RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/221 
4 December 2006 
 (06-5806) 
Dispute Settlement Body 
26 October 2006  
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 26 October 2006  
 
Chairman:  Mr. Muhamad Noor Yacob (Malaysia) 
 
 Subjects discussed
: Page  
 
1. Surveillance of implementation of recommendations adopted by the DSB.........................2  
(a) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by 
the United States .............................................................................................................. ...........2  
(b) United States – Anti-dumping measures on certain hot-rolled steel products from 
Japan:  Status report by  the United States...................................................................................6  
(c) United States – Section 110(5) of the US Copyright Act:  Status report by the 
United States .................................................................................................................. .............6  
2. Implementation by the European Co mmunities of the recommendations and 
rulings of the DSB in relation to "European Communities – Regime for the Importation, Sale and Distribution of Bananas" and related subsequent WTO 
proceedings .................................................................................................................... ............7
 
(a) Statements by Honduras, Ni caragua and Panama.......................................................................7  
3. United States – Continued Dumping and Subsidy Offset Act of 2000:  
Implementation of the recommenda tions adopted by the DSB ..........................................10  
(a) Statements by Canada, the European Communities and Japan.................................................10  
4. China – Measures affecting imports of automobile parts ...................................................13  
(a) Request for the establishment of a pa nel by the European Communities.................................13  
(b) Request for the establishment of a panel by the United States .................................................13  
(c) Request for the establishment of a panel by Canada ................................................................13  
5. United States – Measures relating to shrimp from Thailand..............................................14  
(a) Request for the establishment of a panel by Thailand ..............................................................14  
6. United States – Final anti-dumping me asures on stainless steel from Mexico..................15  
(a) Request for the establishment of a panel by Mexico ................................................................15  
7. United States – Customs Bond Directive for merchandise subject to  
anti-dumping/countervailing duties ......................................................................................16  
(a) Request for the establishment of a panel by India ....................................................................16  WT/DSB/M/221 
Page 2  
 
  8.
 Proposed nominations for the indicative list of governmental and 
non-governmental panelists ...................................................................................................18  
9. United States – Subsidies on upland cotton..........................................................................18  
(a) Statement by  Brazil............................................................................................................ .......18  
 
 1. Surveillance of implementation of recommendations adopted by the DSB 
(a) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.47) 
 
(b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.47) 
 (c) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.22) 
 
1. The Chairman
 recalled that Article 21.6 of the DSU required that "unless the DSB decides 
otherwise, the issue of implementation of the re commendations or rulings shall be placed on the 
agenda of the DSB meeting after six months follo wing the date of establishment of the reasonable 
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is 
resolved". He proposed that the three sub-items to which he had just referred be considered 
separately. 
(a) United States – Section 211 Omnibus Appropria tions Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.47) 
2. The Chairman  drew attention to document WT/DS176/ 11/Add.47, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning US Section 211 Omni bus Appropriations Act of 1998. 
3. The representative of the United States  said that his country had provided a status report in 
this dispute on 13 October 2006, in accordance with Article 21.6 of the DSU.  As noted in the status report, several legislative proposals that would im plement the DSB's recommendations and rulings in 
this dispute had been introduced in the current C ongress, both in the US Senate and the US House of 
Representatives.  The US administration continued to  work with the US Congress to implement the 
DSB's recommendations and rulings.  
4. The representative of th e European Communities
 said that, at the previous DSB meeting, the 
United States had asserted that it was second to none  in providing strong protection for intellectual 
property rights, and that the United States' commitmen t and efforts to comply with the DSB's rulings 
could not undermine the authority of the TRIPS Ag reement.  The EC was pleased to hear the US 
statement, but had difficulties reconciling that st atement with the present situation with which 
Members had been confronted, not just in this dispute but also in the Section 110 dispute.  A commitment was one thing, living up to that commitmen t was another.  For more than four and a half 
years, the United States had not made any serious efforts to implement the DSB's rulings and recommendations which had condemned Section 211 for not respecting the obligations of national 
treatment and most-favoured-nation treatment.  Th is month again, the United States could not do 
better than submit a status report, which but for the da te of circulation, was absolutely identical to the 
report submitted in the previous month and actually  to all reports that had been submitted since 
March 2005.    WT/DSB/M/221 
 Page 3 
 
 
  5. The truth was that the failure to respect these core principles of the TRIPS Agreement several 
years after the WTO condemnation had sent the mes sage that the disciplines of the TRIPS Agreement 
could be ignored.  This was necessarily damaging esp ecially since it had come from one of the main 
promoters of that agreement.  To make it worse, th e recent decision of the US  administration to refuse 
the specific licence that would have allowed the rene wal of the registration of the Havana Club mark, 
once again had sent the wrong message.  The renewal w ould not have given away or granted rights.  It 
would have only preserved the status quo and would t hus allow the US courts to decide, in pending 
proceedings, who was the legitimate owner of that mark. What purpose was the United States 
pursuing by refusing the very possibility to defend pote ntial rights to a mark in a court of law?  What 
was even more worrying was the US explanation th at this decision had been made on foreign policy 
grounds.  Ownership of intellectual property rights shoul d be decided in courts on the basis of the rule 
of law and free from the interference of political consider ations.  If this US policy were to be followed 
by other countries, it would seriously undermine th e efforts to promote rules-based protection of 
intellectual property rights worldwide.  Therefore, the EC invited the United States to reconsider its 
position, in light of its seriously damaging effects.  Finally, the EC urged the United States, the only 
WTO Member that consistently did not comply w ith panel rulings under the TRIPS Agreement, to 
bring itself into compliance. 
6. The representative of Cuba  regretted that, after more than four years, during which the DSB 
had examined, month after month, the implementation of the recommendations and rulings in this dispute, the United States had continued to present status reports such as the one submitted at the 
present meeting, which suggested that there was not the slightest possibility that a solution would be 
found.  Repeated denunciations of non-compliance, exhortations and systemic concerns expressed by 
Members had been ignored by the United States. This  showed complete disreg ard for the interests of 
Members.  At the previous DSB meeting, the EC had denounced the politicization of the recent 
decision of the US Patent and Trademark Office to re ject the application for renewal of registration of 
the Havana Club trademark by its owner, the Cuban company CUBAEXPORT.  The federal entity 
had followed instructions from the Office of Foreig n Assets Control (OFAC) of the US Department of 
Treasury, which had previously rejected the licence application filed by CUBAEXPORT to renew the 
registration of the Havana Club trademark, on the grounds that the granting of such a licence was inconsistent with the US government policy.  With such conduct, the decisions adopted by US State agencies and institutions were, once again, contrary to  the legislation and the international agreements 
to which the US government was party.  Not only political interests were behind that decision, but 
also pettier interests, namely those of the Baca rdi company in appropriating the prestigious and 
internationally recognized Havana Club brand, and in  trying to eliminate its competitors in a dishonest 
and unscrupulous way.  The company had spared neither  effort nor expense to achieve that aim.  The 
Bacardi company had spent vast amounts of money on lobbying and donating ge nerous sums to the 
Republican Party, including Senator Mel Martín ez, who had been accused by a political corruption 
watchdog group called Citizens for Responsibility and Ethics in Washington (CREW) of accepting 
more than US$60,000 from the Bacardi company.  Th is was how the rum company ensured that, in 
October 1998, the US Congress had approved the inser tion of a clause in the Federal Budget Bill:  
i.e. Section 211, also known as the Bacardi Law, wh ich had been declared to  be inconsistent with 
WTO rules.  This was also how the company ensu red that the US Patent and Trademark Office had 
denied renewal of the Havana Club trademark to its legitimate owner, so that it could announce on 
8 August 2006 that it would be re-launching the brand in the US market.   
7. It was regrettable that the United States bene fited individual interests while jeopardizing the 
interests of hundreds of US businesspersons who owne d trademarks registered in Cuba.  Section 211 
could set a precedent for other governments to enact laws based upon it, thereby violating the Paris 
Convention, the TRIPS Agreement and other internati onal rules in this sphere and departing from the 
classical doctrine on which these Agreements had been found.  Consequently, this would lead to the 
nullification or impairment of the legitimate rights of the affected Members.  Among the bills that had 
been presented to the US Senate and the House of Representatives, there was a bipartisan bill WT/DSB/M/221 
Page 4  
 
