RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/260 
3 March 2009 
 (09-1093) 
Dispute Settlement Body 
11 December 2008  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 11 December 2008  
 
Chairman:  Mr. Mario Matus (Chile) 
 
 
Prior to the adoption of the Agenda1 
 
 Subjects discussed
: Page  
 
1. European Communities – Regime for the importation, sale and distribution of 
bananas:  Second recourse to Article 21.5 of the DSU by Ecuador......................................2  
(a) Report of the Appellate Body and Report of the Panel...............................................................2  
2. Implementation of the reco mmendations of the DSB..........................................................13  
(a) United States – Continued suspension of oblig ations in the EC - Hormones dispute ..............13  
(b) Canada – Continued suspension of obliga tions in the EC - Hormones dispute........................13  
3. Mexico – Definitive countervailing measures on olive oil from 
the European Communities ...................................................................................................16  
(a) Statement by  Mexico ............................................................................................................ ....16  
 
  
                                                     
 
1 See page 2. WT/DSB/M/260 
Page 2  
 
Prior to the Adoption of the Agenda
 
  The Chairman
 said that, in relation to the content of the proposed Agenda, he wished to 
inform delegations that on 9 December 2008 the Un ited States had requested, by letter addressed to 
the Secretariat, that Item 2 of the proposed Age nda concerning the adoption of the Appellate Body 
Report and the Panel Report pertaining to the dis pute:  "EC – Regime for the Importation, Sale and 
Distribution of Bananas:  Recourse to Article 21.5 of the DSU by the United States" be withdrawn from the Agenda and that the same item be inscribed on the Agenda of the DSB meeting to be held on 
22 December 2008.  He said that, in light of the US request, Item 2 was withdrawn from the Agenda 
of the present meeting. 
 
 The representative of the European Communities
 said that the US request was rather unusual 
and unorthodox and the EC, as well as other Member s of the DSB, would welcome an explanation 
from the United States on the motivation and the basis for this withdrawal request. 
 
 The representative of the United States  said that, as correctly noted in the Chairman's 
introductory remarks, on 9 December, the United States had submitted a letter to the Secretariat 
inscribing the adoption of the Reports that had been referred to by the Chairman on the Agenda of the 
22 December DSB meeting, and had withdrawn that item from the Agenda of the present meeting.  In this regard, United States had followed past DSB pr actice and the precedents set in other disputes in 
taking this step.  The United States looked forward to adoption of those Reports at the 22 December 
DSB meeting, which was within the 30-day period fo r adoption of the Reports by negative consensus. 
  The representative of the European Communities
 said that the EC regretted the lack of any 
substantive explanation from the United States and it s lack of openness on this issue, and hoped that 
the United States would give a more substantive explanation on this as soon as possible.  The EC, 
however, took note and welcomed the remark by the United States that the Appellate Body Report 
had to be adopted within 30 days.    The DSB took note
 of the statements. 
  1. European Communities – Regime for the importation, sale and distribution of bananas:  
Second recourse to Article 21.5 of the DSU by Ecuador  
(a) Report of the Appellate Body (WT/DS27/ AB/RW2/ECU) and Report of the Panel 
(WT/DS27/RW2/ECU) 
1. The Chairman
 drew attention to the communication from the Appellate Body contained in 
document WT/DS27/93 transmitting the Appellate Body Report on:  "European Communities – 
Regime for the Importation, Sale and Distribution of  Bananas:  Second Recourse to Article 21.5 of the 
DSU by Ecuador", which had been circ ulated on 26 November 2008 in document 
WT/DS27/AB/RW2/ECU, in accordance with Article 17. 5 of the DSU.  He reminded delegations that 
the Appellate Body Report and the Panel Report pert aining to this dispute had been circulated as 
unrestricted documents.  As Members were aware, Article 17.14 of the DSU required that:  "An 
Appellate Body report shall be adopted by the DS B and unconditionally accepted by the parties to the 
dispute unless the DSB decides by consensus not to adopt the Appellate Body report within 30 days 
following its circulation to Members.  This adopti on procedure is without prejudice to the right of 
Members to express their views on an Appellate Body report".  
2. The representative of Ecuador  said that, first, his country wished to express its appreciation to 
the members of the Appellate Body, the Appellate Bo dy Secretariat, the members of the Panel and the 
WTO Legal Affairs Division for their work and th e support they had provided to Ecuador throughout 
this dispute.  Ecuador also wished to thank tho se third parties that had supported Ecuador in the  WT/DSB/M/260 
 Page 3 
 
 
proceedings, and to thank the United States for in itiating its own claim on this matter.  The WTO, 
once again, had upheld Ecuador's claims regarding the EC's failure to comply with its obligations with 
respect to its bananas import regime.  He noted th at one had lost count as to how may times the EC 
bananas import regime had been found to be incons istent with WTO rules.  In spite of repeated 
rulings under the GATT/WTO panels and decades of discrimination, in particular against Latin 
American developing countries, the EC continue d to maintain its bananas import regime, which 
violated its WTO obligations.  For a developing co untry, such as Ecuador, th e legal proceedings had 
involved million of dollars in sales losses, payments  of excessive tariffs and litigation costs.  Those 
resources could have been used to alleviate poverty a nd to promote the country's development.  In the 
most recent Appellate Body Report, which had upheld , with some modifications the Panel Report, all 
the EC's arguments had been rejected.  Working on  the basis of conclusive precedents and a detailed 
and correct reading of the Agreements, the Appella te Body had upheld all Ecuador's claims.  The 
Appellate Body had found that the tariff of €176/mt  applied by the EC was contrary to its tariff 
bindings and, therefore, in breach of Article II:1(b)  of the GATT 1994.  The €176/mt tariff applied by 
the EC to MFN suppliers was still in effect.  The Appellate Body and the Panel had also confirmed 
that the preferences granted by the EC to the ACP countries were inconsistent with Articles I and XIII 
of the GATT 1994.  The EC continued to grant those preferences.  Ecuador reserved its legal rights as 
to the WTO-consistency of those preferences.  Ecuado r hoped that this matter could be now resolved 
through the signing by the EC of the Geneva Ag reement on Trade in Bananas, which had been 
reached on 27 July 2008.  This could put an end to this longest-standing legal dispute in the history of 
the WTO, so that it would not be necessary for Ec uador to exercise its cross-retaliation rights under 
Article 22 of the DSU.  The EC, once again, held the key to this solution.  Ecuador would request that 
this matter remain on the DSB's Agenda until th e EC fully complied with its WTO obligations. 
3. The representative of the European Communities  said that the EC, like Ecuador, wished to 
thank the Appellate Body for its work in this co mplex case.  The EC was working to implement the 
recommendation made in Ecuador's Report to bring its  regime into compliance with Article II of the 
GATT 1994 by means of modifying its bound duty.  The EC wished to reassure Ecuador that the EC 
too hoped that this rebinding could be made in agr eement with Latin American suppliers:  that was an 
approach the EC had been seeking, an agreement that had been sought since the EC had initiated 
GATT Article XXVIII negotiations back in 2004.  Th e EC was fully committed to finding very soon a 
definitive solution to this long-standing "banana i ssue".  And the EC hoped to  negotiate and conclude 
an agreement with the MFN countries based on the July 2008 Agreement.  An agreement the EC 
hoped to see in the days ahead.  In terms of the more systemic claims made by the EC in its appeal, 
the EC welcomed, first of all, that the Appe llate Body had reversed  some dangerous legal 
interpretations made by the Panel, in particular  concerning the interpretation of the purpose and 
effects of a waiver.  However, the EC regretted that  some other interpretations of systemic concerns 
had been confirmed by the Appellate Body.  Firs t, the EC welcomed the clarification of the 
interpretation of the DSU provisions as regards mutua lly agreed solutions.  However, the EC regretted 
that the Appellate Body had not found that the exp licit statement in an agreement between the parties 
to a dispute to the effect that such agreement c onstituted a mutually agreed solution was sufficient to 
preclude Article 21.5 action, and that the Appellate  Body required explicit relinquishment of DSU 
rights for a mutually agreed solution to have such  effect.  This interpretation would certainly not 
facilitate the negotiation of mutually agreed solutions  in the future.  But all knew what the law was.  
The EC also regretted the confirmation by the A ppellate Body of the far-re aching interpretation of 
Article XIII of the GATT 1994 made by the Panel, which had resulted in an outright prohibition of 
preferential tariff-rate-quotas (TRQs), even when they benefited from an exemption from the MFN 
principle under Article I:1 of the GATT 1994.  In th e EC's view, the Appellate Body had disregarded 
the specific nature of "preferential" TRQs, which were essentially a tariff discrimination under Article 
I:1 of the GATT 1994, which was limited quantitatively.   This would have serious implications for 
WTO practice, notably in terms of concessions covered by the Enabling Clause.   
4. The representative of the United States  said that his country wished to begin by thanking the 
members of the Appellate Body, the members of the Pa nel, and the Secretariat for their work in this WT/DSB/M/260 
Page 4  
 
