WORLD TRADE  
ORGANIZATION  WT/DS265/33 
WT/DS266/33 
WT/DS283/14 
28 October 2005 
 (05-4990) 
 Original:   English 
  
 
     
 
    
 
   
EUROPEAN COMMUNITIES – EXPO RT SUBSIDIES ON SUGAR 
 
 
 
ARB-2005-3/20 
  
 
 
Arbitration 
under Article 21.3(c) of the 
Understanding on Rules and Procedures 
Governing the Settlement of Disputes 
 
 
   
 
   
Award of the Arbitrator 
A.V. Ganesan  WT/DS265/33 
 WT/DS266/33 
 WT/DS283/14 
 Page i 
  
  
I.
 Introduction................................................................................................................... ..............1  
II. Arguments of the Parties....................................................................................................... ......3  
A. European Communities ..................................................................................................3  
B. Complaining Parties ......................................................................................................9  
1. Australia............................................................................................................9  
2. Brazil...............................................................................................................13  
3. Thailand ..........................................................................................................18  
III. Reasonable Period of Time...................................................................................................... .22 
 
 WT/DS265/33 
WT/DS266/33 WT/DS283/14 
Page ii 
  
 TABLE OF CASES CITED IN THIS AWARD 
 
Short Title Full Case Title and Citation 
Argentina – Hides and Leather Award of the Arbitrator, Argentina – Measures Affecting the Export of 
Bovine Hides and Import of Finished Leather – Arbitration under 
Article 21.3(c) of the DSU , WT/DS155/10, 31 August 2001, DSR 2001:XII, 
6013 
Canada – Patent Term Award of the Arbitrator, Canada – Term of Patent Protection – Arbitration 
under Article 21.3(c) of the DSU , WT/DS170/10, 28 February 2001, 
DSR 2001:V, 2031 
Canada – Pharmaceutical Patents Award of the Arbitrator, Canada – Patent Protection of Pharmaceutical 
Products – Arbitration under Article 21.3(c) of the DSU , WT/DS114/13, 
18 August 2000, DSR 2002:I, 3 
Chile – Alcoholic Beverages Award of the Arbitrator, Chile – Taxes on Alcoholic Beverages – Arbitration 
under Article 21.3(c) of the DSU , WT/DS87/15, WT/DS110/14, 
23 May 2000, DSR 2000:V, 2583 
Chile – Price Band System Award of the Arbitrator, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Arbitration under Article 21.3(c) of the DSU , WT/DS207/13, 17 March 2003 
EC – Bananas III Award of the Arbitrator, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas – Arbitration under 
Article 21.3(c) of the DSU , WT/DS27/15, 7 January 1998, DSR 1998:I, 3 
EC – Export Subsidies on Sugar Appellate Body Report, European Communities – Export Subsidies on 
Sugar , WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, adopted 
19 May 2005 
EC – Export Subsidies on Sugar  Panel Reports, European Communities – Export Subsidies on Sugar , 
WT/DS265/R ( Australia ), WT/DS266/R ( Brazil ), WT/DS283/R ( Thailand ), 
adopted 19 May 2005, as modified by Appellate Body Report, 
WT/DS265/AB/R, WT/DS2 66/AB/R, WTDS283/AB/R 
EC – Hormones Award of the Arbitrator, EC Measures Concerning Meat and Meat 
Products (Hormones) – Arbitration under Article 21.3(c) of the DSU , 
WT/DS26/15, WT/DS48/13, 29 May 1998, DSR 1998:V, 1833 
EC – Tariff Preferences Award of the Arbitrator, European Communities – Conditions for the 
Granting of Tariff Preference s to Developing Countries  – Arbitration under 
Article 21.3(c) of the DSU , WT/DS246/14, 20 September 2004 
Indonesia – Autos Award of the Arbitrator, Indonesia – Certain Measures Affecting the 
Automobile Industry – Arbitration under Article 21.3(c) of the DSU , 
WT/DS54/15, WT/DS55/14, WT/DS59/13, WT/DS64/12, 7 December 1998, DSR 1998:IX, 4029 
Korea – Alcoholic Beverages Award of the Arbitrator, Korea – Taxes on Alcoholic Beverages – 
Arbitration under Article 21.3(c) of the DSU , WT/DS75/16, WT/DS84/14, 
4 June 1999, DSR 1999:II, 937 
US – 1916 Act Award of the Arbitrator, United States – Anti-Dumping Act of 1916 – 
Arbitration under Article 21.3(c) of the DSU , WT/DS136/11, WT/DS162/14, 
28 February 2001, DSR 2001:V, 2017  WT/DS265/33 
 WT/DS266/33 
 WT/DS283/14 
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 Short Title Full Case Title and Citation 
US – Gambling Award of the Arbitrator, United States – Measures Affecting the Cross-
Border Supply of Gambling and Betting Services – Arbitration under 
Article 21.3(c) of the DSU , WT/DS285/13, 19 August 2005 
US – Offset Act 
(Byrd Amendment ) Award of the Arbitrator, United States – Continued Dumping and Subsidy 
Offset Act of 2000 – Arbitration under Article 21.3(c) of the DSU , 
WT/DS217/14, WT/DS234/22, 13 June 2003 
US – Oil Country Tubular Goods 
Sunset Reviews Award of the Arbitrator, United States – Sunset Reviews of Anti-Dumping 
Measures on Oil Country Tubular Goods from Argentina  – Arbitration 
under Article 21.3(c) of the DSU , WT/DS268/12, 7 June 2005 
US – Section 110(5) Copyright Act Award of the Arbitrator, United States – Section 110(5) of the US Copyright 
Act – Arbitration under Article 21.3(c) of the DSU , WT/DS160/12, 
15 January 2001, DSR 2001:II, 657 
  WT/DS265/33 
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 WT/DS283/14 
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 W
ORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 
European Communities – Export Subsidies 
on Sugar 
 
Parties: 
 
Australia 
Brazil European Communities Thailand  ARB-2005-3/20 
 
 Arbitrator: 
  A.V. Ganesan  
  
I. Introduction 
1. On 19 May 2005, the Dispute Settlement Body (t he "DSB") adopted the Appellate Body 
Report
1 and the Panel Report2, as modified by the Appellate Body Report, in European Communities – 
Export Subsidies on Sugar .3  At the meeting of the DSB held on 13 June 2005, the European 
Communities stated that it intended to comply w ith the recommendations and rulings of the DSB in 
this dispute, and that it would need a reasonable period of time in which to do so.4 
2. On 9 August 2005, Australia, Brazil and Thailand (the "Complaining Parties") informed the 
DSB that consultations with the European Commu nities had not resulted in an agreement on the 
reasonable period of time for implementation.  The Complaining Parties therefore requested that such 
period be determined through binding arbitra tion, pursuant to Article 21.3(c) of the Understanding on 
Rules and Procedures Governing the Settlement of Disputes  (the "DSU").5 
3. On 30 August 2005, the Complaining Parties a nd the European Communities requested me to 
act as Arbitrator, pursuant to Article 21.3(c) of th e DSU, to determine the reasonable period of time 
for implementation of the recommenda tions and rulings of the DSB in this dispute.  I accepted the 
                                                      
1Appellate Body Report, WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R. 
2Panel Report, WT/DS265/R, WT/DS266/R, WT/DS283/R. 
3WT/DS265/29, WT/DS266/29, WT/DS283/10. 
4WT/DSB/M/191, para. 19. 
5WT/DS265/30, WT/DS266/30, WT/DS283/11. WT/DS265/33 
WT/DS266/33 WT/DS283/14 
Page 2 
  
 appointment on 5 September 2005
6, and undertook to issue my award no later than 1 November 2005, 
the period of time that had been agreed between the parties. 
4. In a letter to me dated 6 September 2005, th e European Communities made certain requests 
concerning the sequencing in the filing of submissi ons by the parties;  allocation of time for the 
opening statement of the European Communities at the or al hearing;  and the date of circulation of the 
arbitral award.  By a letter dated 7 September 20057, Australia, Brazil and Th ailand were invited to 
submit their views on the European Communiti es' requests, which views I received on 
12 September 2005.8  I responded to these requests in a le tter dated 13 September 2005, in which I 
undertook to issue my award no later than 28 October 2005. 
5. The 90 day period following adoption of the Pane l and Appellate Body Reports has expired 
on 17 August  2005.  The parties have confirmed that my award, circulated no later than 28 October 2005, shall be deemed to be the award of  the arbitrator for the purpose of Article 21.3(c) 
of the DSU, notwithstanding the expiry of the 90 day period stipulated in Article 21.3(c). 
6. The European Communities filed its written submission on 21 September 2005;  the 
Complaining Parties each filed its written subm ission on 28 September 2005.  By a letter dated 
4 October 2005, Thailand requested authorizati on to make a "typographical correction" to its 
submission, such that it would add the word "relat ed" to the fifth sentence of paragraph 77 on page 23 
of its submission, so that it would read  "... 1.5 million farmers' and sugar-related
 workers' households" 
(underlining added).  By a letter dated 5 October 2005, I invited the other parties to comment on 
Thailand's request.  None of the other parties obj ected to Thailand's request.  By a letter dated 
7 October 2005, I authorized Thailand to make  the requested correction to its submission. 
7. An oral hearing was held on 10 October 2005.  The parties presented oral arguments and 
responded to the questions posed by me.  During th e hearing, Brazil presented an additional exhibit, 
and the European Communities presented two additional exhibits.  Australia requested that I disregard 
the European Communities' additional exhibits.  I pr ovided the parties the opportunity to submit their 
written comments on the exhibits at issue, if they so wished.  Brazil and the European Communities 
submitted their comments the day following the hearing, serving a copy to the other parties. 
                                                      
6WT/DS265/31, WT/DS266/31, WT/DS283/12. 
7Letter from the Director of the Appellate Body Secretariat to the Parties, dated 7 September 2005.  
8Joint letter from Australia, Brazil, and Thailand, dated 12 September 2005.   WT/DS265/33 
 WT/DS266/33 
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 II. Arguments of the Parties 
A. European Communities 
8. The European Communities requests that I dete rmine the "reasonable period of time" for 
implementation of the recommendations and rulings of  the DSB in this dispute to be 19 months 
and 12 days from 19 May 2005, the date of adoptio n by the DSB of the Panel and Appellate Body 
Reports, that is to say, a period of time expiring on 1 January 2007.
9 
9. As a fundamental general principle, the Eur opean Communities emphasizes that "it is the 
prerogative of the implementing Member to select the means of implementation [of the 
recommendations and rulings of the DS B] which it deems most appropriate"10, that "the implementing 
Member is entitled to choose the method which it deems most appropriate"11, and that "an Arbitrator 
cannot prescribe any partic ular implementation method"12, as "the selection of the implementing 
measure ... is the prerogative of the implementing Member".13 
10. The European Communities' assessment of th e "reasonable period of time" required for 
implementation is based on the following seven set s of "particular circumstances" of the case. 
11. First, the European Communities submits that  "[t]he measures in the underlying panel 
proceedings were contained in Council Regul ation 1260/2001 and im plementing and related 
instruments"14, and that, therefore, implementation in the present case requires the adoption of a 
regulation by the Council of the European Uni on (the "Council"), followed by the adoption of 
implementing regulations by the European Commi ssion (the "Commission").  Under the present 
Council Regulation 1260/2001, the Commission has no lega l authority to "limit the exports of C sugar 
                                                      
9European Communities' written submission, para. 95. 
10Ibid., paras. 22 and 36. 
11European Communities' statement at the oral hearing. 
12Ibid. 
13Ibid. 
14European Communities' written submission, para. 30. WT/DS265/33 
WT/DS266/33 WT/DS283/14 
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 on the ground that such exports exceed the reduction commitments."
15  As a result, according to the 
European Communities, "to the extent that th e Commission has no control over the exports of 
C sugar, it cannot ensure compliance with the recommendations and rulings of the DSB."16  T h e  
European Communities also argues th at if it refuses to grant export licences for exporting C sugar, it 
would act inconsistently with Article XI of the General Agreement on Tariffs and Trade 1994 .17 
12. The European Communities contends that even if the Commission had the authority to limit 
export of C sugar, this circumstance would not  be dispositive for the purpose of establishing the 
"reasonable period of time" in the present dispute.  This is because the European Communities, as the 
implementing Member, is entitled to choose the means of implementation which it deems most 
appropriate.  Among "many different ways" availa ble to the European Communities to ensure 
compliance with its reduction commitments, th e European Communities may legitimately choose a 
method that acts "upon the underlying factors which,  under the current regime, cause the subsidized 
exports, such as the level of domestic prices, the vo lume of production quotas, or the availability of 
alternative uses for sugar, rather than by placing restrictions on the exports themselves".18 
13. The second set of particular circumstances, acco rding to the European Communities, is that, 
as its sugar regime is "complex" and "all its components are ... closely connected and 
interdependent"19, it considers that "[a]n implementation me thod which addresses the structural causes 
of the subsidized exports of sugar would serve best the objectives of the Agreement on 
Agriculture  ..."20, even if it may require a longer implementati on period.  Keeping this in view, after a 
careful assessment of all the options available,  the Commission has submitted a proposal to the 
Council on 22 June 2005 for a new Council regulation, based on an approach that aims at "preserving 
                                                      
