RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/100
11 April 2001
(01-1843)
Dispute Settlement Body
1 March 2001
MINUTES OF MEETING
Held in the Centre William Rappard
on 1 March 2001
Chairman:  Mr. R. Farrell (New Zealand)
Subjects discussed: Page
1. United States – Anti-dumping measures on stainless steel plate in coils and
stainless steel sheet a nd strip from Korea...............................................................................1
(a) Implementation of the reco mmendations of the DSB.................................................................1
2. Canada – Measures affecting the importation of milk and the exportation of
dairy products ................................................................................................................. ..........2
(a) Recourse to Article 21.5 of th e DSU by the United States .........................................................2
(b) Recourse to Article 21.5 of the DSU by New Zealand...............................................................2
3. Canada – Measures affecting the importation of milk and the exportation of
dairy products ................................................................................................................. ..........5
(a) Recourse to Article 22.2 of th e DSU by the United States .........................................................5
(b) Recourse to Article 22.2 of the DSU by New Zealand...............................................................5
4. Timing of notification of third- party interest in panel proceedings.....................................6
1. United States – Anti-dumping measures on stai nless steel plate in coils and stainless steel
sheet and strip from Korea
(a) Implementation of the recommendations of the DSB
1. The Chairman recalled 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 the effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3
of the DSU provided that the Member concerned shall inform the DSB, within 30 days after the date
of adoption of the panel or Appellate Body report, of its intentions in respect of implementation of therecommendations and rulings of the DSB.  He recalled that at its meeting on 1 February 2001, the
DSB had adopted the Panel Report on "United States – Anti-Dumping Measures on Stainless Steel
Plate in Coils and Stainless Steel Sheet and Strip from Korea".  He invited the United States to inform
the DSB of its intentions in respect of implementation of the DSB's recommendations in this case.WT/DSB/M/100
Page 2
2. The representative of the United States said that her country intended to implement the DSB's
recommendations and rulings in a manner which respected its WTO obligations.  However, the
United States would need a reasonable period of time for implementation and was ready to consult
with Korea on this matter.
3. The representative of Korea said that his country welcomed the intention of the United States
to fully comply with its WTO obligations.  At the same time, Korea wished to reiterate its statement
made at the 1 February DSB meeting in the context of the adoption of the Panel Report.  In Korea's
view the problems in this case derived not from US laws or regulations per se , but from the manner in
which those laws and regulations were being applied.  Therefore, the errors identified by the Panel
could be corrected by minor changes in the calculating methodology and by implementing them in the
calculated results through a revised determination of dumping. Korea believed that the
implementation in this case could be accomplished promptly and in a manner that fully respected the
Panel's findings.  His country looked forward to ea rly consultations with the United States regarding
the manner and the time-frame in which the United States intended to implement the DSB's rulings.
He noted that Canada had requested consultations with the United States with regard to the manner in
which the US was implementing the DSB's rulings regarding its anti-dumping or countervailing duties
(WT/DS221/1).  Korea believed that Canada's request was relevant to the US implementation of theDSB's recommendations in this case and would closely follow any developments in this regard.
4. The representative of the European Communities said that the Panel Report pertaining to this
case had dealt with important systemic and legal issues and had contributed to further clarification of
the provisions of the Anti-Dumping Agreement.  The EC had participated as a third-party in this case
and was interested in faithful and timely implementation of the DSB's recommendations.
5. The DSB took note of the statements and of the information provided by the United States
regarding its intentions in respect of implementation of the DSB's recommendations.
2. Canada – Measures affecting the importation of milk and the exportation of dairy
products
(a) Recourse to Article 21.5 of the DSU by the United States (WT/DS103/16)
(b) Recourse to Article 21.5 of the DSU by New Zealand (WT/DS113/16)
6. The Chairman 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 United States contained in
document WT/DS103/16.
7. The representative of the United States said that despite concerted efforts over the past several
months, the United States and Canada had been unable to bridge their differences of views regarding
the WTO consistency of Canada's measures taken to comply with the DSB's recommendations andrulings in this case.  Those efforts had culminated in additional consultations on 9 February 2001, as
required under the bilateral agreement between Canada and the United States, but unfortunately no
progress had been made.  In the US view, Canada ha d not brought its export regime for dairy products
into compliance with its export subsidy obligatio ns under the Agreement on Agriculture.  Instead,
Canada appeared to continue to export subsidized dairy products at a rate that was inconsistent withits export subsidy reduction commitments.  As a result, the United States was requesting that a panel
be established pursuant to Article 21.5 of the DSU to examine the provincial and other export
measures introduced by Canada in the year of 2000.
