RESTRICTED
WORLD TRADE WT/DSB/W/35
7August 1996
ORGANIZATION(96-3156)
Dispute Settlement Body
NOTIFICATION OFMUTUALLY AGREED SOLUTIONS UNDER
ARTICLE 3.6OFTHE DISPUTE SETTLEMENT UNDERSTANDING
Background Note bytheSecretariat
Atthemeeting oftheWTO Dispute Settlement Body (DSB) heldon24April 1996, the
representative ofIndia requested theSecretariat toprovide information onwhatkindofsettlements
oftrade disputes between Members might fallunder Article 3.6oftheWTO Dispute Settlement
Understanding (DSU). Inresponse, theSecretariat would offerthefollowing background information,
which ithopes might beuseful toMembers intheiranalysis ofArticle 3.6oftheDSU.
Article 3.6.Thestarting pointforananalysis ofArticle 3.6isitswording. Article 3.6provides:
"Mutually agreed solutions tomatters formally raised under theconsultation anddispute
settlement provisions ofthecovered agreements shallbenotified totheDSBandthe
relevant Councils andCommittees, where anyMember mayraiseanypoint relating
thereto".
ItisnotclearinArticle 3.6(i)whatitmeans foramatter tohavebeen"formally raised", (ii)whether
thephrase "consultation anddispute settlement provisions" encompasses anyconsultation provision
oronlyconsultation provisions thatareapartofdispute settlement provisions, and(iii)whether the
phrase "dispute settlement" refers onlytoformal dispute settlement under theDSU. Anexamination
ofthecontext oftheDSUdoesnotprovide clearguidance either, sinceArticle 1.1oftheDSUprovides:
"TherulesandproceduresofthisUnderstandingshallapplytodisputesbroughtpursuant
totheconsultation anddispute settlement provisions ofthe[covered] agreements".
Inlightofthis,itisappropriate toconsider thedrafting history ofArticle 3.6.
Drafting History. Theequivalent provision toArticle 3.6reads asfollows intheDraft Final
Actof20December 1991 (theso-called Dunkel Text):
"1.6 MutuallyagreedsolutionstomattersformallyraisedunderGATTArticlesXXII
andXXIII shallbenotified totheCouncil where anycontracting party mayraiseany
point relating thereto".
Thedifferences between theproposed textofDecember 1991 andtheDSU canbeexplained bythe
subsequentdecisionofUruguayRoundnegotiatorstohaveaunifieddisputesettlementsystem,applicable
toallUruguay Round agreements andunder thesupervision oftheDSB.
Issues forconsideration. Itappears thatArticle 3.6oftheDSU wasintended torequire
notification totheDSBandtherelevant Councils andCommittees ofsolutions tomatters raised under
theformal "consultation anddispute settlement" provisions oftheWTO agreements, thatistosay,
notification ofamutually agreed solution would berequired ifitresulted fromconsultations heldunderWT/DSB/W/35
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covered agreement "equivalents" ofGATT Articles XXII andXXIII. Asapractical matter, the
provisions similar toGATT Article XXII areGATS Article XXII andthose provisions identified as
"corresponding provisions" toGATT Article XXII inArticle 4.11, footnote 4oftheDSU. The
provisions similar toGATT Article XXIII andGATS Article XXIII arebasically thesame asthose
mentioned infootnote 4,except inthecases oftheagreements onArticle VI,Preshipment Inspection
andRules ofOrigin, where theimmediately following provision ofthecovered agreement istheone
similar toArticle XXIII (Table I).Thelistofprovisions infootnote 4isconsistent withAppendix 2
oftheDSU, which lists"special oradditional" dispute settlement rulesandprocedures inthecovered
agreements towhich DSUrulesaresubject, inthattheprovisions listed inAppendix 2generally relate
tospecial procedures tobefollowed inrespect ofdisputes subject totheArticle XXIII equivalent in
thecovered agreement inquestion. Theprincipal exception tothisstatement areseveral provisions
oftheAgreement onTextiles andClothing (ATC), which arediscussed below.
Inthisregard, itisnoteworthy thatdespite themany consultation provisions inGATT 1994
itself, theDunkel Textwould haverequired notification onlyofmutually agreed solutions arising out
ofconsultations under Article XXII orXXIII. Indeed, there areover100consultation provisions in
theWTO agreements, butmany ofthose provisions donottrigger aformal dispute settlement process
under theDSU. While consultations under these provisions mayresult inmutually agreed solutions,
itappears thatthecontext (Article 1.1oftheDSU) andthedrafting history ofArticle 3.6donotindicate
thatitwasintended byArticle 3.6oftheDSU thatallsuchsolutions benotified totheDSB. Rather
theDunkel Textanddrafting history ofArticle 3.6would suggest thatonlythose mutually agreed
solutions arising outofconsultation provisions which trigger formal dispute settlement should benotified
totheDSB.
