RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/194 
26 August 2005 
 (05-3770) 
Dispute Settlement Body 
20 July 2005  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 20 July 2005  
 
Chairman:  Mr. Eirik Glenne (Norway) 
 
  Prior to the adoption of the agenda
, the item concerning the Panel Report in the case on:  
"Mexico – Definitive Anti-Dumping Measures on Beef and Rice:  Complaint with Respect to Rice" 
(WT/DS295/R) was removed from the proposed agenda  following Mexico's decision to appeal the 
Panel Report.   Subjects discussed
: Page  
1. Surveillance of implementation of recommendations adopted by the DSB.........................2  
(a) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by 
the United States .............................................................................................................. ...........2  
(b) United States – Anti-dumping measures on certain hot-rolled steel products from 
Japan:  Status report by  the United States...................................................................................3  
(c) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report 
by the Unite d States ........................................................................................................... .........4  
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the 
United States .................................................................................................................. .............6  
(e) Mexico – Measures affecting telecommunications services:  Status report by Mexico .............6  
(f) European Communities – Conditions for th e granting of tariff preferences to 
developing countries:  Status repor t by the European Communities ..........................................7  
(g) Canada – Measures relating to exports of wheat and treatment of imported grain:  
Status report by Canada ........................................................................................................ ......9  
2. European Communities – Measures affecting trade in commercial vessels........................9  
(a) Implementation of the recommendations of the DSB.................................................................9  
3. European Communities and certain member States – Measures affecting trade 
in large civil aircraft ........................................................................................................ .......10  
(a) Request for the establishment of a panel by the United States .................................................10  
4. United States – Measures affecting trade in large civil aircraft .........................................12  
(a) Request for the establishment of a pa nel by the European Communities.................................12  
5. Egypt – Anti-dumping duties on matches from Pakistan ...................................................13  
(a) Request for the establishment of a panel by Pakistan...............................................................13  WT/DSB/M/194 
Page 2  
 
6.
 Japan – Measures affecting the importation of apples:  Recourse to Article 21.5 
of the DSU by the United States.............................................................................................14  
(a) Report of the Panel............................................................................................................ ........14  
7. United States – Countervailing duty in vestigation on dynamic random access 
memory semiconductors (DRAMS) from Korea .................................................................16  
(a) Report of the Appellate Body and Report of the Panel.............................................................16  
8. United States – Section 211 Omnibus  Appropriations Act of 1998 ....................................21  
(a) Joint request by the European Co mmunities and the United States..........................................21  
9. United States – Anti-dumping measures on certain hot-rolled steel products 
from Japan..................................................................................................................... ..........22  
(a) Joint request by Japan and the United States ............................................................................22  
10. Appointment of Appella te Body members............................................................................23  
 
 
1. Surveillance of implementation of recommendations adopted by the DSB 
(a) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.33) 
 (b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.33) 
 
(c) United States – Continued Dumping and Subsid y Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.18 – WT/DS234/24/Add.18) 
 (d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.8) 
 
(e) Mexico – Measures affecting telecommunications services:  Status report by Mexico 
(WT/DS204/9/Add.7) 
 (f) European Communities – Conditions for the gr anting of tariff preferences to developing 
countries:  Status report by the European Communities (WT/DS246/16/Add.3) 
 
(g) Canada – Measures relating to exports of wheat and treatment of imported grain:  Status 
report by Canada (WT/DS276/20/Add.2) 
 1. The Chairman
 recalled that Article 21.6 of the DSU required that "unless the DSB decides 
otherwise, the issue of implementation of the re commendations or rulings shall be placed on the 
agenda of the DSB meeting after six months follo wing the date of establishment of the reasonable 
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is 
resolved".  He proposed that the seven sub-items  to which he had just referred be considered 
separately. 
(a) United States – Section 211 Omnibus Appropria tions Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.33) 
2. The Chairman  drew attention to document WT/DS176/ 11/Add.33, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning US Section 211 Omni bus Appropriations Act of 1998.  WT/DSB/M/194 
 Page 3 
 
