WORLD TRADE
ORGANIZATIONTN/DS/W/33
23 January 2003
(03-0370)
Dispute Settlement Body
Special SessionOriginal:  Spanish
NEGOTIATIONS ON IMPROVEMENTS AND CLARIFICATIONS OF
THE DISPUTE SETTLEMENT UNDERSTANDING
Proposal by Ecuador
The following communication, dated 17 January 2003, has been received from the Permanent
Mission of Ecuador.
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We propose that Article 21 be amended as follows:
Article 21
Surveillance of Implementation of Recommendations and Rulings
1. Prompt compliance with recommendations or rulings of the DSB is essential in order to
ensure effective resolution of disputes to the benefit of all Members.
2. Particular attention should be paid to matters affecting the interests of developing country
Members with respect to measures which have been subject to dispute settlement.
3. At a DSB meeting held within 30 days1 after the date of adoption of the panel or Appellate
Body report, the Member concerned shall inform the DSB of its intentions in respect of
implementation of the recommendations and rulings of the DSB.  If it is impracticable to comply
immediately with the recommendations and rulings, the Member concerned shall have a reasonableperiod of time in which to do so.  The reasonable period of time
2 shall be:
(a) The period of time proposed by the Member concerned, provided that such period is
approved by the DSB;  or, in the absence of such approval;
(b) a period of time mutually agreed by the parties to the dispute within 45 days after the
date of adoption of the recommendations and rulings; or, in the absence of such
agreement;
                                                     
1 If a meeting of the DSB is not scheduled during this period, such a meeting of the DSB shall be held
for this purpose.
2 For the purposes of this Understanding, the "reasonable period of time" shall include the time-period
specified under paragraph 7 of Article 4 of the Agreement on Subsidies and Countervailing Measures.TN/DS/W/33
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(c) a period of time determined through binding arbitration within 90 days after the date
of adoption of the recommendations and rulings.3  In such arbitration, a guideline for
the arbitrator4 should be that the reasonable period of time to implement panel or
Appellate Body recommendations should not exceed 15 months from the date of
adoption of a panel or Appellate Body report.  However, that time may be shorter orlonger, depending upon the particular circumstances.
3 bis Where the Member concerned cannot comply immediately with the recommendations and
rulings of the DSB, at any moment prior to the invocation by a complaining party of Article 22.2 and
as from the meeting of the DSB referred to in paragraph 3 above in which the Member concerned
informs the DSB of its intentions in respect of implementation of the recommendations and rulings, a
complaining party may request arbitration to determine the annual level of nullification or impairmentcaused by the non-compliance of the Member concerned.  To that end the complaining party shall
indicate, in its request for arbitration, the annual level of nullification or impairment which, in its
view, results from the non-compliance with the DSB recommendations and rulings by the Member
concerned. Such arbitration shall be carried out by the original panel, if members are available, or by
an arbitrator5 appointed by the Director-General, and shall be completed within 60 days after the date
on which the arbitrator is summoned.  If the complaining party has requested such arbitration before
the reasonable period of time for compliance with the recommendations and rulings of the DSB has
been set and the parties to the dispute have not reached an agreement on such reasonable period of
time, the arbitration may also determine the reasonable period of time within the 90 days stipulated in
paragraph 3(c) above.  If the complaining party is a developing country and the Member concerned is
a developed country, the complaining party may request  that the arbitrator, in addition to determining
the level of nullification or impairment on the basis of the trade affected by the challenged measures,
make an estimate of the impact of those measures on its economy.  That estimate shall include the
determination of the level of injury and  the recommendation that the Member concerned take account
thereof in its prompt compliance with the recommendations and rulings adopted by the DSB - and in
case of non-compliance, that the said estimate be taken into account in proceeding with the
compensation or suspension of concessions or other obligations under Article 22.
3 ter.The annual level of nullification or impairment may be definitively revised by the arbitrator
responsible for its determination at the request of one of the parties to the dispute, and only on the
basis of the determination of compliance made under Article 21 bis.  Such arbitration shall be
requested within the 20 days following the circulation of the determination of compliance made underArticle 21 bis.  The arbitrator shall have a period of 45 days to issue its decision.  The parties shall
accept the said decision as definitive, and shall not try to obtain a second arbitration.
4. Except where the panel or the Appellate Body has extended, pursuant to paragraph 9 of
Article 12 or paragraph 5 of Article 17, the time of providing its report, the period from the date of
establishment of the panel by the DSB until the date of determination of the reasonable period of time
shall not exceed 15 months unless the parties to the dispute agree otherwise.  Where either the panel
or the Appellate Body has acted to extend the time of providing its report, the additional time taken
shall be added to the 15-month period;  provided that unless the parties to the dispute agree that there
are exceptional circumstances, the total time shall not exceed 18 months.
5. During the reasonable period of time, each party to the dispute shall accord sympathetic
consideration to any request from another party to the dispute for consultations with a view to
reaching a mutually satisfactory solution regarding the implementation of the recommendations or
                                                     