proceeding.  The United States appreciated their cons istent dedication in returning, once again, to a 
dispute that they had seen so many times before.  The United States had participated as an interested 
third party in this proceeding.  The United States would, therefore,  like to thank the Appellate Body 
for its handling of the two Reports that had been  circulated simultaneously – the Report in the 
proceeding initiated by Ecuador that was being cons idered at the present meeting, and the separate 
Report in the separate proceeding initiated by th e United States.  The United States wished to 
commend the approach that the Appellate Body had ta ken to ensure that the two Reports' findings and 
conclusions were clearly distinct, and the Unite d States appreciated the work of those in the 
Secretariat who had helped make that approach possi ble.  The United States also appreciated that both 
the Panel and the Appellate Body had agreed to ma ke the hearings in this dispute open to public 
observation for those Members who had chosen to ma ke their statements openl y, thus continuing the 
record of success of open hearings at the WTO.  The open panel hearing was a fitting way to help mark the 60th anniversary of the GATT.  And the United States was particularly pleased that none of the Members that had appeared before the Appe llate Body – three participants and 16 third 
participants – had chosen to request that  their statements be kept confidential. 
5. Turning to the substance of the Reports before the DSB at the present meeting, the Panel and 
the Appellate Body had thoroughly a nd properly rejected this most recent attempt by the EC to avoid 
its WTO obligations with respect to bananas.  Th e United States, therefore, welcomed the Panel and 
the Appellate Body Reports, and supported their adop tion.  The United States wished to comment at 
the present meeting on two points that it thought were unique to the Reports in the Ecuador 
proceeding.  First, the United States was somewhat surprised to read the comment in the Appellate 
Body Report that an interpretation under Article IX:2  of the Marrakesh Agreem ent could be likened to 
a subsequent agreement of the type contemplated  by Article 31(3)(a) of the Vienna Convention.
2  To 
the extent that the Appellate Body 's phrasing could suggest that such  interpretations should merely be 
"taken into account" during the interpretation of the WTO Agreement, the United States did not agree:  
as Article 3.9 of the DSU made clear, when such interpretations were adopted by the Ministerial 
Conference or the General Council, they were author itative.  Second, the United States was interested 
to see the Appellate Body's discussion in para graph 433 of its Report relating to reading the 
concessions set out in Members' Schedules.  In particular, the United States had considerable 
sympathy with the proposition that the WTO's objectives were served through the exchange of 
concessions and that those concessions must in turn be properly read.  As the United States had noted 
on previous occasions, the WTO dispute settlement syst em provided security and predictability to the 
multilateral trading system when, and only when, it properly read the agreement that Members had 
negotiated.  In addition, the participants in these appeals would know that the United States had 
requested that the Appellate Body correct certain apparent typographi cal errors in its Reports.  The 
United States hoped that a corrigendum could be circulated soon. 
6. The United States said that, a few moments ago, it had alluded to the fact that this dispute had 
been before the DSB many times.  The United States was very much encouraged  by the progress that 
the EC and the Latin American suppliers had made  a few months ago in their negotiations on the 
long-standing bananas issue.  Unfortunately, howev er, the EC had unilaterally decided to suspend 
those negotiations.  The United States continued to  encourage those discussions.  The United States 
hoped that the EC would have good news to report at the 22 December DSB meeting.  And in that 
vein, the United States looked forward to receiving the EC's status report later in the course of the day 
for the 22 December DSB meeting. 
7. The representative of the Dominican Republic , speaking on behalf of the ACP countries, said 
that the countries in question wished to thank th e Appellate Body, the Panel and the Secretariat for 
their work on this dispute.  It was no secret that  the ACP countries disagreed with several conclusions 
of the Appellate Body Report.  However, the ACP countries fully respected the role and authority of 
the Appellate Body, and would constructively co ntribute to the resolution of the dispute under 
                                                      
2 Appellate Body Report, para. 383.  WT/DSB/M/260 
 Page 5 
 
 
consideration and, hopefully, of all past and pot ential disputes relating to  the EC bananas import 
regime.  The ACP countries remained disappointed with the treatment of third parties in this dispute.  
The effective participation of third parties rema ined a challenge for the WTO dispute settlement 
mechanism.  It was obvious that the ACP countries, beneficiaries of the EC's preferences, had an 
interest in this dispute.  Yet, despite efforts by both the Panel and the A ppellate Body to provide 
extended opportunities for their participation, the ACP countries had felt virtually excluded from the 
"real action".  The ACP countries believed that it was important for the dispute settlement system to find ways to better accommodate third parties in cases involving third parties which were direct 
beneficiaries of challenged trade measures.  The ACP countries recognized that the difficulties faced 
by the DSU process were the same as those faced in  tariff negotiations dealing with preferences and 
preference erosion.  Therefore, due to their trade and economic importance, wa ys should be sought to 
deal with such problems.  The sense of exclusion fe lt by the ACP countries in this dispute manifested 
itself not least in the treatment of ACP concerns and arguments in the Appellate Body proceedings.  
While the ACP countries recognized the legal nature of  the process, it was unfortunate – and in this 
case almost absurd – that that process, which direct ly concerned real trade issues, had difficulties to 
find a proper way to take full account of economic reality .  It was a plain and irrefutable fact that the 
MFN producers were enjoying unprecedented access to, and success on, the EC's market under the current bananas tariff regime.  This access and su ccess went well beyond any legitimate expectations 
vis-à-vis the EC's WTO obligations. 
8. It was further unfortunate that neither the Pa nel nor the Appellate Body had found ways to 
consider, and reflect on potential impacts of their c onclusions on ACP bananas industries and, in some 
cases, their entire economies.  While the ACP count ries recognized the legal nature of the process, 
they considered that its function was to assist in settling – that meant: actually resolving – trade 
disputes and the underlying conflicts.  Reports that  did not address fully such conflicts could not 
actually provide much of assistance.  The ACP count ries recognized the legal logic of the Appellate 
Body's final conclusions as to the legality of th e EC current tariff regime, once it had reached its 
earlier conclusion that the EC tariff quota concession had not expired despite the expiry clause in the 
Bananas Framework Agreement.  The ACP countries c ontinued to disagree with that conclusion.  But 
given the finality of the Appellate Body's ruling, the ACP countries could resign itself to live with a 
faithful and literal implementation of these conclusi ons, namely, the application of an out-of-quota 
tariff of €680/mt and a TRQ of 2.2 million mt at a ta riff rate of €75/mt.  Such  literal implementation 
would seem to be the only sensible option left, unless a satisfactory agreement emerged between the 
parties concerned in the DDA or elsewhere.  The co nclusions as to what the current EC bindings were 
should further provide the main refe rence for determining what, if any, changes to the EC's tariff were 
required, as part of rebinding processes under way.  It was clear that those bindings did not suggest any overall lowering of the current tariffs, which, as it had been indicated, provided access well beyond what the EC's Uruguay Round concessions w ould lead MFN suppliers to expect.  The ACP 
countries respected, but continued to consider un fortunate, the Appellate Body's conclusions on 
Article XIII of the GATT 1994.  A quantitatively restricted duty-free acc ess was less than an 
unrestricted duty-free access.  That meant that wherev er such unrestricted access would be legal, the 
restricted access should be legal, too.  That logic should extend to the interpretation of waivers, too.  
The interpretation and application of WTO law should never lose sight of the need for pragmatism.  
The ACP countries considered that the conclusions reached in this case did not fully serve that 
purpose. 
9. The representative of Honduras
 said that his country welcomed the Appellate Body Report 
and commended the Appellate Body for its careful anal ysis of the case.  Now, the EC could no longer 
claim that its tariff of €176/mt constituted an approp riate level.  That tariff violated both the bound 
duty and MFN treatment.  As his delegation had stated  at the meeting of the General Council, the EC 
also violated its obligations resulting from its enlargement.  Since Honduras was one of the original 
complainants in the Bananas III case, it expect ed the EC to implement the DSB's rulings and 
recommendations in that case, and considered that  it was entitled to adjustments resulting from the 
EC's enlargement.  In July 2008, when the EC had negotiated a deal with certain countries, Honduras WT/DSB/M/260 
Page 6  
 
