RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/151
12 August 2003
(03-4197)
Dispute Settlement Body
24 June 2003
MINUTES OF MEETING
Held in the Centre William Rappard
on 24 June 2003
Chairman:  Mr. Shotaro Oshima (Japan)
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB.........................2
(a) United States – Section 110(5) of the US Copyright Act:  Status report by the United
States......................................................................................................................... ..................2
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States.......................3
(c) United States – Section 211 Omnibus Approp riations Act of 1998:  Status report by
the United States .............................................................................................................. ...........4
(d) United States – Anti-dumping measures on certain hot-rolled steel products from
Japan:  Status report by the United States...................................................................................4
(e) Egypt – Definitive anti-dumping measures on steel rebar from Turkey:  Status report
by Egypt....................................................................................................................... ...............5
2. Korea – Measures affecting tr ade in commerci al vessels......................................................5
(a) Request for the establishment of a panel by the European Communities...................................5
3. United States – Measures affecting the cross-border supply of gambling and
betting s ervices ............................................................................................................... ...........9
(a) Request for the establishment of a panel by Antigua and Barbuda ............................................9
4. Proposed nomination for the indicative list of governmental and
non-governmental panelists ...................................................................................................11
5. Update to the Annual Report (2002) to the General Council .............................................11WT/DSB/M/151
Page 2
1. Surveillance of implementation of recommendations adopted by the DSB
(a) United States – Section 110(5) of the US Copy right Act:  Status report by the United States
(WT/DS160/18/Add.16)
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States
(WT/DS136/14/Add.16 – WT/DS162/17/Add.16)
(c) United States – Section 211 Omnibus Appropri ations Act of 1998:  Status report by the
United States (WT/DS176/11/Add.9)
(d) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:
Status report by the Unit ed States (WT/DS184/15/Add.9)
(e) Egypt – Definitive anti-dumping measures on steel rebar from Turkey:  Status report by
Egypt (WT/DS211/7/Add.1)
1. 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 proposed that the five sub-items to which he had just referred be considered separately.
(a) United States – Section 110(5) of the US Copyri ght Act:  Status report by the United States
(WT/DS160/18/Add.16)
2. The Chairman drew attention to document WT/DS160/18/Add.16 which contained the status
report by the United States on progress in the implementation of the DSB's recommendations in the
case concerning Section 110(5) of the US Copyright Act.
3. The representative of the United States said that her delegation was very pleased to report that
the United States and the EC had concluded a mutually satisfactory temporary arrangement with
respect to this dispute.  The arrangement covered a three-year period, beginning 21 December 2001.
The United States would make a payment of US$3.3 million to the EC, to a fund to be established for
the promotion of authors' rights and provision of general assistance to members of the EC performing
rights societies.  These funds had recently been appropriated by the US Congress.  The parties had
notified the arrangements to the DSB and expected the Secretariat to circulate the notification to
Members shortly.1  The United States was pleased that the parties had been able to work
constructively and cooperatively to find a way forward on this matter.
4. The representative of the European Communitie s said that the EC was satisfied with the
arrangement reached with the United States.  Nonetheless, the EC expected that the United States
would continue working towards compliance with the DSB's ruling.
5. The representative of Australia said that her country's views on this issue were well-known
and had been expressed at previous DSB meetings.  Australia continued to have significant concerns
about the apparent discriminatory nature of the compensation arrangements agreed between the
United States and the EC in this dispute.  Australi a wished to reiterate these concerns in the light of
the US statement made at the present meeting with regard to this arrangement.
6. The representative of the United States said that, in response to the comments made by
Australia, the arrangement in this dispute had been reached by the United States and the EC, which
                                                     
1 Subsequently circulated in document WT/DS160/23.WT/DSB/M/151
Page 3
were the only parties to the dispute.  Moreover, the substance of the arrangement was consistent with
WTO rules.  Indeed the DSU encouraged parties to  resolve disagreements in lieu of imposing trade
restrictive measures.
7. The DSB took note of the statements.
(b) United States – Anti-Dumping Act of 1916:  Status report by the United States
(WT/DS136/14/Add.16 – WT/DS162/17/Add.16)
8. The Chairman drew attention to docume nt WT/DS136/14/Add.16 – WT/DS162/17/Add.16
which contained the status report by the United States on progress in the implementation of the DSB's
recommendations in the case concerning the US Anti-Dumping Act of 1916.