With respect totheATC, Article 8.4isclearly theequivalent ofGATT Article XXII, as
evidenced byitssimilar wording andbyitsinclusion inArticle 4.11, footnote 4oftheDSU. Inaddition,
Article 8.10oftheATC isdirectly tiedtotheDSU through itsreference toArticle XXIII:2. Onthe
other hand, several other provisions oftheATCprovide fororregulate consultations andareincluded
intheabove-mentioned Appendix 2oftheDSU. Itcanbeasked whether thismeans thattheyshould
beconsidered tobeequivalent toGATT Articles XXII orXXIII, suchthatiftheconsultations result
inamutually agreed solution, itshould benotified under Article 3.6oftheDSU.
Inconsidering whether suchmutually agreed solutions should beorshould notbeconsidered
within thecoverage ofArticle 3.6oftheDSU, thefollowing, notnecessarily exhaustive, listofissues
should beexamined. Indoing so,Members should keepinmind theimportance ofhaving practical
working arrangements fortheconduct oftheWTO 'sbusiness.
(i) SinceArticle3.6oftheDSUmustbeconsideredinconjunctionwithallotherprovisions
oftheDSU, including Article 1.1oftheDSU which limits theapplication oftheDSU to"disputes",
doesnotthatmean thatnotnecessarily allmatters raised inconsultations arecovered? Does thefact
thatamatter resolved byamutually agreed solution under ATC provisions willnotbecome adispute
considered byaDSU panel suggest thatArticle 3.6oftheDSU should notapply? Furthermore, can
matters raised under theATC provisions atissue beconsidered as"formally raised" asthatphrase
isusedinArticle 3.6oftheDSU?
(ii) Article 3.6oftheDSU hasatransparency function thatisintended toensure thatall
WTO Members mayreview mutually agreed solutions forconsistency withWTO obligations. Isthat
function adequately served intheATCbyTMB reviews ofmutually agreed solutions andthecirculation
oftheTMB reports toallWTO Members?
(iii) Were theTMB procedures intended tobeseparate fromtheDSU procedures (except
through applications ofArticle 8.10oftheATC)? Does thefactthat,todate,nocommencement ofWT/DSB/W/35
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consultations under ATC consultation provisions hasbeennotified totheDSBunder Article 4.4of
theDSU, confirm theseparateness ofthese provisions from theDSU? Does notArticle 1.6ofthe
ATC, which states that"[U]nless otherwise provided in[theATC], itsprovisions shallnotaffect the
rights orobligations ofMembers under theprovisions oftheWTO Agreement andtheMultilateral
Trade Agreements", mean thatArticle 3.6oftheDSU should notapply toATC consultations?
(iv) Since theDSUcanbeconsidered ascreating aunified dispute settlement system, should
nottheconsultation provisions oftheATC beconsidered tobepartofthatsystem, suchthatthe
notification obligation ofArticle 3.6oftheDSUapplies, especially iftheATC consultation provision
atissue islisted inAppendix 2oftheDSU?
(v)Or,tothecontrary, totheextent thattheconsultation provisions oftheATC listed in
Appendix 2oftheDSUrequire notification totheTMB, should theynotrather beviewed asprecluding
application ofthenotification requirements ofArticle 3.6oftheDSU, given thatArticle 1.2ofthe
DSU states thatDSU rules "apply subject tosuchspecial oradditional rules ...inAppendix 2"?WT/DSB/W/35
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TABLE I
Agreement Article XXII
EquivalentArticle XXIII
EquivalentRemarks
Agriculture Article 19 Article 19 Explicit reference
SPS Article 11.1 Article 11.1 Explicit reference
Textiles Article 8.4 Article 8.10(See
discussion in
Background Note)Similar wording
(8.4); explicit
reference (8.10)
TBT Article 14.1 Article 14.1 Explicit reference
TRIMs Article 8 Article 8 Explicit reference
Antidumping Article 17.2 Article 17.3-4 Similar wording
Customs Valuation Article 19.2 Article 19.1-2 Similar wording
PSI Article 7 Article 8 Explicit reference
Origin Article 7 Article 8 Explicit reference
Licensing Article 6 Article 6 Similar wording
Subsidies Article 30 Article 30 Explicit reference
Safeguards Article 14 Article 14 Explicit reference
TRIPS Article 64.1 Article 64.1 Explicit reference