15European Communities' written submission, para. 33. (footnote omitted)  The European 
Communities' sugar regime provides for quota sugar and non-quota sugar.  Quota sugar is composed of A quota 
sugar and B quota sugar.  Quota sugar is the maximum quantity of sugar eligible for domestic price support and 
direct export subsidies.  Quotas are allocated on an  annual basis to individual European Communities Member 
States who, in turn, allocate shares of their national quotas to individual undertakings.  Sugar produced over and 
above the A and B quota is referred to as C sugar;  such  sugar may not be sold on the domestic market and must 
be exported.  However, an undertaking may decide to "carry forward" C sugar into the next marketing year.  In that event, the undertaking need not export C sugar and may sell that C sugar in the next marketing year on the 
domestic market as quota sugar.  However, such carry fo rward of C sugar is subject to a quantitative limit;  this 
limit is currently set at 20 per cent of the A quota. 
16European Communities' written submission, para. 35. 
17Ibid., para. 33;  European Communities' statement at the oral hearing. 
18European Communities' written submission, para. 36. 
19Ibid., para. 40. 
20Ibid., para. 41.  WT/DS265/33 
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 some level of support for the beet farmers and suga r producers while at the same time minimising the 
production of exportable surpluses."
21  According to the European Communities, a "comprehensive 
and coherent legal system" will have to be devised by the European Communities' legislator22, but, 
regardless of which specific option is ultimately c hosen, the implementing measures are "likely to be 
technically complex".23 
14. Thirdly, the European Communities submits that a Council regulation repealing, amending or 
replacing the current Council Regula tion 1260/2001 would have to be  based on Articles 36 and 37 of 
the Treaty Establishing the European Community (t he "EC Treaty").  Consequently, the following 
procedural steps are necessary:  submission of a Commission proposal to the Council;  opinions of the 
European Parliament and of the Economic and So cial Committee of the European Community (the 
"EESC") to the Council;  consultations with the Af rican, Caribbean and Pacific ("ACP") countries;  
and, finally, the adoption of a regulation by the Council. 
15. Following the normal procedure, the Commission proposal of 22 June 2005 will be examined 
by several committees of the European Parliament24, and their reports will be debated in one or more 
plenary sessions of the Parliament.  The Euro pean Communities estimates that the European 
Parliament will require at least six months from the reception of the proposal to deliver its opinion, that is, until January 2006.  In addition, although Articles 36 and 37 of the EC Treaty do not require 
the consultation of the EESC, the EESC nevert heless will be consulted pursuant to a 2001 Co-
operation Protocol agreed between the Commission and the EESC, as the routine practice in such 
matters.  The European Communities estimates that the EESC will require six months to deliver its 
opinion, that is, until January 2006. 
16. Furthermore, the European Communities is obligated, by Article 12 of the Cotonou 
Agreement between itself and the ACP countries, to  consult ACP countries when it intends to take 
measures "which may affect the interests of the ACP states".
25  Accordingly, the European 
Communities has informed the ACP countries of the Commission proposal to the Council and has 
                                                      
21European Communities' written submission, para. 43. 
22Ibid., para. 45. 
23Ibid. 
24The Committee on Agriculture and Rural Development (COMAGRI);  the Committee on Budgets 
(BUDG);  the Committee on International Trade (I NTA), and the Committee on Development (DEVE). 
25European Communities' written submission, para. 61. WT/DS265/33 
WT/DS266/33 WT/DS283/14 
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 engaged in an "extensive consultation process".
26  This process will "add to the complexity of the 
debate by the different [European Communities'] in stitutions involved and re quire additional time."27 
17. As regards the adoption of the regulation by the Council, the European Communities 
maintains that, although the Council may start de liberating on a Commission proposal while it is 
being considered by the European Parliament and the EESC, the Council w ill require additional time 
to take into account the opinions issued by those bodi es.  Referring to the "potential complexity of the 
implementing measures" and to "recent precedents c oncerning similar agricultural legislation", the 
European Communities estimates th at the Council will require nine months to adopt formally the 
relevant regulation, that is , until the end of March 2006.28 
18. As regards the implementing regulations, th e European Communities emphasizes that the 
Commission will have to enact "a comprehensiv e set of detailed" implementing regulations. 29  In so 
doing, the Commission must follow a "comitology procedure[]", under which the Commission is 
assisted by a "management committee" composed  of representatives of the Member States and 
chaired by a Commission representative.30  Under that procedure, the Commission presents its 
proposals to the management committee, which in tu rn provides its opinion;  if a favourable or no 
opinion is issued by the management committee, the Commission adopts the proposed regulation.  If 
the management committee issues an unfavourable opinion, the Commission nevertheless adopts the 
regulation, but the Council may take  a different decision from the Co mmission within a specified time 
period. 
19. The European Communities submits that, althoug h Commission staff may start preparing the 
implementing legislation before adoption of the C ouncil regulation, they cannot finalize the texts and 
launch the "comitology procedure" until the Council has taken a definitive decision.  The Commission 
will, according to the European Co mmunities, need three months in order to enact the implementing 
regulations, that is, un til the end of June 2006.31 
                                                      
26European Communities' written submission, para. 63. 
27Ibid. 
28Ibid., para. 68. 
29Ibid., para. 69. 
30Ibid., paras. 71–72. 
31Ibid., para. 75.  WT/DS265/33 
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 20. The fourth set of "particular circumstances" in  the present dispute, according to the European 
Communities, are requirements concerning the publicati on and entry into force of the regulations at 
issue.  All regulations must be published in the O fficial Journal of the European Union.  Although not 
explicitly required by the EC Treaty,  it is an "established legislativ e practice" that regulations which 
must be implemented by the customs authorities are published "at least six weeks before their entry into force and take effect from 1 January or, exceptionally, from 1 July".
32  This practice is based on a 
Council Resolution of 27 June 1974.  The European  Communities argues that previous arbitration 
awards have acknowledged the relevance of this practice for the determination of the reasonable 
period of time.33  Moreover, it is also a "well-established le gislative practice" that "significant changes 
to the rules of a common market organization" take  effect from the start of the following marketing 
year, "so as to take account of production in course and avoid disrupting the market".34  T h e  
marketing year 2005/2006 of the European Commun ities runs from 1 July 2005 to 30 June 2006. 
21. As the fifth set of "particular circumstan ces", the European Communities argues that the 
European Communities' sugar regime is of a "longsta nding nature", because it h as been in place since 
the early 1970s, and is "essentially integrat ed" in the European Communities' policies.35  As a result, 
the implementation of the recommendations and rulings  of the DSB will have "a major impact" on the 
European society and not just on the sugar industry. 36  It is therefore "unavoidable" for the European 
Communities to consider the "continued viability" of the sugar regime as a whole.37  In this context, 
the European Communities refers to the "numer ous and very different implementation options"38 
available to it, the significance of sugar as an "e ssential component of the diet of the European 
population"39, energy and environmental policies, as well as the relationship between the European 
Communities and the ACP countries.  These varied factors will show that the implementation of the 
recommendations and rulings of the DSB necessitates a "serious debate", both within and outside the 
European Communities' legislature.40 
                                                      
32European Communities' written submission, para. 77. 
33Ibid., para. 77, referring to Award of the Arbitrator, EC – Bananas III , para. 3 and Award of the 
Arbitrator, EC – Tariff Preferences , paras. 50–51.  
34European Communities' written submission, para. 78. 
35Ibid., para. 81. 
36Ibid. 
37Ibid., para. 82. 
38Ibid., para. 83. 
39Ibid., para. 84. 
40Ibid., para. 87. WT/DS265/33 
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 22. As the sixth set of "particular circumstances", the European Communities refers to sugar beet 
production already undertaken before the present di spute was decided by the Appellate Body in 
April 2005.  In Europe, beets are sown in Februa ry and March and harvested in the autumn.  As a 
result, decisions concerning the volume of beet  and sugar to be produced in the marketing 
year 2005/2006 had been agreed upon between farmer s and sugar producers before the DSB made its 
recommendations and rulings.  Revers ing their production decisions w ould be "very costly and often 
materially impossible".
41  The European Communities points out that the Commission proposal of 
22 June 2005 provides for levies to be imposed on  the production of "surplus sugar", designed to 
avoid the accumulation of sugar;  however, it would be inappropriate to appl y those levies to sugar 
produced from beet sown before the present dispute was decided.42  In any event, even if such exports 
were not allowed after 31 July 2 006, its consequence might be that  the European producers "would be 
forced to make all their exports within a shorter pe riod of time", thereby "exacerbat[ing] the effects of 
those exports", to the detriment of all sugar exporting countries.43 
23. As the seventh, and final, set of "particular  circumstances", the European Communities argues 
that the reasonable period of time it suggests is "broad ly in line" with the time periods granted to the 
European Communities in previous arbitration aw ards concerning "similar" legislative measures.44  
The European Communities refers to the awards in EC – Bananas III  and EC – Tariff Preferences , in 
which the reasonable period of time was 15 mont hs and 6 days, and 14 months and 11 days, 
respectively.  The longer reasonable period of tim e in the present case is necessary so as "not to 
penalise production already undertaken" prior to th e decision of the Appellate Body in April 2005.45 
                                                      
41European Communities' written submission, para. 88. 
42Ibid., para. 90. 
43Ibid., para. 91. 
44Ibid., para. 92. 
45Ibid., para. 94.  WT/DS265/33 
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 B. Complaining Parties 
1. Australia
 
24. Australia disagrees with the reasonable pe riod of time proposed by the European 
Communities.  Australia provides three distinct scenarios to decide how the European Communities 
could bring itself into compliance with its obligations under World Trade Organization ("WTO") law and the recommendations and rulings of the DSB in  the "shortest period possible within the legal 
system" of the implementing Member.  Under th e first scenario, the Eu ropean Communities can 
implement the DSB's recommendations and rulings by doing three things:  by adopting a Commission 
regulation that limits export licences such that the relevant commitment levels are not exceeded;  by 
adopting a second Commission regulation increasing the permitted carry forward of C sugar;  and by 
adopting a third Commission regulation to reduce the le vel of export availability of sugar.  Under this 
scenario, the required reasonable period of time is no more than six months and six days from the date 
of adoption of the Appellate Body Report and the Pa nel Report by the DSB, that is to say, it would 
expire on 25 November 2005.
46 
25. Under the second scenario, should the Arbitrator fi nd that, contrary to Australia's assertions, 
Commission regulations can be used to regulate , but not to limit the export of C sugar through export 
licences, then the European Communities can adopt  and implement a different set of Commission 
regulations, spreading C sugar exports over the 2005/2006 and 2006/2007 quantity commitment 
marketing years;  limiting export licences for quota sugar;  increasing the permitted carry forward of C sugar;  and reducing the level of export availability of sugar.
47  The reasonable period of time under 
this scenario is no more than six months and six days, that is to say, it would expire on 
25 November 2005.48 
26. The third scenario put forward by Australia is a pplicable "[i]f the Arbitrator finds ... that a 
Commission Regulation cannot be used to control the export of C sugar at all"49;  under this scenario, 
the European Communities can implement by adopting a Commission regulation limiting export 
licences for quota sugar and adopting a Council regulation granting the Commission the authority to 
control the export of C sugar; the Commission could subsequently adopt an implementing 
                                                      
46Australia's written submission, para. 201. 
47Ibid., para. 166. 
48Ibid., para. 203. 
49Ibid., para. 163. WT/DS265/33 
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Page 10 
  
