RESTRICTED  
  
WT/DSB/M/424  
 
10 April 2019 
(19-2319) Page: 1/17 
Dispute Settlement Body  
11 January 2019  Original: English  
 
MINUTES OF MEETING  
HELD IN THE CENTRE W ILLIAM RAPPARD  
ON 11 JANUARY  2019 
Chairperson: Ms. Sunanta Kangvalkulkij (Thailand)  
Prior to the adoption of the Agenda , the item concerning the adoption of the Panel Report in  the 
dispute on:  "Thailand  – Customs and  Fiscal Measures on Cigarettes from the Philippines: Recourse 
to Article 21.5 of the DSU by the Philippines" ( DS371)  was removed from the proposed Agenda 
following Thailand's decision to appeal the Panel Report.  
Table of Contents  
1   TURKEY – ADDITIO NAL DUTIES ON CERTAI N PRODUCTS FROM THE UNITED STATES  . 1 
A. Request for the establishment of a panel by the United States  ................................ ..............  1 
2   BRAZIL – CERTAIN  MEASURES CONCERNING  TAXATION AND CHARGE S .....................  3 
A. Report  of the Appellate Body and Report of the Panel  ................................ ..........................  3 
B. Report  of the Appellate Body and Report of the Panel  ................................ ..........................  3 
3   UNITED STATES – MEASURES CONCERNING THE IMPORTATION, MAR KETING AND 
SALE OF TUNA AND TUN A PRODUCTS: RECOURSE  TO ARTICLE 21.5 OF THE DSU BY THE 
UNITED STATES  ................................ ................................ ................................ ...............  8 
A. Report  of the Panel and  the report contained in WT/DS381/AB/RW/USA and 
WT/DS381/AB/RW/USA/Add.1  ................................ ................................ ..............................  8 
 
1  TURKEY – ADDITIONAL DUTIES ON CERTAIN PR ODUCTS FROM THE UNIT ED STATES  
A. Request for the establishment of a panel by the United States  (WT/DS561/2)  
1.1.  The Chairperson  drew attention to the communication from the United States contained in 
document WT/DS561/2, and invite d the representative of the United States to speak.  
1.2.  The representative of the United States  said that several WTO Members were unilaterally 
retaliating against the United Stat es for actions it had taken pursuant to Section 232 that, as national 
security actions, were fully justified under A rticle XXI of the GATT 1994. Tho se Members, including 
Turkey, were pretending that the US actions under Section 232 were so -called "safeguar ds", and 
further pretended that their unilateral, retaliatory duties constituted suspension of substantially 
equivalent concessions under the WTO Agre ement on Safeguards. Just as tho se Members appeared 
ready to undermine the dispute settlement system by th rowing out the plain meaning of Article XXI 
and 70 years of practice, so too were they ready to undermine the WTO by pretending they were 
following WTO rules while taking measures blatantly against those rules. And Members  knew from 
the actions of those Me mbers that they did not seriously believe that the US security measures under 
Section 232 were safeguards. Turkey, for example, had not addressed whether its action was in 
response to an alleged "safeguard" taken as a result of an absolute increase in impo rts. If there had 
been an absolute increase, the right to suspend substantially equivalent concessions under the 
Safeguards Agreement could  not have been exercised for the first three years of the safeguard WT/DSB/M/424  
 
- 2 - 
 
  measure. To be clear: Article XIX of the GATT 199 4 could  be invoked by a Member to depart 
temporarily from its commitments in order to take emergency action with respect to increased 
imports. The United States, however, was not invoking Article XIX as a basis for its Section 232 
actions. Thus, Article XI X and the Safeguards Agreement were not relevant to the US actions under 
Section 232, and the United States had not utilized its domestic law on safeguards to take the actions 
under Section 232. Because the United States was not invoking Article XIX, there  was no basis for 
another Member to pretend that Article XIX should have been invoked and to use safeguards rules 
that were simply inapplicable. The additional, retaliatory duties were nothing other than duties in 
excess of Turkey's WTO commitments and wer e applied only to the United States, contrary to 
Turkey's most -favoured -nation obligation. The United States would not permit its businesses, 
farmers, and workers to be targeted in this WTO -inconsistent way. For these reasons, the 
United  States requested that the DSB establish a panel to examine this matter with standard terms 
of reference.  
1.3.  The representative of Turkey  said that his country  regretted that the United States had chosen 
to request a panel to examine this matter.  Members were well aware  that the current  situation  was 
not caused by  the Turkish measures that were formally challenged by the United States in this 
dispute. Rather, the real reason was the US decision  taken last year to impose unwarranted and 
unjustified unilateral measures on imports  of steel and aluminium. Those US measures affect ed 
imports from  all but  a handful of WTO Members, including Turkey, and were subject to a series of 
other WTO disputes, inc luding the" US – Steel and Aluminium Products (Turkey) " dispute ( DS564 ) 
brought by Turkey.  Clearly, the measures taken by Turkey, although technical ly they were subject 
of the US panel request at the present  meeting, could not be viewed in isolation from this broader 
context. The import restrictions on steel and aluminium had been taken by the United States in order 
to protect the US industry from the economic  effects of competing imports. The US measures were, 
by their very nature, their purpose and their design, economicall y-motivated safeguard measures.  
They were "emergency  measures" to protect the domestic industry, within the meaning of Article 
XIX of the GATT 1994 and the Agreement on Safeguards, that suspend ed the US concessions and 
other obligations. Like many other Members, Turkey had  no choice b ut to react to these 
unilateral  safeguard measures, as the United States had left without any response  Turkey's request 
of 20 April 2018, under Article 12.3 of the Safeguards Agreement, to engage in consultations to 
achieve precisely the goals set out in Article  8.1 of the Safeg uards Agreement . Equally important, 
when imposing its measures on steel and aluminium, the United  States had made no attempt, under 
Article 8.1 of the Safeguards Agreement, to maintain a balance of equivalent concessions and WTO 
obligations. Then, in Augus t 2018, the United States had doubled the duty on imports of steel from 
Turkey and  had threatened to do the same with r espect to imports of aluminium.  There had been 
no explanation, and no explanation  had been given since then, as to why the United States felt that 
imports of steel from Turkey had  to be burdened with double the duties imposed on other WTO 
Members. In any event, whatever the rationale behind the US discriminatory treatment of Turkey, 
Turkey was fully entitled under Article 8 of the Agreement  on Safeguards, to withdraw equivalent 
concessions.  And this was all that Turkey had done, nothing more and nothing less.  And once the 
United States had chose n to escalate its duties on Turkey, Turkey had been, once again , fully entitled 
to withdraw equiva lent concessions. And this was the reason why the current situation was before 
Members  at the present meeting . Turkey wished to s tep back from the narrow confines of this dispute  
and express i ts sincere hope that this  dispute could be resolved by a mutuall y agreeable solution in 
line with multilateral rules, without pro ceeding to a WTO panel process.  However,  this amicable 
resolution could only be achieved if the very root and the broader context of DS561 were addressed , 
namely,  the unilateral US import res trictions on steel and aluminium. Turkey stood  ready to engage 
in meaningful and constructive discussions with the United States  on how this could be achieved.  
Turkey was ready to do so as a long -standing WTO Member that was deeply committed to its WTO 
obligations and to the multilateral trading system at large. For these reasons, Turkey considered the 
US panel request to be premature.  Therefore, Turkey could not , at the present meeting , agree to 
the establishment of a panel.  
1.4.  The representative of the European Union  said that t he DSB , in its meetings towards the end 
of 2018 , had considered five similar panel requests of the United States against other WTO Members 
that had suspended equivalent GATT  obligations in response to the  undeclared safeguard measures 
which the U nited States had taken to protect its steel and aluminium industries against imports. The 
EU had made a  detail ed statement  at the 21 November 2018 DSB meeting in relation to the US  panel 
request relating to the EU. His delegation  wished to welcome the fact that Turkey likewise  had 
resorted to its right to suspend equivalent o bligations vis -à-vis the United  States. The EU looked 
forward to defending the rules -based multilateral tradin g system and the right of itself and other WT/DSB/M/424  
 
