RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/46
6 August 1998
(98-3101)
Dispute Settlement Body
22 June 1998
MINUTES OF MEETING
Held in the Centre William Rappard
on 22 June 1998
Chairman:  Mr. Kamel Morjane (Tunisia)
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB.........................2
(a) Canada – Certain measures concerning periodicals:  Status report by Canada
(WT/DS31/9/Add.2) .............................................................................................................. .....2
2. European Communities – Customs classifica tion of certain computer equipment ............2
(a) Report of the Appellate Body (WT/DS62/AB/R – WT/DS67/AB/R –
WT/DS68/AB/R) and Report of the Panel (WT/DS62/R – WT/DS/67/R –
WT/DS/68/R).................................................................................................................... ..........2
3. Korea – Definitive safeguard measure on imports of certain dairy products .....................5
(a) Request for the establishment of a panel by the European Communities (WT/DS98/4)............5
4. Argentina – Safeguard measures on imports of footwear.....................................................6
(a) Request for the establishment of a panel by the European Communities
(WT/DS121/3) ................................................................................................................... .........6
5. Australia – Subsidies provided to producers and exporters of automotive leather............7
(a) Request for the establishment of a pa nel by the United States (WT/DS126/2) ..........................7
6. European Communities – Regime for the importation, sale and distribution of
bananas ........................................................................................................................ ............13
(a) Statement by Ecuador, Guatemala, Hondu ras Mexico, Panama, and the United States
concerning implementation of the recommendations of the DSB ............................................13
7. Delay in circulation of panel reports.....................................................................................15
(a) Statement by Japan .......................................................................................................... .........15
8. Argentina – Certain measures affecting imports of footwear, textiles, apparel
and other items................................................................................................................ ........16
(a) Statement by Argentina regarding its agreement with the United States on
implementation of the DS B's recommendations.......................................................................16
9. Agreement of 18 May 1998 between the United States and the European
Communities regarding the Helms-Burton Act ...................................................................17
(a) Statement by Cuba ........................................................................................................... .........17
10. Antidumping investigation by Ecuador on imports of cement from Mexico ....................18
(a) Statement by Mexico ......................................................................................................... .......18
11. Review of the DSU ........................................................................................................... .......19
(a) Statement by  the Chairman................................................................................................... ....19
12. Next meeting of the DSB..................................................................................................... ....20WT/DSB/M/46
Page 2
1. Surveillance of implementation of recommendations adopted by the DSB
(a) Canada – Certain measures concerning periodicals:  Status report by Canada
(WT/DS31/9/Add.2)
The Chairman recalled that Article 21.6 of the DSU required that :  "Unless the DSB decides
otherwise, the issue of implementation of the recommendations or rulings shall be placed on the
agenda of the DSB meeting after six months following the date of establishment of the reasonable
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is
resolved."  He drew attention to document WT/D S31/9/Add.2 which contained Canada's third status
report regarding its progress in the implementation of the DSB's recommendations.
The representative of Canada said that her Government was pleased to present its third status
report on the implementation of the DSB's recommendations on this matter.  As noted in the report,
Canada continued to review and discuss compliance options at the highest level and hoped to fully
implement the DSB's recommendations by 30 October 1998.
The representative of the United States expressed her delegation's appreciation for the
statement made by Canada  and said that although eleven months had elapsed after the adoption of the
Reports of the Appellate Body and the Panel, Canada had not yet provided any outline of the
proposed changes to dismantle its WTO-inconsistent regime nor disclosed the specific options it was
currently considering.  The statement made at the present meeting appeared to give the impression
that Canada was using the reasonable period of time not for implementation but for delay.  Her
delegation was concerned about the options under consideration by Canada for replacing its WTO-inconsistent regime, some of which appeared not to be WTO-consistent.  The substitution of one
WTO-inconsistent publication regime for another of the same nature would not constitute a valid
implementation of the DSB's recommendations.  With only four months before the expiry of the
reasonable period of time, her delegation called on Canada to provide an early opportunity for the
United States and other interested Members to consult on the proposed changes.   
The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.
2. European Communities – Customs classifi cation of certain computer equipment
(a) Report of the Appellate Body (WT/DS62/A B/R – WT/DS67/AB/R – WT/DS68/AB/R) and
Report of the Panel (WT/DS62/R – WT/DS/67/R –  WT/DS/68/R)
The Chairman drew attention to the communi cation from the Appellate Body contained in
document WT/DS62/10 – WT/DS67/8 – WT/DS68/ 7 transmitting the Appellate Body Report in
"European Communities – Customs Classification  of Certain Computer Equipment" which had been
circulated in document WT/DS62/AB/R – WT/DS67/AB/R – WT/DS68/AB/R in accordance withArticle 17.5 of the DSU.  In accordance with the Decision on Procedures for the Circulation and
Derestriction of WTO Documents (WT/L/160/Rev.1) the Appellate Body Report and the Panel Report
had been circulated as unrestricted documents.  He recalled that Article 17.14 of the DSU required
that: "An Appellate Body report shall be adopted by the DSB and unconditionally accepted by the
parties to the dispute unless the DSB decides by consensus not to adopt the Appellate Body reportwithin 30 days following its circulation to Members.  This adoption procedure is without prejudice to
the right of Members to express their views on an Appellate Body report".
The representative of the European Communities expressed the Community's satisfaction
with the Appellate Body Report.  The Community had appealed the Panel's findings that the EC had
accorded to imports of LAN equipment from the Un ited States treatment less favorable than thatWT/DSB/M/46
Page 3
provided for in its Schedule and thus had acted incons istently with its obligations under Article II:1 of
GATT 1994.  The Community had argued that the Panel had erred in interpreting Schedule LXXX, in
particular, by reading Schedule LXXX in the light of "legitimate expectations" of an exporting
Member, and in placing the onus of clarifying the scope of a tariff concession during a multilateral
tariff negotiation conducted under the GATT/WTO, solely on the importing Member.  The AppellateBody had clarified and had resolved these important questions of principle.
First, the United States had explicitly challenged the practices of two member States which
indicated that not only the Community but also the United Kindgom and Ireland had been responsible
for the tariff practices examined by the Panel.  For its part, the Community had clarified that it was the
only defending party in this case. The Panel had accepted the Community's position although some
statements contained in its Report had been ambiguous.  This uncertainty had been eliminated by theAppellate Body which in paragraph 96 of its Report had stated that: "… the European Communities
constitutes a customs union …. The export market, therefore, is the European Communities, not an
individual member State".  He underlined that the unique character of the EC customs union went
beyond this consideration since it had been  a Member of the WTO.
Second, the Appellate Body had stated that the interpretation of the tariff concessions agreed
during the Uruguay Round negotiations should not be determined on the basis of the subjective point
of view of an exporting Member.  The interpretation of a Schedule should take into account the
common intentions of all parties, as indicated in paragraph 84 of the Appellate Body Report:  "These
common  intentions cannot be ascertained on the basis of the subjective and unilaterally determined
"expectations" of one of the parties to the treaty. "  The Appellate Body had drawn two important
conclusions: (i) in paragraph 93 of its Report, the Appellate Body had stated:  "To establish this
intention, the prior practice of only one of the parties may be relevant, but it is clearly of more limited
value than the practice of all parties.  In the specific case of the interpretation of a tariff concession in
a Schedule, the classification practice of the importing Member, in fact, may be of great importance".The Appellate Body had considered that "…..the Panel was mistaken in finding that the classification
practice of the United States was not relevant"; and (ii) with regard to the question of the consistency
of prior practice, the Appellate Body had considered that if consistent prior classification practice
might often be significant on the contrary inconsistent classification practice could not be relevant in
interpreting the meaning of a tariff concession (paragraph 95 of the Report).  In this context, the
Appellate Body had stated that the factual findings of the Panel had led to the conclusion that, during
the Uruguay Round tariff negotiations, the practice regarding the classification of LAN equipment bycustoms authorities in the Community was not consistent.  The Appellate Body had also confirmed
the distinction which it had made previously in the case of "India – Patent Protection for
Pharmaceutical and Agricultural Chemical Products" between violation complaints and non-violation
complaints under Article XXIII of GATT 1994.  It had reaffirmed that the concept of "legitimate
expectations" or "reasonable expectations" could only be raised in the context of non-violationcomplaints.  The Appellate Body had confirmed th e Community's view on this matter as stated  in
paragraph 80 of the Report.
