RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/38
20 November 1997
(97-5108)
Dispute Settlement Body
16 October 1997
MINUTES OF MEETING
Held in the Centre William Rappard
16 October 1997
Chairman:  Mr. Wade Armstrong (New Zealand)
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB ....................... 2
- Japan - Taxes on alcoholic bevera ges:  Status report by Japan ............................. 2
2. European Communities - Regime for the importation, sale and distribution
of bananas ..................................................................................................................... ...... 3
- Implementation of the reco mmendations of the DSB............................................ 3
3. Korea - Taxes on alc oholic beverages ................................................................................ 6
(i) Request for the establishment of a panel by the European Communities.............. 6
(ii) Request for the establishment of  a panel by the United States .............................. 6
4. India - Patent protection for pharmaceutica l and agricultural ch emical products............... 7
- Request for the establishment of a panel by the European Communities.............. 7
5. Argentina - Measures affect ing textiles and clothing ......................................................... 8
- Request for the establishment of a panel by the European Communities.............. 8
6. Chile - Taxes on al coholic beverages ................................................................................. 10
- Request for the establishment of a panel by the European Communities.............. 10
7. India - Quantitative restrictions on imports of agricultural, textile and industrial
products....................................................................................................................... ........ 11
- Request for the establishment of  a panel by the United States .............................. 11
8. Japan - Measures affectin g agricultural products ............................................................... 12
- Request for the establishment of  a panel by the United States .............................. 12
9. Proposed nominations for the indicative list of governmental and non-governmental
panelists ...................................................................................................................... ........ 13WT/DSB/M/38
Page 2
Prior to the adoption of the Agenda, the item entitled:  "India - Patent Protection for
Pharmaceutical and Agricultural Chemical Products - Panel Report:  Complaint by the United States
(WT/DS50/R)" was withdrawn from the proposed agenda since on 15 October 1997, India notified
the DSB of its decision to appeal this Report (WT/DS50/6).
1. Surveillance of implementation of recommendations adopted by the DSB
- Japan - Taxes on alcoholic beverages:  Status report by Japan
(WT/DS8/18/Add.1, WT/DS10/ 18/Add.1, WT/DS11/16/Add.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 then drew attention to  document WT/DS8/18/ Add.1- WT/DS10/18/Add.1-
WT/DS11/16/Add.1, which contained the second report by Japan with regard to its progress in the
implementation of the DSB's recommendations on this matter.
The representative of Japan said that pursuant to Article 21.6 of the DSU, his Government
was required to inform the DSB of progress in implementation of the DSB's recommendations.  On
6 October 1997, Japan had submitted its second status report concerning this matter.  As stated in its
first status report, major adjustments of the liquor tax rates had come into effect on 1 October 1997,four months before the expiry of the reasonable period of time, as the first step to implement the
DSB's recommendations.  Tax rates on whisky/brandy had been reduced by about 44 per cent and tax
rates on Shochu A and B had been increased by 30 per cent and 48 per cent respectively.  In an effort
to find mutually acceptable solutions with the other parties to the dispute, Japan continued to examine
possible practical options concerning the modalities for the implementation of the DSB'srecommendations.
The representative of the United States said that Japan's status report had emphasized the
adjustment of tax rates with regard to various categories of distilled spirits which had entered into
effect on 1 October 1997.  While a step in the right direction, this adjustment fell short of removing
the discriminatory nature of Japan's liquor tax regime.  Foreign exports continued to facediscriminatory tax treatment in Japan.  In addition, under Japan's implementation schedule, further
adjustments in the tax rates would not be implemented until 1 October 1998, well past the 15-month
reasonable period of time established by the arbitrator.  The United States remained open to reaching
a mutually acceptable resolution with Japan on this matter.  In order to be able to meet the deadline
set by the arbitrator, Japan would need additional legislation, the work on which would need toadvance this autumn as part of Japan's budget cycle.  Thus not much time was left.  The United States
looked forward to further discussions with Japan on its response to the DSB's recommendations and
the arbitrator's ruling.
The representative of Canada  said that his country was disappointed that Japan had not yet
assured Members that it would implement the DSB's recommendations within the 15-month time
period found to be a reasonable period by the arbitrator.  His delegation had noted Japan's offer to
hold consultations in order to settle this matter, however, it was Canada's preference that Japan takethe necessary steps to bring its internal tax system on distilled spirits into conformity with the findings
of the Panel and the Appellate Body.  Therefore, he strongly urged Japan to take all the necessary
legislative and administrative measures to implement the DSB's recommendations within the specified
15-month period.