 Commission regulation to impose such controls.
50  Under this third scenario , the reasonable period of 
time is no more than 220 days and it would expire on 27 December 2005.51 
27. Finally, in addition to the three scenarios put fo rward by it, Australia argues that, even on the 
basis of the European Communities' submission th at a Council regulation on a new common market 
organization ("CMO") in the sugar sector is requi red—which basis Australia considers "incorrect"52—
the reasonable period of time should be shorter than that requested by the European Communities;  it 
should be no more than 11 months and 2 da ys and should expire on 21 April 2006. 
28. Turning to Australia's specific arguments unde r these various scenarios, Australia argues that 
the European Communities does not substantiate why a date "significantly in excess" of the 
Article 21.3(c) guideline of 15 months is justifiable.53  Australia emphasizes that the reasonable period 
of time in this dispute must be determined by re ference to the action needed to comply with the 
recommendations and rulings in question, and not by reference to "any wider reform" that the 
European Communities may choose to unde rtake in response to a WTO ruling.54   
29. Australia argues that the European Communities has "full legal authority" under its existing 
regime to regulate the levels of refunds, to de termine the quantity of "export availability of ... 
C sugar" and to regulate such exports.55  Contrary to the assertions of the European Communities, the 
Commission has the authority, under the existing sugar regime, to suspend the granting of export 
licences for exports of any sugar, including C sugar .  The requirement in Article 13 of Council 
Regulation 1260/2001 that C sugar mu st be exported is not an impediment to this authority, because 
the relevant provision does not apply to all C sugar,  but rather only to C sugar that is not carried 
forward to the following marketing year.  The curr ent limit on such carry forward, amounting to 
20 per cent of the A quota56, has been established by the Commission and could either be increased or 
"abolished entirely", without requiring a change to Council Regulation 1260/2001.57   
                                                      
50Australia's written submission., paras. 165–167. 
51Ibid., para. 205. The reasonable period of time would expire on 25 December;  the next working day 
is 27 December 2005. 
52Australia's written submission, para. 206. 
53Ibid., para. 11. 
54Ibid., para. 174. 
55Ibid., para. 21. 
56For a description of A, B, and C sugar, see supra , footnote 15. 
57Australia's written submission, para. 122.  WT/DS265/33 
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 30. Should the Arbitrator find that, contrary to Au stralia's assertions, the current authority of the 
Commission cannot be used to prevent or limit the export of C sugar, Australia argues that this 
"would not serve as a barrier" to compliance by th e European Communities by means of Commission 
regulations.
58  Commission authority under the existing regime can still be used to regulate such 
exports.  Although C sugar not carried forward must be exported within a defined time period, there is 
no requirement to export C sugar within the year of its production .  Under the existing regime, 
producers have a period between the end of the ma rketing year and 31 December to export C sugar 
not carried forward;  in the event that C sugar pr oduction in any one year were to exceed the European 
Communities' quantity commitment level, the Europ ean Communities has the legal authority to limit 
export licences to that quantity commitment level;  the balance of C sugar production not carried 
forward could then be exported in the period 1 Oct ober to 31 December in the following marketing 
year. 
31. According to Australia, all of the above-referre d measures can be adopted by the Commission 
under the "management committee procedure".  The time period for the Commission to adopt 
measures in the sugar sector under this pro cedure in the past has been "very short".59  U n d e r  t h a t  
procedure, the Commission presents proposals to th e management committee, which in turn provides 
an opinion;  if a favourable or no opinion is issued by the management committee, the Commission 
adopts the proposed regulation.  If the management  committee issues an unfavourable opinion, the 
Commission nevertheless adopts the regulation, but  the Council may take a different decision from 
the Commission within a specified time period.  Australia argues that, for a range of regulations 
adopted by the Commission in th e sugar sector under the "management committee procedure", the 
average and median duration of the procedur e has been 23 days.  Although the European 
Communities could have, therefore, already impl emented the recommendations and rulings of the 
DSB, Australia proposes that, "exceptionally and as a gesture to the [European Communities]", the 
reasonable period of time should end four weeks from the date of the circulation of the arbitration 
award.60  Thus, the reasonable period of time would expire on 25 November 2005.  This reasonable 
period of time is applicable for both the first and second scenarios for implementation set out in 
Australia's written submission. 
                                                      
58Australia's written submission, para. 125. 
59Ibid., para. 142. 
60Ibid., para. 144. WT/DS265/33 
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 32. In the event that the Arbitr ator were to consider "necessary to calculate ... periods"
61 for the 
adoption of a new Council regulation amending the CMOs in the sugar sector, as well as for the 
subsequent adoption of implementing Commission regula tions, Australia refers to a "study of Council 
[r]egulations adopted by the [European Commun ities] between 1 January 1998 and 31 July 2005 
which amended existing common market or ganizations for agricultural products".62  On the basis of 
"median figure[s]" derived from this sample, Aust ralia argues that the a doption of a new Council 
regulation should occur by 27 November 2005, and the entry into force of this regulation on 2 December 2005.
63   Subsequently, when adopting implem enting regulations, the Commission should 
be granted an additional 23 days to complete th e management committee procedure.  The reasonable 
period of time for this scenario should therefore expire on 27 December 2005.64 
33. As stated above, in Australia's view, contrary  to the European Communities' arguments, it is 
not necessary, for purposes of implementa tion, to adopt a Council regulation creating  an entire new 
CMO for sugar;  rather, according to Australia , it is sufficient to adopt a Council regulation amending  
the existing  CMO.  Nevertheless, even if the reasonable period of time were calculated on the basis of 
adopting a Council regulation creating a new CMO, the reasonable period of time should be shorter 
than that suggested by the Europ ean Communities.  Using a median figure from a sample of previous 
Council regulations that created new CMOs, Australi a argues that a new Council regulation could be 
adopted by 7 March 2006 and it could enter into fo rce by 29 March 2006.  Subsequently, for adopting 
implementing regulations, the Commission should n eed no more than 23 days to complete the 
"management committee procedure".  The reasonabl e period of time under this scenario should 
therefore expire on 21 April 2006. 
34. Australia, moreover, disputes that certain factors invoked by the European Communities 
constitute "particular circumstances" within the m eaning of Article 21.3(c) of the DSU, justifying a 
longer reasonable period of time.  Australia points out  that arguments related to the likely impact on 
the domestic industry have been rejected in prev ious arbitrations.  The correction of possible 
"structural market imbalances" should similarly not be taken into account in the determination of the 
                                                      
61Australia's written submission, para. 146. 
62Ibid., para. 147. 
63Ibid., para. 149. 
64Ibid., para. 205. The reasonable period of time would expire on 25 December;  the next working day 
is 27 December 2005.  WT/DS265/33 
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 reasonable period of time.
65  Moreover, the present dispute does not present circumstances 
comparable to those in Chile – Price Band System ;  this is because export subsidies under the 
European Communities' sugar regime do not have a "unique role and impact" on society, they do not 
serve as a "cornerstone" of the European Comm unities' agricultural policy, and they are not 
"fundamentally integrated" into the "central ag ricultural policies" of the European Communities.66  
Finally, the implementation period proposed by th e European Communities is not, as claimed by the 
European Communities, "broadly in line"67 with previous awards under Article 21.3(c) concerning 
legislative measures of the European Communities;   the reasonable periods of time granted in EC – 
Bananas III  and EC – Tariff Preferences  were "only, at the most, around half as long" as the 
"effective reasonable period of time" sought by the European Communities in this arbitration.68 
2. Brazil  
35. Brazil requests that the Arbitrator determine th e reasonable period of time to be six months 
and six days, that is, until 25 November 2005, if implementation is brought about by administrative 
action.  Alternatively, if implementation requir es legislative measures, Brazil requests that the 
Arbitrator determine the reasonable period of time to  be seven months and eight days, that is, until 
27 December 2005. 
36. Brazil recalls that the European Communities is required to comply "in the shortest time 
legally possible"69 and rejects the European Communities' ar gument that the implementation period 
should be the period that it will take for the Europ ean Communities to reform its overall sugar regime.  
Rather, implementation requires only the adoption of measures that will ensure that the European 
Communities respects its export subs idy reduction commitment levels. 
37. Brazil submits that the existing legal framework of the European Communities' sugar regime 
permits the European Communities to comply within  four weeks.  Three principles of European 
Communities' law are relevant in this respect:  first, international agreements are binding on the 
institutions of the European Communities and on its Member States;  secondly, secondary legislation 
                                                      
65Australia's written submission, para. 185, referring to the European Communities' written submission, 
para. 41. 
66Australia's written submission, para. 192, referring to Award of the Arbitrator, Chile – Price Band 
System , paras. 46 and 48. 
67Australia's written submission, para. 197, referring to the European Communities' written submission, 
para. 92. 
68Australia's written submission, para. 197. 
69Brazil's written submission, heading IV.A. WT/DS265/33 
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 of the European Communities must, as far as possibl e, be interpreted in a manner consistent with 
these agreements;  and thirdly, the management of agricultural policy is left "very largely" to the 
Commission, acting under the implementing authority delegated to it by the Council.
70  In this respect, 
Brazil argues that the Commission enjoys the author ity to suspend the grant of export licences for 
sugar, "for the express reason of ensuring complia nce with the [European Communities'] obligations 
under the Agreement on Agriculture "71;  the Commission also enjoys the authority to amend the 
existing rules to enable producers to  carry forward, to the following marketing year, any C sugar that 
cannot be exported in a given year. 
38. With respect to export licences, Brazil ar gues that Article 22 of current Council 
Regulation 1260/2001 "subjects all exports of sugar ... to an export licence and draws no distinctions 
between A, B and C sugar".72  Furthermore, the Commission is authorized to lay down detailed 
implementing rules governing the conditions for gr anting export licences for all exports of sugar, 
including C sugar.  In 1995, the Commission a dopted rules to govern import and export licences 
"among other reasons, to enable the [European Comm unities] to control the level of its exports of 
subsidized sugar".73  These rules are still in  force and contain rules regulating the grant of export 
licences for A, B and C sugar.  The Commission does not require express authorization to control exports of C sugar, provided that such controls are not prohibited by Council Regulation 1260/2001 or 
implementing regulations, which is not the case.  In  this respect, Brazil also rejects the European 
Communities' argument that Council Regulation 1260/2001 requires  that C sugar be exported;  rather, 
C sugar can also be carried forward into the following marketing year. 
39. With respect to the rules governing the carry fo rward of C sugar into the next marketing year, 
Brazil argues that under Council Regulation 1260/2001 all C sugar could be carried forward.  The 
implementing rules concerning this provision are cont ained in a Commission regulation that limits the 
carry forward to 20 per cent of the A quota;  however, if it wishes, the Commission can "increase the quantity of C sugar that can be carried forward fro m the current 20 [per cent] limit [or] eliminate 
entirely  the current ... restriction on carry-forward."
74  Indeed, previously, the relevant implementing 
rules permitted producers to carry forward 100 per cent of their sugar production.  If the Commission 
                                                      
70Brazil's written submission, para. 28. 
71Ibid., para. 33. (original italics) 
72Brazil's written submission, para. 34.  (For a description of A, B, and C sugar, see supra , 
footnote 15.) 
73Brazil's written submission, para. 38. 
74Ibid., para. 62. (original italics)  WT/DS265/33 
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 permitted full carry forward of C sugar, it could, in conjunction with a suspension of export licences, 
ensure that subsidized sugar in excess of its quant ity commitment levels is not passed onto the world 
market;  rather, this sugar would remain within the Community and w ould "be[] absorbed internally in 
the next marketing year".
75 
40. Neither of these two measures—suspending the gr ant of export licences for A, B and C sugar, 
as well as raising or eliminating the 20 per cent rest riction on the carry forward of C sugar—is, in 
Brazil's view, particularly complex, and both ar e similar to measures that have been adopted 
previously by the Commission.  Both measures could be adopted under the "management committee 
procedure" and could be adopted in "just four weeks".76  Brazil notes that, for a range of 
27 regulations adopted by the Commission in the suga r sector under this procedure, the length of the 
procedure has varied between 14 and 43 days, with  an average and median length of 23 days.  
41. Brazil concludes that, on the basis of the Co mmission's existing authority, the European 
Communities could secure compliance within a period of  28 days, to be counted from the date of the 
adoption by the DSB of the Appellate Body Report and the Panel Report.  Brazil notes that, in fact, 
the European Communities "did not ta ke the necessary steps to implem ent within the shortest possible 
period".77  Brazil therefore proposes, "exceptionally and as a gesture" to the European Communities, 
that the reasonable period of time should end 28 days from the date of circulation of the arbitration 
award, that is, on 25 November 2005.78 
42. In the event that the Arbitrator decides th at the Commission's existing authority under 
Council Regulation 1260/2001 does not  permit the European Communities to secure implementation, 
Brazil argues, alternatively, that a limited amen dment to Council Regulation 1260/2001 would permit 
the European Communities to comply in seven months.  Under this scenario, the European 
Communities would have to "extend the existing [cont rol] system to apply expressly to C sugar", and 
this involves "no more than a straightforw ard amendment of ... Re gulation [1260/2001]".79 
43. Although Brazil "generally agrees" with the pro cedural steps for the adoption of a Council 
regulation, as explained by the European Communities,  it disagrees with the asserted duration of this 
                                                      