Third, the Community's arguments regarding th e correct interpretation of Article II:5 of
GATT 1994 and its link with Article II:1 of GATT 1994 had been fully taken into account by theAppellate Body which in paragraph 81 of its Report had stated that:  "… nothing in Article II:5
suggests that the expectations of only the exporting Member can be the basis for interpreting a
concession in a Member's Schedule for the purposes of determining whether that Member has acted
consistently with its obligations under Article II:1."
Fourth, the Appellate Body had concluded that if the issue of tariff treatment of products
overlapped with that of products classification, a proper interpretation of Schedule LXXX should
have included an examination of the Harmonized System and its Explanatory Notes.  The Appellate
Body had considered that in interpreting the tariff concessions in Schedule LXXX, the decisions of
the World Customs Organization (WCO) might be relevant and  therefore should have been examinedWT/DSB/M/46
Page 4
by the Panel (paragraph 90 of the Report).  The A ppellate Body had clarified the relationship between
the WTO and the WCO by implicitly accepting that the former should not deal with technical aspects
regarding the classification of products and that in the area of dispute settlement concerning tariff
concessions in the WTO, the provisions of the Harmonized System and its Explanatory Notes as well
as the decisions of the WCO should be taken into account.
Fifth, in overturning the Panel's findings which had created an obligation to clarify a Schedule
by only an importing country, the Appellate Body had confirmed the Community's argument
regarding the nature of multilateral tariff negotiations and had reached the following conclusions: "…
the fact that Members' Schedules are an integral part of the GATT 1994 indicates that, while each
Schedule represents the tariff commitments made by one Member, they represent a common
agreement among all Members" (paragraph 109 of the Report).  The Appellate Body had rightlyconcluded in paragraph 110 of its Report that: "… the Panel erred in finding that 'the United States
was not required to clarify the scope of the European Community's tariff concessions on LAN
equipment'.  We consider that any clarification of the scope of tariff concessions that may be required
during the negotiations is a task for all interested parties".
The Community believed that the Appellate Body had confirmed most of is arguments and
had clarified the interpretation of Article II:1 of GATT 1994, the manner of interpretation of tariff
commitments of a Member in the light of its Schedule and competence between the WTO and the
WCO regarding the classification of tariff concessions .  Finally the Appellate Body had reaffirmed the
unity of the Community as a customs union and its responsibility as a WTO Member.
The representative of the United States expressed her country's gratitude for the work of the
Appellate Body.  The United States wished to express its views on certain aspects of the Appellate
Body and the Panel Reports and requested that these views be fully recorded in accordance with
Article 16.3 of the DSU.  Her country supported th e Panel's findings which had been upheld by the
Appellate Body that the US request for a panel was sufficiently specific with respect to both the
measures and products involved.  The Community's argument to the contrary had been properly
rejected.  As pointed out by the United States, su ch arguments would only lead to long, protracted
procedural battles at the beginning of panel proceedi ngs.  In this regard, her country was pleased that
the Appellate Body had shared its concerns.  The United States regretted that the Appellate Body had
not upheld the Panel's findings that the EC's Uruguay Round tariff concessions under heading 84.71
bound LAN equipment.
The US concern with the Appellate Body Report was twofold.  First, the United States was
concerned whether in this case the dispute settlement system had operated in the manner it had been
intended.  In fact, the Report had not resolved this dispute because it had not answered the
fundamental question of whether the Community had violated its tariff binding with respect to LANequipment.  Thus, in spite of the examination by the Appellate Body and the Panel this matter
remained unresolved.  In other cases, the Appellate Body had not limited itself to simply identifying
errors in the specific reasoning of the Panel.  Instead, where permitted by the Panel's factual findings
or the facts submitted by the parties that had been  uncontested at the panel stage, the Appellate Body
had taken the next logical step and had applied its reasoning to resolve the legal issues before it.  TheUnited States was puzzled  that the Appellate Body had not found it appropriate to follow the same
approach in this case.  Certainty and finality were the cornerstones of an effective dispute settlement
system.  However, the Appellate Body Report had left substantial uncertainty as to the treatment to
which Members were entitled with respect to a major article of international trade.  This, in turn,
might raise questions about the ability of Members to enforce other Members' scheduled WTOcommitments.
Second, the United States was concerned that the Appellate Body Report not be interpreted in
a manner that would ignore the basic tariff negotiations practices or undercut Members reliance on
tariff nomenclature classification terms as a basis for determining existing or future tariff bindings.WT/DSB/M/46
Page 5
Negotiated tariff bindings had long played a central role in the liberalization of international trade and
should continue to do so in the future.  She empha sized that while the Appellate Body had overturned
the particular manner in which the Panel had relied on the EC's prior classification treatment - and
hence prior tariff treatment - in interpreting the scope of the EC's commitment, the Appellate Body
had made clear in paragraphs 92 and 93 of its Report that prior treatment was sufficient and couldeven be of great importance.  It was appropriate and essential that prior treatment be given substantial
weight to effectuate the understanding of all parties to tariff negotiations.  Parties negotiating market-
access commitments had generally placed great reliance on the actual treatment that national
authorities of the importing Member had accorded to a product.  This was because no matter how
detailed the Harmonized System in its description of a particular product it could not cover all
possible variations.  The introduction of the Harmonized System was intended to facilitate trade,
including tariff negotiations.  Generally, the Harmonized System headings and sub-headingsencompassed more than products specifically listed therein.  Consequently, negotiators had expected
that the tariff treatment being accorded would be a basis for the negotiations and would be
maintained.  An inability to consider prior treatmen t in determining or establishing the nature of the
bindings would substantially change the manner in which negotiations were conducted.  For example,
the inability to rely on prior treatment would render difficult, if not impossible, some tariffnegotiations techniques such as formula tariff cuts.  Moreover, such a departure from tradition could
well place an untenable burden on each Member to identify, as part of the negotiating process, every
product within a line item in order to establish certai nty with respect to the tariff treatment.  Such an
exercise could result in the development of a "shadow" tariff schedule that listed products not
otherwise specifically listed in the Harmonized System.
Finally, the United States noted that the Appellate Body Report had questioned the extent to
which Members could relay on the tariff treatment practices of individual member States of the
European Community.  In the United States' view this raised concerns about the stability of
commitments provided by individual WTO Members which were part of the Customs Union.  Hercountry believed that these important issues concerning existing bindings, future negotiations and
customs unions which had been raised by the Appellate Body should be taken up by the General
Council or the Council for Trade in Goods in the near future.
The DSB took note of the statements and adopted
 the Appellate Body Report in
WT/DS62/AB/R-WT/DS67/AB/R-WT/DS68/AB/R and the Panel Report in WT/DS62/R-
WT/DS67/R-WT/DS68/AB/R as modifi ed by the Appellate Body Report.
3. Korea – Definitive safeguard measure on imports of certain dairy products
(a) Request for the establishment of a panel by the European Communities (WT/DS98/4)
The Chairman drew attention to the communication from the European Communities
contained in document WT/DS98/4.
The representative of the European Communities expressed the Community's serious
concerns with regard to the measure taken by Korea on imports of certain dairy products.  The
Community believed that the Agreement on Safeguards had been violated by the finding of seriousinjury and the causal link not supported by evidence, the absence of price analysis, incorrect
calculation of the quota, the delay in consultations and inadequate notifications to the WTO.  On
22 January 1998, the Community had placed its request for the establishment of this panel on the
agenda of the DSB meeting.  However, at that mee ting the EC's request had not been considered since
an amicable settlement of the dispute had seemed possible.  Unfortunately, consultations with Koreahad not led to such a solution. Therefore, the Community had decided to resume the dispute
settlement proceedings.WT/DSB/M/46
Page 6
The representative of Korea noted the EC's statement requesting the establishment of a panel
to examine Korea's safeguard measure on imports of certain dairy products.  His delegation could not
agree to the establishment of a panel at the present meeting.  His country was convinced that its
safeguard measure was in full conformity with its WTO obligations.  Nonetheless, Korea had made
sincere efforts to seek a mutually satisfactory solution to this matter through consultations with theCommunity, pursuant to the provisions of Article 4.5 of the DSU.  As indicated at the DSB meeting
on 22 January, a solution had been worked out in this consultations on the basis of which the
Community had agreed not to seek the establishment of a panel.  He regretted that in spite of this
mutual understanding, the Community had proceeded with its request for a panel.  In particular, his
delegation was concerned that this had resulted due to an internal disagreement which had followed
the Community's mutual understanding with Korea.  Such an inability on the part of the Community
to act according to the outcome of negotiations, which had been carried out with a proper mandate,would not only damage its credibility but would also frustrate the settlement objectives embodied in
the DSU.  His delegation urged the Community to reconsider this matter and to withdraw its request
for the establishment of a panel.