3 If the parties cannot agree on an arbitrator within ten days after referring the matter to arbitration, the
arbitrator shall be appointed by the Director-General within ten days, after consulting the parties.
4 The expression "arbitrator" shall be interpreted as referring either to an individual or a group.
5 The expression "arbitrator" shall be interpreted as referring either to an individual or a group.TN/DS/W/33
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rulings of the DSB.  When such consultations are entered into, each party to the dispute shall afford to
any third party, which so requests, an adequate opportunity to express its views.
6. (a) The DSB shall keep under surveillance the implementation of adopted
recommendations or rulings.  The issue of implementation of the recommendations or
rulings may be raised at the DSB by any Member at any time following theiradoption.
(b) The Member concerned shall report on the status of its implementation of the
recommendations or rulings of the DSB at each DSB meeting
6, where any Member
may raise any point pertaining thereto, beginning at the half point of the length of the
reasonable period of time or six months after the date of adoption of the
recommendations or rulings of the DSB, whichever is the earlier, until the parties tothe dispute have mutually agreed that the issue is resolved or until the DSB finds
pursuant to Article 21 bis that the Member concerned has complied.  At least ten days
prior to each such DSB meeting, the Member concerned shall provide the DSB with a
detailed written status report concerning its progress in the implementation of the
recommendations or rulings.
(c) (i) Upon compliance with the recommendations or rulings of the DSB the
Member concerned shall submit to the DSB a written notification on
compliance.
(ii) If the Member concerned has not submitted a notification under
subparagraph (c)(i) by the date that is 20 days before the date of
expiry of the reasonable period of time, then not later than that date
the Member concerned shall submit to the DSB a written notification
on compliance including the measures that it has taken, or themeasures that it expects to have taken by the expiry of the reasonable
period of time.  Where the notification refers to measures that the
Member concerned expects to have taken, the Member concerned
shall submit to the DSB a supplementary written notification no later
than the expiry of the reasonable period of time, stating that it has, or
has not, taken such measures, and indicating any changes to them.
(iii) Each notification under this subparagraph shall include a detailed
description as well as the text of the relevant measures the Member
concerned has taken.  The notification requirement of this
subparagraph shall not be construed to reduce the reasonable period
of time established pursuant to paragraph 3 of Article 21.
7. If the matter is one which has been raised by a developing country Member, the DSB shall
consider what further action it might take which would be appropriate to the circumstances.
8. If the case is one brought by a developing country Member, in considering what appropriate
action might be taken, the DSB shall take into account not only the trade coverage of measures
complained of, but also their impact on the economy of developing country Members concerned.
                                                     
6 The parties to the dispute may agree to waive this requirement for a particular DSB meeting.TN/DS/W/33
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We propose that Article 22.2 be amended to read as follows:
Paragraph 2 of Article 22 shall be amended to read as follows:"2. If:
(i) the Member concerned does not inform the DSB pursuant to paragraph 3 of
Article 21 that it intends to implement the recommendations or rulings of the
DSB;
(ii) the Member concerned does not submit within the required time-period a
notification pursuant to paragraph 6(c) of Article 21 stating that the Memberconcerned has complied; or
(iii) the Compliance Panel or the Appellate Body report pursuant to Article 21 bis
finds that the Member concerned has failed to bring the measures found to be
inconsistent with a covered agreement into compliance therewith or otherwisecomply with the recommendations or rulings of the DSB;
such Member shall, if so requested by the complain ing party, enter into consultations with a view to
agree on a mutually acceptable compensation.
Within 30 days from the request, the Member concerned shall submit to the other Member a
proposal for mutually acceptable compensation. Such compensation may be partly or entirely
monetary. When an arbitration referred to in Article 21.3 bis has taken place, such proposal shall be
consistent with the award of the arbitrator. If the parties reach a compensation agreement, they shall
so inform the DSB.  If no proposal for compensation has been submitted within the time-periodreferred to in the previous subparagraph or if no agreement has been reached within 30 days from the
submission of the proposal for a mutually acceptable compensation, the complaining Party shall be
entitled to request authorization from the DSB to suspend the application to the Member concerned of
concessions or other obligations under the covered agreements equivalent to the level of nullification
and impairment . A meeting of the DSB shall be convened for this purpose 10 days after the request,
unless the complaining party requests that the meeting be held at a later date.
7
If the complaining party is a developing country and the Member concerned is a developed
country, during the consultations held between the parties to the dispute with a view to reaching a
compensation agreement they shall bear in mind the provisions of Article 21.8.  If, in the above
situation, no compensation agreement is reached and the complaining party asks the DSB for
authorization to suspend the application to the Member concerned of concessions or other obligationsunder the covered agreements, the DSB shall authorize such suspension, taking account of the level of
nullification or impairment indicated by the complaining party or established by the arbitration under
Article 21.3 bis concerning trade affected by the challenged measures, including, in addition, the level
of impact of the said measures on the economy of the developing country in question as estimated by
the arbitrator."
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7 In the case of paragraph 2 (ii) above, such DSB meeting shall not be convened before the expiry of
the reasonable period of time.