9. The representative of the United States said that her country had provided an additional status
report in this dispute on 12 June 2003, in accordance with Article 21.6 of the DSU.  As noted in the
report, legislation repealing the 1916 Anti-Dumping Act and terminating all pending cases had beenintroduced in the US Senate on 19 May 2003.  Other bills repealing the 1916 Anti-Dumping Act had
been introduced in the House of Representatives on 4 March 2003, and in the Senate on 23 May 2003.
The US administration would continue to work with  the US Congress to achieve further progress in
resolving this dispute with the EC and Japan.
10. The representative of the European Commun ities said that the EC welcomed the recent
introduction of repealing bills in the Senate.  The EC noted also with satisfaction that one of these
bills would repeal the 1916 Anti-Dumping Act and terminate the pending litigation.  The EC
considered that this was the appropriate course of action.  He recalled that the EC had accepted to
extend the implementation deadline and to suspend the arbitration on its request for retaliation on the
express understanding that the repealing Act would also terminate the pending litigation.  As a resultof the US failure to meet the implementation deadlines, three cases now involved EC companies,
which bore substantial litigation costs and the threat of a treble damage condemnation.  These positive
signs should not hide the fact that the situation was identical one year ago:  i.e. three repealing bills
had been introduced in Congress and were waiting for further action.  The EC strongly hoped that the
implementation process would not stall at this stage as it did in the last Congress otherwise the ECwould have no other option than to exercise its WTO rights.
11. The representative of Japan said that the United States was yet to implement the DSB's
recommendations and rulings even after two years and nine months since the adoption of the Panel
and the Appellate Body Reports in these proceedings.  The United States had to fulfill its obligation as
early as possible, by having the bills repealing the 1916 Act passed before the summer recess of the
current session of the 108th Congress.  This was imperative not only for solving this dispute, but also
for preserving the credibility of the WTO dispute settlement system.  Two of the three repealing billsreferred to by the United States, namely, the one introduced to the House of Representatives on
4 March 2003 and the other introduced to the Senate on 23 May, would not have the effect of
terminating the pending cases.  Japan reiterated its position that the repealing bills with proper
retroactive effect had to be passed in the House and the Senate.  Termination of the pending cases
through the retroactive effect was critical in view of the substantial damages, including significantlegal costs, which the respondent Japanese companies had to suffer.  Japan expected the United States
to report to the DSB on the status of the three bills, and to describe in more detail how the United
States planed to ensure the earliest passage of the repealing bills with the proper retroactive effect.
Japan reminded the United States of Japan's right to suspend concessions or other obligations.
12. The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.WT/DSB/M/151
Page 4
(c) United States – Section 211 Omnibus Appropriat ions Act of 1998:  Status report by the
United States (WT/DS176/11/Add.9)
13. The Chairman drew attention to document WT/DS176/11/Add.9 which contained the status
report by the United States on progress in the implementation of the DSB's recommendations in the
case concerning US Section 211 Om nibus Appropriations Act of 1998.
14. The representative of the United States said that her country had provided a status report in
this dispute on 12 June 2003, in accordance with Article 21.6 of the DSU.  The US administration was
working closely with the US Congress to resolve this dispute.
15. The representative of the European Communitie s said that the time for implementation was
running out.  He noted that the reasonable period of time for compliance would expire in a few days.
There was, however, a positive move in this case which the status report could not reflect.  A week
ago, a bill had been introduced in the US Congress.  This bill would provide a whole scheme ofmeasures that would ensure an effective protection of  intellectual property rights both in Cuba and the
United States.  In connection with this objective, it would, inter alia , repeal Section 211.  This bill
reaffirmed the US attachment to ensure adequate protection of intellectual property rights, which
should not be affected by a special interest legislation.  The EC hoped that this initiative would
provide the basis for resolving this dispute to the benefit of all.
16. The representative of Cuba said that, once again, her delegation had to condemn the lack of
progress by the United States in carrying out the implementation of the DSB's recommendations and
rulings with regard to Section 211 of the Omnibus Appropriations Act of 1998.  It was now more than
one year that Members had been waiting for the United States to meet and respect its obligations.