The DSB took note of the statements and agreed
 to revert to this matter.WT/DSB/M/38
Page 3
2. European Communities - Regime for the importation, sale and distribution of bananas
- Implementation of the recommendations of the DSB
The Chairman said that in accordance with the DSU provisions, the DSB was required to
keep under surveillance the implementation of recommendations and rulings of the DSB in order to
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 of
the DSU provided as follows:  "... the Member co ncerned shall inform the DSB of its intentions in
respect of implementation of the recommendations and rulings of the DSB".  He recalled that at its
meeting on 25 September 1997, the DSB had adopted the Appellate Body Report and the Panel
Reports on "European Communities - Regime for the Importation, Sale and Distribution of Bananas"
as modified by the Appellate Body Report.1
The representative of the European Communities reiterated his statement made at the DSB
meeting on 25 September.  At that meeting he had stressed the Communities' strong attachment to the
DSU, its basic principles and rules.  Under Article 21.3 of the DSU, the Communities had theobligation to inform the DSB of their inte ntions on the implementation of the DSB's
recommendations.  He confirmed that the Communities would fully respect their international
obligations with regard to this matter.  Wh en designing the present regime, the Communities'
objectives had been to support their own banana producers and to meet their international obligations,
including their m.f.n. commitments under the WTO Agreement and with regard to the ACP countriesunder the Lomé Convention.  These objectives remained unchanged.
The Communities had initiated a process which would enable them to examine all options for
compliance.  In the view of the internal decision-making process, he was not in a position, at this
stage, to anticipate or to prejudge the results of this process.  The Communities wished to draw the
attention of Members to the extreme complexity of this matter.  The Appellate Body had recognizedthat the legislative task of the Communities was difficult as they would have to respect the
requirements of the Lomé Convention while simultaneously designing a single market for bananas.
Therefore, the Communities, while intending to act expeditiously would require a reasonable period
of time in which to examine all the options  to meet their international obligations.
The representative of Guatemala, speaking also  on behalf of Ecuador, Honduras, Mexico and
the United States, said that the parties to the dis pute had looked forward to this meeting when the
European Communities had to inform the DSB of th eir intentions with respect to compliance with
their WTO obligations.  He enquired as to the extent to which the Communities valued and respected
their international commitments.  For the future of the WTO, it was important that a Member such as
the Communities should make a clear statement at the present meeting concerning the intentions withrespect to the implementation of the DSB's recommendations pursuant to Article 21.3 of the DSU.  He
therefore requested the Communities to state more specifically how they intended to implement the
rulings of the Panel and the Appellate Body so as to bring their banana import regime into conformity
with their obligations under the WTO Agreement.  The term "international obligations" used by the
Communities was too vague, as this matter concerned compliance with specific trade-related
agreements.  Article 21.3 of the DSU was very clear with regard to the granting of a reasonable period
of time for the purpose of complying with the DSB's recommendations.  Guatemala which haddevoted more than six years to this matter wished to have more precise information as to how the
Communities expected to comply with the DSB's recommendations.
The representative of the United States supported the statement made by Guatemala
concerning the DSU process.  The Communities had referred to their commitments to respect
international obligations.  He sought confirmation that it was the Communities' intention to implement
                                                     
1 WT/DS27/12.WT/DSB/M/38
Page 4
the DSB's recommendations by making their banana import regime consistent with their obligations
under the GATT and the GATS.
The representative of Honduras wished to associate her delegation with the statements made
by Guatemala and the United States.  Honduras was a recent participant in the international  trading
system having joined the GATT in 1994.  Although its accession negotiations had constituted an
extremely demanding process, Honduras had always respected its obligations and believed that themultilateral trading system, in particular the di spute settlement mechanism, provided the right
framework for promoting its economic and trade development.  The present meeting was of critical
importance as this was the first case which Honduras had brought to the dispute settlement system.
Both the Panel and the Appellate Body had met her country's expectations by providing an
unprecedented number of recommendations and rulings with regard to the Communities'
discriminatory measures.  In accordance with the DSU provisions, the Communities were now
required to indicate clearly and decisively how they would implement all these recommendations.Honduras did not consider that the vague references made by the Communities regarding the
fulfilment of their international obligations, without linking them to the rulings of the Panel and the
Appellate Body, constituted a clear declaration of their intentions within the meaning of the DSU.
