RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/DS/M/20 
26 May 2005 
 (05-2145) 
Special Session of the Dispute Settlement Body 
22 October 2004  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 22 October 2004  
 
Chairman:  Mr. David Spencer (Australia) 
 
 
 Prior to the adoption of the agenda , the Chairman  welcomed participants to the twenty-third 
meeting of the Special Session and recalled that at the last meeting of the Special Session at the end of  
May 2004, it had been agreed that he would report  to the TNC the consensu s among participants that 
work should continue towards clarification and impr ovement of the DSU, and that, on that basis, the 
Chairman of the TNC had forwarded to the Genera l Council the TNC's recommendation that work in 
the Special Session should continue on the basis set  out in that report and that this recommendation 
was adopted by the General Council on 1 August, as part of the July package.1  Turning to the agenda 
for this meeting, the Chairman said that it contai ned three items, namely (i) discussion of the paper 
circulated as Job 04/52 by Argentina, Brazil, Ca nada, India, New Zealand and Norway; (ii) future 
work programme; and (iii) "Other Business".  He asked whether any delega tion would like to raise 
any matter under "Other Business".  As there was no request from the floor, the item relating to "Other Business" was removed from the agenda.  The agenda was sub sequently adopted, as amended.  
 
 The Chairman noted that in preparation for the present meeting, a number of reference documents had been circulated.  This included a checklist of documents, circulated as Job 04/157, 
which listed all documents made available in  this negotiation since the commencement of 
negotiations.  A revised version of the compilati on of proposals had also been circulated as 
Job 03/10/Rev.4.  A revised version of the statis tical document, updated as of 30 September 2004, had 
been circulated as Job 03/225/Rev.1.  It followed th e same format as the previous version circulated 
last year.  The Secretariat would welcome any comment s or corrections that de legations might have in 
respect of this document.  Also made available in the room were two informal contributions made by 
Canada and the United States in respect of treaty draf ting conventions which were circulated last year 
as Job 03/1 and Job 03/2, respectively.  Finally, also available was the document circulated as 
Job 04/52 by Argentina, Brazil, Canada, India, Ne w Zealand and Norway which would be formally 
presented by participants under the first agenda ite m.  The Chairman recalled that the document was 
circulated on 19 May 2004 but it had not been possibl e at the time to engage in a detailed discussion 
of its contents, as the date foreseen for the conclusi on of the work was approaching. He reiterated his 
appreciation to the proponents for their initiative, r ecalling that he had encouraged participants to 
actively engage with one another a nd noting that this was a very cons tructive step forward.   The 
opportunity to engage the entire membership in a disc ussion of the paper at this meeting was also very 
important.     
                                                     