This showed a lack of political will and interest in resolving this matter, which was to be condemned,
especially in view of the fact that it was that same country which had set itself up as the greatest
defender of intellectual property issues, calling on repeated occasions for the strict fulfilment of the
rules of the TRIPS Agreement.  As Cuba had already stated several times, the United States had to be
strict with itself and to comply with the DSB's recommendations and rulings.  In Cuba's view, the
United States was in breach of its commitments since it had failed to observe the first time-period forimplementation, which had expired in January 2003.  Cuba requested that the United States finally
observe the second period of time, which had been agreed in this connection.  As far as this matter
was concerned, from the legal point of view, the solution would be the repeal of the 1998 Act.
17. The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.
(d) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:
Status report by the Unit ed States (WT/DS184/15/Add.9)
18. The Chairman drew attention to document WT/DS184/15/Add.9 which contained the status
report by the United States on progress in the implementation of the DSB's recommendations in the
case concerning US anti-dumping measures on certain hot-rolled steel products from Japan.
19. The representative of the United States said that her country had provided a status report in
this dispute on 12 June 2003, in accordance with Article 21.6 of the DSU.  The US administration
continued to work with the US Congress to addr ess the DSB's recommendations and rulings that had
not been addressed in the 22 November 2002 anti-dum ping duty determination of the US Department
of Commerce.  Specifically, the US administration was supporting the passage of specific
amendments to the US anti-dumping duty law that would implement these recommendations and
rulings.WT/DSB/M/151
Page 5
20. The representative of Japan said that Members needed to endeavour, to maintain and enhance
not to undermine the confidence in the WTO, of which one of the central pillars was the effectiveness
of the dispute settlement system.  It was truly sad that the United States was doing what it should not
be doing by failing to implement yet another DSB's recommendations and ruling for an extended
period of time.  The letter by Ambassador Zoellick and Secretary Evans had been sent to the USCongress more than two months ago.  Japan noted with great concern that no amendments of the
relevant US statute had thus far been introduced to the Congress.  Japan strongly urged the United
States to strengthen its efforts to implement the DSB's recommendations and rulings as early as
possible, including working more extensively with  the US Congress to secure the introduction and
passage of the relevant legislation before the summer recess of the current session of the 108th
Congress.  The United States also had to consult cl osely with Japan on the status and contents of the
implementation.
21. The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.
(e) Egypt – Definitive anti-dumping measures on steel rebar from Turkey:  Status report by
Egypt (WT/DS211/7/Add.1)
22. The Chairman drew attention to document WT/DS211/7/Add.1, which contained the status
report by Egypt on progress in the implementation of the DSB's recommendations in the case
concerning definitive anti-dumping measures on steel rebar from Turkey.
23. The representative of Egypt said that on 19 May 2003 his country had submitted its first
status report on the implementation of the DSB's recommendations and rulings with respect to anti-
dumping measures on steel rebar from Turkey.  The investigating authorities had re-examined thedumping calculation of the two Turkish companies and the general injury assessment in light of the
Panel's recommendations.  Egypt had submitted its revised injury assessment and the revised dumping
assessment to the interested parties.  Egypt woul d continue to work with the Turkish authority to
implement the DSB's recommendation and rulings in a mutually satisfactory manner.
24. The representative of Turkey noted the stat ement made by Egypt with regard to the
implementation of the DSB's recommendations on th is matter.  His government and the concerned
companies had received the revised disclosure of findings from the Egyptian authorities.  After careful
review of the revised calculation of dumping meas ures for the two companies in question, Turkey had
raised questions about the methodology and had ma de comments about the details of the calculations
of the Egyptian authorities.  Turkey expected that  the Egyptian authorities would take these concerns
into serious consideration and implement the Panel's recommendations in good faith and in a timely
manner.
25. The DSB took note of the statements and agreed  to revert to this matter at its next regular
meeting.
2. Korea – Measures affecting trade in commercial vessels
(a) Request for the establishment of a panel by the European Communities (WT/DS273/2)
26. The Chairman drew attention to the communication from the European Communities
contained in document WT/DS273/2.