had announced its decision to accept the July Agreemen t in order to put an end to this long-standing 
dispute.  The EC had then backtracked, and had made that Agreement contingent upon the agreement 
on modalities in the Doha Round.  When the regi me of a particular Member was found to be 
inconsistent with earlier rulings of the DSB, th at Member did not have a right under the DSU 
provisions to make compliance with its obligations contingent on the success of trade negotiations.  
The EC had an obligation to comply "promptly",  something which according to the DSU provisions 
"is essential in order to ensure effective resolution of disputes to the benefit of all Members".  After 
13 rulings on bananas against the EC and more than  a decade of non-compliance by the EC, the EC 
had yet to confirm that it intended to bring its ba nanas import regime into conformity with its WTO 
obligations without further delay, with or wit hout a Doha agreement.  Honduras urged the EC to 
provide confirmation of its intention to do so.  At a moment so crucial to the strengthening of 
confidence in the rules-based system, Honduras hope d that the EC would remove its illegal tariffs 
without delay, honour its WTO commitments and bind tariff cuts for developing countries, which 
would be no less significant than what had already been agreed under the July Agreement.  Finally, 
Honduras supported the request made by the United States regarding the correction of typographical 
errors in the Appellate Body Report.  His delegation considered that that correction must be taken into 
account since this was important from the point of view of the system.  
10. The representative of Panama
 said that, as his country had previously stated before the DSB, 
Panama had a large stake in this dispute.  Like Ecuador, Panama was the main supplier of bananas to 
the EC's market, and was entitled to the EC's tari ff and enlargement adjustments.  Although the 
Appellate Body had undertaken a careful and impr essive review of the issues before it, Panama 
regretted that such a review had been necessary in  the first place.  Before the Appellate Body had 
undertaken its review, there had already been 11 GATT and WTO rulings against the EC's bananas 
policies.  The interests of Latin American deve loping countries, and the system, would have been 
much better served had the EC signed the July 2008 Agreement, as it had promised to do so.  Instead, 
the EC had chosen to appeal the Panel Report and had now been told by the Appellate Body that its 
regime was out of compliance:  (i) the EC's tariff  of €176/mt had been in excess of its bindings since 
1 January 2006, making it illegal under Article II of the GATT 1994;  and (ii) the EC's tariff 
discrimination had lost its waiver on 1 January  2006, making it illegal under Article I of the 
GATT 1994.  Pursuant to its oblig ations under the Bananas III case, the EC had owed the Latin 
American banana-supplying countries a much lower and non-discriminatory tariff rate for three years.  
It had owed them enlargement adju stments for even longer than that.  The countries in question were, 
therefore, concerned to hear the EC say that it "cons iders the Doha Round to be the right forum to find 
a resolution" and was "ready to take up the negotiatio ns on a deal on bananas with all suppliers where 
they were left in July".  The EC had an obliga tion to redress its tariff illegalities irrespective of the 
Doha Round outcome.  Moreover, when the EC had st ated that it was ready to "take up negotiations 
where they were left in July", it had forgotten th at a banana agreement had already been closed in 
July 2008.  That settlement had taken months to  negotiate.  The so-called Geneva Agreement on 
Trade in Bananas contained seven carefully ne gotiated paragraphs.  U nder the terms of the 
Agreement, the EC had agreed to a schedule of bound tariff reductions from €148/mt on 1 January 2009 to €114/mt by 1 January 2016 in order to settle all WTO pending proceedings and 
claims.  Since the 27 July Agreement was not linked to an agreement on modalities, the EC should not 
have walked away from that negotiated solution when  the Doha talks had collapsed in July 2008.  
Panama noted that when the Agreement was being negotiated, the EC bananas import regime had not 
yet been legally condemned by the Appellate Body .  Now the final outcome was known.  Panama was 
still willing to consider the 27 July Agreement as a fina l settlement in order to bring this long-standing 
dispute to an amicable end, but would not accept any weaker solution.  This was an especially 
important time for the EC to rise above protectionism , and to put an end to this negative cycle of non-
compliance.  On behalf of its 8,000 producers, Pa nama again called on the EC to settle this dispute 
without further delay under the terms and conditions of the 27 July Agreement.  
11. The representative of Colombia
 said that his country had participated as third party in the 
appeal proceedings against the findings in Ecuador 's Panel Report and the US Panel Report regarding  WT/DSB/M/260 
 Page 7 
 
 
the EC bananas import regime.  Colombia thanked the Appellate Body and th e Secretariat for their 
excellent work.  The Bananas dispute was the longest-standing trade dispute in the GATT/WTO 
history.  It had started in 1992 when the Latin American banana exporters  had challenged both the 
quantitative restrictions imposed by various memb ers of the then European Economic Community, 
and the tariff preferences granted by the EC to the ACP countries.  This was the Bananas I case in 
which claims of the Latin American exporters ha d prevailed.  EEC Regulation 404/93 establishing the 
common market organization had been challenged in  1993.  Under that Regulation, the EC had 
introduced a complex import bananas regime which, inter alia , had unilaterally altered the bound 
20 per cent ad valorem  tariff on bananas and replaced it with  a tariff quota of ECU 100/tonne for 
2 million tonnes and ECU 680/tonne for out-of-quota vol umes.  The preferential tariff enjoyed by the 
ACP countries had also been disputed since the EC had argued that it was justified under the 
provisions of Part IV of the General Agreement.  Th is was the Banana II case, in which the claims of 
the Latin American exporters had again prevailed.   
12. The Bananas III case was better known to all since it had been brought under the WTO 
Agreement.  It was nevertheless worthwhile to recall it.  In September 1997, the DSB had requested 
the EC to bring Regulation No. 404/93 into conformity  with the WTO rules as it was inconsistent with 
the GATT 1994, the Agreement on Services and the Agreement on Import Licensing.  Subsequently, 
the compliance Panel of 1999 had found that the measu res taken to comply set out in EC Regulations 
Nos. 1637/98 and 2362/98 were also not in conformity with the GATT 1994 and the Agreement on Services.  In 2005, the Latin American exporters ha d requested two arbitration proceedings when the 
EC had notified its intention to  modify its bound banana tari ff in its schedule of concessions, 
beginning with a tariff of €230/tonne, and then with a tariff of €187/tonne.  Both Arbitration Awards 
had determined that neither tariff was equivalent to market access conditions prevailing at that time;  
€75/tonne for a volume of 3,113, 000 tonnes.  Howe ver, this equivalency was the condition upon 
which the Latin American exporters  had agreed to the Article I waiver during the Doha Ministerial 
Meeting.  
13. The Panel and the Appellate Body Reports to be adopted at the present meeting contained 
findings of the same kind as those in the Banana s II Panel in 1993, namely, that the preferences 
granted to bananas from the ACP countries were not  justified under the WTO rules and the current 
applied tariff on banana imports w as not in conformity with the commitments undertaken by the EC 
in its Schedule of Concessions.  In other words, 15 years later and many legal proceedings, Members 
were faced with a ruling of the sa me kind as the Bananas II  case in 1993.  At the most recent appeal 
hearing, the EC had stated in its final conclusions  that if its arguments did not prevail, then the 
bananas exporters would have two alternatives:  e ither to initiate new pr oceedings under the DSU, 
since the measures in force were different fro m the measures challenged in the most recent 
proceedings, or to reach a mutually satisfactory solution.  
14. As far as a mutually agreed solution was c oncerned, he recalled that there existed the 
Bananas IV case.  The Bananas IV case was a pro ceeding under the DSU, initiated by Colombia in 
March 2007 whereby Colombia had requested the Director-General's Good Offices.  Between December 2007 and July 2008 the Director-General had chaired thirty-eight  negotiating meetings.  
The outcome of the process was what was known as the Geneva Agreement on Trade in Bananas of 
27 July 2008.  That Agreement provided for a gradual reduction of the banana tariff to €114/mt by 2016.  This encompassed the following:  the D oha Round tariff cuts, compensation for the EC's 
enlargement and the settlement of all disputes relating to bananas.  The final specific tariff of €114/mt 
was equivalent to a 19 per cent ad valorem  duty, meaning that one would be reverting to the situation 
that had existed at the time of the Bananas II cas e, when the bound tariff was 20 per cent;  i.e. as it 
had been bound by the then EEC in 1962.  Despite th is, the EC maintained that it could not put the 
27 July Agreement into effect.  The Bananas case  was an example of the reasons whereby some 
developing countries had put forward, in the context of the DSB Special Sessi on, proposals aimed at 
promoting effective compliance by strengthening the remedies available under Article 22 of the DSU.  WT/DSB/M/260 
Page 8  
 