 
1 See document WT/L/579; 2 August 2004. TN/DS/M/20 
Page 2  
 
 1. Discussion of the contribution contained in Job(04)/52 
1. The representative of Norway
 recalled that a group of delegati ons had circulated and briefly 
introduced a "textual contribution to the negotiations on improvements and clarifications of the Dispute Settlement Understanding" info rmally to the Special Session in May 2004.  At that time, they 
had also consulted with interested  delegations and were prepared to  hold further consultations with 
any interested delegation to discuss any of the elements  in their paper.  They had also indicated that 
they would welcome the opportunity to formally presen t their paper.  It was against that backdrop, 
they were pleased to have the opportunity to present their paper at the present meeting.  He said that 
the proponents had focussed on three issues of syst emic importance for the operation of the DSU: 
sequencing, remand and post-retaliation.  They did no t believe that these were the only  issues to be 
addressed in the negotiations but believed that  these three proposals covered issues that most 
Members agreed should be dealt with in these nego tiations.  The group had started its work hoping to 
come up with a kind of "substantive mini-package", encompassing these and other issues of recognized systemic importance, within the then  agreed time-frame.  There was now no formal 
deadline for the negotiations.  Rega rdless of when the next "milestone" would be, the group continued 
to believe that these three systemic issues would ha ve to figure prominently in any revised DSU, be it 
in 2005 or later.   In their view, any meaningful package to reform the DSU must take as its point of 
departure substantive changes, and not "cosmetics".   2. When the group originally set out to see wh at was achievable by the now long-gone May 
deadline, they chose to concentr ate on a few topics selected on the basis of the following criteria: 
First, any proposed changes had to be of systemic  importance, meaning that they would bring real 
improvements to Members.  Second, the issues that to be addressed were those that could not be 
easily agreed or negotiated on an ad-hoc  basis between the parties to a particular dispute.  Third, the 
issues had to be "doable" in the short-term, based  on the relative level of support and opposition they 
had perceived during the past couple of years.  In drafting the elements of such a package, the group 
had been inspired by the inputs and the discussions  that had led to the so-called "Balás text"
2, but 
were not necessarily wedded to those texts.  The gui ding principle was that any changes to the DSU 
should be kept as simple as possible and as few as pos sible, as that would make them easier to explain 
and understand.  He said that the proponents had been considering other issues of systemic importance in addition to the three presented at this  meeting, but their thinking on these issues was not 
as advanced.  On certain issues, there seemed to  be a general sense of how to operationalize the 
concepts, while other topics were still problematic.  The other four topics the group had chosen to 
work on were "transparency", "third party rights",  "compliance" and "developing-country issues".  
These four issues had also been chosen on the b asis of the criteria detailed above.  The proponents 
expected to circulate texts on some or on all four issues for later sessions.   
3. The proponents were engaged in c onsultations with other Members to gauge their reactions to 
the proposals with a view to making changes to th e drafts, as appropriate, and such consultations 
would continue in the near future.   However, the suggestions for changes received so far had not been 
incorporated into the texts presented in the "non-paper".  This did not at all imply that the group  did not consider it feasible or desirable to make chang es.  Rather, time had not permitted such changes in 
May, and the reactions were also to some extent poi nting in opposite directions.   It was not for the 
group to say that the middle ground they had tried to capture in their textual proposal represented the 
exact correct balance.  This would evolve as part  of the final negotiations.  The proponents were 
conscious of the fact that with the new time-frame  for the conclusion of the negotiations, the pressure 
to converge rapidly might have evolved, as delegati ons would want to see the full picture of what a 
possible package might look like before relinquishing long-held positions on these three issues.  The 
proponents fully appreciated this pos ition and indeed some of them might even wish to revise and re-
submit proposals that they had tabled earlier in other areas.  At the same time, most would agree that,  
                                                     
 
2 TN/DS/9.  TN/DS/M/20 
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 while there were also conceptual differences in re spect of certain aspects of some topics, including 
sequencing, most of these concerns related to th e mechanics of the earlier proposals.  It should be 
possible to refine the mechanics in light of r ecent proposals and crystallize areas where there were 
still political or conceptual differences, so that simp le options could be presented to capitals for their 
consideration. 
 