27. The representative of the European Communities said that the dispute on the Korean subsidies
and their impact on the shipbuilding market was a long-standing one.  This issue had been discussed
almost exhaustively between the EC and Korea in the past three years.  The EC was disappointed at
the failure of the bilateral negotiations with Korea, in particular that Korea did not wish to honour itsWT/DSB/M/151
Page 6
commitments under the Agreed Minutes.  Moreover, in the absence of any progress during the
consultations under the DSU, the EC had now decided to request a panel under Articles 4.4 and 7.4 of
the SCM Agreement.  He then referred to key elements of the case.  Korea had granted since 1997 and
continued to grant substantial amounts of export and actionable subsidies, through export schemes by
the state owned Korean Export-Import Bank (KEXIM), and through debt forgiveness anddebt-to-equity swaps by government-owned or go vernment-controlled financial institutions.  These
subsidies were both prohibited (because they were export contingent) and actionable because they had
caused and were still causing adverse effects in several key commercial vessels sectors.  It was these
subsidies which were at the heart of the request at the present meeting.  To sum up, with the help of
government or financial institutions not operating under market conditions, Korean yards had been
completely shielded from the consequences of both  their debt-financed expansion and their drive to
win market share through very low pricing practices.  These practices were threatening the veryexistence of competitive European yards even in market sectors where Europe had traditionally been
in a leadership position.  In the light of the above, the EC sought a condemnation of these practices by
the WTO.
28. The EC considered that, in accordance with Articles 4.4 and 7.4 of the SCM Agreement, a
panel had to be established at the time the matter was referred to the DSB, unless the DSB decided byconsensus not to establish a panel.  This meant that a panel would normally have to be established at
the present meeting unless there was consensus against it.  Furthermore, the EC, as already indicated
in its panel request, had requested the DSB:  (i) in accordance with paragraph 2 of Annex V to the
SCM Agreement, to initiate the procedure to obtain  information on serious prejudice from Korea;  and
(ii) in accordance with paragraph 4 of Annex V to the SCM Agreement, to appoint a representative toserve the function of facilitating the information-gather ing process.  However, in order to facilitate the
resolution of this procedural imbroglio, and to allo w for sufficient preparation of the appointment of
the representative of the DSB and on other matters of an organisational nature, the EC could
exceptionally (and without prejudice of its WTO rights in the future) agree to consider putting the
issue on the agenda of the next regular DSB meeting to be held on 21 July, provided, however, that, atthat meeting, in parallel to the establishment of a panel, Korea would agree to the initiation of the
Annex V procedure and to the appointment of the facilitator.  In the meantime, the EC was prepared
to further consult with Korea so as to agree on a facilitator.  The EC was also prepared to propose
further names to the DSB and expected that, should the parties fail to agree, the Chairman of the DSB
would, on his own initiative, propose names, if necessary , so as to ensure the effective starting of the
Annex V procedure together with the establishment of a panel at the next DSB meeting.
29. The representative of Korea said that, on 22 November and 13 December 2002 as well as on
7 May 2003, his country had held consultations with the EC to discuss the EC's concerns regarding
the measures affecting trade in commercial vessels under Article 4 of the DSU, Article XXIII:1 of
GATT 1994 as well as Articles 4, 7 and 30 of the SCM Agreement.  It was regrettable that the EC had
decided to request the establishment of a panel in this regard.  It was Korea's firm position that it had
not provided any subsidies, which were inconsistent with the SCM Agreement.  The main issue of thiscase was the nature of the activities of the financial institutions into which the government had been
forced to inject public funds due to a financial crisis.  In the wake of the Asian financial crisis, which
had begun in 1997, the IMF and the World Bank had provided Korea with emergency bailout loans,
and the Korean government had pursued these policies as part of IMF conditionality, that had been
designed to overcome its economic problems.  The Korean government, in line with therecommendations of the IMF, had restructured its financial sector in order to consolidate the banking
institutions and to enhance their financial soundness.  In the initial stage of financial restructuring, a
large amount of public funds were injected by the Korean government into the financial sector in
order to clean up non-performing loans and to replenish capital.  This inevitably resulted in a
temporary increase in the government's stake in the financial institutions.  Such an increase was,
however, temporary in nature as plans had been prepared for reprivatization of the commercial banks.
Furthermore, the Korean government had faithfully abided by the principle that even under
government ownership, the financial institutions shall operate on a fully commercial basis withoutWT/DSB/M/151
Page 7
government intervention in the day-to-day business.   Nonetheless, the implementation of financial
reform by the Korean government, as recommended by the IMF, had become the basis for a legal
challenge.