Colombia looked forward to the EC's statement as how it intended to implement the recommendations 
and rulings to be adopted at the present meeting.  
15. The representative of Nicaragua
 said that her country wished to express its appreciation at the 
hard work carried out by the members of the Appella te Body and the Secretariat in relation to this 
dispute.  Nicaragua also wished to congratulate Ecuador on the important victory obtained and joined 
the banana-producing countries of Latin America in ca lling on the EC to put an end to 15 years of its 
illegal protectionism.  In the course of those 15 years,  Nicaragua had fought for fair access to the EC's 
market since bananas were one of Nicaragua's ma in agricultural crops and enabled the country to 
promote growth and to alleviate poverty.  For the pa st three years, since January 2006, Nicaragua had 
listened to the assertions put forward by the EC be fore the DSB that its MFN tariff – a duty of over 
US$4.20 a box – was "legal" and constituted a "correct balance" for the parties involved.  As a third 
party in those proceedings, Nicaragua had repeated ly expressed its disagreement.  The EC's tariff, 
over twice the tariff imposed on Nicaragua's banana s for a decade, was an obvious infringement of the 
binding.  A tariff which conferred an advantage of US$4.20 per box to suppliers with the higher GDP 
than Nicaragua's GDP was discriminatory.  Conse quently, Nicaragua was pleased that the WTO had 
confirmed, beyond any legal doubt, that the EC's tariff of €176/mt was illegally high and 
discriminatory.  There was no justification for th e EC to continue to postpone the solution even 
further.  To link the July 2008 Agreement to an  agreement on modalities in the Doha Round was not 
an answer.  Better MFN access was required irrespectiv e of whether or not there was progress in the 
Doha Round.  To delay the solution would only prolong even further the EC's record of non-
compliance, which was unprecedented.  By virtue  of the fact that the GATT and the WTO had 
delivered 13 rulings condemning the EC's bananas polic ies, the EC must resolv e this dispute once and 
for all.  Nicaragua's producers had the right to  fair and non-discriminatory access, which would 
provide them with the opportunity to eliminate poverty through trade. 
16. The representative of Cote d'Ivoire  said that his delegation wished to be associated with the 
statement made by the Dominican Republic, on behalf of the ACP countries, and thanked the 
members of the Appellate Body and the Secretariat fo r their work.  As mentioned by the Chairman in 
his introductory remarks, the Appellate Body an d the Panel Reports were before the DSB for 
adoption.  In accordance with the pr ocedure laid down in Article 17. 14 of the DSU, the Chairman had 
invited delegations to express their views on the Reports.  His delegation wished to make a few 
comments on the major issue raised in the Reports, an  issue which was of considerable importance to 
his country, namely, the conditions for the importa tion of ACP bananas into the EC's market, and 
more generally, the place of bananas in world trade.  As a third party, Côte d'Ivoire had participated 
fully and to the best of its abilities in the work of the Panels and the Appellate Body.  It had closely 
examined both the findings contained in the Repor ts and the conclusions and recommendations of the 
members of the Appellate Body.  Côte d'Ivoire w as extremely disappointed mainly on two counts.  
First, it was disappointed by the work of the Appe llate Body.  The Panels, which had been appealed, 
had failed to properly and objectively fulfil their mission.  Côte d'Ivoire, as well as Cameroon and 
Ghana, had made this clear in their written submis sion, recalling the provisions of Article 11 of the 
DSU:  "The function of panels is to assist the DS B in discharging its responsibilities …  Accordingly, 
a panel should make an objective assessment of the matter before it, including an objective 
assessment of the facts of the case and the applicabili ty of, and conformity with, the relevant covered 
agreements … ".  The fact was that this assessment of the facts had not been made by the Panels, in 
particular an evaluation of bananas imports from all origins since the entry into  force of the disputed 
importation regulations on 1 January  2006.  Côte d'Ivoire had asked the Appellate Body to condemn 
this failure to respect the panelists' mandate.  Th e Appellate Body had not done so, since it had not 
seemed fit to respond to the concerns expressed both or ally and in writing by his country.  Nor had the 
Appellate Body, in its Report, made the slightest mention of this request and the reasons why it had 
not acted on it.  In short, Côte d'Ivoire regretted that the Appellate Body ha d also failed to abide by 
the general mandate pursuant to Article 11 of the DS U.  This was a matter of principle, which his 
country was submitting at the present meeting.  If Members wanted the WTO to fulfil its missions 
given to it by Ministers, if they wanted its in stitutions or bodies to function in the best possible  WT/DSB/M/260 
 Page 9 
 
