above 
the bound customs duties on products originating in th e United States.  The annual level of retaliation 
would be linked to actual disbursements under the By rd Amendment during the previous year.  India 
hoped that this request along with that from certai n other co-complainants in this dispute would 
actively encourage the United States to comp ly with the DSB's decision immediately. 
8. The Chairman  drew attention to the communicati on from Japan contained in document 
WT/DS217/24. 
9. The representative of Japan  reiterated her country's deep di sappointment and regret that the 
United States had failed to implement the DSB's recommendations and rulings in this case by 
27 December 2003.  The Continued Dumping and S ubsidy Offset Act of 2000, the so-called Byrd 
Amendment, was kept intact, and the payments under the Act, which were not permitted actions 
against dumping or subsidy under the WTO Agreement, still continued.  As her delegation had stated 
at the 23 January DSB meeting, this situation had le ft Japan with no choice, but to preserve its right 
under the DSU by requesting the DSB's authorization to suspend concessions or other obligations.  
Since the United States had submitted its objection to Japan's request on 23 January 2004, her country 
was aware that the matter had been referred to arbitr ation.  Japan was confident that the Arbitrators 
would find that Japan's request fully satisfied the requirements of Article 22 of the DSU, and that it was more than specific so as to enable them to pe rform their functions under Article 22.7 of the DSU. 
10. The Chairman
 drew attention to the communication from Korea contained in document 
WT/DS217/25. 
11. The representative of Korea  said that his country was seriously concerned about the US 
failure to implement the DSB's recommendations a nd rulings in this dispute.  The Continued 
Dumping and Subsidy Offset Act of 2000 (the CDS OA) had been found to be WTO-inconsistent and 
it had yet to be brought into conformity with the US obligations under the covered agreements.  The 
reasonable period of time determined by an arbitration under Article 21.3(c) of the DSU had already 
expired on 27 December 2003 without the US compliance.   It was unfortunate that Korea had no other 
choice, but to request authorization from the DSB to  suspend the application to the United States of 
concessions or other obligations under the covered ag reements, in accordance with Article 22.2 of the 
DSU. The purpose of Korea's exercise of its right und er Article 22.2 of the DSU was to ensure prompt 
compliance with the DSB's recommendations or ruli ngs, which was essential for effective resolution 
of disputes to the benefit of all Members. In  its request, Korea proposed that the DSB grant 
authorization to suspend concessions or other obli gations for an amount that would be determined 
annually by the amount of offset payments made to  affected domestic producers in the United States 
in the latest annual distribution under the CDSOA.   Further details were contained in document 
WT/DS217/25, dated 16 January 2004.  In this  regard, the United States had made known its 
opposition to the level of proposed suspension in its letter to the DSB dated 23 January 2004.  To the 
extent that the United States persisted in its objecti on to the proposed level of suspension, the matter 
would be referred to and se ttled through arbitration unde r Article 22.6 of the DSU. 
12. The Chairman  drew attention to the communicati on from Canada contained in document 
WT/DS34/25. 
13. The representative of Canada  said that the United States had not brought itself into 
compliance with the DSB's ruling and recommenda tions within the implementation period in the 
matter of United States – Continued Dumping and Subsidy Offset Act of 2000.  Canada had already 
noted the systemic and direct commercial harm done to it by the continued operation of this measure. 
Therefore, he would not repeat those points again at the present meeting.  To protect Canada's rights WT/DSB/M/164 
Page 4  
 
 under the WTO, and with a view to encouraging th e United States to bring itself into compliance, 
pursuant to Article 22.2 of the DSU, Canada requ ested, at the present meeting, authorization to 
suspend concessions or other obligations to th e United States under the WTO Agreement.  More 
specifically, Canada was seeking authorization to suspend tariff concessions and other obligations in 
an amount linked to the annual disbursements under the Byrd Amendment. 