The DSB took note of the statements and agreed
 to revert to this matter.
4. Argentina – Safeguard measures on imports of footwear
(a) Request for the establishment of a panel by the European Communities (WT/DS121/3)
The Chairman drew attention to the communication from the European Communities
contained in document WT/DS121/3.
The representative of the European Communities said that the Community had requested the
establishment of a panel on this matter since the safeguard measures imposed by Argentina were in
violation of the Agreement on Safeguards.  These provisional measures had been imposed without
any evidence of critical circumstances as required under that Agreement.  The subsequent finding of
serious injury caused by increased imports had been seriously flawed.  In fact, in volume terms
imports had decreased each year since 1993 and in terms of value since 1994.  A price analysis had
not been conducted and the evidence presented had not supported the finding of serious injury for the
whole footwear sector.  A causal link between impor ts and the condition of the Argentinian industry
could not be established.  In particular, sin ce Argentina had excluded the MERCOSUR countries'
imports from the scope of the measure while includin g such imports for the injury analysis.  Although
required under Article XIX of GATT 1994, Argentina had not addressed the issue of why it was not
reasonably foreseeable that if import restrictions on footwear were removed imports might increase.
The Community was very concerned by this blatant abuse of the safeguard instruments for
protectionist purposes.  These measures had impaired substantial trade interests of the Community
which was the sixth-biggest exporter of this product.  If this case remained unchallenged it could set adangerous precedent regarding the use of these trade instruments.  For the above-mentioned reasons,
the Community had to resort to dispute settlement since all attempts to find a mutually amicable
solution had failed.
The representative of Argentina said that hi s delegation rejected the comment made by the
Community that Argentina had abused the WTO in struments.  Both the investigation and the
measures taken were in full conformity with Article XIX of GATT 1994 and the Agreement on
Safeguards.  In order to give this discussion its proper context, he underlined that imports of footwear
from the Community represented only 0.4 per cent of Argentina's total imports of footwear.  He had
mentioned this in order to make the situation less dramatic.  Argentina regretted the Community'sdecision to request the establishment of a panel on this matter, instead of continuing the consultation
process which had not yet been exhausted and could still provide positive results taking into account
the interests of both parties and of other Members.  For these reasons and because Argentina wishedWT/DSB/M/46
Page 7
to continue working towards a mutually acceptable  solution, his delegation was not in a position to
accept the establishment of a panel at the present meeting.  He said that during the discussions in the
Committee on Safeguards, Argentina had extensively responded to the arguments made by the
Community.
The DSB took note of the statements and agreed  to revert to this matter.
5. Australia – Subsidies provided to producers and exporters of automotive leather
(a) Request for the establishment of a panel by the United States (WT/DS126/2)
The Chairman drew attention to the communication from the United States in document
WT/DS126/2 which contained its request for the establishment of a panel pursuant to Article 4 of the
Agreement on Subsidies and Countervailing Measures  (SCM).  As indicated in this communication,
the earlier US request for the establishment of a panel contained in WT/DS106/2 regarding the same
measure had been withdrawn.  It was his understanding that this implied that the United States had
decided to terminate any further action in pursuance to the DSB's decision of 22 January 1998 to
establish a panel at the request of the United States.
The representative of the United States said that her country requested the immediate
establishment of a panel to examine Australia's provision of export subsidies on automotive leather
and asked that the panel in its examination of th is matter proceed in accordance with the expedited
procedures contained in the SCM Agreement.  It was regrettable that this matter had persisted for toolong.  Since 1991 Australia had provided Howe and Company Proprietary Ltd., one of its leading
leather producers, with a series of subsidies that had been tied both de jure  and de facto  to Howe's
export performance.  These export subsidies had transformed Howe into a major leather exporter.  In
the late 1980s, exports had accounted for less than 10 per cent of Howe's total sales, while now it
comprised approximately 90 per cent of Howe's bus iness.  In October 1996, the United States had
invoked dispute settlement procedures with respect to Australia's grant of import credits that were
directly tied to export performance under the Textil es, Clothing and Footwear and Export Facilitation
Schemes.  In November 1996, Australia and the United States had reached an agreement that had
resolved the dispute, with Australia agreeing to remove automotive leather from its import credit
schemes.  However, at the time that Australia and the United States had been negotiating a settlement,
Australia had agreed to provide Howe with a package of subsidies.  While different in form, these
subsidies had the same aim and effect as the de jure   export subsidies they had replaced: i.e., allowed
Howe to continue to expand its export activities.  In particular, Australia had agreed to compensate
Howe for its loss of import credits by giving the company grants up to $A 30 million and a
preferential loan of $A 25 million.  The United States had made considerable efforts to try to resolve
this matter without the need to resort to a panel.  Her country had attempted to persuade Australia to
withdraw its replacement package of subsidies to Howe when Australia had first announced itsexistence.  In fact, the United States had continued to discuss this matter with Australia even after it
had requested the establishment of a panel to examine the consistency of the replacement package of
subsidies with Australia's WTO obligations. The United States preferred such a resolution and was
prepared to continue to seek a common ground.  However, it could not ask its domestic industry to
continue to compete under unfair conditions.  Therefore, her delegation was obliged to request theestablishment of a panel to address this long-standing dispute and, to the extent that the parties could
not find a solution, to recommend that Australia withdraw the subsidies in question.
The United States regretted that this matter had again to be brought before the DSB.  She
hoped that other Members, including Australia recognized that the repeated requests for a panel by theUnited States were the direct result of its efforts to find a mutually satisfactory resolution with
Australia, and reflected the US commitment to avoid recourse to a panel, if possible.  In this spirit, the
United States also requested that its previous request for a panel contained in document WT/DS106/2WT/DSB/M/46
Page 8
which had effectively been suspended pending discussions between the two Governments be
withdrawn.  In this regard, she confirmed that the United States had decided to terminate any action in
pursuance of the DSB's decision of 22 January to esta blish a panel at the request of the United States.
The representative of Australia  said that the DSB had before it the most unusual situation
which raised important procedural issues and a possible issue of precedent, as it had been made
known in document WT/DS126/3 which was avai lable in the room.  This document outlined
Australia's concerns with the US request for the establishment of a second panel which raised some
important systemic issues that should be considered by the DSB. Australia did not dispute the right of
the United States to have a panel examine its complaint regarding the consistency of a particular
measure with Article 3.1(a) of the SCM Agreement.  But such a panel had already been established by
the DSB on 22 January 1998.  The object and purpose of the DSU in this area was to ensure that aMember could not be blocked from having a hearing and Australia strongly supported that right.  A
Member was only required to complete the appropriate procedures contained in the DSU and the
relevant covered agreement.  Under such a situation a panel had been established in great haste at the
request of the United States without any intention of starting its work immediately.  On reflection, it
would appear that the United States considered that its paper work should have been done differentlyand therefore requested a second panel in respect of the same complaint and the same measure.
Australia considered that this was not the object and purpose of the DSU and believed that it was an
attempted abuse of process.  In this particular case, while panelists had not yet been selected, the
panel had been established and its standard terms of reference determined.  The DSU did not make
any distinction of rights in this area in the post-establishment period and did not distinguish betweenthe period before appointment of panelists, the first hearing, the interim report or the final report.  The
logic of the United States' position was that it could do this at any time before the circulation of a
panel's final report: i.e., it could seek the termination of any panel before the circulation of its final
report.  Presumably, if the interim report had come out in a way that the United States did not like, it
would have wished to have the flexibility to be able to start a new panel almost immediately aftersuspending the first one.  On this logic, as s oon as a complainant encountered problems with the
process it could request new consultations so as it could have another panel established as soon as
possible in case there might be some flaw in its approach to the first panel.  The United States was not
exactly a novice in the dispute settlement area and it could reasonably be expected to do its
preparatory work correctly the first time around.  He recalled that Australia had considered that the
original US paper work had been inadequate and had raised this at the DSB meeting on 22 January
but its comments had been ignored by the United States.  There were also some peculiarities aboutthis new request which would have to be addressed if a panel was established on this basis.