75Brazil's written submission, para. 64. 
76Ibid., para. 68. 
77Ibid., para. 78. 
78Ibid., para. 78. 
79Ibid., para. 79. WT/DS265/33 
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Page 16 
  
 procedure.
80  In providing its estimate on the basis of previous legislative procedures, the European 
Communities refers only to the duration of procedures for the adoption of new CMOs, rather than 
amendments  to existing CMOs.  The median period for the adoption of a new CMO is 9.2 months, 
while it is 5.4 months for the adoption of an ame ndment to an existing CMO.  Thus, the adoption of 
an amending regulation is "considerably quicker" than the adoption of a new CMO.81  Although the 
reasonable period of time should be the short est possible period within which a Member can 
implement in its domestic law, Brazil states that it does not object if the Arbitrator uses this median 
figure for purposes of determining the reasonable period of time.  This median period runs from the 
date of the Commission proposal to the entry into fo rce of the Council regulation and, consequently, it 
should expire on 2 December 2005.   
44. Furthermore, Brazil rejects the European Co mmunities' arguments on publication and entry 
into force of the regulation.  The alleged Europ ean Communities' practice of  publishing regulations to 
be implemented by customs authorities six weeks be fore their entry into force, and implementing 
them only from 1 January or 1 July, is "not as widespread" as the European Communities claims82;  
Brazil lists 33 European Communities' regulations w hose implementation did not follow that practice.  
Moreover, Brazil contends that the Council docum ent setting out this alleged practice does not 
indicate that it applies to measures regulating impor t and export licences.  Brazil also rejects the 
argument that "significant changes to the rules of a common market organization should take effect, at 
the earliest, from the start of the following marketi ng year, so as to take account of production in 
course and avoid disrupting the market."83  Brazil refers to ten Counc il amendments to existing CMOs 
that did not take effect at the commencement of th e marketing year.  In any event, the changes that 
implementation would entail are not "significant", as the European Communities suggests, because 
the Commission already has significant authority to control sugar exports.84 
45. Brazil acknowledges that, when the Council amends Council Regulation 1260/2001, the 
Commission "will likely have to adopt" an implementing regulation.85  The Commission could, as the 
European Communities admits, "start preparing the implementing regulations before the adoption of 
                                                      
80Brazil's written submission, para. 83. 
81Ibid., para. 88. 
82Ibid., para. 94. 
83Ibid., para. 98, referring to the European Communities' written submission, para. 78. 
84Brazil's written submission, para. 102, referring to the European Communities' written submission, 
para. 78. 
85Brazil's written submission, para. 104.  WT/DS265/33 
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 the Council regulation", such that this regulation enters into force eight days after the Council 
amending the regulation.
86  However, "exceptionally and as a gesture to the [European 
Communities]", Brazil requests that the Arbitrator grant the European Communities the "full average 
or median period" of 23 days for the completion of  the management committee procedure, such that 
the reasonable period of time expires on 27 December 2005.87  
46. Brazil rejects that four additional factors invoked by the European Communities constitute 
"particular circumstances" relevant to the determinat ion of the reasonable period of time in this case.  
First, concerning the need for consultations with the ACP countries, Brazil argues that the European 
Communities fails to substantiate how the ACP countri es will be affected by implementation.  This is 
because the European Communities' obliga tions to the ACP countries are to import certain quantities 
of ACP sugar, whereas the European Communities'  obligations in the present dispute relate to exports  
of the European Communities' own subsidized sugar.  Secondly, with respect to the alleged need for 
debate within European society, Brazil argues that previous arbitrators have declined to accept that 
domestic "contentiousness" and "po litical sensitivity" are a particular circumstance relevant under 
Article 21.3(c).88  Thirdly, there is "no justification" for additional time for structural adjustment for 
the [European Communities'] domestic industry.89  Brazil submits that no arbitrator to date has 
granted a Member additional time to enable its do mestic industry to make structural adjustments 
facilitating the transition to a WTO-consistent regime ;  a right to such a transition period does not 
exist even under European Communities law.  Fourthly , the duration of reasonable periods of time in 
previous cases in which the European Communiti es was the implementing Member is "irrelevant".90 
47. Finally, Brazil requests that, Brazil being a developing country Member, the Arbitrator pay 
particular attention to the significance of prom pt compliance for Brazil's development objectives, 
pursuant to Article 21.2 of the DSU.  Brazil's sugar industry is an important part of its economy;  the 
                                                      
86Brazil's written submission, para. 106, referring to the European Communities' written submission, 
para. 74. 
87Brazil's written submission, para. 110.  The reasonable  period of time would expire on 25 December;  
the next working day is 27 December 2005. 
88Brazil's written submission, para. 118, referring to Award of the Arbitrator, Canada – 
Pharmaceutical Patents , para. 60;  Award of the Arbitrator, Canada – Patent Term , para. 58;  and Award of the 
Arbitrator, US – Offset Act (Byrd Amendment) , para. 61. 
89Brazil's written submission, heading IV.D(3). 
90Ibid., heading IV.D(4). WT/DS265/33 
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Page 18 
  
 European Communities' WTO-inconsistent subsid ized sugar exports "cost Brazil USD $ 494 million 
annually".
91 
3. Thailand  
48. Thailand requests that the reasonable peri od of time for implementation of the 
recommendations and rulings of the DSB in this case be set at six months and six days, that is, until 
25 November 2005, if implementation is effected by  administrative action.  Alternatively, should 
legislative action be required, Thailand argues that  the reasonable period of time be set at seven 
months and eight days, that is, until 27 December 2005.   
49. Thailand argues that the European Communities bears the burden of proof of demonstrating 
that the duration of its proposed implementation period constitutes a reasonable period of time and 
that it has not discharged this burden.  The Eur opean Communities is required to implement within 
the "shortest period possible within [its] legal system " by making changes to those aspects of its sugar 
regime that were subject to the r ecommendations and rulings of the DSB.92  The European 
Communities "must not delay its immediate obliga tion to implement ... to facilitate any broader 
review of its agricultural policy".93  According to Thailand, the relevant circumstances in this case "all 
[militate] in favour of speedy implemen tation by the [European Communities]."94 
50. Thailand argues further that the European Comm unities needs no additional time to consider 
its implementation options.  Thailand also takes issu e with the European Commu nities' argument that, 
due to the complexity of the sugar regime, ther e are many different options available to it to 
implement the recommendations and rulings of the DSB.  The fact that the European Communities 
has already decided upon a proposed means of implem entation "suggests" that it has already engaged 
in consultations with its domestic industry, the AC P countries and other interested parties, so that 
there is no reason to permit further c onsideration of alternative options.95  Similarly, the fact that 
implementation may engender political debate is not a factor that can affect the determination of the 
reasonable period of time.  In addition, unlike in Chile – Price Band System , the European 
Communities' measure is not one of "horizontal application affecting a number of agricultural 
                                                      
91Brazil's written submission, para. 140, referring to a study by Oxfam International. 
92Thailand's written submission, heading IV.A.2. 
93Ibid., para. 24. 
94Ibid., para. 28. 
95Ibid., para. 34.  WT/DS265/33 
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 products and their pricing", but ra ther it relates only to the Europe an Communities' sugar policy and 
does not require any changes to policy regarding other agricultural products.
96 
51. Thailand emphasizes that the European Communitie s' implementation obligations relate only 
to the measure that was found inconsistent w ith WTO law and can be fulfilled promptly by 
administrative means.  Thailand argues that the onl y point of disagreement between the parties is 
"whether the [European Communities] can control exports of C sugar by administrative means".97  By 
"suspending export licences and enabling producers to ca rry-over [C sugar] that cannot be exported in 
a given year to the next", the European Commun ities could secure "rapid and prompt compliance".98 
52. Thailand argues that, contrary to the European  Communities' assertions, the Commission does 
have the authority under existing regulations to c ontrol the export of C sugar in a manner that would 
enable it to comply with its reduction commit ments.  Council Regulation 1260/2001 permits all 
C sugar to be carried forward;  decisions on limits on the carry forward of C sugar—like the current 
limit of 20 per cent of the A quota—lie with the Commission, are "purely discretionary"99, and are 
currently found in a separate Commission regulation.100  This shows that th e Commission enjoys "full 
authority" under Council Regulation 1 260/2001 either not to restrict th e carry forward of C sugar or to 
increase the quantity of C sugar that can be carried  forward above the current limit of 20 per cent of 
the A quota.101  According to Thailand, the Commissi on can accomplish this by following the 
management committee procedure under Council Regul ation 1260/2001.  Similarly, according to 
Thailand, the Commission could control exports by  suspending the issuance of export licences for 
A, B, and C sugar.  There is no legal basis to the European Communities' assertion that the 
Commissions' authority to suspend licences with respect  to A and B sugar does not extend to C sugar.  
Requiring C sugar to be carried forward and suspen ding export licences "together constitute the most 
flexible and efficient means by which the [Eur opean Communities] can reduce the level of its 
subsidised exports".102 
                                                      
96Thailand's written submission., para. 36. 
97Ibid., para. 39. 
98Ibid., para. 39. 
99Ibid., para. 43. 
100Commission Regulation (EEC) No. 65/82 of 13 January 1982. 
101Thailand's written submission, para. 44. 
102Ibid., para. 49. WT/DS265/33 
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 53. In Thailand's view, the shortest period possibl e for the aforementioned administrative action 
is the period required for the "manag ement committee procedure" under Council 
Regulation 1260/2001, namely, one month.  Unde r this procedure,  the Commission submits a 
proposal for a Commission regulation to the mana gement committee that must render an opinion 
within a time-limit fixed by the Chairman of th at committee.  If the committee renders a favourable 
opinion, the Commission regulation is adopted imme diately;  if the opinion is unfavourable, the 
Commission nevertheless adopts the regulation, but the regulation is also referred to the Council, 
which may take a different decision within one mo nth.  There have been no unfavourable opinions 
delivered in the management committee procedur e, and the average as well as median period for 
completion of the procedure has been 23 days.  Thailand considers that the management committee 
procedure could "certainly" be completed within 28 days.
103  As a result, Thailand takes the view that 
the European Communities could have implemente d the recommendations and rulings of the DSB 
even before commencement of the present arbitration.  However, "[a]s a practical matter", given that 
the European Communities has not taken these steps, Thailand proposes that the reasonable period of 
time end 28 days from the date of circulati on of the arbitration award, that is, on 
25 November 2005.104 
54. In Thailand's view, the European Communities ha s failed to prove that a legislative measure 
to implement would take 12 months to enact.  However,  in the event that the Arbitrator considers that 
the European Communities needs to ta ke legislative action to allow a greater proportion of C sugar to 
be carried forward, Thailand submits that this can be achieved by a simple amendment to the existing 
Council Regulation 1260/2001.  An implementing Memb er's decision to "undertake broad systemic 
reforms" does not justify a longer implementation period.105  Moreover, Thailand argues that the 
European Communities has overstated "significantly"  the time required to implement by legislative 
means.106  Thailand refers to a table submitted as an exhibit to the submissions of Australia, Brazil 
and Thailand and argues that re gulations amending existing CMOs  can be adopted in periods 
considerably shorter than the median figure of 5.4 months.  Nevertheless, Thailand states that it would 
not object if the Arbitrator were to use this median figure as the basis for assessing the duration of the 
reasonable period of time. 
                                                      