4. A lesson learned from experience so far wa s that proposals could benefit from being 
discussed in small informal groups before being brought to the Special Session.  Broad-based discussions as well as broad-based support were essential to presenting ideas that would have a 
reasonable chance of acceptance in the Special Sessi on.  In relation to the as to whether or not 
delegations forming part of the group were demandeurs or protagonist s of DSU reform in the selected 
areas, he said that when the group set out to see wh ether there could be a possibility of developing a 
compromise package on what they perceived as the seven most important substantive issues in the 
review, it was not because they were "demandeurs" on  all or some of these issues.  Rather, the group 
was acting more as friends of the DSU than as "dem andeurs" in their own right.  If they were 
demandeurs, it was not for the DSU review as such, but in safeguarding and promoting and furthering 
the DSU as a tool to ensure application of a ll the WTO agreements in all WTO Members, and 
certainly as a dispute settlement system accessible to all Members regardless of their size or economic 
weight.   Their motivation was to see what could be done on the selected issues, trying to limit the changes to what was necessary to serve the thr ee-pronged objective highlighted above.  They hoped to 
receive comments from others on the same basis, and would respond with an open mind.   The three 
issues would now be explained in more de tail by other members of the group.  
 5. The representative of Brazil
 noted that sequencing was probably one of the longest-standing 
problems ever encountered with the operation of the DSU.  Before proceeding to outline the details of 
their proposal, it was in order to give a brief overv iew of the problem and how it arose.  The problem 
was brought to the fore in the EC -  Bananas  case, where the European Communities and Ecuador 
separately requested the establishment of complian ce panels under Article 21.5 to determine the 
consistency of the new measur es implemented by the European Communities with the DSB's 
recommendations and rulings, and the United States  requested authorization under Article 22.6 to 
suspend concessions to the European Communities.   The issue, in a nutshell, was whether a 
multilateral determination of non- conformity under Article 21.5 was always necessary before recourse 
to Article 22.6 for authorization to suspend equivale nt concessions.  In other words, should there be a 
sequence between Articles 21.5 and 22.6 of the DSU.    The problem was made more difficult as there 
was no cross-references between the two articles.  It was further exacerbated by the reference to "these dispute settlement procedures" in Article 21.5.  Did it mean that all DSU procedures had been 
incorporated into this procedure which had to be completed within 90 days?  For example, it was not 
clear whether Article 4 consultations were manda tory and whether compliance panels had to be 
established upon the first request, or whether Article 6.1 of the DSU was applicable.  The rights of third parties were also not clear.  Did they have  an automatic right to participate in compliance 
proceedings under Article 21.5?  Could Members that  had not participated as third parties in the 
original dispute participate as third parties in th e compliance proceedings?  It was also not clear 
whether the findings of the compliance panel could be appealed under Article 17 and whether a new 
reasonable period of time for implementation of the DSB's recommendations and rulings should be 
established as a result of Article 21.5 proceedings .  All of these questions arose and had no clear 
answer.  6. Turning to Article 22.6 of the DSU, he said that under this Article, the DSB had to grant 
authorization to retaliate within thirty days of the expiry of the reasonable period of time.  This time-
frame was difficult to meet, and a compliance panel took much longer than that.  Article 22.2 of the 
DSU, on the other hand, provided a short period fo r negotiations on compensation, assuming a request 
was made by the complaining Member.  If no request  was made or agreement was not reached within 
20 days after the expiry of the reasonable period of time, the complaining Member could request TN/DS/M/20 
Page 4  
 
 authorization to retaliate against the responding Member.  There was no cross-reference in this 
provision to Article 21.5 adding to the complexity of the problem.  Finally, it was provided in Article 22.6 of the DSU that arbitration on the le vel of suspension of concessions should be completed 
within sixty days from the expiry of the reasonabl e period of time, rather than from the arbitration 
request.  This had proved in practice to be absolute ly insufficient for the arbitrators.    Reference 
should also be made to Article 23 of the DSU, which aimed at the strengthening of the multilateral 
trading system and the prevention of unilateral acti on.  It was debatable whether that provision shed 
any light on the sequencing issue.  While Members had tried to cope with the sequencing issue by 
entering into bilateral agreements, this had not al ways worked.  Brazil was involved in one dispute 
where it was not possible for the parties to reach ag reement.  There were also a number of variations 
in the agreements being concluded.  Having a clearly defined legal procedure was therefore desirable.   
 7. Turning to the proposal of the group, he noted that the proposal first made it clear that any 
disputing party could request the establishment of a compliance panel.  Currently, it was not clear whether it was only the complaining Member that could request the establishment of a panel.  It was 
also proposed that consultations should not be ma ndatory.  They may be necessary in some cases and 
not in others, so it would be up to the parties to de cide on that.   The proposal also made it clear that 
compliance panel reports could be appealed and th at reports would be adopted in accordance with 
Article 16 of the DSU.  It was clarified that the Member concerned would not be entitled to an 
extension of the reasonable period of time for the implementation of the recommendations and rulings 
of the DSB after the end of the Article 21.5 procedure.   
 