Furthermore, Honduras did not consider the reasonable period of time as a means which the
Communities could use to postpone the implementation of the DSB's recommendations.  Thereasonable period of time was a period in which the Communities would be required to alter their
banana import regime in order to bring it into compliance with the DSB's recommendations.  She
therefore sought confirmation that the Communities intended, in a timely manner, to implement all
the recommendations and rulings of the Panel and the Appellate Body.  As a developing country
heavily dependent on access to the European market for its banana exports, Honduras believed thattransparency in accordance with Article 21.3 of the DSU was fundamental for a satisfactory resolution
of this dispute.
The representative of Ecuador said that his delegation could only accept the Communities'
statement if their intention was to promptly implement the DSB's recommendations which required,
inter alia , to revisit their discriminatory quota alloca tions, to eliminate immediately and totally the
Banana Framework Agreement (BFA) as well as category B licences, activity functions, licenses for
ripeners, export certificates, hurricane licenses and those ACP preferences in violation of the Lomé
waiver.  If the Communities' intention was different he  wished to have clarification as to their plans
with regard to prompt compliance.
The representative of Mexico supported the statement made by Guatemala.  The
Communities' intentions were not very clear.  On the one hand reference had been made to
Article 21.3 of the DSU, and on the other hand to fully respecting international obligations.  He was
not certain whether the latter referred to the recommendations of the Panel and the Appellate Body or
to obligations broader than those under the WTO Agreement.  The Communities had stated that they
had initiated examination of all options for compliance for which they required a reasonable period of
time.  It was not very clear whether the Communities would implement the DSB's recommendations
as stipulated in Article 21.3 of the DSU.  Under the provisions of Article 21.3 of the DSU thereasonable period of time was provided only if it was not feasible to comply immediately with the
recommendations and rulings, not to review and examine options for compliance.  He sought
clarification on the legal basis for the Communities with regard to the reasonable period of time.WT/DSB/M/38
Page 5
The representative of the  European Communities said that at present he could not provide
any further information.  With regard to Guatemal a's question, he said that the Communities intended
to fully respect their obligations.  However, it was not possible to provide details in every case.  For
example, in the Gasoline case2 the intentions of the parties had been broad, general and procedural.
The Communities' decision-making procedures were known to be difficult and complicated, and this
matter was complicated.  At this stage, he could not go beyond what had been stated.  TheCommunities intended to respect their international obligations and this phrase had been carefully
selected.  The Communities had many obligations and this phrase included WTO obligations.  At
present, the Communities were examining all options  for compliance.  He questioned why this period
should not be used to review options, as it had not been possible to do so until after the results of the
Reports.  The Communities were reviewing their options which was positive and constructive and this
should be accepted.  It was better for the Communities to seek solutions than to state that nothing
could be done.  The comment made by Honduras that the Communities by asking for a reasonableperiod of time were postponing their action was not fair.  The reasonable period of time was a right
provided under the DSU, if it was not possible to comply immediately with the DSB's
recommendations.  It was therefore not a question of postponement but the need to find the best
results.  In doing so, the Communities could discuss this matter with other parties.  For those seeking
immediate results he recalled that the choice had been either to invoke time-consuming disputesettlement procedures or to make bilateral agreements with the Communities.  He reiterated that the
Communities would fully respect their obligations and would examine all options for compliance.
The representative of the United States said  that the Communities' instructions had been
insufficient to properly inform the DSB in acco rdance with the DSU procedures of the Communities'
intentions.  He did not wish to put pressure in order to make it difficult for the Communities, but itwas known that the reasonable period of time under Article 21.3 of the DSU was not a right, as
suggested by the Communities.  It was available only for the purpose of implementing the DSB's
recommendations.  The reasonable period of time which the United States expected to negotiate with
the Communities pursuant to Article 21.3 (b) of the DSU, was not a period in which to negotiate
compensation or to consider non-compliance options.  As stated by Ecuador, it was clear that theCommunities having requested a reasonable period of time, had to fully amend their regulations in
order to make them consistent with their obligations under the GATT and the GATS.  The question
was not that of considering options for compliance because the United States expected the
Communities to move during the reasonable period of time in order to eliminate their discriminatory
licensing system, including category B licences, licences for ripeners, exports certificates andhurricane licences and its discriminatory quota allocations for countries under the Lomé Conventions
and the BFA.  During the consultations to be held on the question of the length of the reasonable
period of time, the United States expected to have greater and more specific reassurances with regard
to the Communities' intentions.  The US position with regard to the length of time would depend on
the specificity of the Communities' plans concerning compliance.