  endorsed by several senators that would invalidate S ection 211 and reflected the general feeling of the 
US business sector, which believed that disregard for trademark rights was a tremendous heresy.  
Cuba reiterated its call for prompt  and effective action to enforce the letter of the WTO Agreements 
before it was too late. Cuba considered that the only possible solution was to repeal Section 211 and 
request that the United States immediately and unconditionally implement the rulings and 
recommendations adopted by the DSB. 
8. The representative of Brazil
 said that, in view of the systemic relevance of the issue, his 
country wished to reiterate its concerns about the continuation of the non-compliance situation in this 
dispute.  The Panel and the Appellate Body Reports in this dispute had been adopted by the DSB in 
January 2002, more than four and a half years a go.  However, no implementing action had been taken 
thus far.  Based on the status report submitted by the United States, it appeared that there was no 
tangible sign that the matter would be resolved soon .  This situation could not be reconciled with the 
principle of prompt implementation of the DSB's rulings and recommendations, a cornerstone of the 
multilateral trading system.  This also impaired th e credibility of the dispute settlement mechanism as 
an effective means to solve trade problems, irrespective of the parties involved.  In light of these 
considerations, Brazil urged the United States to ta ke the necessary steps to implement the relevant 
DSB's rulings and recommendations. 
9. The representative of India  said that his country wished to  thank the United States for the 
situation report and its statement.  However, India felt compelled again to stress that the principle of 
prompt compliance with the DSB's rulings and r ecommendations appeared to be missing in this 
dispute.  This was a matter of systemic concerns, especially since almost five years had elapsed after 
the adoption of the DSB's recommendations and rulings in this dispute.  India again urged the parties 
to this dispute to inform the DSB as to how they in tended to fulfil the objective of prompt settlement. 
10. The representative of the Bolivarian Republic of Venezuela  said that his country wished to 
thank the United States for its status report. His c ountry thanked Cuba for its statement and wished to 
be fully associated with that statement.  Cuba 's complaint was legitimate since the DSB had 
demonstrated that Section 211 was inconsistent  with the WTO Agreements and the fundamental 
principles of the WTO.  As his delegation had stated on several occasions, his country was deeply concerned about the continued failure by the United St ates, as well as other Members, to comply with 
the DSB's recommendations.  This not only had serious  systemic implications, but also undermined 
the credibility of the DSB and, even worse, the credibility of the WTO since it had set a serious 
precedent that could adversely affect other Members in  future, in particular it could affect developing 
countries for whom the WTO dispute settlement system was an essential element in providing 
security and predictability to the multilateral tradi ng system.  The attitude of the United States not 
only undermined the DSU, it also affected the b asic pillars on which the TRIPS Agreement and the 
Appellate Body rested.  Moreover, that demonstrated  the arbitrariness and discretionary attitude of the 
United States, which his country had condemned  at the previous DSB meetings, and had 
understandably made his country reluctant to ne gotiate and assume new commitments in the DSU 
negotiations, as well as in the Doha Round negotiations in general.  At the same time, his country was 
particularly concerned at the recent decision by the US Patent and Trademark Office to reject the application for renewal of the registration of th e "Havana Club" trademark submitted by the Cuban 
company that owned it, on the basis of the arbitrary and illegal Section 211.  This situation had been 
brought to the attention of the DSB by Cuba some time ago – so that now Members were faced with 
yet further evidence that the obvious reason for the US delay in compliance with the DSB's 
recommendations and hence with the WTO rules, w as to enable a powerful American company to 
appropriate the Havana Club trademark.  Unfortunate ly, the United States had shown, once again, that 
it had little intention of finding a compromise solu tion to the matter.  His country, nevertheless, 
repeated its call for a prompt solution to this disp ute, a solution which would be satisfactory to the 
parties and which, above all, would respect the Agreements that constituted the raison d'être of the 
WTO.   WT/DSB/M/221 
 Page 5 
 
 
  11. The representative of China  said that his country thanked the Unites States for its status report 
and its statement.  However, it was regrettable that the US status report did not provide new 
information as to when this matter would be resolv ed to the satisfaction of the parties and other WTO 
Members.  As other delegations had stated, it had b een more than four years since the adoption by the 
DSB of both the Panel and the Appellate Body Reports pertaining to this dispute, but the 
implementation in this dispute was still befo re the DSB under discussion.  Although China was 
conscious of possible difficulties involved in th e implementation, the undue delay of full 
implementation of the DSB's rulings had caused systemic concerns about the functioning and efficiency of the dispute settlement system.  As provided for in Article 21.1 of the DSU, prompt 
compliance with the DSB's recommendation or rulings was essential to ensure effective resolution of 
disputes to the benefit of all Members.  Therefor e, China again urged the United States to fully 
implement the decision of the DSB pertaining to this dispute as soon as possible.   
12. The representative of Bolivia
 said that, once again, Members had heard the US status report 
and yet again, Bolivia noted with concern that there had been no progress towards compliance with 
the DSB's rulings and recommendations, which provided that the restrictions set forth in Section 211 
should be lifted.  This was a source of concern for Bolivia because the failure to comply with the DSU 
provisions, which had been intended to provide Members with certainty, undermined the credibility of 
the WTO.  As Bolivia had stated on previous o ccasions, this non-compliance, which had been going 
on for more than four years, drew the attenti on of governments and other social actors to the 
functioning of the multilateral trading system, in particular in the area of intellectual property rights.  Once again, his delegation wished to join other Me mbers in urging the United States to implement the 
DSB's rulings and recommendations in this dispute since significant injuries were being caused to a 
developing country Member.  
13. The representative of Uruguay
 said that her country recognized the legitimate right of the 
parties to the dispute to seek a mutually acceptabl e solution that was consistent with the covered 
agreements.  Nevertheless, Uruguay shared the syst emic concerns expressed by Cuba, Brazil, India, 
Venezuela, China and Bolivia regarding the importa nce for Members to comply promptly with the 
DSB's recommendations, which was an essential elem ent in ensuring the smooth operation and the 
credibility of the dispute settlement system, as well as the legal certainty and the effective balance of 
rights and obligations provided under the multilate ral trading system. Members must, therefore, do 
their utmost to comply promptly with the DSB's recommendations. 
14. The representative of Argentina  said that, like others, his country also wished to thank the 
United States for its status report.  In light of the current situation and, in particular since a long period 
of time had elapsed following the adoption of the DS B's recommendations and rulings in this dispute, 
Argentina requested that the United States undertake the necessary efforts in order to implement those 
recommendations and rulings as soon as possible.   
15. The representative of the United States  said that, for several meetings now, the EC had been 
criticizing the US commitment to intellectual property rights and to the TRIPS Agreement.  The EC's 
comments were regrettable, and its criticisms were complete ly unfounded.  It was of course true that 
the United States had been and remained a strong ad vocate of substantial protections for intellectual 
property internationally.  The EC, and its member States, were well placed to be aware of this.  
However, it was equally true – and once again, the EC knew this very well – that the United States 
was second to none in providing strong intellectual property protection within its own territory.  The 
United States reiterated that the US administra tion continued to work with the US Congress to 
implement the DSB's recommendations and rulings in this dispute.  With respect to the comment 
directed at a particular trademark registration, none of the recomme ndations and rulings of the DSB in 
this proceeding related to the renewal of specific tr ademarks, so this was not an issue related to the 
implementation of the DSB's recommendations and rulings.  WT/DSB/M/221 
Page 6  
 