30. The EC claimed that the measures taken by Korea during the financial crisis constituted
prohibited and actionable subsidies under the SCM Agreement stemmed from a lack of understandingof the joint efforts made by the IMF and the Korean government, aimed at corporate restructuring.  In
accordance with the understanding reached with the IMF, the Korean government had set up a
mechanism, through which debtors and creditors could make use of the out-of-court workout debt
restructuring programme whereby they could agree on the condition for the rescue of ailing
companies.  These restructuring measures were taken strictly on a commercial basis.  More
importantly, the corporate restructuring programme did not specifically target any individual company
or industrial sector.  Under the workout programme, debt forgiveness, equity infusion and interestrelief had been provided on commercial grounds by the financial institutions concerned, which acted
in accordance with market principles.  The strong performance of Korean shipyards was due to their
competitive edge based on efficiency and the devaluation of the Korean currency.  Korean
shipbuilders should not be blamed for the comparative advantage they had over their European
counterparts.  Besides, Korea had not caused injury or prejudice to the European shipyards asEuropean and Korean yards largely operated in di fferent market segments.  European yards were
focused on the market for ships that were smaller in  yard size and higher in value, whereas Korean
shipyards produce larger vessels, a market segm ent in which European shipyards had not recently
been involved.  Since Korea believed that it had not provided any WTO-inconsistent subsidies to its
shipbuilding industry, the Korean government was not in a position to agree to the establishment of apanel at the present meeting.
31. With regard to procedural matters, Korea noted that the EC had requested the panel to
examine Korea's measures in light of, inter alia , Articles 5(a) and 5(c) of the SCM Agreement.  This
related to serious prejudice as defined in Article 6.  Korea was concerned that in its request, the EC
had not specified the third-country markets where the serious prejudice had supposedly arisen.  Thiswas important because the EC was also resorting to the Annex V procedures.  In the last paragraph of
the panel request, the EC stated that it would reveal some information at a later date, but that was an
unsupportable position.  As this ambiguity affected its fundamental rights in its ability to defend itself,
Korea urged the EC to indicate the third-country markets concerned.
32. With regard to the timing of the establishment of a panel, Korea did not believe the EC had
the right to the immediate establishment of a panel.  The EC had asked the panel to examine
complaints under both Part II and Part III of the SCM Agreement.  Articles 4.4 and 7.4 of theSCM Agreement were not identical.  The word "immediate" was conspicuously missing from
Article 7.4 and by a contrario argument, establishm ent was not immediate.  It was well established
that mixed cases, which involved prohibited subs idies and other claims were subject to the normal
procedures under Article 6.1 of the DSU.  Otherwise, complainants would automatically get
accelerated procedures by merely including claims of prohibited subsidies in their complaint.
33. With regard to the interpretation of paragraphs 4 and 5 of Annex V of the SCM Agreement:
i.e. the timing for the designation of the facilitator and the triggering point of the 60-day time-frame,
Korea believed that these two issues were logicall y linked to the establishment of a panel.  The sole
purpose of referring the matter to the DSB under Article 7.4 of the SCM Agreement was to establish a
panel.  Accordingly, the phrase in Annex V paragraph 2, "matters are referred to the DSB underparagraph 4 of Article 7," should be read in conjunction with the first sentence of Article 7.4, with
emphasis on the phrase "for the establishment of a panel".  This interpretation was particularly
justified when looked at from the perspective of due process.  Paragraph 2 of Annex V provided for
the right of parties to the dispute to present questions to each other.  If the facilitator was designated
upon referral of the matter to the DSB under Article 7.4 of the SCM Agreement, the rights of theresponding party would be seriously prejudiced because it would not have enough time to formulateWT/DSB/M/151
Page 8
questions to be presented to the complaining party,  as the time-frame for the facilitator was limited to
60 days and the parties were required to provide the facilitator with questions for circulation to one
another within days of the designation of the facilitator.  Besides, it was only logical to designate the
facilitator as the panel was established, and not before, because the function of the facilitator was to
help the panel develop information and evidence concerning serious prejudice.  Otherwise, it wouldbe like putting the cart before the horse.  Korea also believed that the 60-day time-frame should come
into effect upon designation of the facilitator.  If the time-frame was triggered prior to the designation,
the facilitator would be left with insufficient time to carry out his function.  Finally, Korea would
continue to work with the EC with regard to the selection of the Annex V facilitator with a view to
reaching an agreement before the next regular meeting of the DSB.