- 3 - 
 
  WTO Members to suspend equivalent obligations. The United States remained wrong in suggesting 
that actions of the EU had undermine d this Organization, that its actions were blatantly in breach of 
WTO rules and tha t the EU was undermining the dispute settlement system. In reality, his delegation 
was standing up to the abuse of Article XXI of the GATT 1994  by the United States. The EU firmly 
believe d that the US measures were safeguards, in no event covered by Articl e XXI of the 
GATT  1994, and that other WTO Members had the right to suspend equivalent GATT  obligations.  
1.5.  The DSB took note  of the statements and agree d to revert to this matter.  
2  BRAZIL – CERTAIN MEA SURES CONCERNING TAX ATION AND CHARGES  
A. Report  of the Appellate Body (WT/DS472/AB/R and WT/DS472/AB/R/A dd.1) and 
Report of the Panel  (WT/DS472/R; WT/DS472/R/A dd.1 and WT/DS472/R/C orr.1) 
B. Report  of the Appellate Body (WT/DS497/AB/R and WT/DS497/AB/R/A dd.1) and 
Report of the Panel  (WT/DS497/R; WT/DS49 7/R/A dd.1 and WT/DS497/R/C orr.1) 
2.1.  The Chairperson  propose d that the two sub -items under Agenda item  3 concerning the 
Appellate Body Reports and the Panel Reports in the respective disputes on "Brazil – Taxation"  
(DS472 ) and "Brazil – Taxation (Japan) " (DS497 ) be taken up together.  She drew attention to the 
communication from the Appellate Body contained in document WT/DS472/12 – WT/DS497/10 
transmitting the Appellate Body Reports on: "Brazil – Certain Measures Concerning Taxation and 
Charges", which  had been circulated on 13 December 2018 in documents WT/DS472/AB/R and Add.1 
– WT/DS497/AB/R and Add.1. She then wished to remind delegations that the Appellate Body 
Reports and the Panel Reports pertaining to these disputes had been circulated as unrestricted  
documents.  As Members were aware, Article 17.14 of the DSU required that: "[a]n Appellate Body 
report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless 
the DSB decides by consensus not to adopt the Appellate Bod y report within 30  days following its 
circulation to the Members. This adoption procedure  is without prejudice to the right of Members to 
express their views on an Appellate Body report".  
2.2.  The representative of Brazil  said that his country  wished to  thank the Panel, the Appellate Body 
and the WTO Secretariat for their work in these disputes.  Brazil was pleased that the Appellate Body 
had reversed a number of legal errors committed by the Panel. Brazil also welcome d a number of 
important systemic clarifications contained in the Appellate Body Reports that were being adopted 
by the DSB at the present meeting . However, Brazil wished to address, in its statement  under this 
Agenda item , one particular aspect of the Appel late Body Report that raised serious concerns for 
Brazil – one which Brazil believe d should be carefully considered by the Membership as a whole.  
First, Brazil welcomed the Appellate Body's reversal of the Panel's erroneous findings that the 
so-called "PEC " and "RECAP " program mes provide d subsidies in the form of government revenue 
otherwise due that was foregone or not collected under Article 1.1( a)(1)(ii) of the SCM Agreement.  
The Panel's selection of the incorrect benchmark for comparison had created a s ubsidy where none 
had existed. It had also converted a tax administration measure, of broad application, into a 
prohibited export subsidy under Article 3.1(a) of the SCM Agreement. Brazil welcomed , in particular, 
the Appellate Body's finding that the Panel had erred in seeking to ascertain the existence of a 
general rule of taxation for all those enterprises that structurally accumulate d tax credits in Brazil. 
As the Appellate Body had correctly no ted, at the second st age of its analysis, panels were required 
to identify the tax treatment of comparably situated taxpayers, taking into account the Member's 
tax regime and its organizing principles.  The Panel's failure to do so in these disputes, theref ore, 
had constituted a reversible legal error. Brazil appreciated this decision by the Appellate Body.  
Second, Brazil also welcomed the Appellate Body's finding that – with the exception of the limited 
occurrence of so -called "nested  Basic Productive Proce sses (PPBs) " – production requirements, or 
other requisites aimed at defining the class of eligible Brazilian producers under the subsidy 
program mes at issue, did not entail a condition requiring the use of domestic over imported goods 
within the meaning o f Article 3.1(b) of the SCM Agreement.  Third, Brazil welcome d the Appellate 
Body's reversal of the Panel's broad finding that any "aspects of a subsidy resulting in product 
discrimination" were not covered by Arti cle III:8(b) of the GATT 1994. Such finding , if allowed to 
stand, would have d eprive d Article III:8(b) of any meaning, insofar as subsidies would almost always 
impact conditions of competition between the subsidized domestic product and the like imported 
product in the marketplace.  Brazil , therefor e, welcomed the Appellate Body's finding that both : 
(i) the effects of subsidies on competitive conditions in the marketplace ; and (ii) the conditions for WT/DSB/M/424  
 
- 4 - 
 
  eligibility that define d the class of domestic producers, by referencing them to their activities in the 
subsidized products' markets, could be justified under Article III:8(b) of the GATT  1994.  
2.3.  Brazil considered that the Appellate Body's findings had made some progress toward gi ving 
meaning to Article III:8(b) of the GATT 1994. Brazil was deeply concerned, nonetheless, with on e 
aspect of the Appellate Body R eports in these disputes.  Brazil was particularly troubled by the 
majority reading of the terms "payment of subsidies" in Ar ticle III:8(b). It encompassed , apparently, 
only those subsidies that involve d the "expenditure of revenue" by a government understood in its 
narrowest possible meaning . By opting to remain dogmatically attached to a decades -old GATT  
decision to this effec t – and failing to appreciate the context provided by the SCM Agreement – the 
majority in the Appellate Body d ivision had established arbitrary distinctions among categories of 
subsidies without any interpretative basis in the covered agreements.  As Member s would recall , 
Article III:8(b) of the GATT 1994 provide d that Article III – the national treatment obligation – "shall 
not prevent the payment of subsidies exclusively to domestic producers".  The separate opinion of 
one Member of the Division articulated with great clarity, and on solid legal grounds, what Brazil 
believe d was the proper interpretation of Article III:8(b ). Brazil would  not quote the separate opinion  
at length  at the present meeting  but strongly recommend ed its careful study by W TO Members.1 
What Brazil  wished  to do in its statement at the present meeting was  to draw Members' attention to 
the consequences of what appear ed to be the majority's interpretation.  Brazil believed that t his 
interpretation severely undermined , inconsistently with Article 3.2 of the DSU, the balance of rights 
and obligations enshrined in the subsidy disciplines of the WTO agreements.  Article III of the GATT 
1994 was understood broadly to mean that any internal measure capable of affecting  the con ditions 
of competition between domestic and like imported products to the detriment of the latter was, in 
principle, a violation of the national treatment obligation. This was a well -established interpretation.  
It was clear that subsidies granted exclusive ly to domestic producers would  have, by definition, 
directly or indirectly  affect ed conditions of competition in favo ur of domestic products. The Appellate 
Body Division had confirmed this view in its Reports.  It stated that : "[s]ubsidies provided to domestic 
producers will often, if not always, have an impact on the conditions of competition between the 
product produced by the subsidized domestic producers … and the like imported product produced 
by foreign producers that are  not paid the subsidy".2 Showing that conditions of competition under 
Article III of the GATT 1994 had been affected was a rather simple test. It was not nearly as 
demanding as the demonstration, for example, of "serious prejudice" under Part III of the SC M 
Agreement. In order to demonstrate that a measure affected the conditions of competition, there 
was virtually no threshold. In fact, actual trade effects "do not have to be demonstrated for a 
measure to be found to be inconsistent with Article III".3 Any modification of conditions of 
competition, however minimal, sufficed to violate the national treatment discipline.  It was for no 
other reason that Article III:8(b) had been added to the GATT 1994.  As noted by the Appellate Body 
Division itself, "[in] the absence of Article III:8(b), [subsidies] paid exclusively to domestic producers 
could therefore be seen as being inconsistent with the broadly worded national treatment obligation  
in Article III insofar as they alter the conditions of competition in favour  of the product produced by 
the domestic producer to whom the subsidy is paid".4 Article III:8(b) clearly stated , therefore, that 
the national treatment obligation "shall not prevent the payment of subsidies exclusively to domestic 
producers".  Such subsidies, of course, while not subject to the national treatment obligation, were 
still subject to the disciplines of the SCM Agreement.  
2.4.  Brazil had argued, in its appeal, that Article III:8(b) of the GATT 1994 made no distinction as 
to what types of subsidies  were covered by the exception. Brazil had argued, in particular, that 
subsidies in the form of " revenue  foregone" should not additionally be subject to the national 
treatment obligation.  This was only natural because, as the Appellate Body itself  had recognized, 
"tax regimes may be used to achieve outcomes equivalent to the results that are achieved where a 
government provides a direct payment. This explains why the [SCM] Agreement includes the 
foregoing of government revenue otherwise due among t he measures that constitute financial 
contributions under Article 1.1(a)(1)".5 The majority  of the Appellate Body d ivision in these disputes, 
however,  had restricted the coverage of Article III:8(b) in two ways.  First, it  had asserted that Article 
III:8(b)  "was intended to exempt from the obligations of Article III only the payment of subsidies 
                                                
1 Appellate Body Reports, paras. 5.125 -5.138.  
2 Appellate Body Reports, para. 5.93.  
3 Appellate Body Report, "Canada – Periodicals" (DS31), p. 18; see also Appellate Body Report, 
"Japan  – Alcoholic Beverages II" (DS8, DS10, DS11), p. 16.  
4 Appellate Body Reports, para. 5.93.  
5 Appellate Body Report, "US – Large Civil Aircraft (2nd complaint)" (DS353), para. 811.  WT/DSB/M/424  
 