  16. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.47) 
17. The Chairman  drew attention to document WT/DS184/ 15/Add.47, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning US anti-dumping measures on certain hot-rolled steel products from Japan. 
18. The representative of the United States  said that his country had provided a status report in 
this dispute on 13 October 2006, in accordance with Article 21.6 of the DSU.  As of 
23 November 2002, the US authorities had addresse d the DSB's recommendations and rulings with 
respect to the calculation of anti-dumping margins in the hot-rolled steel anti-dumping duty 
investigation at issue in this dispute.  Details  were provided in document WT/DS184/15/Add.3.  The 
US administration continued to support legislative amendments that would implement the DSB's recommendations and rulings with respect to the US  anti-dumping duty statute, and was working with 
the US Congress to pass such amendments. 
19. The representative of Japan
 said that his country noted the statement made by the 
United States along with its most recent status report. While Japan was encouraged that the US 
administration would continue to work with the US Congress to enact legislation H.R. 2473, it regretted that there had been no progress since th at legislation had been introduced in the US 
Congress in May 2005.  As his delegation had repeatedly  stated before the DSB, Japan believed that a 
full and prompt implementation of the DSB's recomm endations and rulings was essential in order to 
maintain the credibility of the WTO dispute settlement  system.  Japan wished to renew its strong hope 
that the US administration would accelerate its effort s to work with the US Congress in order to pass 
the necessary legislation without further delay. 
20. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(c) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.22) 
21. The Chairman   drew attention to document WT/DS160/ 24/Add.22, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning Section 110(5) of the US Copyright Act. 
22. The representative of the United States  said that his country had provided a status report in 
this dispute on 13 October 2006, in accordance with Ar ticle 21.6 of the DSU.  As noted in the report, 
the US administration was working closely with the US Congress, and conferring with the EC, to 
reach a mutually satisfactory resolution of this matter.  
23. The representative of the European Communities  said that, once again, the United States had 
submitted before the DSB a status report empty of any meaningful content.  From that report, it 
seemed clear that there was a total lack of progr ess in solving this long-standing dispute.  This 
situation had lasted now for more than five year s.  If one were to judge the commitment of the 
United States to its obligations under the TRIPS Agre ement on the basis of this dispute, the appraisal 
would be anything but positive.  The United States ha d failed to take any steps to amend a piece of 
legislation that violated intellectual property rights  and hurt the interests of music creators.  The 
United States was failing to comply at home with th e rules that it actively so ught to enforce abroad. 
This situation of double standards created damage  that went beyond the boundaries of this specific  WT/DSB/M/221 
 Page 7 
 
 
  dispute.  Therefore, the EC urged, once again, th e United States to provide information on the specific 
steps that it had taken or intended to take to solve this dispute.  This situation of non-compliance had 
already lasted for too long.  Finally, the EC wished to recall that it had reserved its right to reactivate, 
at any point in time, the arbitration proceedings on retaliation. 
24. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
2. Implementation by the European Communiti es of the recommendations and rulings of 
the DSB in relation to "European Communiti es – Regime for the Importation, Sale and 
Distribution of Bananas"1 and related subsequent WTO proceedings 
(a) Statements by Honduras, Nicaragua and Panama 
25. The Chairman  said that this item was on the agenda of the present meeting at the request of 
Honduras, Nicaragua and Panama.  He then invite d the representatives of the respective countries to 
speak. 
26. The representative of Honduras  noted that the provisions of Article 21 of the DSU set forth 
two objectives:  first, to ensure prompt complia nce with the DSB's recomme ndations or rulings and 
second, to pay particular attention to matters affec ting the interests of developing-country Members.  
The Banana dispute was about the violation of both  provisions more openly and persistently than any 
other WTO dispute. He noted that the Bananas III dispute was a result of two GATT panel rulings, 
which had not been enforced.  This dispute had been initiated by Honduras and some other Members 
in 1996 and had perpetuated that unfortunate legacy.  Following th e adoption of the Bananas III report 
by the DSB in 1997, the EC had modified its regime  in a way that had disregarded the DSB's rulings.  
Even when the procedures for suspension of con cessions and the compliance procedures under Article 
21.5 of the DSU had been initiated, the EC had persis ted in its refusal to comply.  The EC had agreed 
with the United States and Ecuador to a series of measures, to be phased ove r several years, in an 
effort to resolve the Bananas III dispute.  Howeve r, Honduras was not a signatory to such agreement 
and had continued to reserve its right s to refer this matter to an Article 21.5 panel, if necessary.  Given 
that the EC agreement called for a waiver, additi onal waiver requirements had been established.  As 
of 2006, which had marked the final stage of the EC multi-year agreement, the EC had again 
implemented a series of measures which had disregar ded its obligations under the Bananas III dispute, 
and was in breach of its commitments made to r esolve this long-standing dispute.  Thus, Honduras 
was still awaiting the EC's compliance with the Banan as III report, nearly a decade after its adoption.  
Therefore, should Honduras' rightful claim go without redress, this decade-long DSU action would 
result in a WTO-illegal discrimination, which proved to be more adverse to MFN interests than the 
very measures that had been challenged in this di spute.  Such an outcome would discredit the key 
objectives of the DSU, cast doubt on the system in  general, and would cause irreparable harm to 
Honduras and other countries in the region.  His count ry accordingly renewed its request that the DSB 
enforce the rulings and recommendations of the Bana nas III dispute so as to ensure that particular 
attention was paid to Honduras and the other Latin American countries that had sought the support of 
the DSB. 
27. The representative of Panama  said that, for almost a year now, the EC had insisted that the 
"monitoring process" was the appropriate framework in which to discuss this matter.  Over that 
lengthy period of time, which would have been su fficient to reach a satisfactory solution had there 
been the will to do so, the "monitoring process" ha d monitored a number of developments – none of 
them was favourable.  Thus, the following developmen ts had been monitored:  (i) month after month 
market gains by the ACP countries had exceeded trade by MFN suppliers by a factor of 2.5, according 
                                                      
1 WT/DS27. WT/DSB/M/221 
Page 8  
 
  to Eurostat information;  (ii) the EC prices had dropped by almost 35 per cent compared with 2005 
levels, if one excluded the tariff of €176/mt that was paid to the EC Treasury;  (iii) massive increases 
occurred in amber box banana subsidies in the EC , which would be financed through the onerous 
tariff being paid by the countries concerned;  (i v) inevitably, unlimited duty-free access for ACP 
countries was about to become a reality;  (v) the Commission had repeatedly confirmed that, in the 
short-term, it was not prepared to take remedial  action regarding MFN access;  (vi) the Commission 
had repeatedly refused to reveal the bound tariff to  which Panama's bananas were now subject.  The 
situation that he had described summarized the true  meaning of the EC's assertion that it remained 
open to addressing the concerns of Latin American  suppliers under the monitoring process.  After 
eleven long months, the overriding objective of the monitoring process was clearly to force Latin 
American countries into resignation.  Since Pana ma's banana exports were vital to its rural 
communities' economic and social well-being, his country  could not afford to become resigned in this 
respect.  Consequently, Panama, once again, joined Honduras and called for prompt and full compliance by the EC, in accordance with Article 21 of the DSU.  
28. The representative of Nicaragua
 said that since the previous DSB meeting in September, there 
had been mounting evidence that the EC's discr iminatory import arrangement was causing a major 
commercial shift away from traditional Latin Amer ican suppliers, such as Nicaragua, towards the 
countries that benefited from that discrimination. Two weeks ago, for example, press reports had confirmed that yet another substan tial multinational investment had been made in an ACP country, in 
this particular instance to cover the acquisiti on of a well-known ACP banana marketing company. 
What had induced that ACP investment, and the many others in recent months, was the US$4.22/box 
EC tariff advantage, which ACP preferential supplie rs enjoyed over countries like Nicaragua.  There 
was no comparable investment activity in eith er Nicaragua or any other Latin American 
developing-country supplier, and no such activity was expected as long as th e EC's discrimination 
continued.  Nicaragua's view was shared by a well-known credit agency, which had issued a report a 
few weeks ago confirming that none of the major ba nana marketers had any choice now, but to shift 
their sourcing out of Latin America to countries where the US$4.22/box tariff did not apply.  That 
report had been out at about the same time as a new EC Council document on bananas had been circulated confirming that ACP access benefits w ould multiply several-fold in another year, when 
unlimited duty- and quota-free access would be ac corded to all ACP bananas at a US$4.22/box 
advantage.  That meant that the discriminatory incentives that were now shifting investments and 
sourcing decisions away from countries like Nicara gua were about to get far worse. Since the 
previous DSB meeting, the Commission's respons e to Nicaragua's access concerns had been no 
different than in previous months.  It has been reaffirmed, at the highest levels of the Commission, 
that no near-term relief of any kind would be po ssible for MFN suppliers.  Thus, after hearing 
Nicaragua's urgent requests month after month, the EC's only response had been to schedule far 
greater discrimination for 2008 and to deny any MFN relief in the interim.  If this was how 
Nicaragua's major trade concerns were being addr essed, Nicaragua's affected sectors would have no 
hope of attracting investment, creating jobs or e xpanding its impoverished economy.  Nicaragua again 
urged Members to join it as we ll as other countries in calling for a solution consistent with the 
obligation of compliance and the developing-country objectives.  
29. The representative of the European Communities
 said that the EC wished to refer to its 
previous statements on why this matter was not an  "implementation issue" covered by Article 21 of 
the DSU.  The EC remained open to addressing the c oncerns of Latin American suppliers in relation 
to its import regime in the appropriate fora.  The EC was well aware of the importance of the banana 
industry for Latin American countries, as well as AC P countries, and had always taken these interests 
into consideration.  The EC was in regular cont act with the WTO Members involved to discuss this 
issue, including the rebinding of the MFN tariff.  Th e EC had always been and remained committed to 
maintaining access to its market by all banana supplyi ng countries.  Contrary to the statements made 
by Honduras, Nicaragua and Panama at the previous  DSB meeting, which had been reiterated at the 
present meeting, data on overall MFN imports availa ble to-date gave no reason to believe that such  WT/DSB/M/221 
 Page 9 
 