Australia considered that a new panel on the same issue could only be established after the
first panel had lapsed or otherwise terminated.  This  had been recognized by the United States in the
last point in its document regarding withdrawal of it s request for a panel.  Accordingly, the procedures
for establishing a new panel could only start after the first panel had been terminated.  It would be
illogical on the one hand to agree that two panels on the same matter could not coexist but on the
other hand to allow the complainant to start fulfil ling the procedural requirements leading to the
establishment of a new panel while the first one still existed.  Furthermore, the DSU did not provide
for the merging of two panels over precisely the same matter with the same complainant and
respondent.  This was not covered by Article 9 of  the DSU which dealt with multiple complainants
and not how to handle the same complaint with multiple panels, involving the same two parties.
He drew attention to the last sentence in docu ment WT/DS126/2 which read as follows:  "
The United States also asks that, at the next meeting of the Dispute Settlement Body, its earlierrequest for a panel, dated 9 January 1998, circulated as WT/DS106/2, regarding the same subsidies
identified in the present request be withdrawn".  In fact, there was no request outstanding since a
panel had been established on 22 January pursuant to that request.  This meant that the US request for
the withdrawal of  an existing panel raised at least two important issues:  (i) could the DSB terminate
a panel on the request of the complainant? and  (ii) could the complainant terminate a PanelWT/DSB/M/46
Page 9
unilaterally?  Australia considered that the DSU did not give the DSB the authority simply to
terminate a panel at the request of the complainant once it had been established nor give the
complainant the right to terminate a panel unilate rally once it had been established.  To accept this
would confer upon a complainant the right to termin ate a Panel the day before the final report had
been issued if it did not like the outcome.  In accordance with the DSU provisions, the only case inwhich a panel could lapse was under Article 12.12 of the DSU.  Otherwise a panel could only be
finalized without a substantial report by mutual agreement of the parties under Article 12.7 of the
DSU.
If in this case, Members gave the complainant such rights, a precedent would be created
which could lead to future abuse with potentially significant damage to the dispute settlement system.
Australia, which supported the automaticity of the system, was at a loss and considered that a panelestablished in these circumstances would be tainted and ill-founded since the United States did not
have the right to a new panel at this time. A panel could be established but his country could not agree
that this had been done properly because of these faulty procedures. Any panel report or subsequent
proceedings would be irreparably tainted by this process since this false start would not be corrected
by subsequent process.  Accordingly, Australia  reserved its rights on this matter.  Furthermore,Australia could not agree to the US assertion that the first panel had been effectively suspended.  If
this were the case, certain procedures should have been followed  under Article 12.12 of the DSU
whereby a panel suspended its work and this was not the case.
The DSB took note of the statements and agreed
 to establish a panel in accordance with the
accelerated procedures pursuant to Article 4.4 of the SCM Agreement with standard terms of
reference.
The representative of India recognized that the DSB had taken a decision to establish a panel.
He noted that the United States had referred in its request to the termination of an earlier panel and as
pointed out by Australia there was no specific provision under the DSU regarding this matter.  Since
his delegation wished to reflect further on this matter, he sought clarification as to whether the DSB
would take any decision on this issue at the present meeting.
The Chairman said that at the present meeting the DSB took note of the statements made but
would not take any decision regarding the previous panel.
The representative of Australia reiterated that the DSB was in a most unusual situation at the
present meeting. He sought clarification whether as of now there were two panels on the same subject
with the same parties.
The Chairman said that technically as from now  two panels existed on this matter.  However,
it was clear as the United States had indicated that this would have no impact on the first panel
because in fact there would be only one panel.
The representative of Australia said that technical points were very important in this legal
forum.  Therefore, technically, his delegation could not accept the establishment of two panels on the
same subject and with the same parties.
The representative of the United States said that her delegation had made it quite clear that the
United States had terminated the first panel.  She drew attention to the final part of her statement
which read as follows:  "… we confirm that the United States has decided to terminate any action inpursuance of the DSB's decision following our request to establish a panel (WT/DS106/2)".  There
was no provision in the DSU that would prevent the United States from doing so unilaterally.  She
drew attention to Article 6.1 of the DSU which clearly stated that:  "If the complaining party so
requests, a panel shall be established at the latest at the DSB meeting following that at which the
request first appears as an item on the DSB's agenda, unless at that meeting the DSB decides byWT/DSB/M/46
Page 10
consensus not to establish a panel".  Furthermore, the United States had referred to Article 4.4 of the
SCM Agreement which stated as follows:  "If no mutually agreed solution has been reached within
30 days of the request for consultations, any Member party to such consultations may refer the matter
to the Dispute Settlement Body for the immediate establishment of a panel, unless the DSB decides by
consensus not to establish a panel".  She said that in her statement it was clear that the United Stateshad eliminated its first request for a panel.
The Chairman said that since there was no consensus not to establish a new panel, Australia's
arguments could be raised before the panel established at the present meeting.
The representative of Australia said that he was still uncertain about what was being decided
at the present meeting.  Australia had made it very clear that it recognized the US right to the
establishment of a panel but that its main concern was about the fact that two panels existed on the
same issue and with the same parties.  His delegation did not deny the United States its right to a
panel but raised the question of what should be done with the first panel.  The US representative had
stated that her country had unilaterally terminated th e first panel but this was in contradiction with the
US request seeking the DSB to terminate this first panel.  The question was therefore what should bedone with this first panel.
The representative of Mexico said that this matter was important and believed that the DSB
was obliged to establish a panel at the present meeting because there was no consensus to the
contrary.  He noted that there were two opposite interpretations with regard to the procedures.  TheDSB was not obliged to take a position on this issue unless there was a consensus.  The only course of
action for the DSB would be to take note of the statements and the parties would reserve their rights
under the WTO Agreement.  The parties could do so by raising their concerns before the Panel and
the Appellate Body, in consultations with each other or during the DSU review.  From the systemic
point of view, Mexico had its own view which it would not wish to raise at the present meeting.
The representative of the European Communities said that the United States had stated that it
had terminated the work of the first panel.  He wished to know on what legal basis the United States
had taken its decision.  He drew attention to Article 12.7 of the DSU which read as follows:  "Where
the parties to the dispute have failed to develop a mutually satisfactory solution, the panel shall submit
its findings in the form of a written report to the DSB….. Where a settlement of the matter among the
parties to the dispute has been found, the report of the panel shall be confined to a brief description ofthe case and to reporting that a solution has been reached".  He therefore asked on what legal basis the
United States could terminate the work of the first panel and whether or not a mutually satisfactory
solution had been found in the dispute with Australia.
The Chairman said that there was a number of questions and delegations had expressed
different views.  The DSB had established the panel following the request by the United States and
there was no consensus to the contrary.  Australia could raise its arguments before the panel which
had just been established.  He assumed that the first panel established on 22 January would remain
inactive since its composition had not yet taken place.  This approach had also been taken in the past
with regard to similar cases.
The representative of Australia said that there was no legal basis to distinguish between the
phases of the establishment of a panel.  After a panel was established it existed and whether the
members of a panel had been selected or not this would not change the fact that such a panel existed.
In this case the panel had been established on 22 January 1998.
The representative of Japan noted that some serious legal problems were involved in this case.
The Chairman had suggested that Australia could raise its arguments before the newly established
panel.  He was not certain whether this new panel was in a position to consider the procedural
concerns raised at the present meeting.  In his view, this matter should be considered by the DSB andWT/DSB/M/46
Page 11
should not be decided by the new panel.  With regard to the terms of reference he wished to know
whether the terms of reference of the new panel were different from the terms of reference of the first
panel.  If the terms of reference were the same there was no need to have another panel.  He raised the
question of whether one party could terminate unilaterally the work of the panel and what would be
the legal basis to do so.  Article 12.12 of the DSU refered to the suspension of panel proceedings andhe wished to know whether one party could suspend the work of the panel if such panel had not begun
its work since panelists had not yet been selected.  In particular, he wished to know whether the issues
involved in these disputes were the same.  If they were the same then although technically two panels
existed in fact there was only one panel.  If the terms of reference of these panels were the same these
panels could be merged.