34. The representative of Japan said that her country intended to participate in this proceeding as
a third party once a panel was established, given its substantial interest in the matter before the panel.
With regard to the procedures for developing information concerning serious prejudice under
Annex V of the SCM Agreement invoked by the EC , Japan requested that any information gathered
under these procedures be provided to third parties to this dispute.  Availability of such information
was essential for third parties to develop their arguments properly and to have their interests fully
taken into account.
35. The representative of the European Communities said that he wished to react to what had
been stated by Korea with respect to the involvem ent of third-country markets for the purpose of the
Annex V procedure.  At the present meeting, he was in a position to indicate formally to Korea that
the EC considered addressing questions to Japan, which was the other most important producer of
commercial vessels which competed with Korea and the EC.  The EC was still reflecting on the needto address questions to other WTO Members.  For the rest and referring to the procedure, the EC
could agree putting again the issue on the agenda of the next regular DSB meeting scheduled for
21 July and, in the meantime, it would pursue consultations with Korea in order to find a pragmatic
solution and to start the initiation of Annex V as well as the appointment of the facilitator.  It was the
EC's understanding that the parties could rely on the Chairman's assistance.
36. The representative of Brazil said that his country had systemic and specific interest in the
proper functioning of the Annex V procedures.  While Brazil was not aware of the details of the
discussions held between the EC and Korea, it wa s of the view that full cooperation, according to
paragraph 1 of Annex V was required.  In the absence of this cooperation, adverse inferences might be
drawn by the panel, according to paragraph 7.  With regard to practical steps required to initiate the
procedures and to designate the DSB representative, Brazil was satisfied that the EC was at least
endeavouring to avoid the real and fictitious traps that could be set along the way.  Brazil hoped thatthe EC and Korea would cooperate and make progress in making the most of Annex V.  This could
show to the rest of the Membership, that if Members cooperated, Annex V could be used in these
proceedings.
37. The representative of Korea said that he wished to briefly respond to the comments made by
Japan and the EC.  In Korea's view, the right of third parties to have access to information developed
by the facilitator was the subject to discussions be tween the parties to the dispute.  Korea welcomed
the statement made by the EC identifying Japan as a third market.  Korea was also very encouraged
by Brazil's statement that both the EC and Korea should closely cooperate to work this out in a very
amicable way.  Korea was looking forward to that possibility.
38. The representative of the United States said that the failure of the EC to identify all the
third-country markets, if any, relevant to the Annex V process created several problems.  First, it
prevented any "third-country Member concerned" from fulfilling its obligation under Annex V,
paragraph 1, to notify to the DSB, "as soon as the provisions of paragraph 4 of Article 7 have been
invoked," the authorities and procedures relevant to any requests for information under the Annex V
process.  Second, the EC's omission made it difficult for Korea to form a judgment on whichWT/DSB/M/151
Page 9
Member's representative would be appropriate to serve as the DSB representative.  To the extent that
Korea and the EC had reached an agreement on a representative, it certainly was not the intent of the
United States to create an obstacle to the implemen tation of that agreement.  However, to the extent
that they had not reached an agreement, the United States could understand how, from Korea's
standpoint, the EC's omission had complicated things.  Finally, the United States added that the failureof the EC to specify the precise type of serious prejudice it was alleging and the market or markets in
which such serious prejudice occurred raised concerns under Article 6.2 of the DSU.
39. The representative of Japan noted the statement made by the EC regarding its intention to
identify Japan as a relevant country market.  Japan looked forward to an official written
communication from the EC to that effect so that it could start the procedure under Annex V.  Japan
also reiterated its request that all the information ga thered under Annex V be provided to it as it would
participate as a third party in this case.
40. The DSB took note of the statements and agreed  to revert to this matter.
3. United States – Measures affecting the cross-border supply of gambling and betting
services
(a) Request for the establishment of a panel by Antigua and Barbuda (WT/DS285/2)
41. The Chairman drew attention to the communication from Antigua and Barbuda contained in
document WT/DS285/2.