- 5 - 
 
  which involves the expenditure of revenue by a government".6 Second, it  had stated that Article 
III:8(b) "does not include within its scope the exemption or reduction of internal taxes affecting the 
conditions of competition between like products".7 These two statements  appear ed to be  out of 
balance with the remainder of the Appe llate Body's  analysis of Article III:8(b). If those statements 
were read narrowly, together with other sections of the reports , they would lead to results that, 
Brazil believe d, the Appellate Body cou ld not possibly have intended . The consequences of these  
findings would be drastic. Their inescapable logic could be summarized in three steps . First, s ubsidies 
paid exclusively to domestic producers were "inconsistent with the broadly worded national 
treatment obligation in Article III" of the GATT 1994 insofar as they alter – as they inevitably do - 
the conditions of competition in favo ur of the domestic product.  Second, Article III:8(b) "was 
intended to exempt from the obligations of Article III only the payment of subsidies which involves 
the expenditu re of revenue by a government", and "does not include within its scope the exemption 
or reduction of internal taxes affecting the conditions of competition between like products".  Third, 
and a s a result  of the previous findings , entire categories of subsid ies, which under the SCM 
Agreement m ight not be prohibited, actionable or even specific, would be considered to be prohibited 
because they were inconsistent with the national treatment obligation and were not covered by 
Article III:8(b).  
2.5.  Brazil stated  that under what seemed to be the Appellate Body's majority's narrow 
interpretation of Article III:8(b), subsidies  given exclusively to domestic producers not in the form 
of "expenditure of revenue" – but say in the form of credit guarantees, provision of goods  or services, 
as well as revenue foregone – would all be illegal, as long as they could be shown to affect – as they 
had – the conditions of competition between domestic and imported products and, thereby, to violate 
the national treatment obligation.  Brazil wished to mention a few examples t o put the consequences 
of this interpretation of Article III:8(b) in perspective . First, the subsidies at issue in the "US – Tax 
Incentives " dispute  (DS487) , which the Appellate Body had found not to be prohibited  under Article 
3.1(b) of the SCM Agreement, would obviously  be prohibited under  Article III of the GATT 1994 as 
they could not have been justified under Article III:8(b).8 Second, scores of measures routinely 
notified by WTO Members as subsidies in the for m of revenue foregone would likewise be prohibited 
by Article III of the GATT 1994 as they could not be justified under Article III:8(b).9 Third, Brazil  
wished to  refer to a study entitled "OECD Review of National Research and Development (R&D) Tax 
Incenti ves and Estimates of R&D Tax Subsidy Rates , 2017".10 According to this study, "[as] of 2017, 
30 of the 35 OECD countries, 21 of 28 EU countries and a number of non -OECD economies provide 
tax relief on R&D expenditures".11 The study noted , for instance, that "[over] the last decade, many 
countries have tried to increase the availability, simplicity of use and generosity of R&D tax 
incentives".  In this context, the study pointed out that "Japan complemented its R&D tax credit 
regime with a new special tax credi t for collaborative R&D".12 The study also documented that, in 
2017, R&D tax credit and allowance rates  had increased in Japan and Poland.13 In case of small and 
medium enterprises, the "generosity of R&D tax support", as defined in the study, was highest fo r 
France, Portugal and Chile in profit -making scenarios, and for the Netherlands and Portugal in loss -
making scenarios.  Large firms, in turn, "receive the [highest] tax subsidy rate in Portugal and 
Spain".14 It should not be difficult to show that these tax  incentives affect ed conditions of competition 
in favo ur of domestic producers and thus violate d, in principle, the national treatment obligation.  
According to the majority's view, however, these tax incentives could not be justified under Article 
III:8(b) . As a last example, Brazil wished to refer to  domestic subsidies on agricultural products that 
did not involve the "expenditure of revenue" as narrowly interpreted by the majority of the Appellate 
Body Division . They surely did affect the conditions of co mpetition in national markets in  favour of 
domestic products.  Brazil asked whether  the Membership should understand that, even if those 
subsidies were fully consistent with the SCM Agreement and the Agreement on Agriculture, they 
                                                
6 Appellate Body Reports, paras. 5.122 and 5.124.  
7 Appellate Body Reports, paras. 5.122 and 5.124 (underlining added).  
8 See, for example, Appellate Body Report, "US – Tax Incentives" (DS487), para. 5.76 ("a subsidy 
requiring the siting of certain production activities in a Member's domestic territory can ordinarily be expected 
to increase th e supply of the subsidized domestic goods in the relevant market, which would have the 
consequence of increasing the use of these subsidized domestic goods in downstream production and adversely 
affecting imports").  
9 See, for example, items 14.29, 16.8, 1 6.12 and 16.14 of document G/SCM/N/315/CAN.  
10 Version dated 18 April 2018, available at http://www.oecd.org/sti/rd -tax-stats-design -subsidy.pdf.  
11 'OECD Review of National R&D Tax Incentives and Estimates of R&D Tax Subsidy Rates', 2017, p.5 and 
p.7, Table  1. 
12 "OECD Review of National R&D Tax Incentives and Estimates of R&D Tax Subsidy Rates, 2017", p.20.  
13 "OECD Review of National R&D Tax Incentives and Estimates of R&D Tax Subsidy Rates, 2017", p.22.  
14 "OECD Review of National R&D Tax Incentives and Esti mates of R&D Tax Subsidy Rates, 2017", p.26.  WT/DSB/M/424  
 
- 6 - 
 
  were prohibited by Article  III of the GATT 1994 because they violate d the national treatment 
obligation and were not capable of being justified under Article III:8(b) . 
2.6.  Brazil said that t heoretically, under what seemed to be the majority's reading, there would 
appear to be two ways for WTO Members to use all such subsidies without conflicting with the 
national treatment obligation . One would be to design them so that, even if granted exclusively to 
domestic producers, they would not affect conditions of competition in favour of domes tic products.  
This seemed to be impossible, given the Appellate Body's own and correct recognition that 
"[s]ubsidies provided to domestic producers will often, if not always, have an impact on the 
conditions of competition between the product produced by t he subsidized domestic producers … 
and the like imported product produced by foreign producers that are not paid the subsidy".15 The 
other way would be to extend the subsidies to foreign producers alike.  This, however, would entail 
an obligation that WTO Me mbers certainly had not intend ed to undertake . Brazil fully concur red with 
the opinion of the dissenting Member of the Division that the majority's interpretation "would 
undermine, inconsistently with Article 3.2 of the DSU as well as the fundamental principle of 
effectiveness in treaty interpretation, the careful balance of rights and obligations  under the SCM 
Agreement with respect to an entire category of measures that are expressly included within the 
definition of a subsidy in Article  1.1, namely, the foregoing of G overnment revenue that is otherwise 
due".16 Brazil  believed that  the Appellate Bo dy could not possibly have intended to undermine that 
balance.  It could not possibly have meant that subsidies in the form of revenue foregone – or any 
subsidy that d id not involve a cash payment, for that matter – which affect ed conditions of 
competition in favo ur of domestic products, could never be justified under Article III:8(b) of the 
GATT 1994.  Brazil , therefore , hoped that the majority's interpretation was understood in a manner 
that avoid ed the dire systemic consequences , which could otherwise enta il. 
2.7.  The representative of the European Union  said th at his delegation wished  to thank the Appellate 
Body, the Panel and their respective Secretariats for their hard work in this dispute. The EU 
welcomed the overall outcome of th is dispute. The rulings of the Panel and  of the Appellate Body 
vindicate d most of the claims advanced by the EU with respect to Brazil 's taxation measures. In 
particular, the Appellate Body had confirmed that the tax programmes put in place by Brazil 
discrim inated against EU automotive and information and communication technology (ICT) 
intermediate and final products. This confirm ed again that local content requirements that favour ed 
the use or sale of domestic goods over imported goods were illegal under WTO  law. The EU took 
note of the reversal of the findings of the Panel regarding the PEC and RECAP  programmes . The EU 
accepted the Appellate Body Report unconditionally. The EU wished to underline that the 
identification of a benchmark for comparison for fiscal schemes was a particularly challenging task. 
The EU believed  that the Panel 's discussion around the existence of a general rule of taxation for 
credit accumulating companies was not tantamount to an analysis of a general rule and exception 
relationship. The Panel had done nothing more than  define a benchmark for comparison that had 
entailed identifying the tax treatment of comparably situated tax payers on the basis of the structu re 
and organ izing principles of Brazil 's tax system and its own rules of taxation concerning the tax 
credit and debit mechanism. As the Appellate Body itself  had indicated, the challenged treatment 
had to  be compared to an objectively identifiable benchmar k. The mere fact that other companies 
in other sectors m ight have receive d similar tax benefits (i.e. , the existence of other subsidy 
programmes) could not constitute an objectively identifiable benchmark, unless those benefits 
responded to the tax system 's structure and organiz ing principles, as Brazil  had tried to argue in the 
present case without convincing the Panel. A benchmark which was not ba sed on the structure and 
organiz ing principles of a Member 's tax system and its tax rules, but on the mere exi stence of a 
plurality of similar tax programmes, would end up being circular and meaningless. The EU expected 
that Brazil would promptly comply with all  of the DSB's recommendations and rulings  in this dispute , 
and in particular by withdrawing the prohibited subsidies without delay.  
2.8.  The representative of Japan  said that her country wished to express its appreciation for the 
time and effort devoted to this case by the Panel, the Appellate Body and the respective Secretariats. 
Japan welcomed the findi ngs and rulings by the Appellate Body and the Panel as modified by the 
Appellate Body that certain measures concerning taxation and charges by Brazil were in breach of 
its obligations under the GATT 1994 and the SCM Agreement. Japan requested the adoption of the 
Reports at the present meeting. The measures at issue concern ed several Brazilian tax incentive 
programmes for the automotive sector, the information and communication technology (ICT) sector, 
                                                