8. With respect to Article 22.2 on compensation,  it was the view of the proponents that the 
current twenty-day period within which the parties had to agree on compensation was not realistic.  It 
was rare to find an agreement on compensation whic h was concluded within this tight time-frame.  
Under the proponents' proposal, if a request for co mpensation was made, the party to whom it was 
addressed would have to enter into negotiations within ten days of the request.  There would be no 
deadline regarding when the negotiations for co mpensation should be completed.  Compensation 
negotiations could therefore last as long as both parties might want.  The new Article 22 bis was very 
important, as it provided the link to Article 22.6 under which authorization could be sought to suspend 
equivalent concessions to the responding Member upon the occurrence of any of four events listed in 
the proposal.  The proposal made it clear that th e procedure under Article 21.5 should be exhausted 
before recourse could be made to Article 22.6, when there was disagreement on the consistency of 
implementing measures.     9. Finally, with respect to Article 22.6, he said that  their proposal clearly spelt out the situations 
which must arise before authorization could be ob tained under that provision to suspend equivalent 
concessions or other obligations.   The proposal also  provided for arbitrations on the proposed level of 
suspension to be completed within 60 days of the referral of the matter to arbitration, instead of 60 
days after the expiry of the reasonable period of ti me.  The proposed change would enable arbitrators 
to meet the deadline.  He said that the proponents were of the view that their proposal offered a 
logical solution to the sequencing problem.  It was up to Members, however, to decide whether this proposal was the most adequate and comprehensive solu tion to deal with this problem.  In concluding, 
he recalled that the panelists in the EC – Bananas  case had noted that they were aware of the debates 
concerning the relationship between Articles 21.5 a nd 22 of the DSU and that they viewed that 
question as one best resolved by Members in the DS U review.   That was more than five years ago 
and it was probably high time to live up to those e xpectations.  Finally, he noted that the proponents 
would be pleased to respond to any questions that Members might have. 
 
10. The representative of New Zealand
 said that he would start with a general description of the 
problem sought to be addressed through remand and th en outline some of the principles and thinking 
that laid behind the proposed legal text.   He re called that the mandate of the Appellate Body was 
limited to only addressing issues of law.  Inevitably,  there would be times when the Appellate Body  TN/DS/M/20 
 Page 5 
 
 
 could not complete its analysis of a certain issue because there was not a sufficient factual basis for it 
to do so.  In such situations, without a remand procedure, the only option to get such an issue 
addressed would be to restart the entire dispute settleme nt process again with respect to that issue.  
This could involve consultations, a nine-month or more panel proce dure, and everything that went 
with it.  It would therefore seem desirable to ha ve a mechanism that would allow these issues to be 
dealt with more quickly.  A remand process would be needed both to reduce timeframes and as a 
matter of good institutional process.  It should not be necessary to restart a completely new case, 
simply because none of the issues could be resolved  due to insufficient facts.  This was not a 
theoretical problem, and  had arisen in a number of cases, including Canada – Dairy .  The possibility 
of it happening in other cases could not be discounted , and for that reason, the group believed that it 
should be addressed in these negotiations.   
 11. In proposing a solution to this problem, the pr oponents wanted to keep it as simple as possible 
and to make use of existing familiar concepts in the DSU.  They did not wish to create anything 
fundamentally new.    In essence, what they were  proposing was an expedited panel procedure similar 
to the Article 21.5 compliance procedure.   The proponents were also mindful of the need for 
flexibility, as it seemed difficult or impossible to have  a "one-size fits all" solution to this problem, 
because the nature of the issues refe rred back to a panel might vary considerably.  While some cases 
might raise only a single factual issue, others might raise several complicated issues which would 
require significant documentation and argumentation.   It was against that background that the 
proponents advocated that as a general rule, the panel should circulate its report within ninety days of 
the referral of the matter to it, but the panel woul d have the flexibility to modify and adapt its working 
procedures.  The proposal also addressed the quest ion of who should decide whether an issue should 
be remanded.  The proposal would allow any of the disputing parties to request that an issue be 
remanded.  In that sense, the proposal differed fro m the procedure in most domestic jurisdictions 
where an issue would typically be remanded to a lo wer court by a higher court. The process would, 
under the proposed text, remain in the hands of the parties to the dispute.  For that reason, the 
proponents deliberately used the phrase "referral pro cedure" to capture this concept.  Finally, to 
ensure that the procedure was not used as a mean s for delaying implementation, it had been proposed 
that it should be possible for a party to request the adoption of both the Panel and Appellate Body 
reports.  It was possible, for example, to envisag e a case where there were ten different legal claims 
and the Appellate Body made findings on nine issues but  could not complete  its analysis of one issue 
because of insufficient factual inform ation.  In such a case, it would desirable for the original Panel 
and Appellate Body reports to be adopted in order to trigger implementation obligations.  It would be 
open to the complaining party to decide to pursue th e tenth issue through the referral procedure.  He 
said that the proponents would welcome Members' views on both the general concepts lying behind 
the proposals and also on the specific drafting language.  
 