14. Canada took this action in concert with seven other WTO Members.  This was the first time 
in the WTO history that so many Members had acted under Article 22.2 of the DSU in a single case.  It was the clearest possible signal of the breadth and depth of concern about  this measure among the 
Membership.  All eight authorization requests were before the DSB for consideration at the present meeting.  Canada considered that its request, and t hose of its fellow complainants pursuing this action, 
was conservative because it was restricted to the extent of disbursements each year so long as the 
Byrd Amendment remained in force.  Apart fro m the chilling effects the Byrd Amendment had on 
trade flows and the financial inducement it provided to US firms to bring trade remedy cases, at a minimum, the disbursements themselves served as a measure of nullification or impairment because 
those payments were what had been found impermissible by the DSB. 
15. It was only this claim that Canada and the other seven complainants made – a combined 
authorization request that would add up to the to tal annual disbursements under the Byrd Amendment.  
Canada, therefore, called upon the DSB to approve these authorization requests.  As Canada had 
already stated on another occasion, retaliation was not  a course of action it relished.  To the contrary, 
retaliation typically brought further disruption to international trade.  Regrettably, seeking authority to 
retaliate was the only option left to a Member to pr otect its rights in the face of another Member 
simply choosing not to comply with the rules.  On e year ago,  the DSB had adopted the Report of the 
Appellate Body which was the final legal condemn ation of the Byrd Amendment.  The year had 
passed without serious action in the US Congress to do what it knew it must.  Canada, therefore, called upon the United States to do the right thing by  repealing the Byrd Amendment.  This was 
important for avoiding any further disruptions to in ternational trade by ensuring that the complainants 
did not need to exercise their retaliation rights. 
16. The Chairman
 drew attention to the communicati on from Mexico contained in document 
WT/DS234/26. 
17. The representative of Mexico  said that since the entry into force of the Byrd Amendment in 
2000, US producers had benefited from more than 5 50 million dollars worth of illegal contributions, 
and a further 240 million dollars were expected to be  handed out this year.  Mexico, like many other 
affected countries, had made great efforts to obtain a determination obliging the United States to bring 
its legislation into conformity. Unfortunately, all diplomatic contacts, nego tiating bodies and statutory 
measures had failed. The United States had simply not complied with the DSB's recommendations and rulings.  It was for that reason that, at the pre sent meeting, Mexico was obliged to submit to the 
DSB for the first time its request for authorization to suspend concessions or other obligations to the 
United States.  This was not Mexico's preferred opti on, but it was the only statutory tool that remained 
available to it in order to seek compliance by the Un ited States and to prevent  its exporters' interests 
from continuing to be impaired. The amount of Mexi co's request was measured on the basis of the 
annual distributions made in accordance with the Byrd  Amendment, year by year.  Mexico considered 
that this amount covered only part of the damage that this legislation had actually caused.  Mexico 
agreed with Canada that this was a conservative a pproach and it was confident that the Arbitrator 
would agree with Mexico.  At the 23 January DSB meeting, many Members had spoken of how 
failure to comply affected the cr edibility of the system, a view with which Mexico concurred. Mexico 
believed that the central problem of the DSU was th at it offered a system of incentives to impose or 
maintain unlawful measures.  If there was one problem that needed to be resolved in the DSU, it was 
that system.  This need was growing ever more urgent.  There had already been so many cases of 
failure to comply within the reasonable period of time, or cases where time-period had been  WT/DSB/M/164 
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 renegotiated, that the very concept had become me aningless.  Unless this fundamental defect in the 
dispute settlement mechanism was rectified, the mech anism would be further eroded, and the benefits 
gained in the negotiations would gradually become a dead letter. 
18. The Chairman  drew attention to the communicati on from Brazil contained in document 
WT/DS217/20. 
19. The representative of Brazil  said that due to the lack of implementation by the United States 
within the reasonable period of time, his country ha d now to make a request under Article 22.2 of the 
DSU in order to seek the DSB's authorization to suspend concessions to the United States. Brazil's 
request to this effect had been  circulated in document WT/DS217/20.  He then asked the DSB to 
agree to include in the minutes of the present mee ting the full text of Brazil's statement since the 
representative of Brazil, who had been designated to deliv er that statement, had been held up in traffic 
due the severe weather conditions in town that day (snowstorm). 