15 Appellate Body Reports, para. 5.93.  
16 Appellate Body Reports, para. 5.137.  WT/DSB/M/424  
 
- 7 - 
 
  and exporting companies. In particular, the Panel and th e Appellate Body clearly had ruled that all 
of the tax incentive programmes for the automotive sector and ICT products at issue provide d 
incentives to use domestic over imported goods and were thus inconsistent with the national 
treatment obligation under Article III of the GATT 1994. The Panel had carefully reviewed all the 
complexities of Brazil's tax system, and had correctly found th e challenged measures to be 
WTO-inconsistent. Japan highly appreciated that the Appellate Body had upheld the Panel's key 
findings and recommended that the DSB request Brazil to bring its WTO -inconsistent measures into 
conformity with its obligations under the GATT 1994 and the TRIMs Agreement. Japan believe d that 
these findings would provide a definitive resolution of this dispute, and consequently would clarify 
that protectionist market -distorting measures, such as the above -mentioned measures, were not 
permissible under the WTO Agreement.  Having said that, Japan had concerns about  certain findings 
in the Appellate Body Report regarding the tax suspension program me applied to certain exporting 
companies . More specifically, Japan had concern s about  the identification of the benchmark for 
comparison related to financial contributions. Ja pan understood from Brazil's statement that the tax 
suspensions at issue had been introduced to "avoid the structural  accumulation of indirect taxes ".17 
However, Brazil, who was in the best position to explain the structure and organizing principles of 
its own domestic tax regime, had failed to demonstrate how the tax suspensions had been  structured 
and organized to tackle the problem of structural credit accumulation. That was why the Panel had 
concluded that "Brazil has not demonstrated that the tax suspen sions are the benchmark treatment 
for structurally credit -accumulating companies" .18 Nevertheless, the Appellate Body had reversed 
the Panel's conclusion . The Appellate Body had noted that the Panel should have  examined in detail 
the treatment of the catego ries of companies entitled to tax suspension s. Presumably , the Panel had 
acced ed to Brazil's factual assertion that the tax suspensions for credit -accumulating companies 
were the organizing principle of its tax structure.  The Appellate Body had observed that "a Member 
will be held to account for the tax structure  and pr inciples that it itself employs ".19 It was obvious 
that Brazil, and not Japan or the EU, was in the best position, and indeed was required, to explain 
in detail and substantiate the  structure and operation of its tax programme, including the tax 
suspension s. Nevertheless, the Appellate Body had reversed the Panel's conclusion due to a seeming 
deficiency in the Panel's approach including its alleged failure to identify the benchmark o n its own ,20 
the consequence of which had to be borne by all parties. She said that Japan trusted that the 
Appellate Body's finding by no means indicated an alteration in the allocation of the burden of proof 
with regard to the tax structure and principles of each Member. Japan wished to add that the 
demonstrat ion of the non -existence of Brazil's  merely asserted and unsubstantiated tax structure 
and organiz ing principles would have been an impossible task for any Member but Brazil  (let alone 
for the EU and Japan ). Finally, Japan wished  to note that the dispute settlement proceedings in this 
dispute had lasted a long time.  Three and a half years had passed s ince Japan had requested 
consultations with Brazil under the DSU back in July 2015. After years of litigation, the Panel Report 
and Appellate Body Report in this dispute were finally on the Agenda of the DSB meeting . Japan 
hoped that this could be the end of the dispute settlement proceedings in this dispute. Japan urged 
Brazil to fully and promptly implement the DSB's recommendations and rulings without introducing 
any new measure which would undermine its implementation. In this regard, Japan emphasized that 
Article  21 of the DSU provided that: "[p]rompt compliance with the recommendations and rulings of 
the DSB is essential in order to ensure effective resolution of disputes" , and that this same Article 
direct ed the Members to "comply immediately with the  [DSB's] recommendations and rulings". 
Japan stood ready to engage in a dialogue with Brazil in a constructive manner in the weeks  that 
would follow the present meeting , with a view to achieving prompt and full compliance by Brazil for 
the positive resolution of this dispute.  
2.9.  The representative of the European Union  said that r egarding the duration of the proceedings 
in this dispute, his delegation  would also have liked for the proceedings to have been concluded 
sooner. Given their economic impact, the EU indeed had a strong interest in a swift removal of the 
measures at issue. However, with respect specifically to the duration of the Appellate Body 
proceedings, in the f ace of the objective reasons underpinning such duration, the EU wished to  thank 
the AB Division and the AB S ecretariat for their hard work. The EU wished to refer to paragraph 1.23 
of the Appellate Body Report where these reasons were explained, a prominen t reason being of 
course the reduced number of the Appellate Body members.  
                                                
17 Brazil Appellant Submission, paras. 312 -316; Panel Reports, para. 7.1158.  
18 Appellate Body Report, para. 5.172 (citing Panel Reports, para. 7.1171).  
19 Appellate Body Report, "US – Large Civil Aircraft (2nd complaint)" (DS353), para. 813.  
20 Appellate Body Report, para. 5.171.  WT/DSB/M/424  
 
- 8 - 
 
  2.10.   The DSB took note  of the statements  and adopt ed the Appellate Body Report contained in 
WT/DS472/AB/R and Add.1, and the Panel Report contained in WT/DS472/R and Add.1 and Corr.1, 
as modified by the Appellate Body Report; and the DSB adopted  the App ellate Body Report contained  
in WT/DS497/AB/R and Add.1 and the Panel Report contained in WT/DS497/R and Add.1 and Corr.1, 
as modified by the Appellate Body Report.  
3  UNITED STATES – MEAS URES CONCERNING THE IMPORTATION, MARKETI NG AND SALE 
OF TUNA AND TUNA PRO DUCTS: RECOURSE TO A RTICLE 21.5 OF THE D SU BY THE UNITE D 
STATES   
A. Report  of the Panel (WT/DS381/RW/USA and WT/DS381/RW/USA/Add.1)  
and the report contained in WT/DS381/AB/RW/USA and WT/DS381/AB/RW/USA/ Add.1  
3.1.  The Chairperson  drew attention to the communication from the Appellate Body contained in 
document WT/DS381/48 transmitting the Appellate Body Report in the dispute: "United States – 
Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products: Recourse t o 
Article 21.5 of the DSU by the United States", which had been circulated on 14  December 2018 in 
documen t WT/DS381AB/RW/USA and Add.1. She remind ed delegations that the Appellate Body 
Report and the Panel Report pertaining to this dispute had been circula ted as unrestricted 
documents.  As Members were aware, Article  17.14 of the DSU require d that: " [a]n Appellate Body 
report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless 
the DSB decides by consensus not to adop t the Appellate Body report within 30  days following its 
circulation to Members. This adoption procedure is without prejudice to the right of Members to 
express their views on an Appellate Body report".  
3.2.  The representative  of the United States  said, by way of introduction , that the United States 
thank ed the members of the compliance Panels, the Appellate Body,21 and the Secretariat  assisting 
them for their work on these proceedings. A decade ago, in 2008, Mexico, once again, had challenged 
the US measure esta blishing the conditions under which producers could  choose to market tuna 
products as "dolphin safe". Mexico had challenged this measure because it had not permitted tuna 
product harvested by "setting on dolphins" to be marketed as dolphin safe. Setting on dolphins 
meant intentionally chasing, encircling, and deploying purse seine nets on dolphins in order to catch 
tuna swimming beneath them. For the past ten years, the United States had been trying to establish 
that the dolphin safe labelling measure was not discriminatory but was a legitimate environmental 
measure concerned with the protection of dolphins  and, as such, was consistent with US WTO 
obligations. The adoption at the present meeting of these reports marked – at last – the success of 
that endeavour and br ought  this long -running dispute to a close. Both of t hese reports agreed that 
the US dolphin safe labelling measure was consistent with Article 2.1 of the TBT Agreement22 and, 
similar to the findings of the GATT 1947 panel,23 was not inconsistent with the GATT 1994.24 The 
United States welcomed this conclusion and supported the adoption of these reports. In particular, 
the United States commended the compliance Panels for their detailed and comprehensive review 
and analysis of the  factual record before them . The Panels had reviewed and analysed scores of 
pages of argumentation and hundreds of exhibits on the risk profile for dolphins of different tuna 
fishing methods and fisheries. On the basis of this review, the Pa nels had made detailed findings 
concerning possible metrics for assessing the risk to dolphins posed by different fishing methods in 
different fisheries,25 the nature and extent of the risks to dolphins posed by each of the fishing 
methods used to catch tun a generally and in each of the specific fisheries for which there had been 
evidence on the record,26 and numerous other issues relevant to the analysis of the measure at 
issue.27 This thorough and painstaking factual analysis by the Panels had been the basis  for their 
correct factual and legal conclusions concerning the dolphin safe labelling measure and for the 
Appellate Body's upholding all the Panels' findings.  Although the United States agreed with and 
welcomed the conclusion of these reports that the US dolphin safe labelling measure had been 
consistent with US WTO obligations, the United States was disappointed that it had taken more than 
a decade to resolve this matter. In the course of this dispute, the Appellate Body had developed 
                                                
21 For ease of reference, in this statement the term "Appellate Body" is utilized without prejudice to the 
adoption procedure applied by the DSB to any particular appellate report.  
22 Agreement on Technical Barriers to Trade ("TBT Agreement").  
23 "US – Tuna" ( Mexico) (GATT) ( DS21/R - 39S/155 ), paras. 5.43-44. 
24 General Agreement on Tariffs and Trade 1994 (GATT 1994).  
25 See, e.g., "US – Tuna II" (Article 21.5 – Mexico) (Panel), paras. 7.171 -243. 
26 See, e.g., "US – Tuna II" (Article 21.5 – Mexico) (Panel), paras.  7.244 -525. 
27 See, e.g., "US – Tuna II" (Article 21.5 – Mexico) (Panel), paras. 7.578 -599, 7.636 -648, 7.654 -670.  WT/DSB/M/424  
 