12. The representative of Canada
 said that his presentation would focus on the proposed 
amendments to Article 22.8 of the DSU, relating to  procedures for the removal of authorizations to 
suspend concessions or other obligations, or "pos t retaliation".  Simply put, this addressed the 
question of what happened when a complaining party had imposed retaliatory measures and the 
defending party claims that it had taken measures to secure compliance, and there was disagreement 
between the parties that compliance had taken place.   He said that Article 22.8 as currently drafted 
provided that the suspension of concessions or other obligations could remain in place until such time 
as the measure found to be inconsistent with a cove red agreement had been re moved, or the Member 
that must implement the DSB's recommendations or rulings has provided a solution to the nullification or impairment of be nefits, or reached a mutually sa tisfactory solution with the other 
party.  It did not cover situations where there wa s disagreement between the parties as to whether or 
not the measure that the defending party was propos ing as an implementation measure was actually  
an implementation measure.  It was possible to envisage a situation where retaliatory measures would remain in place, even though the other party might  have taken measures to comply with the DSB's 
recommendations and rulings.  At the same time, to suggest that retaliation should be lifted upon TN/DS/M/20 
Page 6  
 
 notification by the defending party would not solve the problem either, as this would provide an 
incentive to defending parties to simply assert complian ce so that retaliatory measures could be lifted.  
The proposal was intended to deal with this pr oblem.  The group was aware that there might be 
alternative ways to address this issue, but believed that their proposal offered a logical solution to the 
problem.   
 
13. Under the proposal, there was the recognition th at the Member against which retaliatory 
measures had been imposed would have already been found not to be in compliance with its 
obligations in the original proceedings and possibl y also in proceedings under Article 21.5 of the 
DSU.  It would therefore be for that Member to est ablish that it was no longer in violation and that the 
retaliatory measures imposed against it should be re moved.  The initial burden of launching another 
compliance proceeding would therefore be on the de fending Member.  Given the possibility that the 
implemented measures might raise questions as to the consistency of those measures with other 
obligations of the responding party, the proposal w ould also allow the complaining party to contest 
the adequacy of the implemented measures or raise a llegations of violation of other obligations.  The 
panel would examine both competing claims of the parties.  Different outcomes could result from 
such proceedings.  It could be envisaged that a panel might find that compliance had taken place, in 
which case the retaliatory measures should be lifted.  It was also possible that the panel might find 
different sorts of violations or different levels of violation in which case there could be recourse to 
arbitration under Article 22.6.  Th e proposal had a number of advantag es.  It provided a mechanism to 
deal with disagreements regarding compliance after retaliatory measures had been imposed.  It also 
struck a balance between the rights of  the complaining and responding par ties.  It was also flexible in 
that it recognized that the Member found to be in vi olation of its obligations might have increased or 
decreased the level of nullification or impairment of benefits.  Accordingly, the proposal envisaged 
the possibility of another recourse to arbitration unde r Article 22.6.  He concluded by saying that the 
group would welcome any comments and respond to an y questions that delegations might have.   
 
14. The Chairman
 thanked the proponents for the comprehensive introduction of their proposal.  
He said that there had been a good exchange of views during the discussion of the proposal in informal mode and that this would be reverted to in due course.  He request ed delegations which had 
posed questions to submit them in writing to the propon ents to facilitate the preparation of responses.   
 2. Future Work Programme 
15. In respect of future work, the Chairman proposed to consult further with participants on how 
best to proceed and suggested that the dates of  the next meeting be confirmed for 25 and 26 
November.  The discussion initiated in respect of the contribution by the group of six delegations could be continued at that meeting.   In parallel, the Chairman said that he would be undertaking some 
further consultations.  He also en couraged delegations, in the meantim e, to continue to talk to each 
other and informally work together in various form ats and noted that the more discussions participants 
had amongst themselves, the more it w ould facilitate the negotiations.   
 
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