WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/DSB/M/319 
28 August 2012  
 
(12-4640) 
Dispute Settlement Body 
10 July 2012  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard 
on 10 July 2012 
 
Chairman:  Mr. Shahid Bashir (Pakistan) 
 
  Prior to the adoption of the proposed Agenda , the Chairman informed delegations that 
Canada, Mexico and the United States had requested , by letter addressed to the DSB Chair, that 
item 2 of the proposed Agenda entitled:  "United States – Certain Country of Origin Labelling 
(COOL) Requirements:  Joint Request by Canada, Me xico and the United States for a Decision by the 
DSB" be removed from the proposed Agenda.  Therefor e, he said that, in light of the request made, 
item 2 was removed from the proposed Agenda.  
 The representative of the United States said that his country would like to confirm the 
announcement just made by the Chairman that Ca nada, Mexico, and the United States had withdrawn 
item 2 from the proposed Agenda through a letter earlie r that day.  He said that Canada, Mexico, and 
the United States would like to make statements under  "Other Business" to explain the withdrawal of 
the item to Members. 
 
 The Agenda was adopted as amended. 
  Subjects discussed: Page 
 
1.  China – Measures related to the exportation of rare earths, tungsten and 
molybdenum .................................................................................................................... .......... 2 
(a)  Request for the establishment of a panel by the United States ................................................... 2  
(b)  Request for the establishment of a panel by the European Union .............................................. 2  
(c)  Request for the establishment of a panel by  Japan ..................................................................... 2  
2.  United States – Certain country of or igin labelling (COOL) requirements ........................ 4  
(a)  Statements by the United States, Canada and Mexico ................................................................ 4  
 WT/DSB/M/319 
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  1. China – Measures related to the exportation of rare earths, tungsten and molybdenum 
(a) Request for the establishment of a panel by the United States (WT/DS431/6) 
(b) Request for the establishment of a panel by the European Union (WT/DS432/6) 
(c) Request for the establishment of a panel by Japan (WT/DS433/6) 
1. The Chairman proposed that the three sub-items to which he had just referred be considered 
together since they pertained to the same matter. 
2. The Chairman drew attention to the comm unication from the United States contained in 
document WT/DS431/6 and invited the representative of the United States to speak. 
3. The representative of the United States said th at his country was concerned about Chinese 
measures that restrained the exportation of certain raw materials – i.e., rare  earths, tungsten, and 
molybdenum – that were critical to manufacturi ng industries in the United States and in other 
Members.  The export restraints at issue included ex port quotas, export duties, various restrictions on 
the right to export, as well as administrative requirements that limited exports of these materials from China by increasing the burdens and costs for exporti ng.  These measures were similar to the policies 
that the United States, the European Union, and Mexico had successfully challenged in the "China - 
Raw Materials"  dispute.
1  And, as in that dispute, while the United States had seen assertions by 
China that the measures were intended to protect th e environment, neither the history nor the design 
of the measures supported those assertions.  Instead, the measures appeared to be designed to tilt the 
playing field in favour of Chinese domestic industries purchasing these raw materials over their foreign competitors.  In fact, b ecause of China's position as a lead ing global producer of these 
materials, China's export restraint measures gave Ch ina the ability to affect significantly global supply 
and pricing.  These measures could provide importa nt advantages to China's downstream producers, 
to the detriment of their counterparts in the Un ited States and other Members.  These measures could 
also create substantial pressure on foreign produ cers to move their operations, jobs, and technologies 
to China.  The materials at issu e were key inputs in the production of a wide range of important 
products, such as hybrid car batteries, wind turbin es, energy-efficient lighting, steel, advanced 
electronics, automobiles, petroleum, and chemicals.   As described in more detail in the US panel 
request, these restraints appeared to be incons istent with provisions of the GATT 1994 and China's 
Protocol of Accession.  The United States had attempte d to resolve its concerns through dialogue with 
China, and formal WTO consultations had been he ld on 25 and 26 April 2012.  Unfortunately, these 
efforts had failed to resolve the dispute.  Accord ingly, the United States requested that the DSB 
establish a panel to examine the matter set out in its panel request with standard terms of reference. 
4. The Chairman drew attention to the communication from the European Union contained in 
document WT/DS432/6 and invited the representative of the European Union to speak. 
5. The representative of the European Union said that , regrettably, the EU found itself left with 
no choice but to request the establishment of a panel to  examine this dispute.  While the consultations 
had been helpful in clarifying the Chinese measures and their application, there had been no basis for 
a negotiated solution to the dispute.  The EU noted that the export restrictions imposed by China on 
raw materials were by no means a recent phenom enon.  They had been a problem when China 
acceded to the WTO and continued to be a problem to date.  The EU regretted that China had not 
signalled any intentions to remove  these export restrictions, despite the clear ruling issued by the 
                                                      