The representative of the United States said that her delegation had very clearly pointed out
that although the panel had been established its members had not yet been selected.  Consequently, no
work had been done and therefore one could not suspend work which had not even begun.  The
United States' intention was not to engage in an y procedure regarding the first panel because this
panel had been terminated. The European Communities and Australia wished to discuss Article 12 of
the DSU.  She drew attention to the fact that both  Article 12.7 and 12.12 referred to cases in which the
composition of panels had already taken place and some work had been done.  Therefore, this Article
was not relevant to this case since members of this panel had not yet been selected and no work had
been done.  In addition, the terms of reference were different.
The representative of Venezuela said that this issue could be considered in the DSU review.
If suspending  a panel could only be done at the request of the complaining party and if the United
States had not formally requested such a suspension how could the establishment of a second panel be
accepted without clarifying the legal situation of the first panel.  A new panel could not be established
if it had not been determined what would be done with the previous panel.
The Chairman said  that the work of the first panel had not been terminated because it had not
even begun.  Therefore, this was a very difficult issue.
The representative of the European Communities said that Article 4.4 of the SCM Agreement
provided for the immediate establishment of a panel.  However, a serious matter with systemic
implications had been raised at the present meeting and he had not been in a position to consult with
member States or his authorities.  This was a shortcoming in the automaticity of the dispute settlementprocess which should be considered in the DSU review.  He had not received a response to his
question which he had asked previously regarding the legal basis for termination of work.  He was
aware of only one provision contained in Article 12.12 of the DSU which allowed for suspension of
panel's work for a period of 12 months after which the panel would lapse. This was the only provision
under which Members could terminate the work of a panel.  He was surprised by Australia'sarguments that there were no legal differences between the various stages of the existence of the
panel.  The Chairman had stated that the previous panel would remain inactive and in his view this
would set a precedent that the Chairman would be terminating the work of a panel.  All legal aspects
of this issue which had systemic implications should be taken into consideration.  Any decision
concerning this panel could only be taken on the basis of the DSU provisions.
The representative of Australia said that his delegation was still puzzled about the legal basis
for termination of the first panel.  He was glad that it had been recognized that there was no legal
distinction between the various stages of the panel once it had been established.  In his view
Article 12.7 of the DSU was the only guidance concerning such situations.  These were veryimportant legal issues which had systemic implications for the operation of the DSB and ran the risk
of setting a precedent. If the course of action proposed by the Chairman was accepted, he would
request that the record of this meeting showed clearly that the United States had unilaterally requested
to terminate the first panel.WT/DSB/M/46
Page 12
The Chairman proposed that the DSB take note of the all the points made as well as the last
point made by Australia and confirm its decision to establish a panel at the present meeting.  At a later
stage, the DSB could revert to this issue in order to discuss the legal implications raised by several
delegations.
The representative of Mexico supported the Chairman's proposal.  He had some comments
with regard to Mexico's position on this matter but since the Chairman had indicated that the DSB
would revert to these issues at a later stage he would then take up these issues.
The representative of India said that any decision on this matter should be taken within the
framework of the DSU. Therefore any clarification provided by delegations had to be examined in the
light of the DSU provisions. Like Japan, he also beli eved that a solution to this problem would have to
be found by the DSB.  It was possible for the parties to this dispute to raise their concerns before the
panel but the newly established panel would have standard terms of reference unless the parties
decided to the contrary.  This procedural issue could not be raised before the panel because it was not
contained in its terms of reference.  Therefore, there was a need for the DSB to find a solution on this
matter.  He hoped that the United States would reconsider this type of approach and that Memberswould be able to find a solution to this delicate matter.
The Chairman said that the DSB would revert to this systemic issue which concerned the
DSU provisions and as suggested by Venezuela it could be taken up in the review of the DSU.
The representative of Cuba said that after the DSB's decision to establish a panel there had
been a divergence of views regarding the legality of this decision.  The legal basis in this case was not
clear and still needed definition.  Therefore, this decision should not be maintained since it had been
taken on inaccurate legal basis.  He wished to know whether or not the decision to establish a panel
would be maintained since it had been taken prior to the exchange of views at the present meeting.
The Chairman said the decision to establish a new panel had not been questioned  but the fact
that another panel on the same matter already existed.  Therefore the question concerned the
revocation of the previous DSB's decision taken on 22 January and whether this could be done at the
request of the complaining party. He reiterated his proposal concerning the course of action for the
DSB at the present meeting, namely that the DSB take note of the statements and revert to the
questions raised at an appropriate time.  The decision taken at the present meeting to establish a panelat the request of the United States would remain since there was no consensus to the contrary.
The representative of Cuba said that following the statement made by the Chairman he was
even more concerned because there had been an initial agreement to establish a panel which had never
begun its work and there was a request for a second panel on the same issue.  Therefore, there weretwo decisions establishing a panel to deal with the same issue.  The fact that the work of the first panel
had never begun could be solved by initiating such work and by selecting the members of this panel.
The establishment of a second panel on the same issue would amount to a situation in which two
decisions had been taken to establish two panels to examine the same matter.  He drew attention to the
fact that the DSU provisions always referred to the establishment of a panel not panels and this shouldbe the guidance with regard to this matter.
The Chairman said that as he had already stated  there were several legal arguments involved
in this case which could be taken up by the DSB at an appropriate time.
The representative of Bulgaria noted that Australia could raise its questions before the panel
and, if so, the panel would have to examine them.
The Chairman said that as he had stated previously, Australia was entitled to raise these issues
before the panel or the Appellate Body.WT/DSB/M/46
Page 13
The representative of Thailand said that in his delegation's view the only question was
whether a Member could unilaterally terminate the panel already established and then request the
establishment of a new panel.  This matter should be resolved by the DSB before any decision
regarding the establishment of another panel. Since the new panel had been established at the presentmeeting in the absence of consensus to the contrary, his delegation wished to reserve its rights under
the WTO Agreement, in particular with regard to the interpretation of the DSU provisions.
The representative of Japan said that there were two panels and in cases in which more than
one panel had been established the practice was to merge such panels.  In this case, both the
complainant and the respondent were the same but the terms of reference of the two panels were
different therefore there should be no problem to merge these two panels.  This could solve thisproblem and Australia could raise its concerns before the panel.
The Chairman noted Japan's suggestion and said that these issues would be discussed in the
DSB at a later date but the decision to establish a new panel would be maintained. He would consult
with the parties to the dispute to arrange for a discussion on this matter in the DSB.  He consideredthat this discussion had been very useful and could be relevant in the future during the DSU review in
the context of which this issue should be considered.
The DSB took note of the statements.
6. European Communities – Regime for the importation, sale and distribution of bananas
(a) Statement by Ecuador, Guatemala, Honduras Mexico, Panama, and the United States
concerning implementation of the recommendations of the DSB
The Chairman said that this item was on the agenda of the present meeting at the request of
Ecuador, Guatemala, Honduras, Mexico, Panama and the United States.
The representative of the United States, speaking also on behalf of Ecuador, Guatemala,
Honduras, Mexico and Panama wished to express their continued deep concern regarding the
Community's proposal to implement the DSB's reco mmendations.  This case was a test of the EC's
willingness to respect the multilateral trading system.  In January 1998, the European Commission
had approved a proposal, which if adopted by member States would fail to implement the DSB'srecommendations.  This proposal had been approved without consultations with the six countries
regarding the requirements of the Panel and the Appellate Body Reports and in spite of their repeated
requests to do so.  Since then, the six countries had expressed their willingness to explore a WTO-
consistent solution with the Community on the basis of either an unrestricted market or a tariff quota,
only to be informed by the Commission's officials that the fundamental discrimination in the proposalwould not be changed.  Nothing that had been stated  concerning plans for the administration of import
licences gave them confidence that the Communities had correctly interpreted  the analysis of the
Panel and the Appellate Body concerning relevant WTO disciplines.  It was their understanding that
at a meeting of the EC Council of Agriculture Ministers which had just begun, the Commission would
make every effort to push through this proposal in spite of the concerns expressed by the six countriesand despite its obvious failure to fully comply with the DSB's recommendations.  Members had just
finished celebrating 50 years of international trade rules.  In order for the new WTO rules to provide
security and predictability in the international trading system, Members should do more than simply
announce their support for WTO obligations;  they should abide by them.  The six countries would
follow carefully the results of the meeting of the EC Council of Agriculture Ministers concerning theEC banana regime and remained ready to work with the Communities to help develop a non-
discriminatory solution that would strengthen the dispute settlement system.WT/DSB/M/46
Page 14
The representative of Ecuador said that on 25 September 1997 the Community had been
requested to change its discriminatory and restrictive regime for the importation, sale and distribution
of bananas which had been established by Regulation 404/93 and other supplementary rules which
had seriously affected Ecuador's trade interest. On 14 January 1998, the European Commission had
adopted a proposal in COM(1998) 4 Final (98/ 0013 CNS) to amend the regime which would be
discussed under item 4 of the agenda of the current meeting of the EC Council of Ministers of
Agriculture. Ecuador had examined this proposal and, in a constructive spirit and open to dialogue,
had made various substantive suggestions in order for this proposal to be WTO-consistent and to
comply with the conclusions and recommendations of  the Panel and the Appellate Body Reports.  His
country had raised its views on this matter in the DSB.  It had made two individual statements and
joint statements with Guatemala, Honduras, Mexico, Panama and the United States.  Ecuador had also
voiced its concerns at the Second Ministerial Conference. It had directly conveyed its views to theEuropean Commission and recently to each of the EC Ministers of Agriculture in letters sent to them
by Ecuador's Minister of Foreign Trade.