 
  access  was not maintained.  The new EC tariff had thus far resulted in an increase in imports from 
both MFN and ACP suppliers as compared to previous  years.  With regard to the statement by 
Panama, he said that the EC commitments did not  include a commitment to "guarantee specific 
market shares", but only equivalent market access.   The envisaged reform was by no means intended 
to increase subsidies to the EC banana producers or to promote the production of bananas in the EC.  
The objective of the reform was to bring the current  aid scheme for banana producers in line with the 
objectives of the 2003 reform of the EC Common Agricultural Policy and to ensure that aid took into account the particularities of each of the producing regions in the EC.  
30. The representative of the United States
 said that this item involved a dispute that had left 
several Members waiting for full compliance for near ly a decade following the adoption of the DSB's 
recommendations and rulings.  The current EC banana  regime had now been in place for almost one 
year.  Serious concerns had been raised about th is regime repeatedly by Members for whom the 
market situation had become untenable and conti nued to deteriorate.  Yet, the United States 
understood that the EC had taken no steps to a ddress the concerns.  This was not an acceptable 
situation, especially given the great social and econom ic importance of this issue to many Members.  
The United States was continuing to  hold informal discussions with interested Members to determine 
the most appropriate way to address the concerns with the EC's regime.  At the same time, the United States strongly urged the EC to work with  interested Members to resolve this dispute as 
expeditiously as possible. 
31. The representative of Brazil
 said that his country wished to thank Honduras, Nicaragua and 
Panama for bringing this matter to the attention of the DSB.  This issue had serious systemic 
implications and raised concer ns among all Members and not only those that had a direct trade 
interest.  Almost one year afte r the issuance of the Award of the Arbitrator on 27 October 2005, 
concerning the second recourse to Arbitration pursuan t to the Decision of 14 November 2001, the EC 
had not yet established a definitive tariff only regime for MFN bananas.  In this regard, Brazil recalled 
that the EC had initiated Article XXVIII negotiati ons, but no new MFN tariff had been rebound in the 
EC's Schedule.  Brazil was not questioning the exis tence or maintenance of preferential schemes by 
the EC.  Brazil understood, however, that MFN supp liers of bananas were entitled to a clear and 
transparent set of rules that would provide predicta bility regarding market ac cess conditions to the EC 
and future investment decisions in producing and exporting countries.  
32. The representative of Ecuador  said that her country fully supported the statements made by 
Honduras, Nicaragua and Panama on th e matter at issue and asked the EC to seek a definitive solution 
to the discrimination against MFN suppliers and ille gal actions arising from the implementation of the 
new banana import regime. Contrary to what ha d been suggested by th e European Commission, 
internal statistics of Ecuador's Ministry of Agricu lture showed that since the new regime had entered 
into force, there had been a fall in exports from Ecuador to the EC market of almost 3 per cent by 
September 2006.  This represented a significant dec line in Ecuador's share in the EC's market.  
Meanwhile, exports from the ACP suppliers, whic h had a tariff-free quota of 775,000 tonnes, had 
increased by more than 18 per cent.  The current ta riff of €176 per tonne applied on a discriminatory 
basis to the MFN countries and the absence of tariff bindings had not only undermined the competitiveness of Latin American producers and exporte rs, but had also deprived them of any legal 
guarantee, while at the same time deterring potential investors and viol ating the obligation to maintain 
"at least total access for MFN suppliers", as stipulated in the Annex to the Doha waiver.  If one added 
to this the new EC's proposal to increase dom estic subsidies for the EC producers, which had 
currently exceeded €250,000,000 per year, the futu re looked bleak for MFN suppliers.  Indeed, 
thousands of jobs, which in Ecuador  depended directly on the exportati on of bananas, were in serious 
jeopardy, and the social cost would be aggravated by serious consequences facing more than a million 
and a half persons who de pended on this lawful activity for thei r subsistence.  At the same time, 
Ecuador was one of the few countries which, havi ng had its rights under Article XXVIII of the GATT 
1994 recognized, had received no compensation for its tr ade losses resulting from the enlargement of WT/DSB/M/221 
Page 10  
 
  the European Union under Article XXIV of the GATT 1994.  Ecuador had participated in good faith 
and with great interest in the good offices process set up by the Hong Kong Ministerial Conference for the purpose of achieving a comprehensive, balan ced and definitive solution to the banana dispute 
with the EC, in spite of the fact that it would so on be one year since two Arbitrations had ruled in 
favour of the MFN banana exporters  and had recognized that a high tariff did not maintain at least 
total access to the EC market for Latin American s uppliers.  As Ecuador had repeated throughout the 
good offices process conducted by the Norwegian Minist er of Foreign Affairs, Ecuador had reserved 
its legal rights under the WTO.  It should be stress ed that the negotiation of the Andean Community-
EU Association Agreement was a separate matter, wh ich should not be confused with the negotiation 
of MFN banana exports to the EC.  She noted, in th is connection, a decision by Ecuador to initiate a 
legal dispute settlement process in the WTO to ensu re that the EC complied with its commitments 
towards Ecuador and the MFN suppliers, and with th e rulings in favour of Ecuador, by introducing a 
non-discriminatory tariff-only regime that guaranteed the principles of free trade on which Membership in the WTO was based and whic h constituted the keystone of the WTO.  
33. The representative of Argentina
 said that, once again, Members were faced with a situation of 
non-compliance with the two WTO Arbitrators' decisions .  The EC had stated that this matter was not 
an implementation issue covered by Article 21 of the DSU.  However, it was difficult to accept that interpretation.  As stated by othe r delegations, two Arbitrations had b een carried out about a year ago, 
but the rules applied by the EC did not seem to be compatible with neither the letter nor the spirit of 
the Arbitrators' decisions.  They rather seemed to undermine the interests and rights of MFN suppliers. In this respect, Argentina hoped that the EC would cooperate with the interested parties in 
an attempt to find a satisfactory solution to all Members.   
34. The representative of the European Communities
 said that the EC had been quite satisfied 
with the way the good offices process had been conducte d thus far with the help of Norway.  The EC 
would have been ready to draw the necessary conc lusions from this process when the representative 
data had been examined.  It would be unfortunate if Ecua dor decided not to give this process a real 
chance and instead opted for dispute settlement proceedings.  
35. The DSB took note  of the statements. 
3. United States – Continued Dumping and Subsid y Offset Act of 2000:  Implementation of 
the recommendations adopted by the DSB 
(a) Statements by Canada, the European Communities and Japan 
36. The Chairman  said that this item was on the agenda of the present meeting at the request of 
Canada, the European Communities and Japan.  He then invited the respective representatives to 
speak. 
37. The representative of the European Communities  said that the United States had had until 
27 December 2003 to stop the distribution of th e collected anti-dumping and countervailing duties to 
its industry.  Almost three years later, on 1 October 2006, the United States had started the 
distribution of the duties collected during the fiscal  year 2006 that had ended on 30 September 2006.  
Details of that distribution had not yet been known,  but the provisional estimates made available by 
the US Customs and Border Protection in June 2006 indicated that the distribution would exceed the amount distributed in the previous year.  In addition, this distribution would, for the first time, treat imports subject to anti-dumping measures differently depending on their origin.  Duties collected on products from NAFTA partners would not be dist ributed following an order of the Court of 
International Trade ruling that the Byrd Amendment could not apply to them.  It went without saying 
that this did not solve the problem of complian ce for the WTO Membership as a whole.  The US 
Congressional Budget Office had also foreseen that the distribution of the anti-dumping and  WT/DSB/M/221 
 Page 11 
 