103Thailand's written submission, para. 58. 
104Ibid., para. 60. 
105Ibid., para. 63. 
106Ibid., para. 64.   WT/DS265/33 
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 55. In Thailand's view, applying the period of 5.4 months to the date of the Commission proposal, 
that is, 22 June 2005, the Council amendment could enter into force on 2 December 2005.  Allowing another 23 days for the Commission to adopt implem enting regulations, the reasonable period of time 
should expire on 27 December.
107  Thailand also points out that a number of regulations to be 
implemented by customs authorities have in the past  entered into force on dates other than 1 January 
or 1 July, and that therefore this plea of  the European Communities has no validity. 
56. Finally, Thailand argues that the particular  circumstances in this case favour prompt 
implementation.  Referring to the special provi sions of Articles 21.2 and 21.8 of the DSU for 
developing country Members, Thaila nd submits that the implementation of the rulings in this dispute 
is "crucial" to Thailand's development objectives.108  Thailand argues that th e WTO-inconsistent sugar 
export subsidies maintained by the European Co mmunities impose an annual loss of USD 151 million 
on Thailand, affect approximately 1.5 million farm ers' and sugar-related workers' households and 
have "very serious consequences for the Thai sugar industry".109  Concerning the ACP countries' 
interests, Thailand submits that the European Co mmunities should fully respect its commitments with 
respect to these countries, but argues that these count ries' interests "cannot take priority over the 
obligation of the [European Communities] to ensure prompt implementation."110  Thailand also notes 
that it has not "in any way" contested the prefer ential access enjoyed by the ACP countries and India 
to the European Communities' market.111  Furthermore, the European Communities should not be 
permitted to use the alleged effects of its suga r regime reform on the ACP countries for "doing 
nothing"112;  the European Communities must be deemed to have taken into account the interests of 
the ACP countries in announcing its pr oposal on 22 June 2005;  as a resu lt, no additional time need be 
considered to permit further cons ultations with the ACP countries. 
57. Thailand also argues that the reasonable period of time should not include a phase-in period, 
during which European Communities sugar producers w ould be permitted to export out of quota until 
1 January 2007.  Previous arbitral awards under Ar ticle 21.3(c) have established that the fact that 
implementation may require some structural adjust ments on the part of a domestic industry does not 
                                                      
107Thailand's written submission., para. 68.  The reasonable period of time would expire on 
25 December;  the next workin g day is 27 December 2005. 
108Thailand's written submission, heading IV.E.1. 
109Ibid., para. 77. 
110Ibid., para. 81. 
111Ibid., para. 80. 
112Ibid., para. 82.  WT/DS265/33 
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 constitute a "particular circumstance[]" within the me aning of that provision.  Moreover, the European 
Court of Justice has held that recipients of a s ubsidy are not entitled to a transition period on the 
elimination of that subsidy;  thus, even under the European Communities' own law, there is no 
requirement to build in a transition period before  changes to a subsidy programme take effect.  
Thailand submits that, by requesting a phase-in pe riod, the European Communities is effectively 
requesting a waiver for its obligati ons, pursuant to Article IX of the Marrakesh Agreement 
Establishing the World Trade Organization (the " WTO Agreement "). 
III. Reasonable Period of Time 
58. Pursuant to Article 21.3(c) of the DSU, my task as arbitrator in this case is to determine the 
"reasonable period of time" for the European Co mmunities to implement the recommendations and 
rulings of the Dispute Settlement Body (the "DSB") in EC – Export Subsidies on Sugar .
113  T h e  
"reasonable period of time" will be calculated as from 19 May 2005, the date on which the Panel and 
Appellate Body Reports relating to this dispute were adopted. 
59. Article 21.3(c) of the DSU provides that, when the "reasonable period of time" is determined 
through arbitration: 
… a guideline for the arbitrator should be that the reasonable period 
of time to implement panel or Appellate Body recommendations 
should not exceed 15 months from the date of adoption of a panel or 
Appellate Body report.  However, th at time may be shorter or longer, 
depending upon the particular circumstances. (footnote omitted) 
In this regard, I would observe, as have other arb itrators before me, that, in arbitrations conducted 
pursuant to Article 21.3(c), the implementing Member  bears the burden of proof to demonstrate that 
the period of time it seeks is a reasonable period of  time within the meaning of Article 21.3 of the 
DSU. 
60. Before I proceed to determine the reasonable period of time for the European Communities to 
implement the recommendations and rulings of the DSB in this dispute, I set out the views of the parties on certain general principles applicable to the determination of the reasonable period of time 
under Article 21.3(c) of the DSU, as articu lated in previous arbitration awards.  
                                                     
 
113See WT/DS265/29, WT/DS266/29, WT/DS283/10.  WT/DS265/33 
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 61. These governing principles at issue are: 
– the reasonable period of time should be the shortest period of time possible within the 
legal system of the implementing Member
114; 
– the implementing Member must utilize all th e flexibility and discretion available within 
its legal and administrative system in order to implement within the shortest period of 
time possible; and 
– the "particular circumstances" of the case must be taken into account in determining the 
reasonable period of time. 
62. While the parties agree with the first principle, they differ sharply on the implementing 
measure with respect to which the "shortest period  of time" is to be determined.  The European 
Communities places considerable emphasis on the proposition that "it is the prerogative  of the 
implementing Member to select the means of implementation which it deems most appropriate"115, 
and that, therefore, the "shortest period of time possible" must be determined with respect to the 
implementation method chosen by the implementi ng Member.  The European Communities submits 
that it is not for the arbitrator, or the complaining parties, to impose any particular method on the implementing Member on the ground that it would result in the fastest implementation of the 
recommendations and rulings of the DSB.  Acco rding to the European Communities, "[w]hen 
previous Arbitrators have said that the 'reasonable pe riod of time' is the 'shortest period of time' within 
the legal system of the implementing Member, they referred to the procedure for the adoption of the 
implementing measure, and not to the selection of th e implementing measure, which is the prerogative 
of the implementing Member."
116  Thus, in the view of the European Communities, it is not for the 
arbitrator to select a particular method of impl ementation and determine th e reasonable period of time 
on the basis of that selection.  Rather, the task of the arbitrator under Article 21.3(c) is to determine 
                                                      
114Award of the Arbitrator, Chile – Price Band System , para. 34 (quoting Award of the Arbitrator, US – 
1916 Act , para. 32).  See also Award of the Arbitrator, EC – Hormones , para. 26;  Award of the Arbitrator, 
Canada – Pharmaceutical Patents , para. 47;  Award of the Arbitrator, EC – Tariff Preferences , para. 26;  and 
Award of the Arbitrator, US – Oil Country Tubular Goods Sunset Reviews , para. 25.  
115European Communities' written submission, para . 22, referring to Award of the Arbitrator, Korea – 
Alcoholic Beverages , para. 45;  Award of the Arbitrator,  Canada – Pharmaceutical Patents , para. 43;  Award of 
the Arbitrator,  Chile – Price Band System , para. 32;  Award of the Arbitrator,  US – Offset Act (Byrd 
Amendment) , paras. 48 and  53;  Award of the Arbitrator,  EC – Tariff Preferences , para. 30;  and Award of the 
Arbitrator,  US – Oil Country Tubular Goods Sunset Reviews , para. 26.  (emphasis added) 
116European Communities' statement at the oral hearing.  WT/DS265/33 
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 the "shortest period [of time] possible"
117 within which the Member can implement through the 
method it has chosen, taking into account the time  required to adopt the necessary legislative, 
regulatory, and administrative measures. 
63. In contrast, Australia, Brazil, and Thailand (t he "Complaining Parties") argue that "prompt 
compliance" with the recommendations and rulings of the DSB, as required by Article 21.1 of the 
DSU, is fundamental to the functioning of the dispute settlement system118;  therefore, it is only when 
"prompt compliance" is "impracticable" that th e implementing Member is entitled to a "reasonable 
period of time" for implementation under Article 21.3 of the DSU.  The shortest possible period of 
time for implementation—the standard articulated by previous arbitrators, which flows from the 
fundamental requirement in Article 21.1 of "prompt compliance"—must, therefore, be determined on 
the basis of a method available to the implementing Me mber that is consistent with its legal system 
and that would result in implementation within the s hortest period of time possible.  Furthermore, the 
scope of the implementation method must be c onfined to that required to implement the 
recommendations and rulings of the DSB, and it must  not extend to extraneous objectives that the 
implementing Member may seek to include in it.  In the view of the Complaining Parties, the right of 
a Member to choose the means of implementation is  not unlimited, and should not be allowed to be 
used by the implementing Member as a means to obt ain a longer period of time for implementation.    
64. As regards the second principle governing the dete rmination of the reasonable period of time 
pursuant to Article 21.3(c), the European Communiti es contends that the requirement that a Member 
use all flexibility available to it within its legal sy stem should not be interpreted to mean that an 
implementing Member is required "to utilize an extraordinary  procedure rather than the normal  
procedure"119.  The European Communities points out, furthe rmore, that, as previous arbitrators have 
held, the reasonable period of time must include th e time required, not only for procedural steps that 
are explicitly mandated by legal instruments, but also  for procedural steps that constitute the normal 
and "routine[]" legislative or administrative practices of the implementing Member.120  
                                                      
117Award of the Arbitrator, Chile – Price Band System , para. 34 (quoting Award of the Arbitrator, US – 
1916 Act , para. 32).  See also Award of the Arbitrator, EC – Hormones , para. 26;  Award of the Arbitrator, 
Canada – Pharmaceutical Patents , para. 47;  Award of the Arbitrator, EC – Tariff Preferences , para. 26;  and 
Award of the Arbitrator, US – Oil Country Tubular Goods Sunset Reviews , para. 25.  
118Australia's written submission, para. 4;  Brazil's written submission, para. 13;  Thailand's written 
submission, para. 20.  
119European Communities' written submission, para. 23. (original emphasis) 
120Ibid., paras. 58–59.  The European Communities relies on the statement of the Arbitrator in EC – 
Tariff Preferences , para. 42.   WT/DS265/33 
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 65. In contrast, the Complaining Parties argue that , even where legislative and regulatory steps 
are required for implementation, it is incumbent upon the implementing Member to utilize all the discretion and flexibility available within its system to ensure fast implementation of its international 
obligations.  
66. As regards the third principle relating to the "particular circumstances" of the case within the 
meaning of Article 21.3(c) of the DSU, the Eur opean Communities and the Complaining Parties agree 
that "particular circumstances" are a relevant factor to be taken into account by the arbitrator in determining the reasonable period of time.  Howe ver, the parties differ on what constitutes such 
"particular circumstances" for the purposes of the present dispute.  The European Communities 
requests that I take into account seven "particular circumstances"
121;  the Complaining Parties 
disagree.  Furthermore, Brazil and Thailand argue that  the arbitrator should pay "particular attention" 
to their respective development interests, pursuant to Article 21.2 of the DSU.  The divergence in 
views is particularly acute with respect to th ree issues:  first, the scope of the means of 
implementation proposed by the European Commi ssion (the "Commission"), as contained in its 
proposal to the Council of the European Union (the "Council") dated 22 June 2005;  secondly, the 
need for "serious debate" within European Communities society concerning the implementing 
measures as well as the need to consult the A frican, Caribbean, and Pacific ("ACP") countries122;  and, 
thirdly, the need for a transition period with respect to domestic production already undertaken. 
67. The parties disagree sharply with respect to th e scope of the implementing measure needed in 
this dispute.  The essence of this disagreement is that, according to the Complaining Parties, the sole 
obligation to be implemented by the European Co mmunities in this dispute is to limit the budgetary 
outlay on export subsidies on sugar to € 499.1 million,  and the quantity of subsidized exports of sugar 
to 1,273,500 tonnes in any marketing year.  This being so, the European Communities can simply use 
an export licensing system to limit the quantity of exports in any marketing year to 1,273,500 tonnes.  The Complaining Parties argue that the Commission has the necessary legal and delegated authority to do this under existing Council Regulation 1260/20 01.  Moreover, even if the Commission does not 
                                                     