The representative of Côte d'Ivoire said that the Communities had clearly underlined their
attachment to the basic principles of the dispute se ttlement system and had confirmed that they would
fully respect their obligations.  For this purpose, they needed a reasonable period of time which
should be granted to any Member in a similar situation.  This would enable them to consult with all
their partners in order to establish a balance between different interests, in particular those under
Article 11 of the Lomé Convention.  He believed that at this stage it was not possible for the
Communities to take a decision and therefore it was reasonable to grant them the reasonable period oftime.
                                                     
2 United States - Standards for Reformulated and Conventional Gasoline (WT/DS2).WT/DSB/M/38
Page 6
The representative of Mexico  understood that on certain occasions it was not possible for a
delegation to go beyond its instructions.  However, at this meeting it was very important to underline
that this type of response was not satisfactory to other Members.
The representative of Ecuador said that pursuant to Article 21.3 of the DSU, the Communities
were required to notify the DSB of their intentions  with regard to the implementation of the DSB's
recommendations.  In his view, the Communities had not provided  information as expected byMembers and in accordance with the practice.  He asked what decision would be taken by the DSB at
the present meeting since the parties to this dispute did not consider this information adequate.  There
were two options: one that this information was sufficient, and the other that it was not.  He therefore
sought clarification and requested the Chairman to ask the Communities to further elaborate on this
matter.
The Chairman said that he would welcome if the Communities wished to respond further but
he believed that the second intervention of the Communities indicated clearly that they were not in a
position to do so.  He noted that in accordance with Article 21.3(b) of the DSU, a period of time
mutually agreed by the parties to the dispute should be indicated within 45 days after the date of the
adoption of the DSB's recommendations and that period of time had not yet expired.
The DSB took note of the statements and of the information provided by the European
Communities regarding their intentions to implement the DSB's recommendations.
3. Korea - Taxes on alcoholic beverages
(i) Request for the establishment of a panel by the European Communities (WT/DS75/6)
(ii) Request for the establishment of a panel by the United States (WT/DS84/4)
The Chairman said that the DSB had considered this matter at its meeting on 25 September
and had agreed to revert to it.  He proposed that  the two sub-items be considered together since they
pertained to the same matter.  First, he drew attention to the communication from the European
Communities contained in WT/DS75/6.
The representative of the European Communities said that at the DSB meeting in September
he had already provided the background of this case.  At the present meeting he only wished to
enumerate the following points: the long-standing irritant, major trade exports interest for theCommunities, frequent bilateral consultations over a long period and unsatisfactory results leaving no
alternative but to request the establishment of a panel.
The Chairman drew their attention to the communication from the United States contained in
document WT/DS84/4.
The representative of the United States said that as had been stated at the previous meeting of
the DSB, his country had requested the establishment of a panel to examine Korea's discriminatory
taxes on distilled spirits.  Under its Liquor Tax Law, Korea imposed a lower tax on the traditional
Korean distilled spirit soju than the high taxes on other distilled spirits such as whisky, brandy, vodka,
rum, gin and "ad-mixtures".  This difference in tax burden was made even more dramatic by the
application of an Education Tax.  As a result, the tax burden on some US distilled spirits could be
over four times greater than the tax burden on soju.  The United States believed that Korea's internal
taxes on distilled spirits were inconsistent with its obligations under Article III:2 of GATT 1994.  Onmany occasions over the past years, the United States had raised this matter with Korea both
informally and formally in the consultations.  Since this matter had not been settled during the
consultations his country requested the establishment of a panel.  The United States considered that
the DSB should establish a single panel pursuant to Article 9 of the DSU to examine both complaints.WT/DSB/M/38
Page 7
The representative of Korea said that his country continued to believe that its internal tax
system on alcoholic beverages was in conformity with its WTO obligations.  His delegation noted that
this was the meeting of the DSB following that at which the requests by the Communities and the
United States had first appeared on the agenda.  He therefore recognized that such a panel should be
established at the present meeting in accordance with Article 6.1 of the DSU.  Korea was prepared to
defend its tax regime before the panel.  He agreed with the US proposal that both complaints beexamined by a single panel with standard terms of reference.
The DSB took note of the statements and agreed
 to establish a single panel pursuant to Article
9 of the DSU with standard terms of reference.
The representatives of Canada and Mexico  reserved their third party rights to participate in
the Panel proceedings.
The representative of Mexico clarified that his country's interest in this case concerned
tequila.
The DSB took note of the statement.
4. India - Patent protection for pharmaceutical and agricultural chemical products
- Request for the establishment of a panel by the European Communities (WT/DS79/2)
The Chairman said that the DSB had considered this matter at its meeting on 25 September
and had agreed to revert to it.  He drew attention to the communication from the European
Communities contained in document WT/DS79/2.