 
manner, all Members had to respect the rules fully.   If the Appellate Body disregarded those rules, 
then confidence in the WTO would be seriously underm ined.  This matter would have to be examined 
by the General Council, the DSB and the WTO Director-General.  The least that could be done for a country directly involved in a dispute was to  hear and respond to that country's concerns. 
17. Second, Côte d'Ivoire was also disappointed that the Appellate Body, without any comment 
or explanation in the entire Part XI of Ecuador's  Report regarding Article II of the GATT (paragraphs 
363 to 465), had come to the following conclusion  on this matter (paragraph 478(c)(iii)):  "The 
Appellate Body … upholds, albeit for different reasons, the Panel's findi ngs, in paragraph 7.504 of the 
Ecuador Panel Report, that the tariff applied by  the European Communities to MFN imports of 
bananas, set at €176/mt, without consideration of  the tariff quota of 2.2 million mt bound at an in-
quota-tariff rate of 75€/mt, was an ordinary customs duty in excess of that provided for in the EC's 
Schedule of Concessions, and thus inconsistent w ith Article II:1(b) of the GATT 1994".  Apart from 
the fact that there was no explanation of this conc lusion in the 30 to 35 pages devoted to Article II – 
which was not at all normal – the Appellate Body shou ld have explained:  (i) why, in the comparison 
made between the applied tariff of €176/mt a nd the bound tariffs (680 and €75/mt limited to 
2.2 million mt), there was no need to take account  of €75 although, as stated, €176 was higher than 
€75;  and (ii) why the Appellate Body, when reversing the Panel's finding, stated in the same paragraph (478) that the tariff quota of 2.2 million mt at €75/mt was still valid.  The fact was that the Appellate Body had failed to follow its reasoning thr ough.  It should have stated that the tariff of 
€176/mt was comparable to the tariff of €75/mt, but was limited to 2.2 million mt and €680/mt for the remaining balance of imports;  in other words, 1.8 million mt, which would give a weighted average 
tariff of €347/mt.  This was considerably higher than €176.  In view of this lack of objectivity and 
faced with this attitude regarding the rights of the defence, Côte d'Ivoire requested that the Appellate 
Body Report not be adopted.  
18. The representative of Cameroon
 said that his delegation wished to thank the Appellate Body, 
the Panel, and the Secretariat for their work .  Cameroon supported the statements made by 
Côte d'Ivoire and the Dominican Republic, speaking on behalf of the ACP countries.  As far as the 
substance of the argument was concerned, his c ountry would not reiterate their arguments.  His 
country had taken into account what had been st ated and endorsed the points and arguments put 
forward by the above-mentioned speakers, and wished to  be fully associated with them.  He noted that 
disappointment and frustration con tinued to be expressed regarding the EC bananas import regime.  
His delegation was concerned about the marginaliza tion of third parties in legal proceedings, and 
wondered what was the third parties' role in those proceedings.  It was true that one was accustomed 
to seeing essentially only two parties in the proceedi ngs, and not third parties, but the time had now 
come to question the role of third parties in lega l proceedings.  It was understandable for a number of 
arguments raised by third parties not to be taken into consideration where the body, or at least the 
Appellate Body, chose to dismiss them on the ground s that they were, in its opinion, unfounded, but 
when those arguments were simply ignored then there was a problem.  Such arguments should be 
formally addressed and refuted.  Cameroon wondere d whether the Appellate Body had chosen to 
disregard the right of defence.  Cameroon was concer ned by the Appellate Body 's legalistic approach.  
As Côte d'Ivoire so rightly stated, with regard to  the binding presented by the EC and examined by the 
Appellate Body, the latter had chosen to question onl y the lower and upper levels.  It was not correct 
to consider only the interests of the opposing party and not to take into account all that was at stake.  
It was not just the tariff of €75/mt for 2.2 million mt that had to be taken into account.  One should 
also consider the fact that 1.8 million mt was not so different from 2.2 million mt.  And yet, there was a clear difference between €75/mt and €680/mt.  Camer oon felt that the silence on the facts of the case 
was a serious problem that must be examined.  There was also a need to clarify the relationship between Articles I and XIII if the waiver was truly to  play its role, as had already been pointed out by 
the EC.  Cameroon felt that the rebinding called fo r by those who had expressed their views on this 
matter should be taken for what it was.  In Ca meroon's view, rebinding did not mean downward 
adjustments of tariffs.  Rebinding meant the re turn to compliance and not downward adjustments WT/DSB/M/260 
Page 10  
 
insofar as this was not a negotiating process.  Finally , his delegation believed th at the Reports, before 
the DSB at the present meeting, should not be adopted. 
19. The representative of Costa Rica
 said that his delegation supported the views expressed by 
Ecuador, Panama and Nicaragua.  He  recalled that since 1992 the EC bananas import regime had been 
examined by 16 different GATT/WTO panels.  He said that he had participated in the first Panel, 
which had considered this matter, and noted that after all these years the EC had been condemned, 
once again, for the same reasons.  The Panel and th e Appellate Body had, once again, found in favour 
of Ecuador.  The Appellate Body had, once again, r ecognized that the EC's discriminatory regime had 
no legal basis in the WTO.  The EC's failure to co mply with its obligations damaged its credibility as 
well as the credibility of the dispute settlement mechan ism.  However, one should not lose hope in the 
functioning of the multilateral dispute settlement syst em.  He recalled that 16 years ago, it had not 
been possible to adopt the Panel Report on ba nanas because the EC and the ACP countries had 
blocked its adoption.  In 1994, the EC bananas im port regime had, once again, been condemned.  
However, the adoption of the Panel Report had been  blocked again and the parties had had to await 
the entry into force of the Uruguay Round Agreem ent for the Report to be adopted by negative 
consensus.  He recalled that Ecuador had won th at case in 1997 and had had to wait all these years 
until now.  Costa Rica trusted that the adoption of the Reports of the Appellate Body and of the Panel, 
which had confirmed the illegality of the EC's regime, would enable  the EC to meet its obligations.  
Those Reports must be adopted at the present meeting and thus the request made by Côte d'Ivoire not 
to adopt the Reports could not be granted. 
20. For several months, Costa Rica had participated  in the negotiations with the EC under the 
auspices of the initiative by Colombia, which had requ ested the Director-General to exercise his good 
offices.  That process had been concluded on 27 Ju ly 2008 with the Geneva Agreement on Trade in 
Bananas.  Costa Rica remained ready to carry out  that Agreement.  The Latin American banana-
exporting countries had agreed to trust the EC not only during the current round of negotiations, but 
also during the next round in the event of failure of the current Round.  The July 2008 Agreement 
constituted a text where all different views found thei r convergence.  This was something that had not 
occurred after decades of litigation.  An equilibri um had been found and was contained in that 
Agreement.  The EC would cause a great deal of harm  by rejecting it now.  In a surprising turn of 
events, the EC had decided to link compliance with that Agreement, which could put an end to years 
of disputes, to an agreement on modalities under th e Doha Round negotiations.  Costa Rica rejected 
and regretted the unilateral position of the EC, wh ich had no support in the Agreement reached.  
Furthermore, it was not acceptable that when Repo rts had been adopted by the DSB, the party 
condemned had decided whether or not to comply  depending on progress in the Round.  This not only 
deprived the Member acting in this way of all credibility, but weakened the dispute settlement 
mechanism.  This was a very important moment in  the Round.  However, the unilateral rejection by 
the EC had had negative consequences in other ar eas.  The chance had been missed to reach an 
agreement in agricultural negotiations on sensitive pr oducts such as sugar, rum or tobacco, including a 
list of 42 products that could have  been settled in July 2008.  However, when the EC had decided not 
to comply with the July Agreement, that list of 42 products had been opened up again and those 
products continued to be on the table as unresolved issues, which was clear from the most recent text 
of the Chairman of the agricultural negotiations.  Co sta Rica reiterated its call on the EC to respect the 
rights and obligations, which existe d independently of the size of the countries against which it had 
lost under the dispute settlement mechanism, and urged the EC to allow good sense, good faith and 
the letter of what had been agreed to prevail.  
21. The representative of Ecuador  said that his delegation wished, once again, to express its 
gratitude to the Appellate Body for the way it had d ealt with third parties in this dispute.  Ecuador 
disagreed with the argument that there was any discriminatory treatment of third parties in the 
proceedings.  Since the imposition of the illegal tari ff by the EC, Ecuador had paid US$101 million, 
which was an absolutely excessive duty for a country such as Ecuador.  His delegation wished to ask 
the ACP countries how much they had paid in terms of  tariffs to have access to the EC's market.  The  WT/DSB/M/260 
 Page 11 
 