42. The representative of Antigua and Barbuda said that first he wished to thank for the
opportunity to appear before the DSB to make a request for the establishment of a panel pursuant to
Article 6 of the DSU.  By way of background, he wished to explain that his country, Antigua and
Barbuda, was a small twin island state in the Caribbean.  It was highly dependent upon tourism for itseconomic survival, and it was also subject to violent hurricanes.  Consequently, its tourism industry
was held hostage to the vagaries of terrible tempests.  At some occasions, they could be less harsh
than at others, but they were always destructive.  In the five years between 1995 and 2000, his country
had endured the ravages of six hurricanes, two of them in one year.  With the passing of each one, the
islands had been ravaged, hotels destroyed, and infrastructure uprooted.  The effect on its tourismindustry was disastrous.  In an effort to diversify its economy, his country had developed electronic
commerce.  To do so, his country had invested in the development of the telecommunication
infrastructure and had introduced computer training in its schools, and in special school for adult
education.  In doing so, it was mindful that it was acting in pursuance of the urgings of the
international community in several fora and public documents, not least of which was paragraph 34 of
the Doha Declaration.
43. Amongst the industries that his country had attracted was Internet Gaming.  The industry
provided much needed employment to thousands of bright and computer literate young people.  It had
provided them with a means of livelihood without which they might have been forced to turn to
unlawful activity, such as the vibrant drug trafficking trade that now plagues the Caribbean region,
which, unfortunately, was the transit area between the supplier countries and the markets in Europe
and North America.  Additionally, the Internet  Gaming industry provided the government with
revenues that were critical for the continued provision of the basic goods and services that inhabitants
of any country had a right to expect from its government.  Importantly, these revenues were not
affected by the ravages of the tempestuous storms that made unwelcome visits to his country.  They
were, therefore, vital to its economic survival and political stability.
44. He said that, the United States had taken the view that its laws prohibited all supply of
gambling and betting services from outside the United States to consumers in the United States.  The
enforcement of this position by the US authorities effectively prevented operators within Antigua andWT/DSB/M/151
Page 10
Barbuda from lawfully offering gambling and betting services in the United States under conditions of
competition compatible with the United States own obligations under WTO arrangements.  He
referred to a recent communication from the United States to the WTO entitled "An Assessment of
Services Trade and Liberalization in the United States and Developing Economies".  In that
communication the United States explained that further liberalisation of trade in services, and inparticular the cross-border supply of services, would be of great benefit to developing countries.
Antigua and Barbuda fully agreed with that.  In any event, the effect of the US enforcement of its laws
was to hurt the small economy of Antigua and Barbuda which was struggling to survive in a world of
intense competition in the trade of goods and services.  Antigua and Barbuda had always respected its
international law obligations and had always cooperated with other countries even when it was strictly
speaking not under a legal obligation to do so.  For instance, Antigua and Barbuda had fully
cooperated with the Financial Action Task Force of the OECD countries on money laundering andcounter terrorism issues.  It had been found by the FATF to be a fully cooperative jurisdiction in the
fight against money laundering.  His country had not only amended existing legislation and introduce
stringent new laws to meet the standards set by the FATF, it had also spent scare financial resources
and devoted its best human resources to the effective regulation and supervision of its financial
services, including Internet Gaming.  This industry in Antigua and Barbuda was arguably the mosttightly regulated and supervised industry of its kind anywhere in the world.
45. In 2002 the United States had complained to Antigua and Barbuda that its reluctance to grant
a licence for cellular telecommunications to the US company AT&T violated WTO law.  His country
looked into the matter and, although the participation of AT&T in its small economy effectively
eroded the economic viability of an indigenous company creating unemployment and a loss ofrevenue to the Government, it agreed to allow AT&T to operate a system in Antigua although it
produced less jobs than it had displaced, and had resulted in a flow of foreign exchange from the
country even though its earnings were in local currency.  Many small, developing countries had made
similar informal settlements that were beneficial to United States economic interests after being told
their laws were in violation of WTO law.  While Antigua and Barbuda respected and upheldinternational law, his government also had a duty of  care to its population to defend their rights and
the rights of the State under international law.  The United States was the centre of the world's
gambling business.  Many of the largest gaming companies in the world were of US origin, and a
great number of them had international operations.  According to a trade association of American
gaming companies, total consumer spending in commercial casinos in the United States had reached
almost US$26 billion in 2001.  That was US$3 billion more than total consumer spending on sound
recordings and movie box office sales combined.  The figure of US$26 billion related to commercialcasinos only, which was just one aspect of legalised gambling in the United States, and was not even
the biggest.