 
3. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 July 2005, in accordance with Artic le 21.6 of the DSU.  As noted in the report, 
several legislative proposals relating to S ection 211 that would implement the DSB's 
recommendations and rulings in this dispute had been  introduced in the current Congress, both in the 
US Senate and the US House of Representatives.  The US administration was working with the US 
Congress to implement the DSB's recommendations a nd rulings.  In this connection, his country 
would be discussing a related agenda item la ter in the course of the present meeting. 
4. The representative of th e European Communities  said that the EC had shown patience in this 
dispute and had accepted on several occasions to ex tend the implementation period in the hope that 
more time would enable the United States to come in to compliance.  But more than three years after 
the condemnation of Section 211 the EC's expectations  had not been met.  He noted that although the 
implementation deadline had expired on 30 June 20 05, the United States was still unable to report on 
any progress in the implementation process. The EC recalled that two bills were pending respectively 
in the US Senate and in the US H ouse of Representatives that would, inter alia , repeal Section 211.  
Adoption of these bills would bring a satisfactory so lution to this dispute by removing a legislation 
driven by specific interests.  The EC had decided not to request retaliation at this stage, but to reserve 
its rights in the future.  He noted that this matte r would be discussed later in the course of the present 
meeting.  The EC wished to call on the US author ities to consider the impact that the failure to 
comply had beyond the more narrow confines of this dispute. 
5. The representative of Cuba  said that the United States had allowed the third reasonable period 
of time – which had ended on 30  June 2005 – to expire w ithout implementing the DSB's 
recommendations regarding Section 211 of the Omni bus Appropriations Act of 1998, demonstrating 
that it had no political will or interest in resolving this matter.  It was striking that the United States 
was the first to champion of intellectual propert y rights when its own interests were affected.  
However, when other Members' interests were at stake the United States systematically delayed implementation of the DSB's rulings and recommendati ons.  More and more, attitudes like that shown 
by this important WTO Member were weakening th e credibility of the dis pute settlement mechanism 
and undermining confidence in its effectiveness.  C uba, once again, condemned the fact that although 
it was now more than three years since the adoptio n by the DSB of the rulings and recommendations 
on Section 211, there had been no progress regarding the matter.  Accordingly, Cuba urged that the 
United States be demanding with itself as well, an d honour its obligations without further delay by 
repealing the aforementioned Act. 
6. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.33) 
7. The Chairman  drew attention to document WT/DS184/ 15/Add.33, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning US anti-dumping measures on certain hot-rolled steel products from Japan. 
8. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 July 2005, in accordance with Article 21.6 of the DSU.  As of 23 November 2002, the US authorities had addressed the DSB's recommendations and rulings with respect to the calculation of anti-dumping margins in the hot-rolled steel anti-dumping duty inv estigation at issue in 
this dispute.  Details were provided in document WT/DS184/15/Add.3.  The US administration 
continued to support specific legislative am endments that would implement the DSB's 
recommendations and rulings with respect to the US  anti-dumping duty statute, and was working with 
the US Congress to pass these amendments.  In this connection, on 19 May 2005, legislation had been 
introduced in the US House of Representatives (H.R. 2473) that would implement the DSB's WT/DSB/M/194 
Page 4  
 