1 "China – Measures Related to the Exportation of Various Raw Materials"  (WT/DS394; WT/DS395; 
WT/DS398).   WT/DSB/M/319 
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  Panel and Appellate Body earlier in  2012 on a similar set of measures.  The EU believed that the 
export restrictions at issue in this dispute constituted a violation of China's WTO commitments undertaken under the GATT, as well as commitmen ts undertaken in its Accession Protocol 
specifically aiming at these types of restrictions.  The export restrictions at issue significantly 
distorted the market and created competitive adva ntages of the Chinese manufacturing industry to the 
detriment of foreign competitors.  Furthermore, those policies put pressure on foreign producers to 
move their operations and technologies to China, as companies outside China we re either cut off from 
supplies or had access only at much higher prices than Chinese companies.  The EU supported and 
encouraged all countries to promote a cleaner and sustainable production of raw materials.  
Environmental protection and sustainable resource management were legitima te aims, recognized and 
fully achievable within WTO rules.  However, the EU strongly believed that export restrictions were 
not the appropriate tools to promote those aims and thus welcomed the clear findings of the Panel in the first raw materials dispute.  The EU was, th erefore, seeking the establishment of a level playing 
field by ensuring that China played by th e rules and respected its WTO obligations. 
6. The Chairman drew attention to the comm unication from Japan contained in document 
WT/DS433/6 and invited the representative of Japan to speak. 
7. The representative of Japan said that, as explai ned in its panel request, this case concerned 
China's export restrictions on various forms of rare  earths, tungsten and molybdenum ("the materials") 
through export duties, export quotas and their admi nistration, thereby challenging their consistency 
with several provisions of the WTO Agreement.  Japan noted that, in the pre-GATT era, national policy tendencies toward exclusive exploitation of natural resources in closed economies had caused 
undesirable results throughout the world, which should never be repeated.  Japan understood, 
therefore, that GATT/WTO had introduced the proh ibition of export restrictions as one of the most 
important principles.  Given China's critical role  in the global market as the second largest economy, 
Japan encouraged China to recall the importance of  the prohibition of export restrictions under the 
WTO Agreement.  It was well known that the materi als at issue were being used by many of the 
manufacturing sectors in Japan for productions of  various final products and for products by 
processing enablers, such as catalysts and polishing me dia.  Japan was of the view that China's export 
restrictions had caused a short supply of the material s in the international market and significant price 
differences between China's domestic market and expor t market.  As a consequence of such measures, 
manufacturers in Japan had faced difficulty in purchas ing the materials from exporters in China, while 
it appeared to provide a significant advantage to ma nufacturers in China to purchase the materials.  
Thus, the measures at issue had put Japanese industri es in the disadvantageous position to the benefit 
of Chinese counterparts.  Japan considered that Ch ina's export restrictions were inconsistent with 
various China's obligations under the WTO Agreemen t, as had clearly been explained in its panel 
request.  On 13 March 2012, Japan had requested cons ultations and had engage d in consultations in 
good faith with China on 25 and 26 April 2012, with  a view to reaching a mutually satisfactory 
solution.  While the consultations had provided  useful opportunities for the parties to better 
understand their respective positions on this matter, th e parties were unable to resolve the differences.  
Therefore, Japan, requested, pursuant to Article 6 of  the DSU, that a panel be established to examine 
the matter as set out in its panel request with standard terms of reference in accordance with 
Article 7.1 of the DSU. 
8. The representative of China said that her country respected the rights of the United States, the 
EU and Japan under the DSU.  However, China regr etted that the complaining parties had requested 
the DSB to establish a panel to examine these disput es.  After the complaining parties had requested 
consultations in these disputes, China had had sincer e consultations with the complaining parties and 
had positively responded to the relevant questions .  As China reiterated on many occasions, China had 
consistently observed the WTO rules and had pos itively implemented its commitments undertaken 
upon its accession to the WTO.  China's policies concerning the products at issue were aimed at 
protecting natural resources and achieving sustai nable economic development.  China had no WT/DSB/M/319 
Page 4  
 