 
121The European Communities' seven "particular circumstances" are:  (i) implementation requires the 
adoption of a Council regulation and of implementing Co mmission regulations;  (ii) the implementing measures 
are complex;  (iii) the implementation process involves a number of procedural steps that are mandated by legal 
documents or by constitutional practice;  (iv) there are requirements concerning the publication and entry into force of the regulations at issue;  (v) the impact of the measures on Euro pean society requires serious debate;  
(vi) account must be taken of production undertaken or planned prior to the decision in the underlying dispute;  
and, finally, (vii) reasonable periods of time awarded in previous awards concerning legislative measures of the European Communities. 
122European Communities' written submission, paras. 28 and 80.  WT/DS265/33 
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 already have the legal authority to control the e xport of C sugar, the Commission can simply acquire 
such authority by means of an amendment to Council Regulation 1260/2001.
123   
68. The European Communities observes that there are two "extreme[]" options available to it as 
means of implementation, namely, "plac[ing] direct restrictions on the exports of sugar"124, while 
"leav[ing] the level of [domestic] support unmodified"125, as propounded by the Complaining Parties 
on the one extreme, and "dismantling the system of support for sugar or ... liberalising completely the 
imports of sugar into the [European Co mmunities'] market" on the other extreme.126  Between these 
two extremes, after a "careful assessment of all the options available"127, the European Communities, 
in its proposal of 22 June 2005, has chosen an in termediate option which "aim[s] at preserving some 
level of support for the beet farmers and sugar pr oducers while at the sa me time minimising the 
production of exportable surpluses".128  According to the Eur opean Communities, unless the 
"structural causes of the subsidized exports of sugar"129 are addressed by modifying the level of 
support given for beet farmers and sugar producers,  surplus production of sugar in the European 
Communities cannot be avoided or controlled.  Ther efore, the European Co mmunities considers that 
the means of implementation set out in its proposal of  22 June 2005 is the most appropriate means for 
implementation from the long-term point of view.  In this connection, the European Communities 
contends that, as recognized by both the Panel and th e Appellate Body in the underlying dispute, the 
European Communities' sugar regime is "very complex"130 and its various components are "closely 
connected and interdependent".131  More importantly, the Panel a nd the Appellate Body had found 
that it is the operation of the European Communitie s' sugar regime as a whole that has led to the 
subsidization of C sugar e xports within the meaning of Article 9.1(c) of the Agreement on 
Agriculture .  The European Communities is, therefore, of  the view that the means of implementation 
it has chosen flows logically from th e Panel and Appellate Body Reports.132  
                                                      
123The parties to this proceeding agree that the Commission has the authority to control exports of A 
and B sugar. 
124European Communities' written submission, para. 41. 
125Ibid., para. 41. 
126Ibid., para. 42. 
127Ibid., para. 44. 
128Ibid., para. 43. 
129Ibid., para. 41. 
130Ibid., para. 37. 
131Ibid., para. 40. 
132European Communities' response to questioning at the oral hearing.  WT/DS265/33 
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 69. Having considered the arguments of the parties on the general principle of "shortest period of 
time possible" for implementation, I set out my views in  this regard.  I am in agreement with previous 
arbitrators that it is not "the role of the arbitr ator under Article 21.3(c) to identify [or select] a 
particular method of implementati on and to determine the 'reasonable period of time on the basis of 
that method'".
133  Rather, the choice of the method of im plementation rests with the implementing 
Member.  However, the implementing Member do es not have an unfettered right to choose any 
method of implementation.  Beside s being consistent with the Memb er's WTO obligations, the chosen 
method must be such that it could be implemented within a reasonable period of time in accordance 
with the guidelines contained in Article 21.3( c).  Objectives that are extraneous to the 
recommendations and rulings of the DSB in the disp ute concerned may not be included in the method 
if such inclusion were to prolong the implementa tion period.  Above all, it is assumed that the 
implementing Member will act in "good faith" in the selection of the method that it deems most 
appropriate for implementation of the re commendations and rulings of the DSB. 
70. Turning to the dispute underlying this arbitrati on, I note that the Appellate Body upheld "as a 
result of its findings ... the Panel's finding ... th at the European Communities, through its sugar 
regime, acted inconsistently with its ob ligations under Articles 3.3 and 8 of the Agreement on 
Agriculture ".134  Under Articles 3.3 of the Agreement on Agriculture , the European Communities has 
the obligation, inter alia , "not [to] provide export subsidies ... in excess of the budgetary outlay and 
quantity commitment levels sp ecified [in its Schedule]."135  With respect to C sugar, as noted earlier, 
the export subsidy that was found to exist was a s ubsidy falling within the meaning of Article 9.1(c) 
of the Agreement on Agriculture , the source of which was the domestic support given, under the 
complex and integrated sugar regime of the Eu ropean Communities, for beet farmers and sugar 
producers. 
                                                      
133Award of the Arbitrator, US – Gambling , para. 33.  See also Aw ard of the Arbitrator, Korea – 
Alcoholic Beverages , para. 45.  In this regard, I also note, as the parties agree, that  the question whether a 
measure taken to comply by the implementing Member is in conformity with the obligations of the 
implementing Member is a matter that falls under Article 21.5 of the DSU.  I also note that under 
Article 21.3(a), it is the implementing Member that proposes the reasonable period of time required by it to implement through the measure it chooses to take. 
134Appellate Body Report, EC – Export Subsidies on Sugar , para. 346(f). 
135Article 8 of the Agreement on Agriculture  provides that "[e]ach Memb er undertakes not to provide 
export subsidies other than in conformity with this Ag reement and with the commitmen ts as specified in that 
Member's Schedule." WT/DS265/33 
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 71. I turn first to the argument of the Complaining Parties that limiting or prohibiting exports of 
sugar, or of C sugar more specifically
136, by means of suspending the grant of export licences, is the 
only option available to the European Communities to comply with the recommendations and rulings 
of the DSB in this dispute.  The Complaining Par ties have not succeeded in rebutting the arguments of 
the European Communities that the latter could, besides limiting its exports of sugar, choose to 
comply with the recommendations and rulings of the DSB by "withdrawing or reducing the 
subsidies";  "by repealing the requirements that make  the subsidies export contingent";  or "by taking 
measures to offset the subsidies (e.g. in the form of export duties)".137  I do not therefore agree that 
limiting or prohibiting the exports of sugar, or of C sugar more specifically, is the only option 
available, or the most effective, for implementation in this dispute. 
72. Given this conclusion, I need not decide here whether it is within the legal authority of the 
Commission, as a matter of European Communities law under existing Council 
Regulation 1260/2001, to suspend the granting of export licences with respect to C sugar.  Similarly, I 
need not address the European Communities' argument that, by suspending export licences with 
respect to C sugar, the European Communities would be acting inconsistently with Article XI of the 
General Agreement on Tariffs and Trade 1994 . 
73. As I held earlier with respect to the govern ing principle, the choice of the method of 
implementation rests with the implementing Member.  Given the facts of the dispute underlining this 
arbitration, I am satisfied that the European Communities is not pursuing extraneous objectives in 
addressing "the structural causes of the subsidized exports of sugar".138  I therefore proceed to 
determine the reasonable period of time required by  the European Communiti es with respect to its 
proposal of 22 June 2005. 
74. I address first the arguments of the parties c oncerning the steps involved in the European 
legislative process.  The Complaining Parties agree,  in principle, with th e European Communities on 
the basic steps involved in the legislative process  under Articles 36 and 37 of the Treaty Establishing 
the European Community (the "EC Treaty"), namely:  preparation of a proposal by the Commission 
and its presentation to the Council;  obtaining th e opinions of the European Parliament and the 
Economic and Social Committee of the European Co mmunity (EESC);  adoption of a regulation by 
                                                      
136Under the European Communities' existing sugar regime, C sugar is exported without the benefit of 
export refunds.   
137European Communities' statement at the oral hearing.  
138European Communities' written submission, para.  41.  WT/DS265/33 
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 the Council;  and, finally, adoption of im plementing regulations by the Commission.
 139  The adoption 
of the implementing regulations by the Commissi on is governed by the so-called "management 
committee procedure".140   
75. However, a disagreement exists as to whethe r, under the so-called "management committee 
procedure", the Commission may start preparing the implementing regulations before the adoption of 
the Council regulation.  The European Commun ities acknowledges that the Commission can start 
preparing such regulations before the Council has fo rmally adopted the Council  regulation;  however, 
the Commission "cannot finalise the texts and la unch the formal inter-service procedure and the 
comitology procedure until the Counc il has taken a definitive decision".141  In contrast, Brazil argues 
that a Commission proposal can be finalized by the Commission, and approved by the management committee, before adoption of the Council regulation.
142 
76. The European Communities' legislative system  is characterized by "considerable flexibility", 
in the sense that no mandatory minimum time periods  are imposed for any particular step in the 
legislative process as outlined by the European Communities.143  Furthermore, as acknowledged by 
the European Communities, it is po ssible that certain steps of the legislative process may proceed in 
parallel.  Thus, for instance, the European Commun ities agrees that the Council may start deliberating 
a Commission proposal, which is still being consider ed by the European Parliament and the EESC.  
However, the European Communities argues, in th is regard, that the Council will "in any event 
require additional time in order to take due account of the opinions issued by those bodies".144   
77. I take note of the "flexibility" available that the Council could begin its examination of the 
Commission proposal of 22 June 2005 before it rece ives the opinions of the European Parliament and 
                                                      
139Australia's written submission, paras. 145–156;  Brazil's written submission, para. 82;  Thailand's 
written submission, paras. 61–70.  The Complaining Pa rties do not agree with the European Communities' 
arguments that additional time is required for purposes of consulting ACP countries.  I address this point in 
paragraphs 80–81, infra . 
140Under the "management committee procedure" or "comitology procedure", the Commission is 
assisted by a "management committee" composed of representatives of th e Member States and chaired by a 
Commission representative.  Under that procedure, the Commission presents its proposals to the management 
committee, which in turn provides its opinion on the proposa l.  In the event that a favourable or no opinion is 
issued by the management committee, the Commission adopts the proposed regulation.  In the event that the 
management committee issues an unfavourable opinion, the Commission nevertheless adopts the regulation, but 
the Council may take a different decision from the Commission within a specified time period. 
141European Communities' written submission, para. 74.   
142Brazil's written submission, para. 108.   
143The same observation was made by the Arbitrator in EC – Tariff Preferences , para. 36.  
144European Communities' written submission, para. 67.  WT/DS265/33 
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 the EESC.
145  This could save some time as compared with the Council examining the Commission 
proposal only after receiving the opinion of the European Parliament and the EESC.146  I agree, 
however, with the European Communities that, even  if the Council has begun examination of the 
Commission proposal prior to receiving the opinions  of the European Parliament and the EESC, it 
will still require time to consider these opinions after it has received them.  As the Arbitrator in EC – 
Tariff Preferences  noted, "[i]f no such time were provided for this, it would defeat the purpose of 
seeking the opinions."147   
78. I also note that the European Communities agrees that, under the "management committee 
procedure", the Commission could begin preparing its  implementing regulations prior to the adoption 
of a Council regulation.148  The European Communities points out  that the staff of the Commission 
"may start preparing the implementing regulations  before the adoption of the Council regulation"149;  
however, the Commission cannot finalize the text and present it to the management committee, for 
purposes of obtaining the opinion of that committee, "until the Council has taken a definitive 
decision".150  In this respect, the Complaining Parties submitted an exhibit indicating three instances 
where the management committee delivered its opinion before  the Council adopted the relevant 
regulation.  The European Communities responds that, although the management committee may be 
invited by the Commission to deliver its opinion be fore the Council regulation has been adopted, this, 
nevertheless, remains an extraordinary procedur e in the practice of the European Communities' 
institutions.151   
79. I agree with previous arbitrators that an im plementing Member is not required to adopt 
"extraordinary legislative procedures" in every case.152  In this respect, I am not persuaded by the 
argument of the Complaining Parties that, although the instances cited by them are few, the flexibility 
suggested by them should not be re garded as "extraordinary".  In this respect, I take note of the 
                                                      
145This flexibility was also noted by the Arbitrator in EC – Tariff Preferences , para. 43. 
146I note that, according to the time limit proposed by the European Communities, both these opinions 
will be available to the Council at about the same time, namely, January 2006. 
147Award of the Arbitrator, EC – Tariff Preferences , para. 43. 
148European Communities' written submission, para. 74. 
149Ibid. 
150Ibid. 
151European Communities' response to questioning at the oral hearing.  
152Award of the Arbitrator, US – Section 110(5) Copyright Act, para. 32;  Award of the Arbitrator, US – 
Offset Act (B yrd Amendment) , para. 74.  Award of the Arbitrator, EC – Tariff Preferences , para. 42.  WT/DS265/33 
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 requirement that the opinion of the management committee would have to be sought again in the 
event that the Council, in adopting the regulation, modified the original Commission proposal.
153 
80. Another aspect of the European Communities' legislative procedure on which the parties 
disagree concerns the need to consult ACP countri es.  The European Communities argues that it is 
obliged, under the Cotonou Agreement between itself and the ACP countries, to consult ACP 
countries on measures that may "affect the interests" of those countries.154  This requirement to 
consult the ACP countries "throughout the legislativ e process", as well as the need "to consider and 
respond to their submissions", will, according to th e European Communities, "add to the complexity 
of the debate ... and require additional time".155   
81. I do not question the need for the European Communities to consult the ACP countries under 
the Cotonou Agreement on "measures which may affect the interests of the ACP states".156  However, 
the European Communities has not demonstrated why this should have an impact so as to require 
additional time for the European Communities to implement the recommendations and rulings of the 
DSB.  I observe, first, that implementation by the European Communities in this  dispute relates to its 
export subsidy commitments  under the Agreement on Agriculture , whereas the ACP countries enjoy 
preferential market access  to the European Communities' ma rket.  Secondly, the European 
Communities did not provide sufficient information on what consultations have  taken place with the 
ACP countries, nor on past experience on how consul tations with ACP countries had an impact on the 
European Communities' legislative process.  The European Communities has not provided me with 
information sufficient to substantiate its asserti on that consultations with the ACP Countries will 
necessitate additional time for implementation of the recommendations and rulings of the DSB.157   
82. I now turn to the disagreement between the parties concerning the time needed for the 
legislative procedure in this case.  In this respect, I note that the European Communities estimates that 
the Council will adopt a Council regulation at th e end of March 2006 and that, thereafter, the 
                                                      