Ecuador deplored the fact that its positive attitude had not received a similar response from
the Commission which had ignored the implications  that the proposed EC measure would have on the
economy such as that of Ecuador where income and employment levels depended largely on banana
exports and on a guarantee of access to the European market governed by predictable, non-
discriminatory WTO-consistent rules.  Without mentioning all aspects of the Commission's proposal
that had been considered inconsistent with the WT O rules, Ecuador wished to point out the lack of
will in the Commission to provide the specific terms of the new import licensing regime, the absenceof assurances that the regime would not continue with inconsistencies and that it would respect the
WTO rules in particular Articles I and XIII of GATT 1994 and the Agreement on Import Licensing
Procedures.  Ecuador also deplored the lack of safeguards for its export and import companies in the
EC's market.  Ecuador reaffirmed that an unsatisfactory solution would seriously affect its economy
and hoped that consideration would be given to th e views and suggestions made regarding the banana
regime at the meeting of the EC Council of Ministers in order to guarantee a Regulation that would be
consistent with the WTO rules and would comply with the recommendations of the Panel and the
Appellate Body.  He reserved his country's right with regard to this matter in the light of the DSU
provisions.
The representative of the European Communities said that in accordance with the provisions
of Article 21.6 of the DSU, six months after the date of establishment of the reasonable period of
time, the Community would be required to make  its status report regarding its progress in
implementation.  Since the reasonable period of time had been established on 7 January 1998 by the
arbitrator, the Community would present its report  at the next meeting of the DSB scheduled for
23 July.  The Commission's proposal would be discussed at the current meeting of the EC Council of
Ministers of Agriculture.  His delegation noted the statements made at the present meeting.  He saidthat with regard to the specific modalities for implementation, this proposal provided a negotiating
mandate on the basis of which the Community would enter into negotiations with its supplying
countries.  However, at this stage, the Commission's proposal to the Council did not constitute the
measures required for implementation of the DSB's recommendations.  The compatibility of the
measures taken by the Community to meet its WTO obligations and the DSB's recommendationscould only be considered after the reasonable period of time had elapsed and the legislative measures
of the Community were in place.
The DSB took note of the statements.WT/DSB/M/46
Page 15
7. Delay in circulation of panel reports
(a) Statement by Japan
The representative of Japan, speaking under "Other Business", expressed concern that the
Report of the Panel on "Indonesia – Certain Measures  Affecting the Automobile Industry", which had
been distributed to the parties to the dispute some time ago, had not yet been circulated to Membersdue to delays in translation.  Japan appreciated the Secretariat's contribution to the work of this panel
and hoped that the Secretariat would be in a position to circulate this Panel Report at an earlier date to
enable the DSB to adopt this Report.  He added that once the Report was adopted, the parties to the
dispute would be required to bring the measures into conformity with the DSB's recommendations.
The issue of delay in circulation of panel reports was relevant to the arguments raised by some
Members during the Second Ministerial Conference, namely that panel reports should be derestricted
when final reports were circulated to the parties to a dispute without a need to wait for theircirculation in all official languages.  He believed that this issue should be considered during the DSU
review to be carried out this year.
The representative of the European Communitie s said that the Community which had been a
party to this dispute was concerned over the delay in circulation of this Panel Report. He recognized
certain constraints including financial ones but it was unusual that the Panel Report which had been
completed on 22 April 1998 had not yet been circulated due to technical reasons.  He recognized that
the Secretariat had to mange its work within the available means but these delays amounted to a
systemic problem which affected the credibility of the DSU.  Members were bound by strict time
periods regarding the implementation of recommendations.  If the Panel Report would not becirculated in time for adoption at the DSB meeting scheduled for 23 July, its adoption might only take
place in September, four or five months after it had been technically completed.  In the Community's
view this situation was not normal as it was not necessary to wait several months for technical
reasons.  Such a delay would automatically lengthen the implementation period.  He believed that this
problem should be considered during the DSU review.
The representative of the United States said that Japan had made a very important
observation.  Her delegation was also concerned  about these long delays in the derestriction and
circulation of panel reports.  Increased resources of WTO translation activities could make an
improvement but depending upon the length of reports, translation could still take a very long time.
The United States believed that transparency in the WTO and the overall operation of the system
would be dramatically improved if panel reports could be derestricted and circulated as soon as theyhad been finalized and available in a single WTO language.  The official date of circulation for the
DSU purposes would remain the date on which reports were available in all three WTO languages.  If
Members could not agree to this simple procedural modification proposed by the United States they
would continue to experience the difficulties mentioned by Japan and would deny the Secretariat the
possibility of informing the public of the facts of the case.
The representative of Canada said that her country considered that the issues raised by the
previous speakers were important and should receive attention in the very near future.  The issue of
derestriction and transparency would be on the agenda of the next meeting of the General Council
scheduled for 15 July where the issues raised at the present meeting could be taken up for resolution.
The representative of Mexico supported Canada's view and said that the issue of derestriction
of WTO documents, in particular panel reports could be considered in the light of paragraph 7 of the
Decision on Procedures for the Circulation and Derestriction of WTO Documents.  Mexico believed
that this was a serious problem which required an appropriate solution.
The Chairman said that delegations had raised very important and sensitive issues concerning
translations and the means made available to the Secretariat.  Some of these issues would be taken upWT/DSB/M/46
Page 16
at the next meeting of the General Council and other issues would be considered by the Budget
Committee.  The question of delays in circulation could also be taken up during the DSU review.
The DSB took note of the statements.
8. Argentina – Certain measures affecting imports of footwear, textiles, apparel and other
items
(a) Statement by Argentina regarding its agreement with the United States on implementation of
the DSB's recommendations
The representative of Argentina, speaking under "Other Business", wished to inform the DSB
of an agreement reached with the United States concerning the reasonable period of time and the
modalities for the implementation of the DSB's recommendations.  In a Note dated 5 June 1998,
Argentina had proposed the following time-frames and modalities for implementing the DSB's
recommendations with respect to the minimum specific import duties (DIEMs):  (i) establishment of
an upper limit (cap) on all import duty payments made upon clearance of textile products and
clothing.  Such payment should not exceed 35 per cent of the declared value of the merchandise;(ii) this would ensure and guarantee compliance with the commitment to apply import duties which
ad valorem  equivalents did not exceed 35 per cent;  (iii) a Ministerial resolution would be issued
confirming this upper limit and instructing the Directorate of Customs to introduce a procedure for
textile and clothing imports.  This procedure would come into force 90 days after the publication of
the Ministerial resolution. With respect to the stat istical tax, Argentina had proposed the following:
(i) application of a rate of 0.5 per cent to import operations covered by the statistical tax, with
maximum ceilings corresponding to ranges of value described in greater detail in the Annex to the
Note;  (ii) the determination of the ranges (according to the mentioned Annex) would be reflected in
an article of the tax bill for the fiscal year 1999 to  be submitted  to Congress;  (iii) the commitment
undertaken by Argentina with respect to the statistical tax would enter into force on 1 January 1999.