46. Simultaneously, the United States prohibited all cross-border supply of gaming services from
Antigua and Barbuda and there was no possibility for its operators to obtain an authorisation.  This
was despite the fact that the United States GATS schedule, when properly interpreted in the light ofthe WTO classification "W/120" and the CPC classification, implied a full commitment on the cross
border supply of gambling and betting services.  Over the past three months Antigua and Barbuda had
consulted in good faith with the United States and had fully disclosed its legal position.  The
consultations had been frank and cordial as befitted two countries, which despite the great difference
in their size and resources, had enjoyed cooperative relations on a wide range of matters.  But, in theend, his country did net feel that that US response addressed its legal position.  In the circumstances,
to protect the jobs of its young people, to safeguard government revenues, and to ensure that its legal
rights in the international community and under WTO rules were respected and upheld, his country
had no other choice than to request that the DSB establish a panel to adjudicate this matter.
47. The representative of the United States said that her country was disappointed and concerned
that the GATS Article XXIII consultations held with Antigua and Barbuda on the matters raised in its
panel request had failed to put this dispute to rest.  The United States had made it very clear in thoseWT/DSB/M/151
Page 11
consultations that cross-border gambling and betting services were not within the scope of US specific
market access commitments under the GATS.  Just as importantly, the United States had made it clear
that cross-border gambling and betting services were prohibited under US law.  They were prohibited
from domestic and foreign service suppliers alike because of the social, psychological dangers and
law enforcement problems that they created, par ticularly with respect to internet gambling and
betting.  The United States had grave concerns over the financial and social risks posed by such
activities to its citizens, particularly but not exclusively children.  It was surprised that another WTO
Member had chosen to challenge measures taken to address these concerns, particularly in an area in
which the United States had made no market access commitment.  The United States also noted with
concern that Antigua and Barbuda had appended to its panel request an Annex which contained a
number of items that did not constitute "measures" that could properly be included within the scope of
a panel request.  In addition, the Annex to the panel request included several measures whichappeared not to have been included in the 1 April 2003 consultation request.  Further, the United
States believed that not all of the measures cited in the Annex were related to cross-border gambling
and betting.  For these reasons, the United States could not accept the establishment of a panel, and
continued to urge Antigua and Barbuda to reconsider  its decision to move forward with the request.
48. The DSB took note of the statements and agreed
 to revert to this matter.
4. Proposed nomination for the indicative list of governmental and non-governmental
panelists (WT/DSB/W/231)
49. The Chairman drew attention to document WT/DSB/W/231 which contained an additional
name proposed for inclusion on the indicative list in accordance with Article 8.4 of the DSU.  He
proposed that the DSB approve the name contained in document WT/DSB/W/231.
50. The DSB so agreed.
5. Update to the Annual Report (2002) to the General Council
51. The Chairman recalled that at its meeting on 10 February 2003, the General Council had
taken up the question of the preparation of the Annual Report for submission to the Cancún
Ministerial Conference.  At that meeting it had been agreed that the General Council would submit to
the Ministerial Conference a brief update to it s Annual Report for 2002 which would describe
developments since December 2002.  The Ministerial Conference would, therefore, have before it, as
the Annual Report of the General Council, a compil ation of the 2002 Annual Reports of all the WTO
bodies, together with update reports concerning devel opments in 2003.  This referred, of course, to the
annual reports of a factual nature similar to those that all WTO bodies were required to make under
existing procedures.
52. Pursuant to this, he proposed that the Secretariat could prepare an update to the DSB's Annual
Report for 2002 that would cover its work since December 2002 up to the present meeting.  He also
suggested that the DSB adopt the report ad referendum , namely that Members would have one week
to comment on the draft report once the Secretariat had made it available to them.  Subsequently, the
report would be forwarded to the General Council at its meeting scheduled for 24 July, taking into
account, as appropriate, comments from delegations.  He would of course be in contact with theSecretariat regarding the final issuance of this report.
53. The DSB so agreed.
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