 
answer, he said, would be zero.  Finally, Ecuador un derlined that the Reports, before the DSB at the 
present meeting, would ha ve to be adopted.  
22. The representative of th e European Communities  said that his delegation would briefly like to 
deal with one institutional point and then respond to some other interventions on substance.  The 
institutional point arose from the statement made by  the United States in which reference had been 
made to its own request to suspend considerations of the Appellate Body Report and had also referred 
to one or two provisions, or paragraphs, in Ecuador's Appellate Body Report which contained 
typographical errors.  The EC would have no probl ems with the Appellate Body correcting clear 
typographical errors but, from what the EC had seen in  the US letter, those references were anything 
but typographical errors.  The DSU did not provide for any provision to amend such Reports after 
circulation or after the 90 days deadline.  Theref ore, the EC would wish to be consulted by the 
Appellate Body on any clerical errors being corrected .  Any rectification would need agreement by all 
parties.  On the substantive remarks, his delegati on wished to reiterate its opening statement that the 
EC was working to implement the recommendation made  in Ecuador's Report to bring its regime into 
compliance with Article II of the GATT 1994 by means of modifying its bound duty.  It was the EC's 
intention to bring its tariff regime into compliance.   The EC would rebind its bananas tariff.  In any 
case the EC would rebind, with or without the Doha  Round.  The Panel Report, not questioned by the 
Appellate Report, and as provided for by the DSU, did allow the EC discretion in which way the EC might implement the recommendations and rulings.  The EC's Latin American partners had made 
comments on how, and at what level, the EC woul d rebind.  The EC was heartened by all MFN 
countries expressing their expectation and hoped on doing so through reaching an agreement with 
them.  That would be the EC's wish as well.  
23. The EC recalled that Colombia had provided a very  useful summary history of this dispute.  
His delegation might also complement it by recalling the most recent history of the Banana negotiations.  Now it was said that the EC had an obligation to implement the 27 July Agreement as a 
standalone agreement irrespective of a successful Doha deal.  This had not been agreed.  A standalone 
Agreement had indeed been reached – but on 16 July – and this had been rejected by all, but the EC 
and one MFN country.  The EC plus that one MFN c ountry had been ready to initial it, but this had 
never happened.  From that point onward the EC  had worked on an agreement which would become 
part of Agricultural modalities, tied to the successf ul completion of such modalities.  This draft 
agreement comprised several elements:  as noted by Colombia in its statement, one of those elements 
was tariff cuts belonging to the Doha Round.  Th at tariff cut component was linked to the Doha 
modalities.  This was why his delegation had stat ed in its opening statement that "we hope to 
negotiate and conclude an agreem ent with the MFN countries based on the July Agreement, in the 
framework of the agricultural modalities we hope to  conclude in the next days".  If one could 
conclude successful Agricultural modalities, the EC's  intention would be to implement the 27 July 
Agreement if others were also willing to do so.  That was still the EC's intention.  If, however, 
Members were collectively unable to adopt the Agri cultural modalities then the EC recognized that it 
would, in any case, have to rebind.   As of now, his delegation could not guarantee that the terms of 
this settlement would be identical to the 27 July Ag reement.  The 27 July Agreement was specifically 
linked to Doha.  He reiterated that the EC intende d to implement the recommendations and rulings of 
the Panel and of the Appellate Body. 
24. The representative of Costa Rica
 said that things were not exactly as the EC had presented 
them.  All parties, except for the EC, had one interpretation.  The EC was alone with its own 
interpretation.  Of course the EC was stronger than th e other parties.  With regard to bananas, the EC 
had demonstrated that for two decades, and ever since, it had done what it wanted.  The EC was 
proving that it was ready to continue doing that.  That was a fact.  The negotiations carried out under 
the Good Offices of the Director-General were very  complex and all remembered the roller coaster 
between optimism and pessimism, and whether there would be modalities in February, March, April, 
June, July, November or December 2008.  From December 2007, and during the first semester of 
2008, negotiations on bananas had been carried out w ith the EC and five Latin American countries.  WT/DSB/M/260 
Page 12  
 
Members had failed to reach agreement on modalities a number of times.  Therefore, from the very 
beginning of the negotiations, it was very clear that Latin American countries wa nted to be sure that 
this dispute was going to be solved with or w ithout modalities under the Doha Round.  Solving this 
dispute with or without modalities was considered to  be option two in those negotiations.  Solving it 
in the context of modalities was considered to be  option one.  For a while, the EC advocated option 
one by stating that "we are not ready to a soluti on if there are no modalities".  Costa Rica's position 
was the opposite, namely, that there would have to be a solution with or without modalities;  i.e. 
option two.  After many months of negotiations, th e Director-General had made a proposal.  And the 
EC had accepted a standalone agreement in the sen se that it would be an agreement on bananas that 
would have its own life, with or without modalities.   Only one Latin American country had accepted 
the Director-General's proposal.  Others had accepted the substance, but not the numbers because the 
numbers had changed substantially in the last we ek.  The question was why the numbers had changed 
in the final week.  The explanation was that the ACP countries had been consulted and they had only decided on this two weeks later in the Ministerial Meeting in July 2008.  The numbers had not been 
accepted by the ACP countries and, therefore, tho se numbers had been substantially reduced.  The 
linkage to modalities had not been made by Latin Am erican countries.  This had been made during the 
negotiations carried out under the Good Offices of the Director-General.  Latin American countries 
had stated that they could accept the text, the moda lities and option two, but th at they would continue 
to negotiate the numbers.  On 27 July 2008, a differe nt set of numbers had been agreed:  instead of a 
reduction of €150 in the first year, it would be €148 , and instead of €116, it would be €114.  That was 
a difference in the Agreement to which the EC ha d referred.  Furthermor e, paragraph 4 of the 
Agreement, which was fundamental, assured that this Agreement was valid with or without 
modalities.  That paragraph had been proposed by th e EC, and had defined the standalone nature of 
the Agreement.  This was also in part what the Di rector-General had proposed.  So if the Agreement 
of 16 July was a standalone Agreement then th e Agreement of 27 July was also a standalone 
agreement.  Costa Rica had sought explanation fro m the EC as to what had made the agreement 
proposed by the Director-General to be different from the 27 July Agreement.  However, the EC had 
not been able to respond.  The EC had said that :  "well the difference is that the negotiations 
continued and we finished during the week in which the Ministers were here".  However, the text had 
been agreed before the negotiations had collapsed.  
25. It was understandable from the political point of view that it was much more difficult for the 
EC to report to its member States that it had not ha d any results in NAMA or Agriculture but that the 
only agreement it had was the agreement on bananas.  That, however, was the EC's domestic problem.  
This was not linked to the good faith nor to the serious ness of the negotiations or to the obligation that 
one had to comply when concluding an agreement a nd that agreement had been concluded.  It had 
been concluded on 27 July 2008, and the parties ha d been ready to sign it.  There had been some 
formalities to finish, but the agreement had already been concluded.  Following the conclusion of the 
banana negotiations, Ecuador's Vice Minister had deci ded to go back to capital, but before that, he 
had signed the agreement.  However, two days late r, he had learned that that agreement had never 
existed.  This was no longer an agreement, it was,  according to the EC, a paper.  When Members had 
agreed on the DSU provisions, they had done this because they had believed that they could rely on it.  
However, in order to rely on it, it was necessary to ensure that all Members respected it, but this was 
not always the case.  Costa Rica expected the EC  to comply with the Agreement it had been 
committed to with or without modalities.  
26. The representative of the United States
 said that regarding the EC's point on the requested 
corrigendum, the EC had asserted that there was no basis for the Appellate Body to issue a corrigendum if the EC disagreed with the content of  that corrigendum.  The Appellate Body evidently 
disagreed that it could not issue a corrigendum if it cons idered there to be an error in its report.  The 
United States was aware of at least eight examples of the Appellate Body issuing corrigenda to its 
reports, and many more examples of panels doi ng so as well.  Indeed, from an institutional 
perspective, the dispute settlement system would not be well-served if the A ppellate Body or a panel 
were to consider there to be an obvious error in its own report, but were not able to correct it.  As a  WT/DSB/M/260 
 Page 13 
 