The representative of the European Communities said that this was the second time that his
delegation requested the establishment of a pa nel to examine this matter.  The Communities
considered that India had not satisfactorily implemented its obligations under Article 70.8 and 70.9 of
the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  The detailsconcerning this matter were contained in document WT/DS79/2.  The Communities had held
consultations with India on this matter but had not been able to find any satisfactory solution.  As he
had stated at the DSB meeting in September, the Communities wished to secure the same rights as
any other party in the dispute settlement procedures in terms of negotiations at the stage of
implementation.  Therefore, the Communities decided to request a panel in addition to being a third-party in the panel on "India - Patent Protection for Pharmaceutical and Agricultural Chemical
Products"
3 established at the request of the United States.  His delegation believed that the DSB
should establish a panel at the present meeting and any questions related to the composition of the
panel and its time-table could be discussed in the coming weeks.
The representative of India noted that the Communities' request for a panel had already been
considered by the DSB at its meeting on 25 September.  At that meeting, India had made a detailed
statement outlining the concerns and issues raised by this request for a panel with regard to a matter
on which the panel established at the request of the United States had recently circulated its report.4
As had been indicated by the Chairman at the outset of the meeting, India had notified the DSB of itsdecision to appeal against the report of this panel.
5  In his statement made at the DSB meeting on
                                                     
3 WT/DS50.
4 WT/DS50/R.
5 Notice of Appeal (WT/DS50/6).WT/DSB/M/38
Page 8
25 September, he had implied that the resources of delegations, in particular small delegations such as
India, would be put to undue strain if delegations had to participate in repetitive panel proceedings on
the same matter because one aggrieved party had not decided to become a complainant or a co-
complainant during the proceedings of a panel established on the same matter at the request of another
aggrieved party.
In India's view the Communities' request raised fundamental systemic questions:  (i)  whether
a Member had a right to request a re-examination of a matter on which a panel had already ruled; and
(ii) if this was the case, whether the exercise of this right was permissible under the circumstances of
the present case.  India recognized that the DSB could not decide on these questions and had an
obligation to establish a panel at the present meeting.  While it accepted the Communities' request for
a panel, India wished to reserve its right to request the panel, if necessary and appropriate, to examine,
as a preliminary issue, whether a Member had the right to request a re-examination of a matter already
decided by a panel and if so, whether the exercise of this right was permissible under thecircumstances of the present case.
He reiterated that by reserving the right to rais e this matter before the panel, India's intention
was not, in any manner, to take away or abridge the rights of the complainant in this case.  Nor had
India been motivated by the sensitive nature of the subject of this dispute.  As he had indicated at the
DSB meeting in September, India's concerns were systemic and his delegation believed that it was inthe interest of all Members to find a meaningful way of dealing with the issues and concerns involved
in this request.  While India accepted the establishment of a panel it wished to preserve the possibility
of raising these questions before the panel as a preliminary procedural matter.
The representative of the United States said that as noted by India, in accordance with
Article 6.1 of the DSU, the DSB was expected to establish a panel at the present meeting.  If so, the
United States would reserve its third-party rights to participate in the panel proceedings.  However, in
the view of the United States, this panel could not legally interfere or delay, in any way, the appeal
process concerning the panel that had been established on the same matter at the request of the United
States.  Furthermore, the Communities' panel proceedings could not interfere or delay in any way the
adoption and implementation of the panel and the Appellate Body reports concerning the UnitedStates' dispute with India with regard to the same matter.
The DSB took note of the statements and agreed
 to establish a panel in accordance with the
provisions of Article 6 of the DSU with standard terms of reference.
The representative of the United States reserved his Government's third-party rights to
participate in the Panel proceedings.
5. Argentina - Measures affecting textiles and clothing
- Request for the establishment of a panel by the European Communities
(WT/DS77/3/Rev.1)
The Chairman said that the DSB had considered this matter at its meeting on 25 September
and had agreed to revert to it.  He drew attention to the communication from the European
Communities contained in WT/DS77/3/Rev.1 and to the correction in the title of this request indicated
at the opening of the meeting.  He informed Me mbers that a corrigendum to this document without
the reference to "footwear" in the title would be circulated shortly as document
WT/DS77/3/Rev.1/Corr.1.