- 9 - 
 
  increasingly demandi ng legal standards under Article 2.1 of the TBT Agreement and Articles I:1 and 
III:4 of the GATT 1994. These legal standards had not been based on the text of the relevant 
provisions, and negotiators had not agreed to them. In this dispute, the United Stat es had been 
forced to expend considerable resources over nearly a decade trying to defend successfully what 
had always been an environmental measure with no element of protectionism.  Frankly, it was 
unclear how many other Members would have been  able to in vest such resources. Other Members 
faced with similar multiple, protracted dispute settlement proceedings might be forced to abandon 
their legitimate objective and withdraw their measures rather than face suspension of concessions 
by another Member. Indeed , under the standard the Appellate Body had developed, it seemed likely 
that only Members with significant resources to devote to the effort would be able to defend 
legitimate public policy measures that had any effect on trade.  At previous DSB meetings ad dressing 
this dispute and others, the United States had expressed concerns with the Appellate Body's 
interpretations of the non -discrimination provisions of the TBT Agreement and the GATT 1994.28 
While welcoming the ultimate outcome in this dispute, the Uni ted States highlight ed the real cost to 
Members  of these incorrect interpretations that narrowed the policy space afforded to Members and 
increased the likelihood of protracted litigation over non -discriminatory public policy measures.  
3.3.  With regard to the evolving legal standards in this dispute and US efforts to meet them , the 
United States said that  in this dispute, the United States  had faced evolving and increasingly 
demanding legal standards under Article 2.1 of the TBT Agreement29 and Articles I:1, III:4, and XX 
of the GATT 1994.  The original panel  had found that the original dolphin safe labelling  meas ure had 
been consistent with Article  2.1 because it had not reflected  origin -based discrimination.  The 
Appellate Body had reversed the panel and articulated a more demanding legal standard under which 
origin -based discrimination was irrelevant.  In the compliance proceeding, the Appellate Body had 
raised the legal standard still further, requiring the United States to prove not only th at the measure 
had not discriminate d but that it never could have in a possible hypothetical scenario.  Thus, the 
standard the Appellate Body had articulated was concerned not with origin -based discrimination but 
with the precision of the fit between the me asure 's effects (actual or hyp othetical) and its objectives.  
While expressing concerns with the legal standards the Appellate Body had been developing, the 
United States had repeatedly tried to meet those standards by amending the measure.  The 
development of this dispute, however, strongly suggested that many legitimate public policy 
measures could be found to be WTO -inconsistent, even for reasons unrelated to the trade issue 
presented, and few Members would be in a position to successfully defend those mea sures.  
3.4.  The United States said that, i n the original proceeding, Mexico had challenged the US dolphin 
safe labelling measure, as set out in the Dolphin Protection Consumer Information Act ("DPCIA"), 
its implementing regulations, and a related court decisio n.30 The measure provided that, since 
setting on tuna was inherently harmful to dolphins, tuna caught by setting on dolphins could not be 
labelled as "dolphin safe" in the US market. As challenged by Mexico, the measure did not distinguish  
tuna products based on origin: the ineligibility of tuna caught by setting on dolphins and the potential 
eligibility of tuna produced by other fishing methods was the same  regardless of whether the tuna 
was produced by Mexico, the United States, or any ot her Member.31 Nevertheless, Mexico had 
argued that the measure was inconsistent with Article 2.1 of the TBT Agreement because it de facto 
accorded "less favourable" treatment to Mexican tuna products than to the like products of other 
Members because of the  manner in which Mexican producers chose to source tuna. The original 
panel had found that the measure was consistent with Article 2.1 be cause it did not reflect 
origin -based discrimination. Under the measure, the Mexican tuna industry faced the same optio ns 
as other tuna industries: it could produce dolphin safe tuna by obt aining tuna from Mexican or 
non-Mexican vessels that fished without  setting on dolphins, or it could produce tuna caught by 
setting on dolphins in the Eastern Tropical Pacific, or ETP, a nd market it without a dolphin safe 
label.32 The fact that the Mexican industry generally produced tuna ineligible for the label, and some 
other industries produced tuna that did qualify, did not mean that the measure itself accorded less 
                                                
28 See, e.g., US DSB Statement, 13 July 2012 ( https://geneva.usmission.gov/2012/06/14/statement -by-
the-united -states -at-the-june-13-2012-dsb-meeting/ ); US DSB Statement, 3 December 2015 
(https://geneva.usmission.gov/wp -content/uploads/sites/290/Dec3.DSB_.Stmt_.as -delivered.Publi c.pdf).  
29 The United States would not cover in this intervention the US  view that the dolphin safe label was a 
"standard", and not a "technical regulation" since it was a voluntary label. See "US – Tuna II"  (Mexico), US 
appellant submission, paras. 24 -73. 
30 "US – Tuna II" (Mexico), para. 2.  
31 "US – Tuna II" (Mexico) (Panel), para. 7.280.  
32 "US – Tuna II" (Mexico) (Panel), paras. 7.304 -311. WT/DSB/M/424  
 
- 10 - 
 
  favourable treatme nt to Mexican products.33 The United States note d that, when the legislation was 
enacted, Mexican and US tuna producers had been in the same situation: both sourced tuna from 
the ETP, and both sourced from fleets that set on dolphins.34 Subsequently, produce rs from the 
United States and other Members had chosen to adapt their practices to meet the conditions for the 
label. Producers from Mexico could also have made this choice  by modifying their fishing or 
purchasing practices, but they had elected not to. Th us, any adverse effects on Mexican tuna 
products that had developed in the years since the legislation was passed had been  simply the result 
of different business choices made by the Mexican industry and other industries and not a result of 
discrimination by the US measure.35 
3.5.  The Appellate Body had reversed the panel and had found that the measure was inconsistent 
with Article 2.1  of the TBT Agreement . The Appellate Body had found that the mere fact that Mexican 
products generally did not qualify for the lab el while other Members ' products  qualified meant that 
the measure had an "adverse impact on [the] competitive opportunities " of Mexican tuna products.36 
Citing a previous appellate report , the Appellate Body had then analysed  whether the detrimental 
impact on Mexican products "stems exclus ively from a legitimate  regulatory distinction rather than 
reflecting  discrimination  against the  group of imported  products ".37 It had placed the burden of proof 
on the United States to show that the measure was not discriminatory.38 Applying this standard, the 
Appellate Body had reviewed whether the US measure was properly "calibrated " to reflect risks to 
dolphins resulting from different  fishing conditions and environmental factors across the world 's 
oceans. The Appellate Body  had noted the panel findings that setting on dolphins was a "particularly 
harmful " fishing method for dolphins and had found that the US measure addressed these adverse 
effects.39 It had then found, however, that the measure had not sufficiently address ed risks to 
dolphins posed by other fishing methods.40 It had explained that these risks "could only be monitored 
by imposing " on tuna caught  by other fishing methods the requirement "that no dolphins  were killed 
or seriously  injured in the sets in which  the tuna was caught ".41 On this basis, the Appellate Body  
had found that the United States had not shown  that the different labelling  conditions of the measure 
were "even-handed in the relevant respects, even  accepting  that the fishing  techn ique of setting  on 
dolph ins is particularly  harmful to dolphins ".42 As the United States had explained at the time, the 
Appellate Body 's analysis had significantly reduced the complainant 's burden to show a measure to 
be inconsistent with Article 2.1 and, conversely, had significantly increased the burden on the 
respondent to defend a measure. For example, r ather than placing the burden on the compl ainant 
to show that the measure reflected discrimination , the Appellate Body  had required the respondent 
to demonstrate that the measure did not.43 Thus, the Appellate Body had required the United States 
to demonstrate that the measure was "calibrated " rather than requiring Mexico to demonstrate that 
the measure was discriminatory, even though the difference in treatment was not related to origin.  
3.6.  With regard to the first compliance proceeding , the United States said that nevertheless,  the 
United States  had proceeded to amend the dolphin safe labelling  measure to address the DSB 's 
recommendati ons in the original proceeding.  In July 2013, the United States had amended the 
dolphin safe labelling  measure to add the requirement that tuna labelled  dolphin safe, wh en caught 
other than by setting on dolphins, be accompanied by "a captain 's statement certifying that no 
dolphins were killed or seriously injured in the sets or other gear deployment s in which the tuna 
were caught ".44 This directly addressed the DSB 's recommendations and also reflected the original 
panel 's suggestion, endorsed by the Appellate Body, that imposing an independent observer 
certification  would not be necessary in all fisheries and that "the measure .. . itself conte mplates the  
possibili ty that only the captain provide  such a certification ".45 In the first compliance proceeding, it 
had been uncontested that the 2013 amendments to the dolphin safe labelling  measure  fully 
                                                
33 "US – Tuna II" (Mexico) (Panel), paras. 7.312 -319. 
34 "US – Tuna II" (Mexico) (Panel), paras. 7.320, 7.324.  
35 "US – Tuna II" (Mexico) (Panel), para. 7.378.  
36 "US – Tuna II"  (Mexico) (AB), paras. 234 -235. 
37 "US – Tuna II"  (Mexico) (AB), para. 215 (citing " US – Clove Cigarettes " (AB)).  
38 "US – Tuna II"  (Mexico) (AB), para. 216.  
39 "US – Tuna II"  (Mexico) (AB), para.  287. 
40 "US – Tuna II"  (Mexico) (AB), paras. 289, 292.  
41 "US – Tuna II"  (Mexico) (AB), paras. 292, 296.  
42 "US – Tuna II"  (Mexico) (AB), para. 297. 
43 See US DSB Statement, July 13, 2012.  
44 See Enhanced Document Requirements to Support Use of the Dolphin Safe Label on Tuna Products, 
78 Fed. Reg. 40,997, 40,998 (9 July 2013) (2013 Final Rule).  
45 "US – Tuna II"  (Mexico) (AB), para. 296.  WT/DSB/M/424  
 