 
practical matter, the United States suggested that Me mbers could continue to reflect on this issue after 
this meeting. 
27. The representative of Honduras  said that his delegation wished to be associated with the 
statement made by Costa Rica and wished to state for the record that the 27 July Agreement was a 
standalone Agreement.  The EC had stated that it did intend to comply with different rulings of the 
Panels concerning the EC bananas regime.  Honduras asked how the EC would comply on 
1 January 2009, if there was no agreement on modalities. 
28. The representative of th e European Communities  said that the EC wished to remind the DSB 
that the item of the Agenda was the adoption of th e Panel and the Appellate Body Reports.  There was 
no Agenda item on the adoption of the 27 July Agre ement so one should try to distinguish between 
the two.  The EC had listened with great care of cour se to the interventions made by Costa Rica.  Yes, 
there were two different interp retations and views on what was understood and what or not had 
happened.  Basically, the parties had agreed to di sagree, whether the July Agreement was conditional 
upon modalities.  He could, and was tempted to answer all points made one by one, because he 
thought the EC had answers to all, but he was conscious of the time.  Also the rules of the DSB 
provided that repeated points should not be raised.  Those points had been made by the EC in the 
General Council as well as in previous DSB meetings .  So rather than to provoke another round of 
interventions, the EC would stop here and would no t repeat arguments made already.  The EC's 
obligation was to comply with the recommendations and rulings.  The EC would comply and rebind.  
With respect to the last US intervention on the ins titutional matter, the EC wished to provide a quick 
clarification on the issue of clerical errors.  First of all, the eight examples that the United States was 
referring to were examples of the Appellate Body correc ting clerical errors "proprio motu";  i.e. out of 
its own motion.  This was very different from the situation here where the correction was requested by 
a party.  This, to the EC's knowledge, was unprecedente d.  In that context the EC's point was one of 
procedure.  In analogy to Rule 18.5 of the AB Wo rking Procedures, the EC thought that in such a 
situation the parties needed to be consulted on the request.  Rule 18.5 applied to requests for 
correction of clerical errors made in a party's subm ission.  A fortiori such a rule should apply in the 
context of a request to correct an Appellate Body Re port.  Therefore, if the Appellate Body was to 
adhere to the request made by the United States  it should devise a procedure whereby the EC would 
be consulted on this request.   
29. The representative of the United States  said that, as stated before, the United States was happy 
to continue this discussion after the DSB meeting, but it wished to correct a f actual error in the EC's 
last statement.  The United States would draw the EC's attention to WT/DS336/AB/R/Corr.1.  This 
corrigendum had been issued by the Appellate Body at  the request of the Unite d States to correct a US 
argument incorrectly reflected in the Report. 
30. The DSB took note  of the statements, and adopted  the Appellate Body Report contained in 
WT/DS27/AB/RW2/ECU and the Panel Report contained in WT/DS27/RW2/ECU, as modified by 
the Appellate Body Report.   
2. Implementation of the recommendations of the DSB 
(a) United States – Continued suspension of obligations in the EC - Hormones dispute  
(b) Canada – Continued suspension of obliga tions in the EC - Hormones dispute  
31. The Chairman  recalled that in accordance with the DSU provisions, the DSB was required to 
keep under surveillance the implementation of reco mmendations and rulings of the DSB in order to 
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 of 
the DSU provided that the Member concerned shall in form the DSB, within 30 days after the date of 
adoption of the panel or Appellate Body report, of its intentions in respect of implementation of the WT/DSB/M/260 
Page 14  
 
recommendations and rulings of the DSB.  He recal led that at its meeting on 14 November 2008, the 
DSB had adopted the Appellate Body Report in th e case on "United States – Continued Suspension of 
Obligations in the EC - Hormones Dispute" and th e Panel Report on the same mater, as modified by 
the Appellate Body Report.  He further recalled that also at its meeting on 14 November 2008, the 
DSB had adopted the Appellate Body Report in the case on "Canada – Continued Suspension of 
Obligations in the EC - Hormones Dispute" and th e Panel Report on the same matter, as modified by 
the Appellate Body Report.  He then invited the European Communities to make a statement. 
32. The representative of the European Communities
 recalled that on 14 November 2008, the 
DSB had adopted the Appellate Body Reports a nd the Panel Reports in the two disputes:  
"United States – Continued Suspension of Oblig ations" and "Canada – Continued Suspension of 
Obligations".  The Appellate Bo dy Reports contained the recommendations that the United States, 
Canada and the EC initiate Article 21.5 procee dings without delay in order to resolve their 
disagreement as to whether the EC had removed the measure found to be inconsistent in the "EC - 
Hormones" dispute and whether the application of the suspension of concessions by the United States 
remained legally valid.  Through the adoption of  the Reports in the DSB, those had become 
recommendations and rulings of the DSB.  As one of the addressees of the recommendation, and 
pursuant to Article 21.3 of the DSU, the EC hereby informed the DSB of its intention to comply with 
the recommendations and rulings of the DSB.  In ot her words, the EC intended to initiate Article 21.5 
proceedings without delay.   
33. The representative of Canada  said that, at the DSB meeting of 14 November 2008, her 
country had expressed its reservations regarding th e final sentence in the Appellate Body Report in 
this case.  In that sentence, the Appellate Body had recommended that Canada and the EC initiate 
proceedings under Article 21.5 of the DSU without de lay.  The Appellate Body's role was limited to 
the powers conferred on it through the DSU.  Artic le 19.1 of the DSU governed the Appellate Body's 
authority to make recommendations to Members in the context of a dispute.  That authority was dependent on a finding of inconsis tency with a covered ag reement.  Since the Appellate Body Report 
had found no inconsistency with a covered agre ement, the Appellate Body's recommendation that 
Canada and the EC "initiate Article 21.5 proceed ings without delay in order to resolve their 
disagreement" could not have any lega l effect.  Canada noted, in this context, that the Appellate Body 
Report had clarified that the EC had the option of  initiating a proceeding under Article 21.5 of the 
DSU.  Canada also noted that the Appellate Body Report had made it clear that the recommendations and rulings of the DSB in the "EC - Hormones" dispute continued to apply to the dispute under 
consideration.  Although the Appellate Body Re port had become part of the recommendations and 
rulings of the DSB, this did not give the senten ce concerned any greater effect than that of a 
suggestion.  Therefore, in Canada's view, the pro cedural steps outlined in Article 21.3 of the DSU did 
not apply in respect of that sentence.  As a c onsequence, there was nothing to discuss at the present 
meeting under the Agenda item:  "Implementation of  the Recommendations of the DSB" in respect of 
the "Canada – Continued Suspension of Obligations in  the EC - Hormones" dispute.  This was simply 
because there was no recommendation to comply with. 
34. The representative of the United States
 said that his delegation wished to begin its statement 
by expressing its appreciation, but this time to the Members of the DSB, for their patience and 
dedication in returning, once again, to a dispute that  they had seen so many times over so many years.  
At the present meeting, it was not just Item 1 that had a long and distinguished history.  With respect 
to the statement made by the EC a few moments ago, as the United States had explained at the 
14 November DSB meeting, the Appellate Bo dy could not have intended to make a 
"recommendation" within the meaning of Article 19.1  of the DSU in its Report in this dispute.  
Therefore, the United States disagreed that this issue and the EC's statement were subject to 
Article 21.3 of the DSU.  He recalled that under Article 19.1, a panel or the Appellate Body was 
authorized to issue a recommendation only where it had concluded that a measure within the terms of 
reference of the proceeding was inconsistent with a covered agreement.  In this appeal, the Appellate 
Body had not concluded that there was any measure th at was inconsistent with a covered agreement.   WT/DSB/M/260 
 Page 15 
 