The representative of the European Communities said that he did not wish to reiterate what
had been stated at the DSB meeting in September.  At that meeting a scope of the request had beenWT/DSB/M/38
Page 9
discussed and as a result, the Communities held further discussions with Argentina in order to revise
the text of their request.  A revised text of this  request was now contained in WT/DS77/3/Rev.1 and a
corrigendum which would bring the title in line with this request would be shortly circulated.  The
present request had a less extensive scope than the previous one, but the measures subject of this
complaint remained essentially unchanged.  The consultations held on this matter had failed to bring a
solution.  Therefore, the Communities sought the establishment of a panel to examine this matter.
The representative of Argentina appreciated that the Communities had taken into account the
comments and observations made by Argentina at the DSB meeting on 25 September, in the
submission of a revised text of their request.  With regard to the question of the timing of this request
for a panel, he said that after a thorough examination of the various aspects of this issue, further
doubts had arisen as to the legal justification for this process.  In addition to his comments made at the
previous meeting with regard to Article 9.1 of the DSU, and the Communities' assessment as to
whether their action under the DSU provisions was fr uitful in the light of Article 3.7 of the DSU,
Argentina believed that this late request had created an imbalance in favour of the complaining party.
The findings of the panel on the same subject established at the request of the United States6, would
probably be available when the first written submissions would be presented to the panel requested by
the Communities or the first substantive meeting of the parties would be held.  Thus, the Communities
would have full knowledge of the arguments of th e defendant.  In addition, the work of the panel
could coincide with a hypothetical appeal proc ess thus creating a situation which would be in
contradiction with the hierarchy of proceedings under the DSU provisions.  Hence, not only would a
single matter be examined twice by two separate panels, but in addition the issues of law and legal
interpretation that might be raised before the A ppellate Body could in theory be simultaneously
subject to examination by a lower body:  a panel.  He queried whether under such circumstances thissecond panel should await until the Appellate Body had ruled on this matter and if so what would be
the purpose of this panel to continue its work.  Furthermore, he inquired how the task of the second
panel would be influenced by the fact that during its work the final decision of the Appellate Body
would be known.  In the context of such a possible scenario, he inquired whether any decision taken
by the DSB would be in line with the provisions of Article 3.2 of the DSU which stated that:"Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations
provided in the covered agreements", in this ca se the DSU.  Undoubtedly, the question of timing
would have implications for the dispute settlement system beyond this particular case.
At the DSB meeting on 25 September, he had stat ed that Argentina would be able to express
its views on the Communities' request after the points concerning the terms of reference had beenclarified.  In the view of Argentina, document WT/DS77/3/Rev.1 met the requirements stipulated in
Article 6.2 of the DSU, and therefore, his delegation did not oppose the establishment of a panel in
accordance with the terms of reference set out in document WT/DS77/3/Rev.1 including the
amendment to the title of the request which as announced by the Chairman would be circulated
shortly in WT/DS77/3/Rev.1/Corr.1
The representative of the United States said that pursuant to Article 6.1 of the DSU it was
expected that a panel would be established at the present meeting.  His delegation believed that it
should be clear that the establishment of a panel at the present meeting should not, in any way, delay
the dispute settlement process of the panel establis hed to examine the complaint by the United States
(WT/DS56).
The representative of the European Communitie s thanked Argentina for its statement which
in his view was constructive.  He acknowledged that a number of questions related to this case might
need further discussions in the coming weeks.  In response to certain questions regarding the legal
                                                     
6 WT/DS56.WT/DSB/M/38
Page 10
basis of the Communities's request he said that the Communities acted pursuant to Article 10.4 of the
DSU which provided the right to any third party to request a panel to examine a measure already a
subject of panel proceedings.  He believed that any questions related thereto could be discussed after
the establishment of a panel.
The DSB took note of the statements and agreed  to establish a panel in accordance with the
provisions of Article 6 of the DSU with standard terms of reference.
The representative of the United States reserved his Government's third-party rights to
participate in the Panel proceedings.
6. Chile - Taxes on alcoholic beverages
- Request for the establishment of a panel by the European Communities (WT/DS87/5)
The Chairman drew attention to the communication from the European Communities
contained in WT/DS87/5.
The representative of the European Communities said that this matter had been the subject of
prolonged discussions between Chile and the Communities for almost ten years.  This case concerned
a wide gap between the tax rates imposed on imported spirits and on local produce.  Whisky was
taxed at 70 per cent, vodka and the majority of other imported spirits  at 30 per cent while the local
Pisco spirit was taxed at only 25 per cent.  Pisco represented some 80 per cent of the market for all
spirits in Chile, and its market share had more than trebled since the introduction of discriminatorytaxation in 1974, at the expense of all imported spirit drinks.  The Communities believed that the
Chilean tax regime for alcoholic beverages had effectively discriminated against imported spirits, and
was therefore in breach of the WTO rules, in pa rticular Article III:2 of GATT 1994.  Under the WTO
Agreement, Chile was committed not to apply discriminatory taxes on imported products.  The
Communities and Chile had sought to resolve this issue through consultations, both bilaterally andunder the provisions of the WTO Agreement.  The delegations of the United States, Peru and Mexico
had joined these consultations.