8. She underlined that the question of whether Canada's new measures constituted an export
subsidy had implications that went far beyond trade in dairy products.  Canada's new measures left theWT/DSB/M/100
Page 3
most fundamental aspects of the programmes found to constitute export subsidies unchanged.
However, Canada had indicated that it would not count such exports as part of its export subsidy
commitments.  All of the substantive elements of the prior export subsidy regimes in Canada were
encompassed in the new measures.  Under both the previous export subsidies and the new measures
milk at discounted prices was still provided only to exporters.  Indeed, prohibitive penalties existed toprevent any discounted milk or products made from such milk from entering the Canadian market.
Most importantly, this exclusion of discounted milk from the Canadian market was accomplished
through government action.  Canada's actions threatened to jeopardize one of the most critical
objectives of the Agreement on Agriculture, the reduction of export subsidies.  The degree of
Canada's circumvention was evident in the fact that Canada had not fulfilled its export subsidy
commitment for the dairy sector for any year of the implementation period, now in its final year.
Moreover, with the recent introduction of the new export measures, it was likely that theimplementation period would expire without compliance by Canada.  To preserve the integrity of the
export subsidy reduction obligations for agriculture, the United States requested that a panel be
established under Article 21.5 of the DSU to examine the consistency of Canada's provincial export
schemes with its obligations under the Agreement on Agriculture.
9. The Chairman drew attention to the co mmunication from New Zealand contained in
document WT/DS113/16.
10. The representative of New Zealand recalled that, on 27 October 1999, the DSB had adopted
the recommendations and rulings in this case.  As had been found in this case, Canada was exporting
subsidised dairy products in breach of its export subsidy reduction commitments under the Agreement
on Agriculture and the DSB had recommended that Canada bring its measures into conformity withthe Agreement.  The staged process for the implementation of the DSB's rulings was to be completed
by 31 January, 2001.  Canada maintained that it was now in full compliance.  New Zealand disagreed
with this position.  Over the past year, Canada ha d put in place new measures which were designed to
continue the exportation of dairy products at levels in excess of export subsidy commitment levels.
These mechanisms, established by Canada's federal and provincial governments, producers andprocessors, appeared to be aimed at minimizing the appearance of government involvement and
overlaying a veneer of market-orientation so as to suggest that illegal export subsidy elements had
been removed in the new schemes.  However, in proceeding in this way, New Zealand believed that
Canada had focused on form rather than substance and had failed to implement the relevant DSB's
rulings.  It had done nothing about the fundamental problem that processors were provided access to
milk at prices lower than those otherwise available on the domestic market contingent upon the export
of products manufactured from that milk.  Canada had stated that it would not count the resultingexports against its subsidy reduction commitments.  New Zealand considered that these schemes, no
less than their predecessors, constituted a "transfer of economic resources" to processors for export
that were inconsistent with Canada's obligations under Articles 3.3, 8, 9.1(a), 9.1(c), 10.1 and 10.3 of
the Agreement on Agriculture.  Despite extensive consultations with Canada over the past year, most
recently on 9 February 2001, it had not been possible to resolve the differences of view over theseschemes.  Accordingly, New Zealand was requesting that, in accordance with Article 21.5 of the
DSU, the matter be referred to the original panel, if possible, for examination.
11. The representative of Canada said that his country was disappointed that the United States
and New Zealand had decided to request a compliance panel to examine the issue of Canada's
implementation in this case.  Canada had implemented fully the DSB's recommendations and rulings.As previously explained in the DSB, Canada had me t with the United States and New Zealand several
times over the past year to explain the modalities of its implementation.  In these consultations,
Canada had provided both countries with detailed  information demonstrating how it would bring its
measures into compliance by the deadline of 31 January 2001.  He underlined that Canada had met
that deadline and had also implemented the DSB's recommendations in a highly transparent manner.As explained in previous status reports, the Canadian government had removed itself from exportWT/DSB/M/100
Page 4
activities in the dairy industry so that exports from Canada were now concluded pursuant to market-
based transactions.  Federal and provincial regulatory changes had been implemented to ensure that
sales of milk by individual producers to processors were free from government control in each of the
provinces.  As a result, the prices and volumes of Canadian export milk sales were determined
commercially between individual producers and processors.  This lack of government involvementconfirmed that these commercial contracts did not confer export subsidies subject to reduction
commitments under the Agreement on Agriculture.  In other words, Canada had fully met its WTO
obligations.  Canada would vigorously defend its measures against the challenge from the United
States and New Zealand and was confident that the Article 21.5 panel would agree with Canada's
assessment.  Finally, it was Canada's understanding that the two Article 21.5 panels, requested by the
United States and New Zealand, would be joined purs uant to Article 9.1 of the DSU.  It was Canada's
understanding that this was in accordance with the wishes of the three parties to the dispute.