153At the oral hearing, the European  Communities stated that the opin ion rendered by the management 
committee before the adoption of a Council regulation would be "conditional" on the Council adopting the Commission proposal without modifications. 
154European Communities' written submission, para. 61.  The Cotonou Agreement is a partnership 
agreement between, on the one hand, the European Communities and, on the other hand, the ACP countries;  it relates to political, trade, and development issues. 
155European Communities' written submission, para. 63.  
156Ibid., para. 61.  
157I discuss the relevance, under Article 21.2 of the DS U, of the interests of ACP countries in para. 102, 
infra . WT/DS265/33 
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 Commission will need three months to enact the necessary implementing regulations, that is, until the 
end of June 2006.
158  In contrast, the Complaining Parties argue that the Council could adopt a 
regulation by 2 December 2005 and that the Commi ssion could adopt implementing regulations by 
27 December 2005.  The Complaining Parties base  their estimate on the adoption of a "narrow"159 and 
"straightforward ... amend[ment]"160 to the existing European Communities' sugar regime161, rather 
than on a broader reform of that regime, as pr opounded by the European Communities.  Australia162 
and Brazil163 have also argued that, even on the basis of a broader reform of the European 
Communities, the Council should adopt a regula tion by 29 March 2006 and the Commission should 
adopt implementing regulations by 21 April 2006. 
83. The Complaining Parties have presented several tables containing information about the 
duration of prior legislative procedures of the European Communities based on Articles 36 and 37 of the EC Treaty.  On the basis of a sample of previous regulations amending  an existing  common 
market organization ("CMO") for agricultural prod ucts, and on the basis of another sample of 
previous regulations adopting  a new CMO for agricultural products, the Complaining Parties argue 
that the relevant median periods are 5.4 months for the adoption of an amendment  to an existing  
CMO, and 9.2 months for the adoption  of a new CMO. 
84. As I have stated earlier, limiting or prohibiting exports of C sugar by means of suspending the 
grant of export licences is not the only option ava ilable to the European Communities to comply with 
the recommendations and rulings of the DSB in th is dispute.  Accordingly, I do not base my 
determination of the reasonable period of time ex clusively on the procedure for adopting such an 
amending  regulation as suggested by the Complaining Parties, or on the basis of the evidence 
concerning the duration of the adoption process for such amending regulations. 
85. At the same time, I note that the information s ubmitted by the Complaining Parties shows that 
the average time for the adoption of a Council regulation and of implementing Commission 
                                                     
 
158The period of time between the date of the adoption of the Panel and Appellate Body Reports—that 
is, 19 May 2005—and 30 June 2006 is 13 months and 11 days.   
159Brazil's written submission, para. 81. 
160Thailand's written submission, para. 65. 
161This amendment, according to the Complaining Parties, shoul d be limited to granting the 
Commission the legal authority to limit exports of C suga r by means of suspending the granting of export 
licences.  
162Australia's written submission, para. 206. 
163At the oral hearing, Brazil stated that it agreed with Australia in this respect.   WT/DS265/33 
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 regulations establishing a new CMO for agricultural products is 11.4 months, and the median figure 
is 9.2 months.  The European Communities has not contested the validity of this data, but emphasizes the complexity and sensitivity of the present dispute.   I note that these time periods are shorter than 
those suggested by the European Communities in this arbitration pr oceeding for the completion of its 
legislative process.
164  I also agree with Thailand that an average or median figure "inherently 
represent[s] more than the shortest possible period of time necessary within [an implementing 
Member's] legal system".165  Even granting that the circumstances of adoption of previous Council 
regulations may have been different and that the pr oposal at issue here may involve a different degree 
of complexity, it would appear that the European  Communities can use the flexibility and discretion 
in its legal system to ensure that the rele vant Council regulation, as well as the Commission 
implementing regulations, are enacted more speedil y than the proposed timel ine it has suggested.  
Indeed, the fact that the legislative process at hand is intended to bring the European Communities 
into compliance with its international obligations  reinforces the need for the European Communities 
to use all flexibility and discretion that may be available to it within its legal system. 
86. I now turn to the other  "particular circumstances"166 alleged by the European Communities:  
first, the alleged complexity of the implementing measu res;  secondly, the need for a serious debate in 
European society;  thirdly, that it would be "appropriate" to permit European Communities sugar 
producers to export C sugar until 1 January 2007;  fourthly, the requirements concerning the 
publication and entry into force of regulations;  and, fifthly, the reasonable peri ods of time determined 
in previous arbitration awards concerning legislative measures of  the European Communities.   
87. The European Communities contends that the reasonable period of time must be determined 
taking into account that the implementing measures are "complex".167  The European Communities 
submits that its sugar regime is "a very comple x regulatory regime, consis ting of many different 
support mechanisms"168 that are "closely connected and interdependent"169;  as a result, the European 
                                                      
164The period between 22 June 2005, the date on which the Commission presented its proposal to the 
Council, and 30 June 2006, the date suggested by the European Communities as the end point of its legislative 
process, is 12 months and 8 days.  Moreover, a legislative process ending on 30 June 2006 represents a period of 
13 months and 11 days from the date of adoption of the Panel and Appellate Body Reports in this dispute, that 
is, 19 May 2005. 
165Thailand's written submission, para. 70. 
166See supra , footnote 121. 
167European Communities' written submission, para. 45. 
168Ibid., para. 37. 
169Ibid., para. 40. WT/DS265/33 
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 Communities has "many different options in order to  implement the recommendations and rulings of 
the DSB".
170  Regardless of which specific option is  ultimately chosen, "the content of the 
implementing measures is likely to be technically complex".171 
88. As previous arbitrators have noted, the comp lex nature of implemen ting measures can be a 
relevant factor for the determination of the reas onable period of time under Article 21.3(c) of the 
DSU.172  But the degree of complexity of an implementing measure depends on the facts of the case.  I 
am not persuaded that the standard of "compl exity" is, as the European Communities appears to 
suggest, reached every time that implementation of the recommendations and rulings of the DSB 
requires more than  "simply ... rewrit[ing] an isol ated legal provision or ... repeal[ing] without more 
the whole measure at issue".173  As an example of "complexity" of an implementing measure, I refer 
to the one given by the arbitrator in Canada – Pharmaceutical Patents , namely where 
"implementation is accomplished through extensive new regulations affecting many sectors of 
activity".174  Although I acknowledge that the sugar regi me of the European Communities has many 
components that are interrelated, I am not convin ced that the Commission proposal of 22 June 2005 
possesses such a level of "complexity" as to wa rrant the granting of any additional time for 
implementation. 
89. The next argument of the European Communities is that the impact of the implementation 
measures on European society requires a "serious debate" because the European Communities' sugar 
regime is of a "long-standing nature", is "essen tially integrated" in the European Communities' 
policies and, in some cases, "go[es] back ... to  the Napoleonic wars of the early XIX century".175  The 
European Communities relies on a finding of the arbitrator in Chile – Price Band System  in 
contending that this "particular circumstance[]" should have a bearing on th e determination of the 
reasonable period of time.  The Complaining Parties respond that the need for "serious debate" or the 
"political sensitivity" of the subject matter cannot be regarded as a "particular circumstance[]" for 
                                                      
170European Communities' written submission, para. 40.  
 171Ibid., para. 45.  
172Award of the Arbitrator, Canada – Pharmaceutical Patents , para. 50;  Award of the Arbitrator, US – 
Offset Act  (Byrd Amendment) , para. 60.   
173European Communities' written submission, para. 45. 
174Award of the Arbitrator, Canada – Pharmaceutical Patents , para. 50;  see also Award of the 
Arbitrator, US – Offset Act  (Byrd Amendment) , footnote 67 to para. 60.  
175European Communities' written submission, para. 81.   WT/DS265/33 
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 extending the reasonable period of time required for implementation
176;  this is all the more so, 
according to the Complaining Parties, as implementati on required in this dis pute consists only in the 
prevention of subsidized exports taking pl ace beyond the European Communities' reduction 
commitments. 
90. Previous arbitrators have consistently held th at the "contentiousness" or "political sensitivity" 
of the measure to be implemented is not a "par ticular circumstance[]" that is relevant under 
Article 21.3(c).177  In any event, I am not persuaded that  the European Communities' export subsidies 
on sugar are characterized by a degree of politic al contentiousness that would fundamentally 
distinguish these measures from any other measure that is  likely to be the subject of a WTO dispute.  I 
do not consider that the measures at issue in th is dispute raise concerns comparable to those 
recognized by the arbitrator in Chile – Price Band System .  Thus, in my view, the European 
Communities' reliance on the award of the arbitrator in Chile – Price Band System  is misplaced;  the 
measure in that dispute had a "unique role and impact on Chilean society", was "fundamental[ly] 
integrat[ed] into the central agricultural policies of Chile", and had a "pri ce-determinative regulatory 
position in Chile's agricultural policy".178   
91. I turn now to the European Communities' contention that production already undertaken 
before the dispute in EC – Export Subsidies on Sugar  was decided should be given consideration as a 
"particular circumstance[]".  More specifically, the European Communities argues that "it would be 
appropriate to allow the European  Communities' exporters to conti nue to export out of quota sugar 
until 1 January 2007 without being subject to the paym ent of the 'surplus' levies provided [for] in the 
Commission proposal."179  The Complaining Parties consider it unwarranted to grant an additional six 
months as a transition period to enable the dom estic industry to export the sugar it has already 
produced.  The Complaining Parties submit that previous arbitrators have rejected arguments that additional time should be granted for "struc tural adjustment" of the domestic industry.
180  Brazil and 
                                                      
176Australia's written submission, para. 196;  Braz il's written submission, paras. 118 and 122;  
Thailand's written submission, para. 33.    
177See Award of the Arbitrator, Canada – Patent Term , para. 58;  and Award of the Arbitrator, US – 
Offset Act (B yrd Amendment) , para. 61.  
178Award of the Arbitrator, Chile – Price Band System , para. 48.  
179European Communities' written submission, para. 90.  
180Australia's written submission, paras. 181–191;  Brazil's written submission, para. 124;  Thailand's 
written submission, paras. 87–88. WT/DS265/33 
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 Thailand also argue that, even under the Euro pean Communities' own law, subsidies may be 
discontinued without advance notice to the affected industry.
181 
92. I agree with the views put forth by the Complaining Parties.  In my view, the European 
Communities effectively requests a transitional period following  the withdrawal or modification of a 
WTO-inconsistent measure, so that the domestic  industry may adjust to such withdrawal or 
modification.  As previous arbitrators have held, the perceived need for such "structural adjustment" 
or phase-in periods for the domestic producers does not  constitute a "particular circumstance[]" within 
the meaning of Article 21.3(c) and, as such, canno t have an impact on the determination of the 
reasonable period of time under that provision.182  In my view, allowing such a transitional period 
would have the effect of including in the reasonabl e period of time action that is extraneous to 
implementation of the recommendations and rulings of the DSB. 
93. I turn next to the European Communities' argument concerning the entry into force of its 
implementing measures.  The European Comm unities argues that the Council regulation under 
discussion must enter into force on 1 July 2006 becau se "it is an established legislative practice that 
regulations which must be implemented by the cu stoms authorities should be published at least six 
weeks before their entry into force and take ef fect from 1 January, or exceptionally, from 1 July".183  
This practice is based on a Council resolution fro m 1974.  In addition, the European Communities 
also argues that it is a "well-established legislative practice" that significant changes to the rules of a 
CMO should take effect from the star t of the following marketing year.184   
94. In response, the Complaining Parties have submitted two tables showing 33 Council and 
Commission regulations that, according to the Comp laining Parties, "appear to fall within the 
[European Communities'] description of the Council's long-standing practice"185;  however, in the case 
of these regulations, the alleged European Commun ities' practice was not followed, in that the 
relevant regulations did not enter into force on 1 January or 1 July, and were not published six weeks 
prior to their entry into force.  The European Communities does not dispute the data submitted by the 
                                                      