In a Note dated 15 June 1998, the United States had stated as follows:  "The United States
agrees that the reasonable period of time for the purpose of Article 21.3 of the Understanding on
Rules and Procedures Governing the Settlement of Disputes (DSU) shall be 180 days from 22 April to
conform its specific duties on textiles and apparel to the findings in the Panel and Appellate Body
Reports and that this period shall end on 19 October 1998.  The United States further agrees that the
reasonable period of time for the purpose of Article 21.3 of the DSU shall be 242 days from 22 Aprilfor Argentina to conform its statistical tax to the fi ndings in the Reports and that this period shall end
on 1 January 1999.  The United States believes that Argentina will have properly implemented the
Panel and Appellate Body Reports when it institutes appropriate measures to, and in fact does:
(1) ensure that its specific duties on textiles and apparel do not exceed the equivalent of 35 per cent
ad valorem , and (2) no longer charge an ad valorem  statistical tax without upper limits and modify
such tax to approximate the cost of rendering a service to importers. Your letter of 5 June and
Argentina's proposal on implementation indicates that Argentina will so conform its measures to the
findings of the Panel and Appellate Body.  To th e extent that Argentina does so, the United States
would be in a position to agree that Argentina has implemented the rulings and recommendations of
the Dispute Settlement Body".  Argentina had confirmed the agreement regarding the reasonableperiod of time and the implementation modalities contained in both letters, copies of which would be
circulated to Members.
The representative of the United States thanked Argentina for the statement and for reading
out the terms of the agreement between the two countries.  The United States looked forward to
Argentina implementing these changes to its laws a nd regulations within the agreed reasonable periodWT/DSB/M/46
Page 17
of time.  Her delegation commended Argentina for accepting the implementation periods shorter than
15 months which constituted truly reasonable periods of time.
The DSB took note of the statements
9. Agreement of 18 May 1998 between the United States and the European Communities
regarding the Helms-Burton Act
(a) Statement by Cuba
The representative of Cuba, speaking under "Other Business", noted that the agenda of the
present meeting did not contain any item regarding the agreement recently reached by the United
States and the European Communities on the Helms-Burton Act.  He had therefore requested theinclusion of this matter under "Other Business" in order to ask the European Communities to clarify
some procedural issues.  At the DSB meeting on 22 April, Cuba had expressed its views about the fact
that the European Communities had withdrawn its reque st for the establishment of a panel to examine
the consistency of the US Helms-Burton Act with WTO rules.  His country had recognized that it was
a sovereign right of the Communities, as of any inju red party, to withdraw a complaint to settle a
dispute under the DSU procedures. However, there had been a great deal of information in the press
about the Agreement on the Implementation of the He lms-Burton Act signed by the United States and
the European Communities in London on 18 May, which had been based on their earlier
Understanding of 11 April. Cuba considered that the Communities had withdrawn its request for the
establishment of the panel because it had expected to reach a negotiated bilateral solution.  If this wasthe case with the signing of the Agreement in London on 18 May, he inquired  why this agreement
had not been notified to the DSB in accordance with the provisions of Article 3.6 of the DSU. Cuba
considered that the London Agreement constituted a mutually agreed solution on a matter formally
raised under the DSU provisions and, consequently required to be notified to the DSB to enable
Members to raise any point under Article 3.6 of the DSU regarding this Agreement.
He drew attention to the Decision on Notification Procedures which had established the
general obligation for all Members to notify, to the maximum extent possible, the adoption of trade
measures affecting the operation of GATT 1994, such notifications being without prejudice to views
on the consistency of measures or their relevance to their rights and obligations under the WTO
Agreement.  It was obvious that the above-mentioned provisions of the WTO Agreement were
intended to guarantee transparency in the WTO which had recently been discussed and which hadbeen enunciated in paragraph 4 of the Second Ministerial Declaration.  Cuba was affected by the
Helms-Burton Act but to avoid politicization of the process it had not become a party to the dispute.
The Helms-Burton Act was a legal manifestation of the economic warfare the United States had been
waging against the Cuban people for four decades.  There was no doubt, that the London Agreement
had implications for investment in Cuba and for his country's trade with third parties, but a crucial factwas that this Agreement represented a legal threat to all countries which had engaged in the process of
nationalization.
The Agreement reached on 18 May had not eliminated the illegal character of the Helms-
Burton Act, nor had it resolved its inconsistency with the WTO's objectives.  It had broadened theextraterritorial character of the Act and other provisions which were contrary to public international
law.  It facilitated unacceptable attempts to transpose national legislation containing provisions of
extraterritorial nature to multilateral instruments which should be agreed by all countries and should
safeguard public international law.  This Agreement had not eliminated the measures outlined by the
Community in document WT/DS38/2 in which it had requested the establishment of a panel nor had itremoved the inconsistency of those measures with the WTO rules.  He reiterated that Cuba wished to
reserve its right under the WTO Agreement to raise this matter in the DSB, if it deemed appropriate.WT/DSB/M/46
Page 18
The representative of the European Communities confirmed that since the April
Understanding, the Community had continued negotiations with the United States.  This had resulted
in a package at the EC/US London Summit in May 1998.   The April Understanding as well as the
EC/US London Summit package had reflected a process of  continued negotiations that had not yet led
to a definitive and final resolution of the dispute.  He also wished to underline that the Communityhad not withdrawn its request for the establishment of a panel nor had it terminated the work of the
panel but  had asked for the suspension of the panel's work pursuant to Article 12.12 of the DSU.  It
had done so due to the fact that it had continued negotiations with the United States.  Since the work
of the panel had been suspended for more than 12 months, the panel had lapsed in accordance with
Article 12 of the DSU.
The representative of Cuba  thanked the European Community for the information it had
provided and hoped that his country would be ke pt informed of any further steps regarding this
matter.
The DSB took note of the statements.
10. Antidumping investigation by Ecuador on imports of cement from Mexico
(a) Statement by Mexico
The representative of Mexico, speaking under "Other Business", said that he had asked for
inclusion of this  item on the agenda of this meeting in order to inform the DSB that in February 1998,
the Ecuador's Ministry of Foreign Trade, Industrialization and Fisheries had decided to initiate an
anti-dumping investigation on imports of cement from  Mexico.  His country believed that the decision
to initiate this investigation had been taken without due regard for the disciplines of the Anti-
Dumping Agreement and, consequently, should not have been initiated and, still less, continued.  This
view had been promptly communicated to both the Permanent Mission of Ecuador in Geneva and theappropriate authorities of the Ministry of Foreign Trade, Industrialization and Fisheries of Ecuador in
Quito.  In view of the fact that these contacts had not yielded the desired results and that this
investigation had been inconsistent with the provisions of the Anti-Dumping Agreement, his
delegation wished to place on record the following :  (i) Mexico believed that the investigation in
question had not been conducted in compliance with the provisions of the Anti-Dumping Agreement
and  should never have been initiated; and  (ii) Mexi co reserved the right to raise this view formally in
accordance with the DSU provisions, should the need  arise.  In view of the excellent relations
between Ecuador and Mexico, the various areas within the WTO in which they had worked together
and the understandable complexity involved in the correct application of the procedures relating to
anti-dumping investigations, his authorities hoped that once this situation had been reviewed by the
Ecuadorian authorities there would be no need to address this matter in the DSB in future.
The representative of Ecuador said that informal discussions had been held with Mexico on
this matter.  Ecuador had decided to initiate its investigation to determine whether dumping on
imports of cement from Mexico had occurred.  This investigation had been conducted in accordance
with the provisions of the Agreement on the Implementation of Article VI of the GATT 1994 which
had been incorporated into its national legislation.  Ecuador which was aware that this issue washighly sensitive to Mexico was nevertheless surprised by Mexico's reaction, namely that it had
included the subject of the investigation on the DSB's agenda in spite of the fact that this matter did
not fall within the competence of the DSB.  Ecuador considered that disputes which might possibly
arise during the investigation stage should be excluded from the DSB, otherwise the right of Members
to initiate anti-dumping investigations would be undermined. The investigation had not yet beenWT/DSB/M/46
Page 19
terminated, and consequently there were no final results.  Ecuador noted the statement by Mexico
regarding its readiness to hold fo rmal discussions in the future.
The DSB took note of the statements.