 
  countervailing duties would continue until at least th e fiscal year 2010, starting on 1 October 2009.  
As long as those transfers continue d, the United States would be in  breach of Articles 18.1 of the 
Anti-Dumping Agreement and 32.1 of the SCM Agre ement and full implemen tation would still have 
to be delivered.  At the previous DSB meeting, th e United States had denied again its obligation to 
take further steps so as to st op immediately the distributions unde r the CDSOA by asserting that it had 
taken all steps to bring itself into compliance with its WTO obligations.  This actually meant that the 
United States granted itself the right to comply with  the DSB's rulings at some undetermined date in 
the future regardless of the Members' duty to co mply promptly with the DSB's rulings.  The FSC 
dispute where the US Congress had finally put an end to WTO-illegal grandf athering periods showed 
that the United States could revisit the delayed te rmination of the Byrd Amendment if the political 
will was there.  The EC wished to ask again the United States if and what steps it intended to take to 
stop the transfer of anti-dumping and countervailing duties without further delay.  The EC also renewed its call on the United States to abide by its  clear obligation under Article 21.6 of the DSU 
and to submit status reports in this dispute. 
38. The representative of Canada
 said that his country had repeatedly expressed its appreciation 
with the steps the United States had taken towards implementing the DSB's rulings and 
recommendations in this dispute.  However, the United States had only prospectively repealed the 
Byrd Amendment.  Anti-dumping and countervailing duties collected up to 30 September 2007 could 
still be disbursed to US producers under the terms of th is legislation.  As such, Canada believed that 
the US claim – made in its last status report fro m over eight months ago – that it had "taken the 
actions necessary to implement the rulings and r ecommendations" in this dispute was not accurate.  
Canada, therefore, called on the United States to resume  the submission of status reports and to repeal 
the Byrd Amendment. 
39. The representative of Japan  said that his country had to reiterate its disappointment that the 
United States, once again, had not submitted a status report this month regardless of its statements in 
the previous DSB meetings.  Despite the enactme nt of the Deficit Reduction Act of 2005, illegal 
distribution was continuing under the transitional clau se of the CDSOA.  Japan was convinced that, as 
long as this situation did not change, the United States had not fully implemented the DSB's recommendations and rulings.  The United States sha ll take the necessary steps to stop immediately 
illegal distribution under the CDSOA.  Japan urged th e United States to provide status reports and to 
comply fully with the DSB's recommendations and rulings as soon as possible.  Japan reserved all its rights under the DSU until the full implementa tion by the United States had taken place. 
40. The representative of Brazil
 said that his country wished to thank Canada, the EC and Japan 
for bringing, once again, this matter to the attention of the DSB.  He reiterated that Brazil did not take 
issue with the repeal of the Byrd Amendment as such .  This was a rather late, but still welcome action 
by the United States.  Brazil could not, however, accept the statement that th is prospective repeal 
alone meant that the United States had fully complie d with the DSB's rulings and recommendations in 
the present dispute.  Brazil and others had been urging the United States to present the rationale 
behind its statement that the issue had been resolved  within the meaning of Article 21.6 of the DSU.  
But no reply had been provided by the United States .  In particular, no expl anation had been given 
about the fact that the repeal would allow illegal disbursements to continue until, at least, October 
2007.  By persistently refusing to provide any explan ation to sustain its allegation of compliance, the 
United States reinforced the perception that its asser tion had no legal basis.  Full compliance on the 
part of the United States would only come through the complete elimination of all disbursements 
under the Byrd Amendment.  In this context, the co -complainants could not be deprived of any right 
conferred by the DSU with respect to this situation of non-compliance. 
41. The representative of China  said that his country thanked a nd supported the EC, Canada and 
Japan for raising this item at this meeting.  Chin a shared the views expressed by the previous speakers 
that the implementation issue had not been resolved in this dispute within the framework of Article 21 WT/DSB/M/221 
Page 12  
 
  of the DSU.  It was clear that a legislative provision providing for prospective repeal of the 
WTO-inconsistent Byrd Amendment in October 200 7 had not resulted in full compliance with the 
DSB's rulings.  Implementation was critically important  to ensure the credibility and efficiency of the 
dispute settlement system.  Should the prospective repeal of a WTO-inconsistent measure be treated 
as equal to immediate compliance, the legal basis of the DSU regarding prompt and full compliance 
with the DSB's recommendations and rulings would be  greatly undermined.  Therefore, China wished 
to join the previous speakers in urging the United St ates to comply fully and promptly with the DSB's 
rulings. 
42. The representative of India
 said that his country wished to thank Canada, the EC and Japan 
for raising this issue at the DSB again.  Unfo rtunately, India was still awaiting a response from the 
United States to the question put by India at earli er DSB meetings as to how continued disbursements 
of duties collected on imports entering the United St ates squared up with its compliance obligations.  
Clearly, the United States needed to do more than to  reiterate its indefensible position on compliance, 
in the face of the new administration action based on the very CDSOA that it admitted had been found 
inconsistent with WTO rules, and asserted that it had been withdrawn.  Such unilateral action 
undermined the WTO dispute settlement system.  Indi a, therefore, again urged the United States to 
inform the DSB of the steps it proposed to take to  ensure full compliance, and reiterated its request, 
that the United States resume submitting status reports in this dispute. 
43. The representative of Thailand  said that his country thanked Canada, the EC, and Japan for 
continuing to bring this item before the DSB.  Th ailand remained disappointed at the US continued 
illegal disbursement of funds under the CDSOA, and at its continue d refusal to submit any status 
report on its outstanding implementation in "US – Continued Dumping and Subsidy Offset Act of 
2000".  At the present meeting, Thailand must theref ore repeat its call for th e United States to cease 
these illegal disbursements, to immediately repeal  the Byrd Amendment, and to resume providing 
status reports in relation to this dispute until such  actions had been taken and this matter had been 
fully resolved. 
44. The representative of the United States  said that, as his country had already explained at 
previous DSB meetings, the US President had signed the Deficit Reduction Act into law on 
8 February 2006.  That Act included a provisi on repealing the Continued Dumping and Subsidy 
Offset Act of 2000.  Thus, the United States had ta ken all actions necessary to implement the DSB's 
recommendations and rulings in these disputes.  With respect to the comments regarding further status 
reports in this matter, as it had already been expl ained, the United States had taken all steps necessary 
to implement the DSB's recommendations and rulin gs in these disputes.  Those Members who had 
inscribed this item on the agenda of the present meeting were, of course, free to do so, but the 
United States failed to see what purpose would be served by further submission of status reports 
repeating the progress the United States had made in the implementation of the DSB's recommendations and rulings. 
45. The DSB took note
 of the statements.  WT/DSB/M/221 
 Page 13 
 