181For this proposition, Brazil and Thailand rely on the judgment of the European Court of Justice in 
Case C-14/01, Molkerei Wagenfeld Karl Niemann .  (See Brazil's written submission, para. 99;  Thailand's 
written submission, para. 89.) 
182Award of the Arbitrator, Indonesia – Autos , para. 23;  Award of the Arbitrator, Argentina – Hides 
and Leather , para. 41.   
183European Communities' written submission, para. 77.   
184Ibid., para. 78.   
185Brazil's written submission, para. 96.  WT/DS265/33 
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 Complaining Parties;  however, it argues that this  practice has been in place since 1974 and that, as a 
result, a long list of exceptions can be expected to exist.
186 
95. In my view, the statistical information submitte d by the Complaining Parties suggests that a 
degree of flexibility exists with respect to the pr actice alleged by the European Communities.  I am 
aware that the arbitrator in EC – Tariff Preferences  regarded this administrative practice of the 
European Communities as a relevant factor in  determining the reasonable period of time for 
implementation.187  However, unlike in that case, the Co mplaining Parties have presented clear 
evidence that the practice has not been followed in a number of instances.  The European 
Communities has not explained why, in this particular case, the European Communities cannot make 
use of the flexibility it appears to have with respect  to this particular administrative practice.   
96. With respect to the European Communities' ar gument that there is a "well established 
legislative practice"188 that significant changes to the rules of  a CMO should take effect from the start 
of the following marketing year, I note that the Eu ropean Communities has not directed my attention 
to any factual evidence in support of this claim.  In contrast, the Complaining Parties have submitted 
evidence that casts doubt on the existen ce of the "legislative practice" in  the form of a table with ten 
Council amendments to existing CMOs that, according to  the Complaining Parties, did not take effect 
at the start of the marketing year.  I am therefor e of the view that the European Communities has not 
discharged its burden of proof with respect to this is sue.  Therefore, the alleged "legislative practice" 
that "significant changes to the ru les of a common market organizati on should take effect ... from the 
start of the following marketing year"189 is not a "particular circumstance[]" that I propose to take into 
account in determining the reasonable period of time. 
97. I now turn to the fifth "particular circumstan ce[]" suggested by the European Communities as 
affecting the determination of the reasonable peri od of time to comply, namely, the periods of time 
awarded in previous arbitration awards conc erning legislative measures of the European 
Communities.  In my view, Article 21.3(c) requires an  arbitrator to take into account the "particular 
circumstances" of the case before the arbitrator.  Although an arbitrator could derive some useful 
guidance from previous arbitration awards in this regard, the facts and circumstances of 
implementation in one dispute may, and in mo st instances will, di ffer from the facts and 
                                                      
186European Communities' response to questioning at the oral hearing. 
187Award of the Arbitrator, EC – Tariff Preferences , para. 50. 
188European Communities' written submission, para. 96. 
189Ibid., para. 78. WT/DS265/33 
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 circumstances of implementation in another dispute.  As a result, I decline to consider as a "particular 
circumstance[]" here the reasonable periods of time awarded in previous arbitration awards 
concerning legislative measures of the European Communities, exclusively on the ground that the 
present arbitration also involves implementation by the European Communities by means of a 
legislative measure. 
98. Finally, I turn to the parties' arguments c oncerning Article 21.2 of the DSU.  Brazil and 
Thailand argue that I should pay "[p] articular attention", within the mean ing of that provision, to their 
respective interests as developing WTO Members, an d have submitted extensive evidence with a view 
to demonstrating those interests.  The European Communities agrees that the scope of Article 21.2 of 
the DSU is not limited to developing country Members as implementing , rather than as complaining , 
parties to a dispute.  Rather, the European Communi ties argues that Article 21.2 is also applicable to 
developing country Members who are not parties to a dispute.
190  The European Communities does 
not appear to dispute the development interests of Brazil and Thailand, nor the evidence submitted by 
Brazil and Thailand.  Instead, the European Comm unities argues that a consequence of a shorter 
implementation period, combined with the susp ension of export C sugar as advocated by the 
Complaining Parties, "could be" an increase in the world market price of sugar191, and that would 
adversely affect the interests of sugar importing developing countries.  The European Communities 
also argues that these interests, as well as the intere sts of ACP countries, are also interests within the 
meaning of Article 21.2 to which I s hould pay "[p]articular attention".  
99. I find that previous arbitrators have not explicitly resolved the question whether the phrase 
"developing country Members" in Article 21.2 refers exclusively to the implementing  Member, or 
whether it also applies to developing country Members other  than the implementing Member such as, 
for instance, the complaining Member, third parties to the dispute, or any developing country Member 
                                                      
190European Communities' statement at the oral hearing and response to questioning at the oral hearing.  
191The European Communities has submitted a study according to which the Complaining Parties do 
not have the necessary production cap acity to replace the European Commun ities as a supplier of sugar to the 
world market by December 2005, in th e event that the European Communities were to suspend its exports of C 
sugar.  According to the European Communities, this ci rcumstance would lead to a higher world market price 
for sugar, which in turn would adversely affect the developing countries that are importers of sugar.  (European 
Communities' statement at the oral hearing and re sponse to questioning at the oral hearing.)  WT/DS265/33 
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 of the WTO.
192  I consider that Article 21.2 is to be in terpreted as directing an arbitrator to pay 
"[p]articular attention" to "matters affecting the interests" of both an implementing  and complaining  
developing country Member or Members.193  I note that Brazil, the European Communities and 
Thailand explicitly agree on this point.194  In arriving at this conclusion,  I agree with the arbitrator in 
US – Gambling  that the text of Article 21.2 does not limit its scope of application to an implementing 
developing country Member.195  I also note that Articles 21.7 and 21.8 refer to circumstances in which 
a "matter ... has been raised by a developing co untry Member" or "the case is one brought by a 
developing country Member";  this suggests that, where the drafters of the DSU wished to limit the 
scope of a provision to a particular category or gr oup of developing country Members, they did so 
expressly.196   
100. Having concluded that I am enjoined by Article 21.2 to pay "[p]articular attention" to matters 
affecting the interests of Brazil and Thailand as complain ing parties in this dispute, I turn to consider 
the specific arguments of Brazil and Thailand in th is respect.  Brazil argues that its sugar industry 
constitutes more than a fifth of its total agribusin ess gross domestic product;  that a study in 1997 
concluded that the sugar industry was "responsible for creating more than 654,000 direct and 937,000 
indirect jobs in Brazil" and directly employed 764,593 persons in Brazil197;  that the sugar industry 
has added importance because it is often located in rural areas and has a tradition of socially 
responsible employment;  and that the European Communities' exports of s ubsidized sugar have a 
"detrimental effect on prices in the export market".198  Thailand argues that the European 
                                                      
192Previous arbitrators have considered that the interests of an implementing  developing country 
Member of the WTO fall within the scope of Article 21.2.  (Award of the Arbitrator, Indonesia – Autos , 
para. 24;  Award of the Arbitrator, Chile – Alcoholic Beverages , para. 45;  and Award of the Arbitrator, 
Argentina – Hides and Leather , para. 51.)  The Arbitrator in EC – Tariff Preferences  stated explicitly that he 
was not required to resolve the question whether Article 21.2 also applied to interests of developing Member 
countries not parties to the arbitra tion.  (Award of the Arbitrator, EC – Tariff Preferences , para. 59.)  The 
Arbitrator in US – Gambling stated explicitly that he was not required to resolve the question whether 
Article 21.2 applied to a complaining  developing country Member.  (Award of the Arbitrator, US – Gambling , 
para. 62.) 
193As noted in paragraph 104, infra , it is not necessary for me to decide whether Article 21.2 is 
applicable to developing countries that are not parties to the arb itration proceedings.  
194Brazil's written submission, para. 137;  European Communities statement at the oral hearing and 
response to questioning at the oral hearing;  Thailand's written submission, para. 74. 
195Award of the Arbitrator, US – Gambling , para. 59.  
196For instance, Article 3.12 also explicitly refers to a situation in which "a complaint based on any of 
the covered agreements is brought by a developing country Member against a developed country Member".  
Article 12.10 refers to "consultations involving a measure taken by a developing country Member" and a 
"complaint against a developing country Member". 
197Brazil's written submission, para. 138.  
198Ibid., para. 140. WT/DS265/33 
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 Communities' sugar exports have a "depressive ef fect ... on the world market price for sugar".
199  
Thailand also refers to adverse consequences flow ing from continued subsid ized exports from the 
European Communities on "1.5 million farmer s' and sugar-related workers' households".200  Thailand 
also argues that a large portion of its sugar-pr oducing areas are located in parts of Thailand with 
annual incomes below the average annual income of Thailand.  Both Brazil and Thailand submit 
evidence in support of their respective arguments. 
101. Upon perusal of the evidence, I am satisfi ed, overall, that Brazil and Thailand have 
demonstrated their interests as developing count ry Members for purposes of Article 21.2 and that 
these interests are relevant for my determination of th e reasonable period of time in this arbitration.   
102. With respect to the developmen t interests of the ACP countries201, I am aware of the 
preferential market access to the European Communities' market that the ACP countries enjoy under 
the Cotonou Agreement.  However, the rather limite d evidence before me does not enable me to glean 
in which specific manner the ACP countries w ill be affected by implementation of the 
recommendations and rulings of the DSB in this disput e.  Therefore, I have no precise basis on which 
to rely in order to pay "[p]articular attention" to  the interests of the ACP countries in determining the 
reasonable period of time in this arbitration.  
103. Likewise, there is insufficient evidence before me that would demonstrate whether or how the 
interests of other developing country Members who are exporters or importe rs of sugar would be 
affected by the implementation of the recommenda tions and rulings of the DSB.  The European 
Communities has not specifically identified such othe r developing country Members in its submission 
or at the oral hearing. 
                                                      
199Thailand's written submission, para. 75. 
200Ibid., para. 77. 
201With respect to ACP countries that were involved in the dispute as third parties with enhanced rights 
and that are least-developed countr ies, the European Communities refers to Article 24.1 of the DSU.  
Article 24.1 provides that, "[a]t all stages of ... dispute settlement procedures involving a least-developed 
country Member, particular consideration shall be give n to the special situation of least-developed country 
Members."  Specifically, Members are to exercise "due restraint" in raising matters under dispute settlement 
procedures involving a least-developed country Member;  where nullification or impairment is found to result 
from a measure taken by a least-developed country Member , complaining parties "shall exercise due restraint in 
asking for compensation or seeking authorization to suspend the application of concessions or other obligations 
pursuant to [dispute settlement] procedures".  WT/DS265/33 
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 104. Accordingly, it is not necessary for me, in the sp ecific circumstances of this arbitration, to 
decide whether Article 21.2 is also applicab le to developing country Members that are not parties to 
the arbitration proceedings under Article 21.3(c). 
105. Finally, I note that the parties expressed vari ous views on a question raised by me during the 
oral hearing:  if the reasonable period of time expires in the course of a marketing year, how would this circumstance affect budgetary and quantity lim itation commitments of the implementing Member 
for that marketing year, assumi ng that these commitments under the Agreement on Agriculture  apply 
to a marketing year as a whole?  Brazil and th e European Communities stated expressly that the 
resolution of this issue does not fall within the manda te of an arbitrator under Article 21.3(c) of the 
DSU and that it is not of relevance for determini ng the reasonable period of time under that Article.  I 
do not consider it necessary to address this issue. 
106. On the basis of the above considerations, I de termine that the "reasonable period of time" for 
the European Communities to implem ent the recommendations and rulings of the DSB in this dispute 
is 12 months and 3 days from 19 May 2005, which w as the date on which the DSB adopted the Panel 
and Appellate Body Reports.  The reasonable peri od of time will therefore expire on 22 May 2006. WT/DS265/33 
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Signed in the original at Geneva this 18th day of October 2005 by: 
 
   
 
________________________ 
A.V. Ganesan 
Arbitrator