12. The DSB took note of the statements and agreed
, pursuant to Article 21.5 of the DSU, to refer
to the original Panel, if possible, the matter rais ed by the United States in document WT/DS103/16
and the matter raised by New Zealand in document WT/DS113/16.  It was confirmed that this would
be a single Panel addressing both matters.  The Panel would have standard terms of reference.
13. The representatives of the EC and Mexico  reserved their third-party rights to participate in the
Panel's proceedings.
14. The Chairman noted that those Members who had reserved their third-party rights by raising
their flags did not need to send any confirmation in writing to the Secretariat.  Other delegations who
might wish to reserve their third-party rights shou ld do so through a written communication within the
next 5 days after this meeting.
15. The representative of Australia said that his delegation had noted that the issue concerning the
timing of notification of third-party rights would be taken up under "Other Business".  However, at
this stage, he wished to register that Australia did not accept that the practice adopted in this case
served to bind Members.
16. The representative of the United States said that her delegation wished to briefly comment on
the Secretariat's note on the timing of the notification of third-party interest in Article 21.5 panel
proceedings (JOB(01)/25).  As stated by Australia this matter would be discussed under "Other
Business" and, therefore, the United States would make its comments under that item.  At this stage,
she only wished to indicate that the United States did not understand the purpose of the Secretariat's
note.  It was the US understanding that the Secretariat had been requested to provide a factual
background note on the issue of notifications, but instead it appeared that the Secretariat had gone
beyond the bounds of what had been requested a nd had issued a legal opinion advocating a certain
position.  While the United States did not object to a five-day notification rule for Article 21.5 panels
and would welcome it, it believed that this should not be based on the Secretariat's note.
17. The representative of Mexico said that his delegation did not share the view that there might
exist a practice and, even less, a binding practice regarding a deadline for notifications of third-party
interest and that such deadline should be five da ys.  Under "Other Business", Mexico would make a
detailed statement on this matter but, at this stage, he only wished to indicate that his country did not
share the view expressed by the Secretariat in its note.  Mexico believed that the Chairman's statement
should not limit the rights of Members regarding third-party interest.  He pointed out that Mexico had
indicated its third-party interest in this case in order to ensure that there would be no peremptory time-
frames.  Mexico believed that Members might take a similar approach in other cases.
18. The representative of Hong Kong, China said that it was his delegation's understanding that
the matter under consideration would be taken up under "Other Business".  At this stage, he onlyWT/DSB/M/100
Page 5
wished to indicate that his delegation had noted the Chairman's statement regarding a five-day period
for notification of third-party interest in this case.  However, this should not be based on the
arguments contained in the Secretariat's note which, in the view of Hong Kong, China had given rise
to certain legal and systemic problems.  His delegation would provide more details in the context of
consideration of this issue under "Other Business".
19. The representative of Uruguay said that his country supported the statements made by Mexico
and other delegations with regard to the question of the reduction of a 10-day time-period for
notification of third-party interest to participate in Article 21.5 panel proceedings.
20. The representative of the European Communities said that, like Australia and other countries,
the EC also wished to reserve its rights on the question of notifications of third-party interest in panel
proceedings.  His delegation wish to make further comments on this matter under "Other Business".
21. The DSB took note of the statements.
3. Canada – Measures affecting the importation of milk and the exportation of dairy
products
(a) Recourse to Article 22.2 of the DSU by the United States (WT/DS103/17)
(b) Recourse to Article 22.2 of the DSU by New Zealand (WT/DS113/17)
22. The Chairman 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 United States contained in
document WT/DS103/17.