 
  4. China – Measures affecting imports of automobile parts 
(a) Request for the establishment of a panel by the European Communities (WT/DS339/8) 
(b) Request for the establishment of a panel by the United States (WT/DS340/8) 
(c) Request for the establishment of a panel by Canada (WT/DS342/8) 
46. The Chairman  proposed that the three sub-items to wh ich he had just referred be considered 
together.  He recalled that the DSB had consider ed these matters at its meeting on 28 September 2006 
and had agreed to revert to them.  First, he drew attention to the communication from the 
European Communities contained in document WT/D S339/8 and invited the representative of the 
European Communities to speak. 
47. The representative of th e European Communities  said that, for the sake of time, he would not 
repeat the reasons which had forced the EC to  request the establishment of a panel on China's 
measures on the import of automobile components.   At the previous DSB meeting, the EC had 
explained the fundamental concerns raised by China' s measures and all details were contained in the 
EC's request for the establishment of a panel to wh ich he had referred.  The present meeting was the 
second time that the EC's request had been subm itted before the DSB, as was the case with the 
requests submitted by Canada and the United States.  As the matter raised in the three requests was 
the same, the EC requested that a single panel be established to examine the three complaints pursuant 
to Article 9.1 of the DSU.  
48. The Chairman  drew attention to the communication from the United States contained in 
document WT/DS340/8 and invited the representative of the United States to speak.  
49. The representative of the United States  said that, as discussed in more detail at the previous 
DSB meeting, all vehicle manufacturers in China that used imported parts in the assembly of vehicles 
must provide specific information about each vehicl e they assembled, including a list of the imported 
parts to be used, and the value and supplier of each  part.  If the number or value of imported parts 
exceeded specified thresholds, Chin a assessed a charge on each imported auto part that was equal to 
the higher tariff on a complete motor vehicle, rather  than assessing the lower ta riff for the auto part.  
These measures discouraged auto manufacturers in Ch ina from using imported parts in the assembly 
of new vehicles.  Contrary to China's suggestion made at the previous DS B meeting, the measures 
could not be justified as intended to avoid circumven tion.  The United States renewed its request that 
the DSB establish a panel to resolve this dispute.  The United States further requested that a single 
panel be established to examine the US, the EC  and Canadian complaints in accordance with 
Article 9.1 of the DSU. 
50. The Chairman  drew attention to the communicati on from Canada contained in document 
WT/DS342/8 and invited the representative of Canada to speak.  
51. The representative of Canada  recalled that, at the DSB meeting on 28 September 2006, her 
country had presented its first request for the establishm ent of a panel in this matter.  Canada had done 
so because of its concerns with certain Chinese ch arges on imported automobiles parts and related 
administrative measures that had given rise to a dvantages for domestic produc tion.  Canada believed 
that these measures were not in conformity with  China's commitments and obligations under the 
WTO Agreement.  Canada had already set out its r easons for proceeding with this case in its request 
for the establishment of a panel, and she wished to  refer Members to Canada's request circulated on 
18 September 2006 in document WT/DS342/8.  The EC  and the United States had also made separate 
requests for a panel.  For the reasons set out in its  panel request, Canada asked, once again, that the 
DSB establish a panel pursuant to Article 6 of the DSU in order to resolve this dispute. WT/DSB/M/221 
Page 14  
 
  52. The Chairman
 invited the representative of China to speak.  
53. The representative of China  said that his country had fully articulated its position on this 
matter at the DSB meeting held on 28 September 2006 and, in the same spirit as expressed by the EC, 
the US and Canada in order to save time, China woul d not repeat its position at the present meeting.  
China was greatly disappointed that the United St ates, the EC and Canada had ignored China's 
arguments and good faith to resolve the disput e under discussion through consultations and had 
decided to proceed with their requests for a pane l for the second time, an action that was unproductive 
for an appropriate solution to the dispute.  Chin a would defend its position and interests before the 
panel and remained confident that China's releva nt measures were consistent with its accession 
commitments and the relevant WTO rules.  Although it was deeply regrettable that the 
above-mentioned Members had insisted in pursuing their panel requests, China would respect any 
decision the DSB might take on the possibility of establishing a single panel to examine the three complaints in accordance with Article 9.1 of the DSU.  
54. The DSB took note
 of the statements and agreed  to establish a single panel, pursuant to 
Article 9.1 of the DSU, with standard terms of  reference, to examine the complaints by the 
European Communities, the United States and Canada.   
55. The representatives of Argentina , Australia , Japan , Mexico  and Chinese Taipei  reserved their 
third-party rights to participate in the Panel's proceedings.  
5. United States – Measures relating to shrimp from Thailand 
(a) Request for the establishment of a panel by Thailand (WT/DS343/7)  
56. The Chairman  recalled that the DSB had considered this matter at its meeting on 
28 September 2006 and had agreed to revert to it.  At  the present meeting, he drew attention to the 
communication from Thailand contained in document WT/DS343/7, and invited the representative of 
Thailand  to speak. 
57. The representative of Thailand  said that the DSB had first examined Thailand's request for the 
establishment of a panel pertaining to this dis pute on 28 September 2006.  Thailand's request was 
circulated to Members as document WT/DS343/7 and, at the present meeting, Thailand again 
requested that the DSB establish a pa nel to examine the matter described in that document.  He would 
not reiterate the specifics of Thailand's request, but wished to emphasize that the United States' 
imposition of the WTO-inconsistent  continuous bond requirement a nd its utilization of "zeroing", 
repeatedly outlawed by the Appellate Body, we re endangering both the livelihood of Thailand's 
shrimp farmers and the existence of its recovering shrimp industry, which was one of the key sectors 
of Thailand's economy and its development.  Un fortunately, in the period between the first 
consideration by the DSB of Thailand's panel request  and now, the United States  had failed to address 
Thailand's concerns.  Therefore, Thailand had no ch oice but to seek recourse to dispute settlement, 
and requested the establishment of a panel to resolve this matter.  
58. The representative of the United States  said that his country would not repeat all of the points 
made at the previous DSB meeting concerning th is matter.  The United States continued to be 
disappointed that Thailand had chosen to pursue this  matter further by requesting the establishment of 
a panel.  Members had the right to ensure that importers paid duties owed.  The United States was 
confident that the panel established at the present meeting would recognize this fact and would reject 
Thailand's claims on the bonding measures at issue. 
59. The representative of India  said that Thailand had identified two measures in its request for a 
panel on this matter.  The first related to the use of the practice of "zeroing" to calculate dumping  WT/DSB/M/221 
 Page 15 
 
 
  margins.  The other was the requirement imposed by the United States on importers of shrimp for a 
continuous bond, on which India had separately requested the establishment of a panel.  India believed that the Amended Bond Directive measure w as inconsistent as such with various provisions 
of the GATT 1994, Anti-Dumping Agreement and the SCM Agreement and, as applied to importers 
of warm water shrimp from six countries (including  Thailand and India), was inconsistent with a 
number of provisions of the GATT 1994 and the Anti-Dumping Agreement.  The use of "zeroing" in 
the final margin determination by the United States had also been repeatedly declared 
WTO-inconsistent by various panels  and the Appellate Body.  Indi a supported the request by Thailand 
for the establishment of a panel in this dispute and reserved its third-party rights to participate in the 
Panel's proceedings 
60. The DSB took note
 of the statements and agreed  to establish a panel in accordance with the 
provisions of Article 6 of the DSU w ith standard terms of reference. 
61. The representatives of Brazil , Chile , China , the European Communities , India , Japan , Korea  
and Mexico  reserved their third-party rights to pa rticipate in the Panel's proceedings. 
6. United States – Final anti-dumping measures on stainless steel from Mexico 
(a) Request for the establishment of a panel by Mexico (WT/DS344/4) 
62. The Chairman  drew attention to the communicati on from Mexico contained in document 
WT/DS344/4, and  invited the representative of Mexico to speak. 
63. The representative of Mexico  said that this was Mexico's first presentation of its panel request 
before the DSB although this was not the first time th at the matter had been ra ised against the use of 
the so-called "zeroing" methodology.  On several  occasions, the Appellate Body had pronounced 
itself on the use by the United States of that met hodology in practically all possible circumstances, 
and in every case had determined that the methodol ogy was inconsistent with the WTO Agreements.  
This had been done in the "Softwood Lumber" case w ith respect to original investigations using a 
weighted-average-to-weighted-average method;  in the Article 21.5 proceedings, also concerning 
"Softwood Lumber", with respect to original investigations using transaction-to-transaction 
comparisons;  and in the "Zeroing" case presented by the EC with respect to administrative reviews 
using the methodology of comparison between weighted  averages and transactions .  In all these cases, 
the Appellate Body had identified and had appropriately applied the same coherent reasoning, which 
had resulted in the methodology used by the United States being found to be inconsistent with the 
definition of the terms "dumping" and "margins  of dumping" contained in the GATT 1994 and the 
Anti-Dumping Agreement, inasmuch as it had disreg arded or had arbitrarily altered the results of 
negative price comparisons and had thus failed to establish a margin of dumping for the "product as a 
whole".  Mexico was extremely patient about initia ting this proceeding, as long as there were other 
proceedings on the same issues, the results of wh ich were still pending.  These past cases had enabled 
Mexico to present a case in which the measures identifie d were identical in substance to those that had 
been previously examined by the Appellate Body.  For that reason, Mexico was confident that it 
would obtain a favourable decision and that such de cisions should also be obtained by other parties 
that were currently participating or seeking to par ticipate in proceedings on similar issues.  Mexico 
was pleased to hear that US legislation could be amended so as to eliminate the practice of "zeroing".  However, there was no certainty a bout the scope of such a reform or the proposed time-frame for its 
introduction.  Mexico did not rule out and, ind eed, preferred voluntary compliance by Members with 
their WTO obligations, or else an agreed solution between Members, rather than the initiation of 
dispute settlement proceedings.  Nevertheless, give n the current circumstances faced by all Members 
that were subjected to the "zeroing" methodology, Mexico had no alternative but to submit a formal 
panel request.  WT/DSB/M/221 
Page 16  
 