- 11 - 
 
  addressed the concerns identified i n the panel and Appellate Body r eports in the original proceeding.  
Mexico had not even challenge d the revised aspect of the US measure.46 Both the panel and 
Appellate Body reports had acknowledged that the amendments  addressed the concern identified in 
the original proceeding and moved the measure towards compliance.47 They had also reaffirmed 
that the objectives pursued by the US measure – consumer information and protecting dolphins – 
were legitimate for  WTO purposes.  Indeed, there had been no argument that the distinctions of the 
measure r eflect ed origin -based discrimination.  Nevertheless, in the first compliance proceeding the 
Appellate Body had found that the measure discriminated under Article 2.1 based on an aspect of 
its design that had been unchanged from the original measure and had never been applied . The 
original dolphin safe labelling  measure provided that the National Oceanic and Atmospheric 
Association (NOAA) could impose observer r equirements on tuna caught : (i) in a purse seine fishery 
outside the ETP with a comparable tuna -dolphin association ; or (ii) in a non -purse seine fishery with 
regular and significant dolphin mortality or serious injury.48 Mexico had advanced no argumentation 
concerning these provisions in the original proceeding, and they had not been discussed in the pa nel 
or Appellate Body reports. The 2013 rule amending the measure had made no change to these 
provisions. At the time of the first compliance proceeding, NOAA had never made a determination 
under either provision. The Appellate Body had nevertheless upheld  the panel, basing its findings on 
those provisions, even though Mexico could have pursued a claim against these provisions, but had 
chose n not to, in the original proceeding.  This was problematic enough on procedural grounds . But 
the Appellate Body had gone further and found that the design of these provisions rendered the 
measure inconsistent with Article 2.1 on the grounds that they did not address all possible scenarios 
"in which there may be heigh tened risks of harm to dolphins ".49 In particular, the Appellate Body 
had considered two all eged gaps in the provisions – (i) the possibility of a purse seine fishery with 
"regular and significant " dolphin mortality but without  a regular and significant tuna -dolphin 
association ; and ( ii) the possibility of  a non -purse seine fishery with a harmful "regular and 
significant " tuna-dolphin association but without "regular and significant " dolphin mortality.  The 
Appellate Body had considered that these two alleged gaps rendered the US measure not 
even-handed.50 To be clear, neither the panel nor the Appellate Body had found that Mexico had 
established  that any fishery actually  fell into either alleged gap.  Rather, the 2013 measure had been 
found to be inconsistent with Article 2.1 on the basis of the hypothetical  existence of such a fishery.  
3.7.  As the United States had explained in detail at the time, the Appellate Body 's analysis had 
significantly  increased  the burden on a Member to demonstrate that its origin -neutral regulation was 
not discriminatory under Article 2.1.51 First, although Mexico 's claim had been one of de facto  
discrimination, the Appellate Body  had found the measure  inconsistent with Article 2.1 based entirely 
on the determination provisions ' "design, structure , and expected operation ". The "expected 
operation " that the Appellate Body had faulted was not based on facts as to how the measure did or 
likely would operate, but on speculation as to what might happen in a hypothetical situation that no 
facts suggested would occur . Under this standard, a measure with purely hypothetical gaps could be 
found inconsistent unless the responding Member  proved it could never  be discriminatory in any real 
or hypothetical scenario.  Second, the findings had not been based on Mexico 's case.  The panel had 
raised  the provisions on its own.52 Thus, reaching out to address this hypothetical situation seemed 
to have been an academic exercise unrelated to trade, and an exercise in impermissibly making the 
case for a complaining party .  
3.8.  The United Sta tes said that the Appellate Body 's analysis had also made it significantly easier 
to demonstrate that a measure was inconsistent with Articles I:1 or III:4 of the GATT 1994. In 
interpreting Articles I:1 and III:4, the Appellate Body had relied on its concl usions under Article 2.1 
that the dolphin safe labelling  measure "modifies the conditions of competition to the detriment of 
Mexican tuna products " by virtue of the fact that Mexican tuna products did not qualify for the label 
and other products did.53 The Appellate Body  had found that this alone was sufficient to demonstrate 
                                                
46 See "US – Tuna II " (Article 21.5 – Mexico) (Panel), para. 7.142.  
47 "US – Tuna II"  (Article 21.5 – Mexico) (AB), paras. 7.241 -242. 
48 "US – Tuna II"  (Mexico), para. 173.  
49 "US – Tuna II"  (Article 21.5 – Mexico) (AB), para. 7.258.  
50 "US – Tuna II"  (Article 21.5 – Mexico) (AB) , para. 7.258.  
51 See US DSB Statement, 3 December 2015 (https://geneva.usmission.gov/wp -
content/uploads/sites/290/Dec3.DSB_.Stmt_.as -delivered.Public.pdf).  
52 "US – Tuna II"  (Article 21.5 – Mexico) (AB), para. 7.178 (referring to no legal argumentation in M exico's 
affirmative case that concerned the design, structure, or operation of the "determination provisions").  
53 "US – Tuna II"  (Article 21.5 – Mexico) (AB), para. 7.339.  WT/DSB/M/424  
 
- 12 - 
 
  that the measure was inconsistent with Articles I:1 and III:4.54 At the same time, the Appellate 
Body's analysis had raised the standard for the United States to show that the measure wa s justified 
under Article XX for the same reasons discussed in the context of Article 2.1.  The Appellate Body 
had required the United States to show that the measure could never  be discriminatory in any 
hypothetical scenario, and it had reached out to address scenarios Mexico had not  raised.55 The 
United Sates noted that the determination provisions of the measure had no relevance to whether 
imports of tuna from  Mexico  could have access to the dolphin safe label.  These provisions only 
affected whether other tuna products could have access to the label, and thus  had no bearing on 
Mexico 's trade concerns that were at issue in th is dispute.  
3.9.  In relation to the current compliance proceeding , the United States said that, nevertheless, the 
United States had tried again to modify the dolphin safe labelling measure to satisfy the new, higher 
standard the Appellate Body had set. On 22 March 2016, the United States had issued an interim 
final rule amending the dolphin safe labelling measure.  Like the 2013 amendment, the 2016 measure 
directly responded to the finding in the previous proceeding: it amended the determination 
provisions to eliminate the two hypothetical gaps that had been the basis for the finding of 
non-compliance in the first c ompliance proceeding.56 Additionally, the 2016 measure imposed 
additional certification and tracking and verification requirements on tuna produced other than by 
setting on dolphins outside the ETP large purse seine fishery – in other words , on tuna other t han 
Mexican tuna products.57 The 2016 measure had been found to be consistent  with Article 2.1 of the 
TBT Agreement and with the GATT 1994. The additional changes made by the 2016 measure – those 
not responding directly to the DSB finding in the first compl iance proceeding – had been essential 
to that finding. In the meantime, the DSB had authorized Mexico to suspend concessions or other 
obligations to the United States pursuant to Article 22.7 of the DSU up to a level not exceeding 
US$163.23  million per yea r. Had the United States not had the resources to undertake a second 
revision of the measure, as well as a second compliance proceeding, it would have had to choose 
between withdrawing a legitimate environmental measure and facing suspension of concessions.  
3.10.   With regard to the issue that t he Appellate Body's interpretations of the non -discrimination 
provisions of the TBT Agreement and the GATT 1994 were flawed , the Un ited States said that  the 
interpretations of Article 2.1 of the TBT Agreement and Articles I:1 and III:4 of the GATT 1994 
discussed previously were not only changing and increasingly demanding – they were also incorrect 
and diminish ed the policy space Memb ers had retained for themselves to regulate. As the 
United  States had expressed  in the past, Articles I:1 and III:4 of the GATT 1994 and Article 2.1 of 
the TBT Agreement were,  in fact, concerned with origin -based discrimination, not with achieving a 
perfec t fit between a measure's effect and its objectives. It was far more difficult to justify public 
policy measures under the legal standard the Appellate Body had invented than under the standards 
to which Members had agreed. Therefore, the Appellate Body's standard significantly restricted the 
regulatory space afforded to Members to pursue legitimate public policy objectives consistent with 
their WTO obligations.  
3.11.   With regard to the issue that t he non -discrimination provisions were concerned with 
origin -based discrimination , the United States said that Articles I:1 and III:4 of the GATT 1994 and 
2.1 of the TBT Agreement set out Members ' national treatment and most -favoured -nation ( "MFN") 
obligations.  The Appellate Body 's recent approach under both Article 2.1  and Articles I:1 and III:4 
was to first look to see if a measure had a "detrimental impact " on imported products of a Member 
compared to the like products of the importing Member or imported products of any other Member.  
Where there was a detrimental impa ct, then the Appellate Body 's approach with respect to Article 
2.1 was to conduct a further analysis to determine if any such detrimental impact stemmed 
exclusively from a legitimate regulatory distinction.  However, with respect to Articles I:1 and III:4, 
the existence of a detrimental impact was alone sufficient to demonstrate a breach of those articles.  
The only recourse for a Member maintaining the measure was to invoke an affirmative defence , such 
as Article XX of the GATT 1994 .  
3.12.   The United States said that t he "detrimental impact " standard was problematic and should be 
of serious concern for Members.  First and foremost, it would appear to be  a standard that was easily 
and perhaps universally satisfied. As demonstrated in this dispute, it would appear th at all that it 
                                                
54 "US – Tuna II"  (Article 21.5 – Mexico) (AB), para. 7.340.  
55 See "US – Tuna II"  (Article 21.5 – Mexico) (AB), paras. 7.354 -360. 
56 "US – Tuna II" (Article 21.5 US / Mexico II) (AB), para. 5.16.  
57 See "US – Tuna II" (Article 21.5 US / Mexico II) (AB), paras. 5.13-24. WT/DSB/M/424  
 