20. The Chairman  noted that there was no objection to the request by Brazil that the full text of 
the statement be included in the minutes of the present meeting. 
21. The full text of Brazil's statement reads as follows:  "Although other complainants have 
suffered nullification and impairment from hi gher disbursements under the so-called Byrd 
Amendment, the concern here is not only the amounts involved.  It is, in fact, the blatant illegality of the Continued Dumping and Subsidy Act of 2000 (C DSOA), an illegality which has been confirmed 
by the Appellate Body.  It is also, furthermore,  the number of countries that can be and are being 
affected by that illegal measure.  Thus, all the WT O Membership, not only th e complainants in this 
dispute, should feel concerned about the lack of  implementation by the Un ited States, within the 
reasonable period of time set by the Arbitrator, of the recommendations and rulings of the DSB.  The 
seriousness of the breach, however, is amplified by the fact that the incompatibility of the measure 
with the WTO rules could hardly have gone unnoticed in the very moment it was being introduced and discussed in the United States.  It was desc ribed as a "double hit", intended to provide an 
additional remedy to dumping and subsidy. It was designed as a mechanism to permit US companies 
to recover losses monetarily rather than simply have  the right, as allowed in the Agreements, to file a 
complaint.  It was, in essence, me ant to assist US companies at the expense of its foreign competitors.  
The adverse effects of the CDSOA, to be sure, were not hypothetical.  Taking the amounts for 2001 
and 2002 and the projections for 2003, the disburse ments totalled about U$800 million.  Brazilian 
companies have been enduring concrete adverse consequences of the non-compliance by the United 
States, despite the long reasonable period of time granted by the Arbitrator.  In light of the failure of 
he United States to implement the recommendations and rulings of the DSB with respect to the 
CDSOA to this date, Brazil, under Article 22.2 of th e DSU, requests the authorization of the DSB to 
suspend the application to the United States of ta riff concessions and other related obligations under 
GATT 1994 in an amount that will be determined ev ery year, in observance of Article 22.4 of the 
DSU, according to the method and form explai ned in the request circulated as document 
WT/DS217/20.  Since the level of suspension is th us clearly specified in the request and easy to 
determine on the basis of the disbursements incurred  in the previous year, it fully conforms to the 
requirements of the DSU.  Brazil, as a Member that has always objected to measures that unduly restrict trade, still hopes that the United States will bring the Byrd Amendment into conformity and will abide by its multilateral commitments, so that  it will become unnecessary to suspend concessions 
or obligations vis-à-vis  the United States." 
22. The representative of the United States
 said that his country regretted that some of the 
complaining parties in the disputes concerning th e Continued Dumping and Subsidy Offset Act of 
2000 had requested authorization to suspend con cessions or other obligations.  As these Members 
knew, legislation to bring the Act into conformity  with the WTO obligations of the United States was 
pending in the US Congress, and the US Administration had proposed repeal.  The United States WT/DSB/M/164 
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 remained fully committed to implementing the DSB' s recommendations and rulings in these disputes.  
At the same time, the United States strongly disagr eed with the proposals to suspend concessions.  On 
23 January 2004, the United States had objected to  the level of suspension of concessions or other 
obligations proposed by these parties,  thereby referring the matters to arbitration.  Thus, as an initial 
matter, the United States failed to see the purpose fo r the present meeting. Once a Member objected to 
a complaining party's request for authorization, th e matter was automatically referred to arbitration. 
No decision by the DSB was necessary.  The present  meeting could have been cancelled. Numerous 
times, a meeting to consider the adoption of a panel report had been cancelled once the notice of 
appeal was filed.  The situation at the present meeting was analogous.  There was no reason for the 
eight complaining parties to have insisted that th e present meeting be held despite the fact that the 
matter was already in arbitration.  It was partic ularly puzzling for these Members to insist on holding 
this meeting when the DSB had just met on 23 Janua ry and one of the agenda items had covered these 
very disputes.  As there was no decision for th e DSB to take, the present meeting was unnecessary 
and the United States suspected that all the DSB Memb ers could have used the time more usefully for 
other purposes.  However, given that the Member s making these Article 22.2 requests had already 
intervened, the United States had some reactions. 
