WORLD TRADE  
ORGANIZATION  TN/RL/GEN/37 
23 March 2005 
 (05-1241) 
Negotiating Group on Rules Original:   English 
  
 
DISPUTE SETTLEMENT 
 
Communication from Canada
 
  
 The following communication, dated 22 March 2005, is being circulated at the request of the 
Delegation of Canada.   The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/45), also be circulated as a formal document. 
 
_______________ 
 
  Members will recall that Canada raised sp ecific dispute settlement related issues in both 
TN/RL/W/112 of 6 June 2003
1 and TN/RL/W/47 of 28 January 2003.2  As Canada has noted in earlier 
submissions, the issues it has raised to date do not purport to represent the totality of the matters it 
wishes to pursue in the trade rules area.  There are other important dispute settlement related issues 
particular to antidumping and countervail that, in Canada’s view, merit discussion in the Rules Group 
with a view to clarifying and improving the ADA and ASCM. In this regard, Canada proposes the 
following clarifications and improvements to address particular concerns relating to the scope of 
compliance with the recommendations and rulings  of the Dispute Settlement Body (DSB). 
 
Basic Principle  
 
 As has been noted by the United States, the WTO Agreement is the product of a carefully 
negotiated balance of concessions.3  As has been further pointed out by Mexico, every time an illegal 
measure is maintained in force, the delicate balanc e of concessions that has been achieved, is upset.4  
Canada agrees and believes that, as a matter of basic principle, immediately upon antidumping or 
countervail measures having been ruled by the DSB to be WTO-inconsistent, the Member concerned 
should be prohibited from continuing to impose such inconsistent measures.  Of course, as a necessary 
corollary to this basic principle, any resulting loophole that would afford exporters a window of 
opportunity within which to ship dumped/subsidized goods with impunity, would have to be closed.  
  In addition, the Member concerned, after bri nging the measure found to be inconsistent with a 
covered agreement into compliance therewith, should be  obliged to apply the compliant measure to all 
past entries and, where application of the compliant measure yields lower duty liability, to refund all 
                                                     
 
1 These related specifically to the need to rec oncile the accelerated timefra mes prescribed in the 
Agreement on Subsidies and Countervailing Measures  for prohibited subsidies with the generally applicable 
timeframes in the Dispute Settlement Understanding, and the need to reconsider the role of the Permanent Group of Experts in dispute settlement. 
2 This related specifically to swift dispute settleme nt procedures for the adjudication of claims of 
violation relating to the initiation of investigations and duty refunds obligations. 
3 Refer to WT/DS248/249/251-254/258/259/R at paragraph 7.51. 
4 Refer to TN/DS/W/23 of 4 November 2002. TN/RL/GEN/37 
Page 2  
 
 excess anti-dumping and/or countervailing duties collected pursuant to the original (WTO-
inconsistent) measure.  
Proposal
 
  Both the Anti-dumping Agreement  (ADA) and the Agreement on Subsidies and 
Countervailing Measures  (ASCM) include ‘special and additional’  dispute settlement rules, which, by 
virtue of Article 1.2 and Appendix 2 of the Dispute Settlement Understanding  (DSU), supersede the 
generally applicable provisions of the DSU to the extent of any conflict between the two.    
 In this regard, Canada believes that consider ation should be given to the inclusion of a new 
provision in both the ADA and ASCM pursuant to which any antidumping or countervailing duty 
enforcement action (e.g., demands for cash deposits to cover estimated duties, the assessment of 
definitive duties on prior unliquidated entries, and th e prospective application of definitive duties) in 
respect of a measure that has b een ruled by the DSB to be WTO-inconsistent, would be prohibited 
until such time as the measure was br ought into compliance with the DS B’s ruling. In short, Members 
would no longer be allowed to apply WTO-inco nsistent antidumping/countervail measures under 
cover of the reasonable period of time for complia nce (RPT) established under Article 21.3 of the 
DSU.
5  At the same time, complaining Members would still be precluded from seeking authorization 
to retaliate during this period.  In order to ensure th at the intent of this new rule was not frustrated by 
inadequate compliance action on the part of an  implementing Member, a measure would not be 
considered WTO-compliant until:  
 
a) a prescribed period of time had elapsed after:  
 