  64. Mexico also wished to make a few additiona l comments concerning the cancellation of the 
special DSB meeting scheduled for 13 October 2006.  Although at the beginning of his statement he had  mentioned that this was the first time that Me xico was presenting its panel request, he wished to 
take this opportunity to explain why it was the first and not the second time.  He noted that Mexico had previously requested the convening of a special  meeting on the same matte r and had subsequently 
requested its cancellation.  He recalled that  Mexico had held consultations, starting on 
5 Janauary 2005, with the United States on some of  the measures referred to in its current panel 
request.  Since then and up to the present date, Me xico had patiently awaited the outcome of other 
dispute settlement proceedings dealing with the pr actice of "zeroing", in the expectation that, among 
other things, this practice would be declared incons istent as such, and that ultimately Mexico would 
not have to resort to the dispute settlement mech anism.  However, the precedents that had been 
established, though favourable, made it necessary for Me xico to submit this request.  It was for that 
reason that, after waiting more than one year and te n months, Mexico had considered it important to 
initiate this proceeding without delay, using all the facilities offered by the DSU for that purpose, 
including the request for a special DSB meeting.  Once Mexico's request for a special meeting had 
been made, it had been drawn to its attention that the Spanish-language request, despite the 
submission of a courtesy translation, had posed cer tain difficulties in terms of its translation into 
English.  In order to avoid any misunderstanding,  Mexico had agreed to submit the new request, 
which was before the DSB at the present meeting a nd which, without changing the substance of the 
claims, Mexico had hoped, would facilitate translat ion of the document into English.  This "new" 
document was also designed to obviate discussions as to whether panel request s could be amended or 
corrected once they had already been submitted or circulated, discussions which would only 
undermine these proceedings.  These were the reasons  which had made it necessary for Mexico to 
cancel the 13 October DSB meeting and to present its request at the present meeting.  Mexico regretted any inconvenience that th is cancellation might have caused to Members and hoped that its 
explanation clarified the action taken by Mexico, whic h in any case Mexico considered to form part of 
the formal dispute settlement procedures to which all Members were subject.  
65. The representative of the United States
 said that, as his country had previously noted, the US 
Department of Commerce had already announced its intention to abandon the use of "zeroing" with 
average-to-average comparisons in anti-dumping investig ations.  In addition, the issue of "zeroing" in 
administrative reviews was currently the subject of a sep arate dispute.  Therefore, even if a panel were 
established at the present meeting, the United States hoped that it would be able to work with Mexico 
to resolve this matter. 
66. The DSB took note  of the statements and agreed  to establish a panel in accordance with the 
provisions of Article 6 of the DSU w ith standard terms of reference. 
67. The representatives of Chile , China , the EC , Japan  and Thailand  reserved their third-party 
rights to participate in the Panel's proceedings. 
7. United States – Customs Bond Directive for merchandise subject to anti-
dumping/countervailing duties 
(a) Request for the establishment of a panel by India (WT/DS345/6) 
68. The Chairman  drew attention to the communication from India contained in document 
WT/DS345/6, and invited the representative of India to speak. 
69. The representative of India  said that his country requested that the DSB establish a panel to 
examine the matter described by India in its request for the establishment of a panel dated 
13 October 2006 contained in document WT/DS345/6.   Consultations had been held with the 
United States in Geneva as well as in Washington and were quite constructiv e, but had not led to a  WT/DSB/M/221 
 Page 17 
 
 
  resolution of the issue.  In view of the ongoing and escalating harm to its industry, India considered it 
necessary to request the establishment of a panel to resolve this matter as quickly as possible.  The 
measures at issue included:  (i) Customs Bond Directive 99-3510-004 on Monetary Guidelines for Setting Bond Amounts issued on 23 July 1991, as amended by the Amendment to Bond Directive 
99-3510-004 for Certain Merchandise subject to Antidumping/Countervailing Duties dated 
9 July 2004;  (ii) the document entitled "Clarifica tion to 9 July 2004 Amended Monetary Guidelines 
for Setting Bond Amounts for Special Categories of Merchandise Subject to Antidumping and/or Countervailing Duty Cases";  (iii) the document en titled "Current Bond Formulas";  and (iv) any 
amendments, clarifications or extensions to these  measures and all related or implementing measures 
(together, the "Amended Bond Directive").  Prior to  the Amended Bond Directive, the United States 
had required importers-of-record in the United States,  including importers of merchandise subject to 
anti-dumping duties or countervailing duties to furn ish continuous entry bonds  ("Continuous Bonds") 
only for an amount equal to 10 per cent of the duti es, taxes and fees paid by the importer on the same 
merchandise imported in the previous year as general security for compliance with customs regulations.   
70. Under the Amended Bond Directive, however, th e United States might require importers of 
certain merchandise subject to anti-dumping or c ountervailing duties designated by US Customs as a 
"Special Category" or a "Covered Case" within  a Special Category to replace their existing 
Continuous Bonds with Con tinuous Bonds for a larger amount that would, in addition, cover the total 
estimated anti-dumping duties or countervailing duties on the value of imports of such for the previous 12 months (the "Continu ous Bond Requirement").  This requi rement was in addition to the 
obligation under the anti-dumping and countervailing duty laws of the United States to provide bonds 
or make cash deposits at the time of importation equal to the estimated anti-dumping or countervailing 
duties on imports of such merchandise.  It was understood that at this time, US Customs had 
designated only agriculture and aquaculture merchand ise as a "Special Category" and only shrimp as a 
"Covered Case" to which a different standard or  formula for determining the bond amount will be 
applied.  US Customs had imposed the Continuous  Bond Requirement on importers of certain frozen 
warm water shrimp from India subject to anti-dum ping duties imposed pursuant to the anti-dumping 
investigation with respect to imports of certain frozen and canned warm water shrimp from India and five other countries.  India understood that US Customs had actually applied the Continuous Bond 
Requirement only to the subject merchandise.  This singling out of the subject merchandise emphasized the arbitrary and discriminatory char acter of the Amended Bond Directive.  India 
considered that the Amended Bond Directive me asure was inconsistent as such with various 
provisions of the GATT 1994, the Anti-Dumping Ag reement and the SCM Agreement.  It further 
considered that the Continuous Bond Requirement under the Amended Bond Directive, as applied to 
importers of the subject merchandise from India, w as inconsistent with a number of provisions of 
GATT 1994 and the Anti-Dumping Agreement.  A summary of the legal basis of India's claims was 
contained in India's request for establishment of panel (WT/DS345/6).  Accordingly, India requested 
that the DSB establish a panel pursuant to Article 6 of the DSU to examine this matter with standard 
terms of reference as set out in  Article 7.1 of the DSU.   
71. The representative of the United States
 said that, as with Thailand's complaint, the 
United States was disappointed that India had request ed a panel on this matter.  As noted previously, 
Members had the right to ensure that importers pa id duties owed.  Nevertheless, the United States had 
been working with India in an effo rt to understand its concerns and to  address them.  In light of these 
efforts, the United States believed that this panel request was premature, and was unable to agree to 
the establishment of a panel at this time. 
72. The DSB took note  of the statements and agreed  to revert to this matter. WT/DSB/M/221 
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  8. Proposed nominations for the indicative list of governmental and non-governmental 
panelists (WT/DSB/W/332) 
73. The Chairman
 drew attention to document WT/DSB /W/332, which contained additional 
names proposed for inclusion on the indicative list of governmental and non-g overnmental panelists, 
in accordance with Article 8.4 of the DSU.  Unless there was any objection, he proposed that the DSB 
approve the names contained in document WT/DSB/W/332. 
74. The DSB so agreed . 
9. United States – Subsidies on upland cotton 
(a) Statement by Brazil   
75. The representative of Brazil , speaking under "Other Business", sa id that his country wished to 
make a few comments on the letter from the Director-General received on 25 October 2006, regarding 
the composition of the Panel established on 28 Septem ber 2006, pursuant to Article 21.5 of the DSU, 
pertaining to the dispute:  "United States – Subsidies on Upland Cotton".  The Director-General had informed Brazil of the composition of the compliance Panel in this dispute, in response to Brazil's 
request under Article 8.7 of the DSU.  Brazil th anked the Director-General for nominating the 
panelists and for doing so in such a prompt fa shion.  In its request, Brazil had asked the 
Director-General to nominate the three members of the Panel in the original proceedings.  Although 
all three members of the original Panel had been available for service in the Article 21.5 proceedings, 
the Director-General had called only one of the pane lists back to service, and had nominated two new 
panelists.  Brazil believed that Me mbers should be made aware of the circumstances that had led to 
the Director-General's decision.  In a letter to the Director-General, following Brazil's request for 
appointing panelists, in accordance with Article 8.7 of the DSU, the United States had objected to the 
re-nomination of two original panelists, on the basis th at they were nationals of the third-parties to the 
dispute.  The United States' objection was curious, to say the very least.  First, the United States had not objected to these panelists in the original pro ceedings.  Second, the United States had not objected 
to the nomination of these panelists as Arbitrators in  the Article 22.6 proceedings in this dispute.  
Third, the United States had often accepted the re- nomination of third-part y nationals (including 
government officials) as panelis ts in Article 21.5 proceedings. 
76. Brazil was left to conclude that the United St ates' position on this matter had little to do with 
any principled objection on the participation of thir d-party nationals as panelists, and more to do with 
the fact that the original panelists had ruled agai nst the United States in this dispute.  This was a 
terrible precedent for the WTO.  An implementing Member should not be entitled to decide that one 
or more original panelists that had ruled agai nst it in the original proceedings was no longer 
acceptable as a panelist in compliance proceedi ngs under Article 21.5 of the DSU.  Nor did 
Article 21.5 of the DSU entitle an implementing Member to do so.  Article 21.5 of the DSU stated that an implementation dispute "shall be decided ... wherever possible [by] resort to the original panel".  The reasons were clear.  Article 21.5 of th e DSU provided for fast-track proceedings aimed at 
the rapid resolution of a lingering dispute that was already subject to DSB's rulings and 
recommendations.  Unlike original proceedings, for which panels were given six months to issue a 
report to the parties, Article 21.5 of the DSU provi ded  a compliance panel with only 90 days to issue 
and circulate its report to all Members.  A comp liance panel must do its work very quickly. To 
facilitate the expeditious disposal of Article 21.5 proceedings, the provision called for resort to the 
original panel in all but those narrow circumstan ces in which it was impossible for the original 
panelists to serve.  The Appellate  Body had underscored this requi rement in two recent cases.  In 
"United States – Lumber IV" (Article 21.5 – Cana da) and "Mexico – HFCS" (Article 21.5 – US), the 
Appellate Body had  emphasized the important role  the original panelists played in fast-track 
proceedings, since they ensured an Article 21.5 pa nel's ability to fulfil its mandate, which included  WT/DSB/M/221 
 Page 19 
 