23. First, as the United States noted in its letters  setting forth those objections, the Article 22.2 
requests had failed to specify a level of suspension a nd were inadequate for the Arbitrator to perform 
the functions provided under Article 22.7 of the DSU.  All Members should be concerned at the 
difficulties that these failures posed to the operati on of the DSU Article 22.7 process. Moreover, all 
Members should also be concerned at the appare nt attempts by the requesters to divorce the 
suspension of concessions that they had requested fro m any actual level of nullification or impairment 
to the benefits of the Members concerned.  On e rather astounding aspect of these requests deserved 
further note, and was cause for concern for other Me mbers.  This aspect was that seven of the eight 
complaining parties had requested authorization to  suspend concessions for other Members' alleged 
nullification or impairment.  These seven complain ing parties apparently sought to divide among 
themselves offset payments that could only be attr ibuted to dumped or subsidized products of other 
countries, including other complaining parties.  The language was the same in each request.  These 
complaining parties asked for authorization to collect "a proportionate amount of the balance of total offset payments less the offset payments attr ibuted to duties collected on products from other 
Members that are authorized by the DSB to suspend concessions or other obligat ions in this dispute." 
The requests did not attempt to explain why these sev en complaining parties had rights concerning the 
products of other Members or why it should matter whether the other Member was authorized to 
suspend concessions in this dispute or not. The sev en complaining parties implicitly conceded that 
this part of their request bore no relationship to any alleged nullification or impairment suffered by 
them. As the Arbitrator in the Bananas case had found:   "there is no right and no need under the DSU 
for one WTO Member to ... request authorization to suspend concessions for the nullification or 
impairment suffered by another WT O Member with respect to [their ] goods."  There was one element 
of good news in these requests.  Although these ei ght Members erred in thinking that the DSU 
permitted them to obtain authorization to suspend a di fferent level of concessions from year to year, at 
least their proposals demonstrated that they rec ognized that the DSU permitted Members to change 
the actual suspension of concessions once authorizati on was granted (the so-called "carousel").  The 
United States was pleased to see that  these Members were now themselves endorsing "carousel".  The 
United States welcomed this recognition and hoped that  it would remove at least one contentious issue 
from the discussions on clarifications and improv ements to the DSU. The remainder of the US 
reactions would be reserved for the actual arbitrations  that had commenced as a result of the filing of 
the US objections on 23 January 2004. 
24. The representative of Canada
 said that the issue before the Arbitrators was the level of 
suspension.  The issue before the DSB at the presen t meeting was the grant of the right to retaliate.  
The two issues being different, the present DSB me eting was necessary and indeed required by the 
DSU.  With respect to the substantive points ra ised by the United States, he noted that under  WT/DSB/M/164 
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 Article 22.6 of the DSU "the DSB ... shall gran t authorization to suspend concessions or other 
obligations ... unless the DSB decides by consensus" not to do so.  In this instance, therefore, there 
was no question about the right of the co-complaina nts to suspend concessions or other obligations.  
Article 22.6 of the DSU also permitted the United Stat es to request arbitration as to the level of the 
retaliatory measures.  The United States had now ex ercised its right.  Accordingly, any discussion in 
respect of that level should properly take place before the Arbitrators. 
25. The representative of the European Communities  said that the EC had taken note of the 
remarks made by the United States and would respond to them in due course during the arbitration process, which was the appropriate forum for such a debate. 
26. The DSB took note
 of the statements and it was agreed  that the matters raised by the United 
States in documents WT/DS217/26, WT/DS217/27 , WT/DS217/28, WT/DS217/29, WT/DS217/30, 
WT/DS217/31, WT/DS234/27 and WT/DS234/28 are referred to arbitration, as required by Article 22.6 of the DSU. 
 
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