7  Unfortunately, in spite of these efforts, and Chile's preparation of a
new legislation, it had not been possible to find a mutually acceptable solution.  Therefore, the
Communities had no alternative but to request the establishment of a panel.  
The representative of Chile said that her delegation noted the Communities' request and
wished to indicated that her Government during the first part of this year had submitted to the Chilean
Congress a draft law which would amend its domestic taxation on spirits.  This draft law had already
been approved by the lower house of Congress.  Since this draft law was in its final stages of
adoption, Chile considered that it was not appropriate to establish a panel at the present meeting.
The representative of Mexico  confirmed that his delegation had participated in these
consultations and said that his country had a strong interest in following this case which had an effect
on tequila.
The representative of the United States said that his country was also concerned about Chile's
discriminatory tax regime and its implications for the US exports of distilled spirits.  The United
States had raised this issue on a number of occasions with Chile.  He noted that the legislative reforms
to the current tax regime on distilled spirits which had recently passed the Chilean Chamber of
Deputies did not resolve the concerns of the United States.  His country was currently evaluating itsnext step with Chile on this matter.
                                                     
7 United States (WT/DS87/3), Peru (WT/DS87/2) and Mexico WT/DS87/4.WT/DSB/M/38
Page 11
The DSB took note of the statements and agreed  to revert to this matter.
7. India - Quantitative restrictions on imports of agricultural, textile and industrial products
- Request for the establishment of a panel by the United States (WT/DS90/8)
The Chairman drew attention to the communication from the United States contained in
document WT/DS90/8.
The representative of the United States said that his country requested the establishment of a
panel to examine India's regime of quantitative restrictions and non-automatic import licensing on
more than 2,700 tariff lines in its Schedule.  These restrictions included import prohibitions, bans,
restrictions, import licenses, special import licenses and the prohibition of non-commercial(sample)
quantities, as well as the procedures required to implement and administer these measures.  India's
regime, which had been in place since the late 1940's, continued to unfairly deny India's trading
partners access to its market and to shield India's industry from competition.  The United States
considered that India's quantitative restrictions were inconsistent with its obligations underArticles XI:1 and XVIII:11 of GATT 1994 and Article 4.2 of the Agreement on Agriculture.
Furthermore, its import licensing procedures and practices were inconsistent with fundamental
requirements of the WTO under Article XIII of GATT 1994 and Article 3 of the Agreement on Import
Licensing Procedures.
He recalled that this matter had been discussed in the Committee on Balance-of-Payments
Restrictions (BOP Committee) for more than 18 months, beginning in November 1995.  Both the
BOP Committee and the International Monetary Fund (IMF) had concluded that India did not have a
balance of payments problems and thus the use of trade measures justified on balance-of-payments
grounds was not warranted.  The BOP Committee had concluded its proceedings in June 1997,
without a satisfactory resolution as to the phase-out programme of India's measures.
8  The United
States had hoped that this matter could be resolved in the BOP Committee.  In the absence of such
resolution, the logical step was to bring this matter to the DSB.  His delegation continued to consult
with India's delegation and hoped that this matter could be resolved on a mutually agreeable basis.
However, since at this stage the matter remained unresolved, the United States requested the
establishment of a panel.
The representative of India said that his delegation had carefully noted the statement made by
the United States concerning its request for the establishment of a panel on the basis that the
quantitative restrictions maintained by India for balance-of-payments reasons as notified in
WT/BOP/N/24 (Annex I, Part B), dated 22 May 1997, were inconsistent with India's obligations
under the WTO.  At the present meeting, he did not wish to enter into detail of this statement but hisdelegation did not share all the elements contained therein.  As the United States had noted,
consultations had been held and continued to be held on this subject.  In this context, he wished to
draw attention to the sentence contained in the United States' request which stated that: " The United
States and India continue to engage in promising consultations on these measures in hopes of
resolving the dispute".  These promising consultations were ongoing and his delegation believed that
it would be worthwhile for both parties to continue to  make serious efforts to resolve this dispute in a
manner satisfactory to both sides.  In his delegation's view, the establishment of a panel at a timewhen the consultations were at a crucial stage which could result in a mutually agreed satisfactory
solution might not be in the interest of either party.   Therefore, at the present meeting, his delegation
was not in a position to accept this request.  It was not India's intention to unnecessarily delay the
establishment of this panel, but rather to maintain the present conducive atmosphere with a view to
                                                     
8 WT/BOP/R/32.WT/DSB/M/38
Page 12
maximizing the chances for a mutually agreed solution.  He believed that the US delegation shared
India's assessment of the current status of the consultations and appreciated the positive assessment
laid behind its negative response to the US request for a panel at the present meeting.