recommendations and rulings with respect to the US anti-dumping duty statute. The US administration would continue to work with the US Congress to enact this legislation.  As with the previous agenda item concerning Section 211, the parties would be discussing a related agenda item 
later in the course of the present meeting. 
9. The representative of Japan
 recalled that in July 2004, upon request and pledge from the 
United States, his country had agreed to extend for th e third time the deadline for the United States to 
implement the DSB's recommendations and rulings in th is dispute, so as to expire on 31 July 2005.  
Japan was pleased to note the fact that the bill H.R. 2473, whic h would amend the relevant US 
anti-dumping statute, had been introduced to the US Congress on 19 May 2005.  However, Japan deeply regretted that there had been no hint of any further steps with regard to the passage of that bill 
and was concerned that the United States was not likely to secure the implementation by 31 July.  One 
of the fundamental obligations of all WTO Members was to ensure the consistency of their measures 
with the WTO Agreements.  To address this matter,  Japan and the United States had recently reached 
an understanding.  Japan would revert to this subj ect under another agenda item to be considered in 
the course of the present meeting.  As Japan ha d repeatedly stated before the DSB, prompt 
implementation was essential for the credible di spute settlement system.  Japan urged the United 
States to do its utmost in order to secure the full-fledged implementation of the DSB's recommendations and rulings without any further delay. 
10. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(c) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.18 – WT/DS234/24/Add.18) 
11. The Chairman  drew attention to document WT/D S217/16/Add.18 – WT/DS234/24/Add.18, 
which contained the status report by the United St ates on progress in the implementation of the DSB's 
recommendations in the case concerning the US Conti nued Dumping and Subsidy Offset Act of 2000. 
12. The representative of the United States  said that his country had provided a status report on 
7 July 2005, in accordance with Article 21.6 of th e DSU. As noted in that status report, the 
US Administration had proposed repeal of the CDSOA in its budget proposal for fiscal year 2006.  In 
addition, legislation that would repeal the CD SOA had been introduced in the US House of 
Representatives.  The US administration would con tinue to work with the US Congress to enact 
legislation, and to confer with the complaining part ies in these disputes, in order to reach mutually 
satisfactory resolutions of these matters. 
13. The representative of the European Communities  said that since 1 May 2005, the EC had 
been applying a 15 per cent additional import du ty on imports of certain products from the 
United States.  The EC had always considered retaliatory measures as a solution of last resort and had not taken that decision lightly.  But the apparent lack  of interest in the US Congress had left the EC no 
choice and the EC was bound to stress that, once again, the status report did not record any progress in 
the implementation process. 
14. The representative of Canada
 said that his country noted the most recent status report of the 
United States on the Continued Dumping and Subsid y Offset Act of 2000.  Canada had informed 
Members of its decision to suspend concessions to  the United States as of 1 May 2005.  The eight 
co-complainants in this dispute had recently attested to the importance of repealing the Byrd Amendment in an Aide Mémoire delivered to the US government.  Canada continued to express its 
disappointment with the US failure to repeal the WTO-inconsistent Byrd Am endment.  Canada again 
called upon the United States to end this dispute and repeal the Byrd Amendment.  WT/DSB/M/194 
 Page 5 
 
 
15. The representative of Japan  said that his country was pleased to take note of the fact that the 
bill H.R. 1121 had been introduced in the US Congr ess in March and that it had been referred to the 
Committee on Ways and Means.  Japan also welcomed the proposal by the US administration of February 2005 to repeal the CDSOA.  However, Japan  regretted that the US status report contained no 
progress since the June 2005 DSB meeting when the prev ious status report had been submitted by the 
United States.  This was all the more regrettable esp ecially in view of the fact that the US Congress 
would enter into the summer recess in about 10 days .  As a result of a continued lack of compliance 
by the United States with its obligations under th e WTO, Canada and the EC had been imposing 
additional duties on US products as from 1 May 2005.  Japan was closely watching how the US Congress might proceed with the deliberation of the propo sed legislation.  Should  there continue to be 
no progress toward the repeal of the CDSOA, Japan w ould have no other option than to take the next 
appropriate steps, including exercising its right recognized under the WTO Agreements.  Once again, 
Japan strongly called on the United States to intensif y its efforts to secure a prompt repeal of the 
CDSOA. 
16. The representative of Korea
 said that his country noted the US status report regarding 
implementation of the DSB's recommendations and rulings in the dispute:  "United States – 
Continued Dumping and Subsidy Offset Act of 2000" (CDSOA).  Korea recognized that the introduction of legislation repealing the CDSOA in  the US House of Representatives was a positive 
sign for resolving this dispute.  However, it w as disappointing that there had been no substantial 
progress reported since the introduction of the b ill.  In this regard, Korea again urged the 
United States to promptly implement the DSB's recommendations and rulings. 
17. The representative of India
 said that his country thanked the United States for the status report 
in relation to this agenda item and noted again w ith great concern that that report showed no change 
or progress from the report submitted to the DSB at its previous meeting.  As his delegation had stated previously, India preferred full compliance by the Un ited States with the DSB's decision rather than 
the suspension of concessions and other obligations under the authority obtained by India from the 
DSB.  India, therefore, urged the United States to  use the remaining few days left of its current 
Congressional session to repeal the CDSOA.  India, of course, reserved all its rights under the DSU. 
18. The representative of Mexico
 said that his country thanked the United States for its status 
report on compliance.  He noted that the domestic procedures regarding its legislation for retaliation 
or suspension of concessions had almost been concluded.  Therefore, in the absence of US 
compliance, Mexico might take retaliatory measur es in the near future.  Mexico reiterated that 
retaliation was a measure of last resort and that it was in favour of compliance.  His country, 
therefore, echoed the statements made by other delegations urging the United States to repeal the 
CDSOA. 
19. The representative of Brazil  said that, like previous co-complainants to this dispute, his 
country thanked the United States for its status  report submitted before the DSB at the present 
meeting.  However, Brazil wished to signal its concern and disappointment with the lack of any 
progress reported in that status report as compared to the previous US report submitted to the DSB in 
June 2005.  Brazil also wished to join previo us co-complainants in urging the United States to 
promptly repeal the Byrd Amendment. 
20. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. WT/DSB/M/194 
Page 6  
 