- 13 - 
 
  would take was for any producer in any Member to decide not to satisfy the requirements of the 
importing Member 's measure. If any producer in any other Member satisfied the requirements under 
the measure, while a producer in the exporting Me mber did not, that would appear  to suffice to find 
that the measure ha d a detrimental impact on the exporting Member 's products.  This applied not 
just for product standards and technical regulations, but for any measure establishing requirements 
for goods.  Similarly, under the Appellate Body 's approach, there would appear to be  a "detrimental 
impact " on imports even where the producer chose  to meet the importing Member 's requirements, 
but it was more costly for the exporting producer to do so.  This could result simply because of 
differences in production methods between producers in different Members.  Exporting producers 
were likely to seek to meet the requirements of the Member in whose territory they produce d as 
well as of each Member to which they wish ed to export.  It was likely that it w ould be more expensive 
to adapt production for some Members ' requirements than for others.  And a measure that had no 
detrimental impact on imports in the past could very well have one  in the present . For example, an 
exporting producer m ight change its product charact eristics or production method. Thus, even where 
a Member ma de a significant effort to ensure that a measure was non-discriminatory, the Member 
had no assurance when adopting a measure that the measure would withstand a challenge in the 
future based  on changes in the market or by exporting producers.  The United States would  ask 
Members whether  this very low and unpredictable threshold really was the concept of discrimination 
that they understood.  The Appellate Body's approach did not find support in the text of the relevant 
provisions, nor in the manner in which they had been applied under the GATT 1947 nor in prior panel 
or Appellate Body reports.  It was difficult to imagine that Members would have agree d to an  
obligation under which any measure that had a disparate impact on the goods from another Member 
– even if the impact was entirely accidental – would be in breach.  In fact, the Appellate Body 's 
approach was contrary to the fact that the phrase "treatment n o less favourable " in Article III:4 had 
been, in the past, always interpreted as providing regulatory space for Members to take otherwise 
legitimate measures that m ight restrict trade unevenly across the Membership of the WTO.58 The 
general principle of Art icle III:1 of the GATT 1994,59 which informed the meaning of Article III:4,60 
had made it clear that considerations of discrimination and "protection " were inherent in Article 
III:4.61 The second sentence of Article II I:4 conveyed a similar concept. It stated : "[t]he provisions 
of this paragraph shall not prevent the application of differential internal transportation charges 
which are based exclusively on the economic operation of the means of transport and not on the 
nationality of the product ". Thus, Articl e III:4 itself embraced the concept that the reason behind a 
measure was important for purposes of the Article III:4 analysis, and that "nationality of the product " 
was a key concept.  However, the Appellate Body 's "detrimental impact " approach said that a 
measure would be found to have a detrimental impact on imports even where the measure made 
no distinctions at all, either in law or in fact, based on the nationality of the imported product.  
Further, prior to 2012,62 the Appellate Body had never interpreted  Article III to mean that any 
detrimental impact on like imports was per se  sufficient to support a finding of inconsistency. Rather, 
in every past dispute finding an Article III:4 inconsistency, the measure at issue either had explicitly 
discriminated aga inst imported products, or it had e stablished a system that, though facially neutral, 
discriminated against imported products de facto . 
3.13.   With regard to f urther problems under the Appellate Body's approach , the United States said 
that t here were several other significant problems with the Appellate Body 's approach.  First, because 
                                                
58 See, e.g., "EC – Asbestos " (AB), para. 100 ("[ a] Member may draw distinctions between products which 
have been found to be 'like,' without, for this reason alone, according to the group of 'like' imported products, 
'less favourable treatment' than that accorded to the group of 'like' domestic products").  
59 Article III:1  of the GATT 1994 state d that : "Members recognize that internal taxes and other internal 
charges, laws, regulations and requirements affecting the internal sale, offering for sale, purchase, 
transportation, distribution, or use of products ... should not b e applied to imported or domestic products so as 
to afford protection to domestic production ". 
60 See "Japan – Alcoholic Beverages 2 (AB), pp. 17 -18 (stating that the "general principle" of Article III:1 
"informs the rest of Article III"); "EC—Asbestos " (AB), para. 94 (stating: "[ i]n our view, Article III:1 has particular 
contextual significance in interpreting Article III:4, as it sets for the 'general principle' pursued by that provision")  
61 See "EC – Asbestos " (AB), para. 100 ("[t] he term 'less favourable treatment' expresses the general 
principle, in Article III:1, that internal regulations 'should not be applied ... so as to afford protection to domestic 
production"); see also "Chile – Alcoholic Beverages " (AB), paras. 69 -71 (conc luding that the absence of a clear 
relationship between the stated objectives of a measure and the structure of the Chilean tax measures confirmed 
its conclusion that, based on the architecture, structure and design of the measures, the measures were appli ed 
so as to afford protection).  
62 "United States - Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products " 
(DS381),  "United States - Certain Country of Origin Labelling (COOL) Requirements " (DS384, DS386), and 
"United States - Measures Affecting the Production and Sale of Clove Cigarettes " (DS406).  WT/DSB/M/424  
 
- 14 - 
 
  the GATT  1994 only provided for an affirmative defence  for a limited list of objectives, some 
measures that pursue d legitimate policy objectives m ight be indefensible.  Under the Appellate Body 's 
approach, any measure would be found in breach of Article I:1 or II:4 of the GATT  1994 if the 
measure had a detrimental impact on imports, no matter how small or accidental, or whether it was 
due to the conscious choice of exporting produc ers or the result of market changes. This meant that 
no Member could maintain any such measure, no matter how legitimate or compelling the policy 
objective of the measure, unless the measure pursued one of the policies eligible for an affirmative 
defence . But this was a very limited  list of policy objectives. For instance, country of origin labelling  
was not listed as an objective under Article XX of the GATT 1994, even though it was recognized as 
a legitimate objective unde r Article IX of the GATT 1994. It was not difficult to think of other 
legitimate objectives that might  not be covered by Article XX – labelling  for geographic indications 
could be another example of such an objective . Second, the Appellate Body 's approach interpreted  
identically worded pr ovisions differently . Articles III:4 of the GATT 1994 and 2.1 of the 
TBT Agreement set out Members ' national treatment obligations, with the relevant language being 
identical: products of other Members "shall be accorded treatment no less favourable than t hat 
accorded to like products of national origin ". Under the customary rules of interpretation of public 
international law reflected in Article 31 of the Vienna Convention on the Law of Treaties, the text of 
these provisions should be interpreted using the  ordinary meaning of the terms, in context, and in 
light of the object and purpose of the agreement.63 The identical terms would have the same ordinary 
meaning.  Furthermore, nothing in the provisions ' context nor in the object and purpose of either 
agreement indicated that the terms should have different meanings.  Indeed, the preamble to the 
TBT Agreement included : "[d]esiring  to furt her the objectives of GAT T 1994 ".64 This also indicated 
the two provisions should be interpreted in the same way . Despite this, the Appellate Body 's 
approach interpreted these two identically worded provisions differently . Third, the Appellate Body 's 
approach raise d the very real p ossibility that Article 2.1 of the TBT Agreement would become 
superfluous.65 If the standards of Article 2.1 and Articles I:1 and III:4 were different, it was unclear 
why a Member would ever bring a claim under Article 2.1, when Articles I:1 and III:4 had a lower 
standard, and Article XX had only a limited list of defences  and place d the burden of proof on the 
responding Member . The Appellate Body had sought to respond to this concern in part by stating 
that Members had not identified "concrete examples of a  legitimate objective that could factor  into 
an analysis under Article  2.1 of the TBT Agreement, but would not fall within the scope of Article XX 
of the GATT  1994".66 However, such examples had been provided.  One such example was provided 
by the TBT Agreem ent text itself.  There the preamble referred to "measures necessary to ensure 
the quality of " a Member 's exports.  There was no parallel provision in Article XX of the GATT 1994 . 
Fourth, the Appellate Body 's standard of stemming exclusively from a legitimat e regulatory 
distinction was found nowhere in the TBT Agreement and had never been the subject of negotiations.  
The Appellate Body had never explained the origin of this legal standard or the basis for importing 
it into Article 2.1 of the TBT Agreement.  This legal standard raised numerous questions. For instance, 
what was the definition of a "legitimate regulatory distinction "? Who decided which distinctions were 
legitimate? On wha t basis was that decision made? How were Members, when adopting a technical 
regulation in good faith, supposed to have any confidence that the measure satisfied this test? 
Indeed, this standard appeared to call for subjective judgmen ts by WTO adjudicatory bodies. 
However, that was not the role of  panels or the Appellate Body. Similarly, what did "stem exclusively 
from" entail? All Members face d a number of constraints, i ncluding resource constraints. If the 
regulatory distinction was based in part on budgetary restraints faced by a Member, for instance, 
and not just the policy objective the Member was pursuing through the measure, did that mean the 
detrimental impact did not "stem exclusively from " legitimate regulatory distinctions? The 
United  States had already seen some arguments that in such a situation, the measure would fa il the 
Appellate Body 's legal test.   
3.14.   The United States said that i t was extremely difficult to justify legitimate and important public 
policy measures under the legal standard the Appellate Body ha d invented.  The very high level of 
                                                
63 See Vienna Convention on the Law of Tr eaties, Art icle 31(1), stating: "[a]  treaty shall be interpreted in 
good faith in accordance with the ordinary meaning to be given to the terms o f the treaty in their context and in 
light of its object and purpose" Note also that Article 31(4) provides: " [a] special meaning shall be given to a 
term if it is established that the parties so intended" . No special meaning is assigned to the relevant te rms in 
either the GATT 1994 or the TBT Agreement.  
64 TBT Agreement, preamble, 2nd recital.  
65 See, e.g., Minutes of the DSB meeting of 18 June 2014 (WT/DSB/M/346), para. 7.7 concerning the 
Appellate Body report in "European Communities – Measures Prohibiti ng the Importation and Marketing of Seal 
Products " (DS400 and DS401).  
66 WT/DS400/AB/R, WT/DS401/AB/R, para. 5.128.  WT/DSB/M/424  
 