 
  taking full account of the factual and legal background to the expedited proceedings.2  In the present 
case, the factual and legal background was reflected in a set of documents that numbered more than 
2500 pages, accompanied by 589 exhibits.  The ev idence was clear:  the United States had no 
principled reason to object to the continued service of two of the original panelists in this dispute.  
Nonetheless, the United States had noted Article 8.3 of  the DSU, and its apparent "right" to object to 
the service of third-party nationals.  One should not be fooled.  While Article 8.3 of the DSU allowed 
Members to object to the service of third-part y nationals as panelists, Article 21.5 of the DSU 
trumped this right of objection.  The Appellate Bo dy had ruled that the phrase in Article 21.5 of the 
DSU "recourse to these dispute settlement procedures"  meant that other provisions of the DSU must 
be "interpreted in the light of Article 21.5" and,  as need be, "adapted" to meet the needs of that 
provision.3    
77. The option under Article 8.3 to object to the continued service of original panelists who 
happened to be third-party nationals  was one of those rights that must be "adapted" to meet the needs 
of Article 21.5.  Should Article 8.3 override the requi rement of Article 21.5 of the DSU that directed 
disputes over implementation to be taken up by the original panel, the same precedent could be 
invoked in respect of other provisions of the DSU.  In this case, implementing Members could always 
object to the participation, in Article 21.5 proceed ings, of panelists who ruled against them in the 
original dispute.  Brazil said that, given the pr ecedent created by the US objection in the "Cotton" 
case, any Member, including Brazil, would feel entitled in  future to resort to similar actions whenever 
its implementation measures were challenged under Artic le 21.5 of the DSU.  Brazil wished to thank 
the new panelists for accepting this responsibility a nd availed itself of this opportunity to express its 
full confidence in their competence and capacity to ca rry out the task they had been entrusted with.  
While Brazil welcomed their commitment to service,  Brazil did not welcome the precedent set by the 
United States.  The interests served by the United St ates' actions in this dispute were decidedly not 
systemic.  They were contrary to the entitlement Brazil and indeed all Members had to the expeditious 
resolution of a dispute, which the United States had lost and had stubbornly refused to implement.  
78. The representative of the United States  said that normally the DSB did not hear Members 
make statements when the Director-General compo sed a panel.  The United States noted that there 
were factual inaccuracies in Brazil's statement, but  that it would not go into those at the present 
meeting, fully respecting the confidentiality of the panel composition process.  But, in light of Brazil's 
comment regarding its "systemic" concerns, the Unite d States said the following.  The systemic issue 
in composing this panel was simple.  Under Artic le 8.3 of the DSU, "citizens of members whose 
governments are ... third parties ... shall not serve  on a panel concerned with that dispute, unless  the 
parties to the dispute agree otherwise" (emphasis added).  The United States had not agreed otherwise.  The United States had sought to agree with Brazil on replacement panelists.  The panel selection 
process envisaged in Article 8.6 of the DSU would have given the parties the opportunity to work 
together to identify mutually acceptable candidates.  That would not only have  been appropriate in a 
dispute of this significance and sensitivity, but was the preferred approach under the DSU.  
Regrettably, Brazil had chosen to go directly to the Director-General to compose the panel.  The issue 
of third-party nationals not serving on a DSU Artic le 21.5 panel was not new.  For example, in 
DS257, the "Lumber IV" dispute, the United States ha d informed Canada that, under Article 8.3 of the 
DSU, it could not accept a third-party national serving on the Article 21.5 panel.  Similarly, in DS207, 
the "Chile – Price Bands" dispute, Chile had objecte d to the participation of a panelist from the 
original proceeding because he was a third-party na tional.  The difference between those disputes and 
the present one was that, in those disputes, the Un ited States, Canada, Chile, and Argentina had been 
all able to cooperate to find replacements for pane lists who were third-party nationals.  But in the 
present dispute Brazil had rejected US efforts to coope rate.  Therefore, the real systemic issue here 
                                                     
 
2Appellate Body Report:  "United States – Lumber IV"(Article 21.5 – Canada), para. 71; Appellate 
Body Report:  "Mexico – HFCS"  (Article 21.5 – US ), para. 121. 
 3Appellate Body Report:  "United States – FSC"(Article 21.5 II – EC), para. 59.  WT/DSB/M/221 
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  was whether the Director-General, in exercising his discretion under Article 8.7 of the DSU to appoint 
"panelists whom the Director-General considers most appropriate
" (emphasis added), could disregard 
the dispute settlement procedures set out in the DSU, particularly Article 8.3 of the DSU.  In the US 
view, it would never be "appropriate" for the Directo r-General to act contrary to the express terms of 
the DSU.  The United States thanked Director-Gener al Lamy for composing the Panel appropriately. 
79. The DSB took note  of the statements.    
__________