(i) a declaration of compliance to the DSB by the implementing Member, or 
 
(ii) expiration of the RPT,  
 
without further challenge (i.e., deemed compliance);6  or  
 
b) a DSU Article 21.5 panel determined the measure to be compliant.7 
                                                      
5 It is conceivable that certain enterprises might take advantage of this period and import massive 
amounts of the subject goods into the country only to disappear before any retrospective duty enforcement under 
a WTO-compliant measure can occur – l eaving no one around to pay duties found to be properly owing.  Such 
scenarios would need to be addressed.  In this regard , Members might consider the appropriateness of providing 
the implementing Member with the option of requiring the posting of bonds.    
6 The prescribed period would be of sufficient duration to afford the complaining Member(s) a 
reasonable opportunity to assess the ad equacy of the compliance action taken.  During this period a complaining 
Member could request consultations to clarify any asp ects of the compliance action.   Where the complaining 
Member decided that the compliance action was sufficient,  the prescribed period would simply be allowed to 
lapse and the measure would be deemed  compliant.  If, however, the complaining Member considered that the 
compliance action was inadequate, it could have recourse to Article 21.5 of the DSU.    
7 Canada recognises that certain collateral issu es concerning the relationship between its proposed 
special/additional dispute settlement provisions and retaliation rights under Article 22 of the DSU would have to be clarified, e.g.: 
(i) The refusal of a Member to suspend the ap plication of anti-dumping/countervailing measure 
after an adverse DSB ruling should deprive that  Member of the benefit of the RPT and entitle 
the complaining Member to request the immedi ate suspension of con cessions pursuant to 
Article 22.2 of the DSU;  and 
(ii) Quantum  of retaliation rights, in the case of non-co mpliance, should accrue as of the date of 
first imposition of the WTO-inconsistent meas ure, as opposed to the end of the RPT. 
  TN/RL/GEN/37 
 Page 3 
 
 
  Once the WTO-inconsistent measure was deemed or determined to have  been brought into 
compliance with the DSB’s recommendations and ruling, the Member concerned:   
(i) would be allowed, to enforce the newly-co mpliant measure retrospectively on subject 
products imported during the period between th e beginning of the RPT and the date on which 
the measure was deemed or determined to be compliant;
8  and 
 
(ii) would be required to apply the newly-compliant  measure retrospectively, as appropriate, and 
to refund any excess antidumping or countervailin g duties collected on all imports of the 
subject product made during the period beginn ing with the first importation in respect of 
which such duties were imposed, and ending at  start of the RPT. If, however, the duty 
assessed under the compliant measure were to be  greater than that imposed under the WTO-
inconsistent measure, the difference would not be collected.9 
 
Schematic Depiction of Proposal  
 
     
 
    
 
     
 
    
 
  The above does not purport to address all of Canada’s concerns with respect to dispute 
settlement and it reserves the right to make further submissions on the subject.  
__________ 
 
                                                     
 
8 This would be consistent with Article 9.1 of the ADA and Article 19.2 of the ASCM, whereby the 
decision whether or not to impose duties, where all the requirements for their imposition have been fulfilled, and the decision whether the amount shall be the full amount or  less, are decisions of th e authorities of the importing 
Member.    
9 This would be consistent with Articles 10.3 of the ADA and 20.3 of the ASCM on the retroactive 
application of definitive antidumping and countervailing duties for the period during which provisional 
measures were imposed.   Adverse DSB RulingMeasure is 
Deemed or is 
Determined 
to be  
WTO-Compliant RPT
Discretionary 
Application of WTO-
Compliant Measure 
 Original 
Implementation of 
WTO-Inconsistent 
Measure 
Imports ImportsMandatory  
Application of WTO-
Compliant Measure 
(Refund of Excess 
Duties) 
Imports Imports 
Suspension of 
Enforcement Period