- 15 - 
 
  scrutiny that had been a pplied under this legal standard in the Tuna dispute went far beyond an 
inquiry into whether a measure discriminated based on origin. A measure did not discriminate based 
on origin simply because an adjudicator considered it could have balanced costs and b enefits better 
or designed a more effective or perfect measure. In fact, WTO Members had agreed to a different 
provision in the TBT Agreement (Article 2.2) that went to analysing  the trade -restrictiveness of a 
measure in light of the objective a Member sought to fulfil. The United States had consistently 
expressed concern that the approach invented by the Appellate Body regarding discrimination would 
diminish WTO Members ' rights to pursue legitimate and important public policy measures.  Members 
had not agree d in the GATT  1994 or the TBT Agreement to an obligation to avoid a "detrimental 
impact " even where there was no discrimination.67 
3.15.   In conclusion , the United States said that it was  pleased that the WTO dispute settlement 
system had ultimately reached t he right result in this dispute.  As the United States had noted , this 
result had taken far too long, as a result of the Appellate Body developing erroneous legal 
interpretations of the non -discrimination provisions of the TBT Agreement and the GATT 1994. T he 
reports proposed for adoption at the present meeting brought to a close a dispute tha t had been 
ongoing since 2008. The United States propose d that the DSB adopt the reports contained in 
WT/DS381/RW/USA and Add.1 and  WT/DS381/AB/RW/USA and Add.1.  
3.16.   The representative  of Mexico  said that  her country  wished to thank  the WTO Secretariat for 
its hard work on this dispute, namely,  the Legal Affairs Division, the Appellate Body Secretariat and 
the translators.  Mexico's Government  and its industry had played an important role in protecting 
dolphins from the adverse effects of tuna fishing. Thanks to Mexico's efforts, the United  States had 
amend ed its measure on two occasions, which  had led to enhanced requirements in fisheries by 
other s than Mexico.  The method used by the Mexican tuna fleet was regulated by the Agreement on 
the International Dolphin Conservation Programme (AIDCP), and was recognized by the Food and 
Agriculture Organization of the United Nations (FAO) as the most sustainable fishing meth od. It had 
not only protect ed dolphins, but had also safeguard ed tuna stocks by preventing the capture of 
juvenile tuna, unlike the methods used by fishing fleets in other waters, which had severely 
endanger ed tuna and, in turn, the tuna supply.  The Mexica n dolphin -associated  purse seine tuna 
fishery ha d recently been certified by the Marine Stewardship Council (MSC) as sustainable in terms 
of maintaining the target species, and ha d been recognized by the same body as a fishery that 
minimize d any environmen tal impact  it might have . This result had oblige d Mexico to continue 
defending and promoting its tuna industry and the highly sustainable fishing method used, as well 
as the efforts made in multilateral forums to ensure protection not only of dolphins, but of other 
marine species affected by different fi shing methods used in other waters.  Mexico had hoped that, 
regardless of the ruling, the United States would  recognize the effect that the fishing methods used 
by its fleet and those of other countries ha d on the marine ecosystem.  Pursuant to Articles 16.4  and 
17.14 of the D SU, Mexico wished to express its views on the R eports . Mexico could  not agree with 
the reasoning, findings and conclusions of the panels and Appellate  Body in the second Article 21.5 
of the DSU compliance proceeding in this dispute. Mexi co had noted that the Appellate Body, in 
paragraph 6.29 of its R eport, agreed with Mexico that calibration was not a separate legal standard 
under Article 2.1 of the TBT Agreement, but, rather, a case -specific analytical tool used to assess 
whether the mea sure at issue in this dispute was consistent with this provision.  In the Eastern 
Tropical Pacific Ocean tuna fishery, where the Mexican fleet operate d, Mexico and its fleet compl ied 
with the AIDCP, under which there were comprehensive dolphin protection requirements, including 
the requirement to have an independent observer on each boat to monitor fishing practices and 
keep accurate records. No other fishery in the world ensure d comparable protection for dolphins. 
The AID CP ha d dramatically reduced the harm caused to dolphins and was widely accepted as one 
of the most successful multilateral environmental agreements in history.  
3.17.   Mexico said that t he United States had initially been a strong supporter of the AIDCP and had 
agreed to ch ange its definition of "dolphin safe" to encourage countries to ratify the Agreement. The 
United States had in fact change d the definition briefly, but had subsequently abandoned its 
commitment due to internal legal proceedings. This was what had led to the initiation of this dispute 
in 2008.  During the first two stages of the dispute – which on the whole had lasted 10 years due, 
inter alia, to the complexity of the measure, its constantly moving objective and the cosmetic 
                                                
67 Article 19.2 of the DSU ("[i]n accordance with paragraph 2 of Article 3, in their findings and 
recommendations, the panel and Appellate Body cannot add to or diminish the rights and obligations provided 
in the covered agreements"); Article 3.2 of the DSU ("[r]ecommendations and ruling s of the DSB cannot add to 
or diminish the rights and obligations provided in the covered agreements").  WT/DSB/M/424  
 
- 16 - 
 
  changes made by the Unit ed States – the WTO panels and Appellate Body had determined that the 
US measure discriminated against Mexican tuna products because US rules  had allowed tuna 
products from other countries to use the dolphin  safe label, even when dolphins had been  harmed 
during tuna fishing operations in those countries.  Throughout the years, and in response to the panel 
and Appellate Body Reports ruling against it, the United States had made some cosmetic changes 
to its legislation. These changes had not, however, put an e nd to the discrimination against Mexican 
products. Tuna from other fisheries, caught by the US fleet and fleets from other countries, was free 
to carry the dolphin  safe label, even where there was no guarantee that dolphins were not harmed 
in those fisheries. Many dolphins were being killed in other tuna fisheries. Furthermore, illegal, 
unreported and unregulated (IUU) fishing prevent ed the accurate tracking of dolphin deaths in 
various oceanic areas. Perhaps the most striking as pect of the Appellate  Body Report was that it had 
agreed with the United States that the fishing methods causing the extinction of dolphin populations 
in certain tuna fisheries were not harmful to dolphins, and that it was not discriminatory to allow 
tuna from these fi sheries to be labelled "dolphin safe".  Unfortunately, by refusing to recognize the 
continuing differences between the sustainable fishing practices of the Mexican fleet and the 
destructive fishing practices of other countries in other fisherie s, the US measure together with the 
Appellate Body's decision would  have the effect of encouraging the use of unsustainable fishing 
methods that were harmful to both dolphins and other marine species. In any case, the report would  
not discourage Mexico fro m maintaining its key role at  the international level in the promotion of 
sustainable fishing and environmental protection.  Mexico ha d addressed this issue as fully as possible 
and would  continue to monitor the application of the US measure, including to s ee whether the 
legislation was ever applied to tuna from non -Mexican fisheries. Regarding the underlying systemic 
issues in the dispute, in particular that relating to the holding of hearings partially open to the public, 
Mexico strongly reject ed the US pr actice of modifying the legal scope of the provisions of the DSU. 
Mexico  recall ed that this had not been the first case in which the United  States had requested 
authorization from panels to hold hearings partially open to the public. This type of request fell 
outside the jurisdiction of the panels, as it affect ed the carefully negoti ated balance of WTO 
obligations. The decision and findings of the panels in this dispute, concerning their alleged authority 
to authorize a partially open hearing without the co nsent of the parties to the dispute, add ed to or 
diminish ed the rights and obl igations of Members provided  in the DSU. The Appellate Body itself had 
implicitly recognized and questioned this authority when stating, in paragraph  7.15 of its R eport , 
that the fact that it had found it unnecessary to rule on this matter in this appeal "should not be 
construed as an endorsement of the Panels' decision to conduct a partially open meeting of the 
parties without the consent of both parties" . Mexico wished to reiterate its commitment to 
international law and multilateral bodies, in particular where their aim was to ensure the peaceful 
settlement of disputes. This included  those that form ed part of this forum, most notably the Appellate 
Body.   
3.18.   The representat ive of the European Union  said that his delegation noted that the title of the 
present Agenda item referred to  the "report contained in WT/DS381/AB/RW/USA and 
WT/DS381/AB/RW/USA/A dd.1". There was no reference to  "Report of the Appellate Body" in the 
title of this Agenda item, unlike the title of the previous Agenda item.  He said that e ven a cursory 
look at these documents confirmed that what was contained therein was the Report of the Appellate 
Body and its adden dum. The EU wished  to stress that there was no doubt that this Report was a 
Report of the Appellate Body, subject to the adoption procedure laid down in Article 17.14 of the 
DSU, i.e., by negative consensus. The EU recall ed that the rules and procedures of  the DSU exclude d 
the right of any particular WTO Member to block the adoption of panel or Appellate Body Reports. 
This was a central feature of the DSU, and a major difference with the dispute settlement mechanism 
that had operated under the GATT 1947. Ar ticle 17.14 of the DSU was clear: "[a]n Appellate Body 
report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless 
the DSB decides by consensus not to a dopt the Appellate Body report ". The EU understood that 
there was no formal objection at the present meeting  to the adoption of the Appellate Body Report. 
But in any event, the EU wishe d to emphasize that it would not be the case at the present meeting 
that "the DSB decides by consensus not to adopt" the reports. Therefore, both Panel and Appellate 
Body Reports would in any event be "adopted by the DSB" within the meaning of Articles 16.4 and 
17.14 of the DSU. The EU wished to recall that these provisions were without prejudice to the right 
of Members to express their views on the report, and such views had been expressed at this meeting. 
However, while there was a right to express a view, there was no right to veto. Any theories 
attempting to underpin such a right to veto were without any merit.  WT/DSB/M/424  
 
- 17 - 
 
  3.19.   The representative of the United States  said that the United States took note  of the view 
expressed by the EU concerning Article 17.14 of the DSU. The United States ha d previously 
expressed its view that the adoption p rocedures reflected in Article 17.14 contemplate d an appellate 
report issued consistently with the requirements of Article 17  of the DSU . However, it might  not be 
necessary to have an extensive debate on this issue at the present meeting.  In this dispute, the 
United States had support ed the adoption of the panel and appellate reports  and the United States 
had understood  that the other party to the dispute did also. The United States had, therefore , 
proposed that the DSB adopt the reports contained in WT/DS381/RW/USA and Add.1 and 
WT/DS381/AB/RW/USA and Add. 1.  
3.20.   The representative  of Canada  said that his delegations simply wished  to indicate  that the 
Report that had been prepared by the A ppellate Body was clearly an  Appellate B ody Report,  as 
contemplated by Article 17.14  of the DSU . Canada  therefore agree d with the view expressed by the 
EU that the adoption of this Report was subject to the negative consensus rule.  
3.21.   The DSB took note  of the statements and adopt ed the Appellate Body Report contained in 
WT/DS381/AB/RW/USA and Add.1 and the Panel Report contained in WT/DS381/RW/USA and 
Add.1, as upheld by the Appellate Body Report.   
 
__________