 
Making any such "recommendation", therefore, would be outside the authority granted to the Appellate Body under Article 19 of the DSU and, ther efore, could not, as a matter of law, give rise to 
legal consequences.  The United States noted that th is was not just the view of the United States and 
Canada but that of several other WTO Members who had spoken on 14 November when the DSB had 
been considering the adoption of the Appellate Body Report.  The United States recognized that the 
EC had the right to make further statements to the DSB concerning its implementation of the 
recommendations or rulings in any dispute.  Indeed , the United States had hoped, for a very long time, 
to hear a statement in which the EC would announc e its intentions to eliminate its import ban on US 
beef.  It was regrettable that the EC continued to refuse to do so.  Furthermore, the United States also 
recognized that the EC might initiate further proceedings  in this matter, and that if the EC chose to do 
so the United States could choose to participate.  Si milarly, the United States would have the right to 
initiate dispute settlement proceedi ngs of its own.  The United States considered, however, that any 
such initiation of, or participation in, further proceed ings would not constitute "implementation" of, or 
"compliance" with, a "recommendation" of the DSB, because no recommendation was made by the 
Appellate Body under the authority of Article 19.1 of the DSU. 
35. The representative of th e European Communities
 said that the EC was highly concerned by 
the attitude of the United States and Canada.  Both  were explicit addressees of the Appellate Body's 
recommendation.  The EC did not find it acceptable that  a party asserted the right to consider itself not 
bound by a recommendation.  It was irreconcilable w ith the WTO's dispute settlement system to allow 
individual parties to a dispute to decide unila terally whether or not a recommendation was valid, 
whether or not it had been made within the Appe llate Body's mandate, and whether or not it was 
binding for the purposes of implementation.  In th e absence of negative consen sus in the DSB meeting 
of 14 November 2008, the Reports of the Appellate  Body had been adopted and must be accepted 
unconditionally according to Article 17.14 of the DSU.  This applied to the entirety of an Appellate 
Body report, no party was allowed to pick and c hoose which parts of a report it considered correct, 
and certainly not a party to whom a reco mmendation was addressed.  The EC noted with 
disagreement the United States' and Canada's failure to  state at the present meeting their intentions in 
respect of implementation, as was their obligation un der Article 21.3 of the DSU.  However, through 
the EC's implementation of the DSB's recommenda tions and rulings of 14 November, it was hoped 
that this issue would soon become moot.  Neve rtheless, the EC, however, found it necessary to voice 
its deep concern about this instance of non-co mpliance with the DSU by the United States and 
Canada.  In this context, the EC wished to add a comment in relation to the tone and content of 
criticism of the Appellate Body, which was recently being voiced by the Unite d States.  There seemed 
to be a close connection because that criticism had re ached a new level of intensity since and because 
of the Appellate Body Report in the "Continued Sanctions" cases.  If the reporting was correct, those 
voices accused the Appellate Body of overreaching and of inventing new obliga tions not reflected in 
the WTO Agreement.  A quote reproduced in the medi a suggested that the Appellate Body "write[s] 
decisions that have no foundation in the WTO agre ements and indeed look like they were written on 
the back of a napkin".  Such polemic most of all suggested that the party voicing the criticism had run 
out of substantive arguments.  Nevertheless, the EC  considered such polemic inappropriate.  It was 
not only insufficiently respectful of the Appellate Bo dy of the WTO.  It was also highly inappropriate 
if representatives of a WTO Member attempted to affect the outcome of future disputes by intimidating panelists and the Appellate Body members.   In this respect, the EC would like to make 
crystal clear that it trusted – but also expected – th at future decisions would continue to be made in 
accordance with the WTO Agreement, and that they would not be influenced  by this type of criticism.   
36. The representative of the United States
 said that with respect to the statement that had been 
made by the EC, the United States rejected the EC's accusations.  The US statements to the DSB were 
consistent in tone and content with those of other Members discussing Appellate Body reports in 
general, and in particular st atements concerning the issue of the Appellate Body's non-
recommendation in this dispute.  In relation to th e EC's assertion about the US implementation, the 
United States had already explained that there were no recommendations of the DSB to implement.  If the EC truly believed that the Appellate Body had made a recommendation under Article 19 of the WT/DSB/M/260 
Page 16  
 
DSU in this dispute, perhaps the EC could identif y for Members the paragraph in the Appellate Body 
Report in which the Appellate Body, in the word s of Article 19, "concludes that a measure is 
inconsistent with a covered agre ement"?  Could the EC explain to Members what measure had been 
found WTO-inconsistent?  And, con tinuing on with the terms of Article 19, could the EC identify for 
Members where the Appellate Body in its Report "recommend[s] that the Member ... bring the 
measure into conformity with that agreement"? 
37. In any case, it was obvious that the "Hormon es Sanctions" dispute had not resolved the 
question of whether the EC had come into complia nce with the rulings and recommendations that the 
DSB had addressed to the EC in February of 19 98.  The United States remained, as it had always 
been, keenly interested in a resolution to that long- standing dispute.  Despite the amount of time that 
had passed since the United States first brought that dispute, the United States continued to hope that 
a successful resolution was possible.  It may be th at the tools of WTO dispute settlement would offer 
a path to a successful resolution.  As stated alr eady, however, the United States considered that any 
possible employment by the United States or the EC of such tools, derived from the rights of Members to avail themselves of such tools and coul d not be considered the "implementation" of the 
DSB "recommendations".  Finally, with respect to th e EC's statement that it intended to initiate an 
Article 21.5 compliance panel proceeding without delay, the United States stood ready, as it always had, to review any requests by the EC for furthering proceedings. 
38. The representative of Australia
 said that she just wished to make a brief comment in relation 
to the exchange between the United States and the EC.  Australia would call on all Members, 
including both the United States and the EC, to en sure that their comments in the DSB remained 
respectful with regards to panels, the Appellate Body,  and other Members.  Australia considered that 
the DSB had a long tradition in this direction, and would consider it a great disservice to the DSB and to the dispute settlement system more generally if the DSB was to fall short of the very high standards 
that Members had set in the past on this measure. 
39. The representative of Mexico
 said that, due to systemic importance of the issue discussed, his 
delegation wished to make a statement.  In Mexico's view, Members could not be forced to comply 
with recommendations and, therefore, it was up to the complainant to challe nge such non-compliance.  
However, it was inappropriate to state unilaterally what was, or what was not, a recommendation of 
the DSB after the adoption of the Appellate Body Reports.  
40. The representative of Canada  said that her country accepted the Appellate Body Report 
unconditionally.  In light of the last intervention of the EC and the heated tone of the last exchange, 
Canada reaffirmed its continued a nd constant respect for the Appella te Body.  Canada simply must 
insist that, in the absence of a violation of a covered agreement, logic as well as the text of Article 19.1 of the DSU dictated that there was nothi ng to implement.  In any event, Article 17.14 of 
the DSU could not override the rules set out in Article 19.1 and 19.2 of the DSU.   
41. The DSB took note
 of the statements.  
3. Mexico – Definitive countervailing measures on olive oil from the 
European Communities  
(a) Statement by Mexico  
42. The representative of Mexico , speaking under Other Business, said that in accordance with 
the provisions of Article 21.6 of the DSU, his count ry wished to raise, at the present meeting, the 
issue of the implementation of the recommendations and rulings relating to the dispute:  "Mexico – 
Definitive Countervailing Measures on Olive Oil fro m the European Communities" (WT/DS341).  He 
recalled that on 21 October 2008, the DSB had adopt ed the recommendations and rulings contained in 
the Panel Report, which had examined the above-men tioned dispute.  On 22 January 2008, a domestic  WT/DSB/M/260 
 Page 17 
 
 
court had ordered the Mexican investigating author ity to remove the countervailing duties imposed on 
olive oil from the EC.  Consequently, on 18 Nove mber 2008, Mexico had published in the Official 
Journal of the Federation a resolution3 for the elimination of the countervailing duties that had been 
the subject of this dispute, thereby complying w ith the recommendations and rulings adopted by the 
DSB. 
43. The representative of the European Communities  said that, at the outset, the EC thanked 
Mexico for its statement.  The EC was very pleased  to see the introduction of this measure and shared 
the view that through its action Mexico brought itself into compliance with the DSB's recommendations.  
44. The DSB took note
 of the statements.  
__________  
                                                      
3 Resolution to give effect to the decision of 22 January 2008 delivered by the Second Division of the 
Upper Federal Tax and Administrative Court in the Administrative Dispute 8558/06-17-01-3/483/07-S2-06-01 
brought by Distribuidora Ybarra, S.A. de C.V.