11. Review of the DSU
(a) Statement by the Chairman
The Chairman, speaking under "Other Business", said that he wished to read out a short
statement concerning the DSU review, and if delegations considered it necessary an informal
consultation would be held later in the day to discu ss this matter.  He drew attention to the fact that
since the informal consultations held on 10 June, in addition to the informal suggestions on the DSU
review submitted by Venezuela, Japan and Korea, the Secretariat had also received informalsuggestions from Hong Kong, China which had been circulated to delegations under Job No. 3339;
DSU/4.  As he had indicated at the informal consultations on 10 June, he had intended to start
substantive discussions in September on informal suggestions submitted by delegations.  He therefore
would not invite discussions on the suggestions received thus far at the informal consultations.  The
main purpose of the consultations would be to determine how to proceed further.  To this effect hehad prepared suggestions in the form of a statement which he would read out at the present meeting.
The text of this statement would be made availabl e to delegations.  He then read out the following
statement: "Following discussions at the informal consultations on 10 June 1998, concerning the
Review of the DSU, the Chairman suggests the following approach:
"1. Delegations are invited to continue to submit informal suggestions concerning issues
to be taken up in the DSU Review, preferably by no later than the end of July, on the
understanding that Members may submit further suggestions if they so wish in the course of
the Review.  Substantive discussions on suggestions submitted by Members will begin late
September – early October 1998.
"2. The Secretariat is requested to prepare a compilation of suggestions from Members
before the commencement of the substantive discussions indicated above.  This compilation
will also include statistical data prepared by the Secretariat on dispute settlement cases.  Other
possible inputs from the Secretariat may be requested at a later stage.
"3. In the first instance the Appellate Body will be invited to present observations of
informal suggestions received from Members and compiled by the Secretariat.  Members may
request further contributions from the Appellate Body as the review exercise proceeds.
"4. A seminar/symposium with the participation of academics may be organized in
Autumn 1998.  Members should decide by the end of July on possible participation at, andfunding of, the seminar/symposium.
"5. It is understood that the DSU review is an exercise to be conducted by Members on
the basis of their suggestion.  It will be the prerogative of Members to decide on how to use
any other inputs to the review referred to above".
The Chairman reiterated that if delegations consid ered it useful an informal meeting of the DSB
would be held later in the day.
The representative of India  recalled that during the consultations held in 1997, he had
proposed that Members ask the Appellate Body members, individually or as a group, to make
suggestions regarding the operation of the dispute settlement mechanism.  At that time, many
delegations had been apprehensive of this proposal. However, the Chairman in the statement made atWT/DSB/M/46
Page 20
the present meeting had indicated that the Appellate Body members would comment on the
suggestions provided by Members.  India did not believe  that, at any time, such a suggestion had
been made as it was not good for the Appellate Body  as an institution and the WTO Members to take
this approach.  He considered that it was not appropriate to ask the Appellate Body to comment on
the Members'  suggestions.
The Chairman said that he did not wish to disc uss this matter in detail at the present meeting
and asked if delegations wished to meet later  in the day.
The representative of Bulgaria said that during the informal consultations many delegations
had stated that ideas from all sources would be welcome. It seemed that there was a general consensus
that only Members could make formal proposals for th e DSU review, but it would be useful to have a
compendium of all ideas already raised.  The Chairman had not indicated that ideas could also be
provided by academics or former members of panels.  The Secretariat could make a compendium of
these ideas, prepare a bibliography on the DSU for consideration by Members  possibly at the
symposium or even before the symposium.
The representative of Mexico  said that  points 3 and 4 contained in the Chairman's statement
required clarification and therefore his delegation considered it useful to hold informal consultations
later in the day.
The Chairman said that in the light of the comments made, an informal meeting of the DSB
would be held later in the day to consider the points on which there was no agreement.
The DSB took note of the statements.
12. Next meeting of the DSB
The Chairman drew attention to Article 16.4 of the DSU which provided that:  "Within
60 days after the date of circulation of a panel report to the Members, the report shall be adopted at a
DSB meeting unless a party to the dispute formally notifies the DSB of its decision to appeal or the
DSB decides by consensus not to adopt the report."  In the case of the Panel Report on "United States
- Import Prohibition of Certain Shrimp and Shrimp  Products", the sixty-day period would expire on
14 July.  He therefore proposed that the DSB meet on 10 or 13 July solely for the purpose ofconsidering this matter on the understanding that if one of the parties appealed the Report before the
scheduled meeting such meeting would be cancelled.  If this was agreeable, the Secretariat would
issue a notice convening the meeting.
The representative of India said he understood that the statement just made by the Chairman
regarding the Panel Report was factual.  However, he sought clarification whether it was a general
practice that the Chairman make such a statement.  It was his understanding that the parties to the
dispute were required to place an item concerning the adoption of panel reports on the DSB's agenda.
The representative of Thailand sought clarification whether it would be necessary to request
the inclusion of the item regarding the adoption of the Panel Report on the DSB's agenda or whether
this would be done automatically by the Secretariat.
  The Chairman said that it was necessary to request the inclusion of this item on the agenda
because this was not automatic.
The representative of Thailand said that his delegation's understanding was that there was no
requirement under Article 16.4 of the DSU that a request be made by the parties to a dispute to place
panel reports on the DSB's agenda for the purpose of adoption.  On the contrary, this was automaticWT/DSB/M/46
Page 21
and it was the duty of the DSB and the Secretariat to ensure that the adoption of panel reports took
place within 60 days after the date of circulation in accordance with footnote 7 to Article 16.4 of the
DSU which read as follows:  "If a meeting of the DSB is not scheduled within this period at a time
that enables the requirements of paragraph 1 and 4 of Article 16 to be met, a meeting of the DSB shall
be held for this purpose".  He noted that the wording of footnote 7 was different from that containedin footnote 5 to Article 6.1 of the DSU which pertained to convening a special meeting of the DSB for
the purpose of establishment of a panel:  "If the complaining party so requests, a meeting of the DSB
shall be convened for this purpose within 15 days of the request, provided that at least 10 days'
advance notice of the meeting is given".  He noted that under footnote 7 there was no reference to the
10-day period.  He expressed concern about a requirement which was not provided for in Article 16.4
and which was contrary to the ordinary meaning of the terms, context and purpose of this Article
which should ensure automatic adoption of panel reports.
Mr. Barthel-Rosa, Secretary of the DSB said that the Secretariat had announced the
possibility of holding a special meeting on 10 or 13 July in order to meet the requirement of Article
16.4 of the DSU.  With regard to the question of whether the item could be automatically included on
the DSB's agenda, he wished to inform delegations that this matter had been the subject of informalconsultations held in 1995 in the beginning of the operation of the DSB.  At that time, a number of
delegations had objected to any automatic action by the Secretariat to place panel reports on the
agenda since there was no consensus on this matter.  Therefore, until Members decided otherwise, the
practice was to have a Member to place an item on the DSB's agenda.
The representative of Thailand said that his delegation could not accept that this practice
which had not been agreed by Thailand could override the DSU provisions.  He therefore reserved its
right with regard to this matter.
The representative of Ecuador noted the points made by delegations and the explanation
provided by the Secretariat.  He sought confirmation of his understanding that it was not necessary to
request that status reports on implementation be placed on the agenda of a DSB meeting since this
was done automatically in accordance with the provisions of Article 21 of the DSU.
The representative of India said that his delegation's understanding of the legal implications of
Article 16.4 of the DSU was the same as that of Thailand.  However, the practice regarding this matter
was different.  India believed that this matter could be considered  in the context of the DSU review toensure that the practice complied with the legal requirements.
The representative of Mexico said that it was his understanding of Article 16.4 of the DSU
that if a meeting of the DSB was not scheduled for the purpose of adoption of a panel report  such a
meeting would have to be held.  However, it was not clear how this item could be included on theDSB's agenda.  He believed that the current practice should be improved so that Members would be
informed of a meeting for the consideration of a panel report to enable the parties to the dispute to
take a position on this matter.   There was no question that a meeting would have to be convened.
However, he was concerned that if no request to in clude this item on the agenda would be made this
could amount to infringement of Article 16.4 of the DSU and the collective violation of the basic
instruments.
The Chairman said that since there was no agreement, he proposed that Members re-examine
the current practice regarding this matter at an appropr iate time.  However, it was clear, as stated by
Mexico, that there was an obligation to convene a DSB meeting.
The DSB took note of the statements.
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