The representative of the European Communities said that his delegation had noted the United
States' request.  The Communities were also actively engaged in consultations with India on the same
matter.9  He interpreted the US statement in the same way as India, namely that "promising"
consultations continued and that it would be possible to find solutions.  He also hoped that it would be
possible to find solutions to the Communities' problems.  If consultations were successful it would be
possible to notify to the DSB that a mutual solution had been found.
The representative of Japan said that his country had joined the consultations requested by the
United States, Canada, the European Communities, Switzerland, Australia and New Zealand pursuant
to Article XXII of the GATT 1994.  At the same time, Japan was engaged in bilateral consultations
with India.  As stated by India and the Communities, his country hoped that the parties to the disputewould be able to reach a mutually satisfactory solution in the very near future.
The representative of Switzerland said his country had held consultations with India with
regard to the latter's quantitative restrictions on agricultural, textile and industrial products.10 As
progress had been made during the consultations, Switzerland was confident that an agreement could
shortly be reached with India.
The DSB took note of the statements and agreed  to revert to this matter.
8. Japan - Measures affecting agricultural products
- Request for the establishment of a panel by the United States (WT/DS76/2)
The Chairman drew attention to the communication from the United States contained in
document WT/DS76/2.
The representative of the United States said that his country requested the establishment of a
panel to examine whether the import prohibition on fruits and the varietal testing requirements
maintained by Japan were inconsistent with its obligations under the Agreement on the Application of
Sanitary and Phytosanitary Measures, the GATT 1994 and the Agreement on Agriculture.  With
regard to each agricultural product for which quarantine treatment was required, Japan prohibited theimportation of each variety of that product until the quarantine treatment had been tested for each
variety, even though the pest was the same and the treatment had proven effective with respect to
other varieties of the same fruit.  This redundant testing served as a significant market access barrier.
Japan had not provided any scientific evidence th at the effectiveness of the quarantine treatment
differed by variety.  In addition, Japan's import prohibition and the absence of published regulationsgoverning the approval of imports of fruits lacked transparency.  The United States had hoped that
this matter could be resolved without the need to request a panel but Japan had not been forthcoming
in addressing this unfair barrier or in providin g meaningful access for the commodities in question.
The representative of Japan said that his country believed that the measures at issue were in
compliance with the relevant WTO provisions.  At this stage, Japan considered that both parties had
not exhausted all possibilities with regard to a solution to this dispute.  This matter needed extensive
discussions based on all relevant scientific and technical data.  Japan and the United States had held
                                                     
9 WT/DS96/1.
10 WT/DS94/1.WT/DSB/M/38
Page 13
consultations under Article XXIII of GATT 1994 on 5 June 1997.  In the consultations, Japan had
answered all questions posed by the United States and had asked for the specific reasons of its request
for consultations.  However, to-date no answers had b een received from the United States.  Japan was
therefore surprised that while it was waiting for a reply from the United States, the latter had
requested the establishment of a panel.  Japan was not in a position to accept this request at the
present meeting and believed that it was in the intere st of both parties to reach a mutually satisfactory
solution through consultations.
The DSB took note of the statements and agreed  to revert to this matter.
9. Proposed nominations for the indicative list of governmental and non-governmental panelists
(WT/DSB/W/62)
The Chairman drew attention to document WT/DSB/W/62 which contained additional names
proposed for inclusion on the indicative list in accordance with Article 8.4 of the DSU.  He clarified
that the last proposal concerning the panelist  from the United Kingdom should appear under the
heading "European Communities".  A corrigendum to this effect was made available in the room.11
As in the past, panelists from Member states of the European Communities would appear on theindicative list under the heading he had just indicated.  He proposed that the DSB approve the names
contained therein.
The DSB so agreed.
The representative of Norway noted the pace with which panels were established and the
number of panels established to-date.  He hoped that the list of panelists contained a sufficient number
of persons who could serve on panels as it was expected that more panels would still be established.
The Chairman responded that the list was still adequate but there was a significant burden of
work.
The DSB took note of the statements.
                                                     
11 WT/DSB/W/62/Corr.1.