23. The representative of the United States said that her country was requesting authorization to
suspend the application to Canada of tariff concessions and related obligations under the GATT 1994
covering trade in the amount of US$35 million on an annual basis.  This level of suspension wasequivalent to the level of nullification and impairment of benefits accruing to the United States that
resulted from Canada's failure to bring its export subsidy measures concerning dairy products into
compliance by 31 January 2001.  Since Canada had objected to the level of suspension requested by
the United States, the matter was being automatically referred to arbitration.  The United States and
Canada had agreed to request that the arbitration be suspended until after completion of the Panel'sproceedings and any Appellate Body  review regarding this matter.
24. The Chairman drew attention to the co mmunication from New Zealand contained in
document WT/DS113/17.
25. The representative of New Zealand said that pursuant to Article 22.2 of the DSU, his country
was requesting authorisation from the DSB to suspend the application to Canada of tariff concessions
and other obligations under the GATT 1994 covering trade in the amount of US$35 million.  This
level of suspension was equivalent on an annual basis to the level of nullification or impairment ofbenefits accruing to New Zealand resulting from Canada's failure to bring its export subsidy measures
concerning dairy products into compliance, by 31 January 2001, with the Agreement on Agriculture
or otherwise to comply with the DSB's recommendations and rulings in this case.  He noted that the
DSB had just agreed to refer, under Article 21.5 of the DSU, New Zealand's complaint about Canada's
non-compliance to the original Panel, if possible.  In accordance with the Understanding betweenCanada and New Zealand Regarding Procedur es under Articles 21 and 22 of the DSU
(WT/DS113/14), in the event Canada objected to New Zealand's request under Article 22.2 and the
matter was referred to arbitration pursuant to Article 22.6 of the DSU, New Zealand had agreed to
request the arbitrator to suspend its work until either the adoption of the Article 21.5 compliance panelWT/DSB/M/100
Page 6
report or, if there was an appeal, the adoption of the Appellate Body report.  New Zealand hoped that,
following the adoption of the Article 21.5 report in this matter, Canada would bring its measures into
compliance with the DSB's recommendations and rulings and that it would, in the event, not prove
necessary to suspend concessions or other obligations.  However, if this was not the case, New
Zealand would be obliged to take action in the form of the suspension of tariff concessions and relatedobligations under the GATT 1994 by imposing duties in excess of bound rates on a range of products
exported by Canada to New Zealand, as drawn from the list set out in the attachment to document
WT/DS113/17.
26. The representative of Canada said that his country disagreed with the allegations by the
United States and New Zealand that it had failed to implement the DSB's recommendations and
rulings in this case.  However, without prejud ice to its position on the WTO-consistency of its
measures, which would be examined in the Article 21.5 panel process, Canada also objected to thelevel of suspension sought by the complaining parties.  As set out in its communications dated
28 February 2001
1, Canada considered that the level of suspension sought by the United States and
New Zealand was by no means equivalent to the level of the nullification or impairment of benefits
accruing to these parties as a result of Canada's alleged failure to comply with the DSB's
recommendations and rulings.  Therefore, in accordance with the provisions of Article 22.6 of theDSU, Canada requested that this matter be referred to arbitration.  He noted that in accordance with
the agreed procedures, as set out in documents WT/DS103/14 and WT/DS113/14, the parties to the
dispute would jointly request the arbitrator, at the earliest possible moment, to suspend its work
pending the outcome of the Article 21.5 process.
27. The DSB took note of the statements and it was agreed
 that the respective matters raised by
Canada in documents WT/DS103/18 and WT/DS113/ 18 are referred to arbitration, as required by
Article 22.6 of the DSU.
4. Timing of notification of third-party interest in panel proceedings
28. The Chairman, speaking under "Other Business", said that Mexico had asked him to suggest a
way forward regarding the consideration of this matter.  He recalled that the statements made by
several delegations on this subject under item 2 of the present meeting had been noted carefully and
he did not think that under "Other Business" one should have a substantive discussion on this matter.
He recalled that the note by the Secretariat on this subject had been circulated in document
JOB(01)/25.  He proposed that, given the level of interest in this matter, the item entitled "Timing of
Notification of Third-Party Interest in Panel Proceedings" be inscribed on the agenda of the next
regular DSB meeting.
29. The DSB so agreed.
__________
                                                     
1 WT/DS103/18; WT/DS113/18.