  intention of protecting the domestic industry through means that would distort trade.  China would not 
defend itself in detail at the present meeting, but wish ed to draw Members' attention to the fact that 
China supplied over 90 per cent of rare  earths on the global market with just 23 per cent of the world's 
total reserves.  Therefore, China was puzzled by the complainants' request for panel establishment.  
China was not in a position to accept the establis hment of a panel at the present meeting. 
9. The DSB took note of the statements and agreed to revert to these matters. 
2. United States – Certain country of origin labelling (COOL) requirements 
(a) Statements by the United States, Canada and Mexico 
10. The representative of the United States, speaking under "Other Business", said that his 
country would like to address why it had agreed th at the second Agenda item should not be taken up 
at the present DSB meeting.  The United States said th at it wished to thank those delegations that had 
participated in a series of discussions over the p ast week relating to the draft DSB decision put 
forward by Canada, Mexico, and the United States.  While those discussions had been very useful, 
unfortunately, there was not sufficient time to disc uss fully the draft decision.  Accordingly, the 
parties to the disputes had decided to withdraw the draft DSB decision in order to permit those 
discussions to continue.  For context, the Unite d States wished to share with Members some 
information on the discussions held over the past week.  The issue the United States, Canada and 
Mexico had sought to address through the draft DS B decision was what should the DSB do when an 
Appellate Body report was circulated outside the 90-da y time limit set out in Article 17.5 of the DSU.  
All Members valued the WTO as a rules-based tradi ng system.  The language of Article 17.5 set out a 
rule that did not contain any exception or mechanism for extension beyond 90 days:  "In no case shall 
the proceedings exceed 90 days".  At the same time, however, Members had recognized in a number 
of appeals over the years that there would be so me exceptional circumstances in which it was not 
possible or desirable that the report be issued within  that time limit.  The qu estion then was what to do 
in those exceptional circumstances.    
11. The draft DSB decision was a joint effort to respond to those circumstances by providing 
transparency to all DSB Members and have Members act  to affirm their respect for the rule.  The draft 
DSB decision recognized the existence of the rule wh ile providing a degree of flexibility by acting to 
deem the rule to be satisfied in the exceptional circ umstances of this dispute.  The draft DSB decision 
would, therefore, in the US view, strengthen the ru les-based trading system.  As had also been noted 
in US discussions with delegates, the draft DSB decision would also confirm the view expressed by 
the Appellate Body itself.  In its communicati on to the DSB Chair transmitting the Reports for 
circulation, the Appellate Body had stated:  "The [r eports] will be circulated to Members of the World 
Trade Organization at 5.00 p.m. today, in accordan ce with paragraph 5 of Article 17 of the [DSU]".2  
Now, this statement was not technically accurate but  demonstrated that the Appellate Body deemed 
the Report to be in conformity with the requireme nts of Article 17.5 of the DSU.  Through the draft 
DSB decision, the DSB would support the Appellate Body  by similarly deeming the rule to have been 
met.  Nonetheless, the discussions over the past we ek had revealed that additional discussions with 
Members would be helpful to explore the best appr oach for responding to the issues presented, and 
the United States was willing to accommodate the desire  for further discussions in order to deepen the 
mutual understanding of these issues with a view to finding shared approaches. 
12. A number of delegations had also noted that the draft DSB decision dealt with one issue – 
what to do when a report was circulated outside the 90-day time limit – but did not address the 
underlying issue:  why were reports circulated outsi de that time limit and what could be done to assist 
                                                      
2 WT/DS384/16;  WT/DS386/15 (3 July 2012).   WT/DSB/M/319 
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  in meeting that time limit?  The United States agreed  that this was an important issue for Members to 
discuss.  Finding potential solutions to this probl em would require a better understanding of the facts 
and circumstances leading to delays.  There were clearly a number of issues that would require further investigation.  Some issues may be more practical  or procedural – the Chairperson of the Appellate 
Body had raised some ideas in he r talk at the recent event to welcome a new Appellate Body member.  
Some issues may be legal in nature.  For example, in a talk at the Graduate Institute (HEI), the 
Chairperson of the Appellate Body had noted the pr oliferation of claims under Article 11 of the DSU 
and the time and resources needed to deal with tho se claims.  Members could consider the impact of 
those sorts of claims on the overall timeframe for app eals.  And some issues may be more structural.  
For example, in relation to ideas to make Appellate  Body members full-time, it could be useful to 
consider what impact outside activities may have on  the Appellate Body's work.  There were many 
more issues Members could explore and discuss.   
13. Therefore, as had been suggested by a number of delegations in conve rsations, it would be 
useful to discuss this underlying issue as well.  De legations may wish to start informally and then 
could consult with the DSB Chair to devise an appropriate process in search of information and 
potential solutions.  The United States believed that  all Members shared a strong interest in 
reinforcing and strengthening the rules-based multil ateral trading system.  Addressing these issues 
would contribute importantly to this end. 
14. The representative of Canada said that his country  wished to make a brief statement about the 
decision to withdraw item 2 from the Agenda of th e present meeting.  In the ten days after the 
United States, Mexico and Canada had placed that item on the Agenda, the three parties had engaged 
in consultations with interested Members on th e draft decision.  The parties appreciated the 
willingness of delegations to engage with them, and very much valued the frank feedback that had 
been provided.  As a result of that feedback, th e parties had concluded that proceeding with the 
discussion of the item at the present meeting would not be productive at this time.  The three parties 
had, therefore, agreed that withdrawal of the item was the best course.  In the spirit of preserving the 
constructive nature that had characterized those cons ultations, Canada wished to take the opportunity 
to clarify its interest in raising the issue.  To be  clear, there had never been any question that the three 
sponsors of the draft decision wished to cast doubt on one of the most important features of the WTO dispute settlement system – negative consensus for th e adoption of reports.  With or without the draft 
decision, the Reports in the "US-COOL" dispute would be adopted in a future DSB meeting by 
negative consensus, as all others had before it.  In stead, the underlying intention had always been to 
contribute to a process through which the DSB coul d exercise its responsibility to preserve another 
feature of the WTO dispute settlement that was equall y important – the prompt settlement of disputes.   
15. Article 17.5 of the DSU was a critical element of that objective such that meeting the 
prescriptions of that provision should be taken very seriously.  The consultations over the past week 
had in fact revealed that there was a widely-sha red interest in ensuring that the system had the 
capacity to deal with the increasing burdens that Me mbers placed upon it.  This view had been echoed 
a few weeks before by the Appellate Body Chairp erson, Ms Zhang, during the recent swearing-in 
ceremony.  In expressing her own concern about the issue of delayed reports, Madam Zhang had 
highlighted a number of practical ideas that might help reconcile the requirement, on the one hand, to 
ensure the prompt settlement of disputes with the need, on the other hand, to provide the amount of 
time and resources necessary to settle disputes prop erly.  Her ideas and others, many of which had 
been cited by the United States, were worth consider ing in greater detail.  In withdrawing the draft 
decision at the present meeting, it was Canada's wi sh that all parties, among the Membership and in 
the institution itself, continued to engage in a constructive dialogue on addressing this issue once and 
for all.  With the cooperation of all parties, Me mbers could develop pragmatic solutions that would 
minimize the occurrence of delays in the first instance , and that would ensure an inclusive, timely and 
transparent response to the circumstan ces that led to such delays when they must occur.  Canada stood 
ready to engage in any and all discussion that would contribute to this outcome.   WT/DSB/M/319 
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  16. The representative of Mexico said that in this dispute, the Appellate Body had informed the 
DSB that it was unable to circulate the Report within  the 90-day period, but had failed to consult with 
or notify the parties to the dispute.  This had caused some uncertainty as to how the parties could 
ensure that a report, that had been issued outside  the time-frame provided for in Article 17.5 of the 
DSU, was consistent with that Article.  And it had put the parties in a difficult situation due to the 
abandonment of the practice that had previously been followed by the Appellate Body.  Mexico 
understood the reasons for the dela y in issuing reports, but noted that it would perhaps be better to 
analyse whether the Appellate Body had sufficient ma terial and human resources to carry out its work 
within the time-frames stipulated in the DSU and, if  not, necessary steps should be taken to rectify the 
situation. 
17. The DSB took note of the statements.   
__________