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.8) 
21. The Chairman
 drew attention to document WT/DS160/ 24/Add.8, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning Section 110(5) of the US Copyright Act. 
22. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 July 2005, in accordance with Article  21.6 of the DSU.  As noted in the report, the 
US administration was working with the US Congress on this matter.  The US administration would continue its consultations with the US Congress and c ontinued to confer with the EC in order to reach 
a mutually satisfactory  resolution of this matter. 
23. The representative of the European Communities
 said that, as every month, the DSB was 
bound to take note of the lack of compliance of th e United States with the Panel's ruling on the US 
Copyright Act.  Unless action was taken quickly, th is situation would ruin the already damaged US 
reputation in the intellectual property field.  This i ssue was of great concern to the EC, which had very 
recently issued a joint declaration with the Un ited States on a global fight against piracy and 
counterfeiting.  He noted that the 20 June decl aration referred to the US commitment to "working 
effectively to combat piracy and counterfeiting at home and abroad".  The EC hoped to see the 
practical translation of that statement as soon as po ssible, as Section 110(5) of the US Copyright Act 
did nothing else than to institutionalize piracy in the US music sector.  Prompt action by the United States to remedy this unfor tunate situation would be important both from the point of view of 
the EC's right holders and from a systemic point of  view.  The EC was still awaiting a formal signal 
from the United States regarding the steps it would be  taking to settle the dispute.  Finally, the EC 
wished to recall that it had reserved its right to reactivate, at any point in time, the arbitration 
procedure on its retaliation request. 
24. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(e) Mexico – Measures affecting telecommunications services:  Status report by Mexico 
(WT/DS204/9/Add.7) 
25. The Chairman  drew attention to document WT/DS204/ 9/Add.7, which contained the status 
report by Mexico on progress in the implementation of the DSB's recommendations in the case concerning Mexico's measures affecting telecommunications services. 
26. The representative of Mexico
 recalled that on 2 June 2004, the United States and Mexico had 
reached an agreement regarding implementation of the DSB's recommendations in the case under 
consideration.  He said that in relation to the on ly commitment outstanding in April 2005, Mexico had 
issued a draft ruling regarding the marketing of tel ecommunications services.  As a result of that legal 
instrument, companies from any country settled in Mexico might market long-distance international 
services in Mexico without owning public telecommunica tions networks.  Pursuant to that agreement, 
Mexico had been engaged in ongoing consultations with the United Stat es on the different versions of 
the regulation.  Mexico hoped that in the very near  future, it would be able to publish the final version 
of that regulation.  To that end, the time-period for implementation had now been extended until  29 July 2005.  Mexico hoped that once published, toge ther with the United States, it would be able to 
notify the DSB that it had reached a mutually ag reed settlement in relation to the dispute under 
consideration. 
27. The representative of the United States
 said that his country wished to thank Mexico for its 
status report.  After filing its written report, Me xico had requested a further extension of the 
reasonable period of time until 29 July 2005.   The Unite d States had agreed to that extension.  The  WT/DSB/M/194 
 Page 7 
 
 
United States expected that the relevant documenta tion would be circulated to Members shortly.  
Turning now to Mexico's implementation of the ru lings and recommendations in this dispute, the 
United States understood that the draft regulations  for the resale of telecommunications services had 
been modified significantly since they had been rel eased for public comment at the end of April.  The 
United States intended to carefully review Mexico's modified regulations to assess Mexico's 
implementation once the final regulations had been published. 
28. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(f) European Communities – Conditions for the gr anting of tariff preferences to developing 
countries:  Status report by the European Communities (WT/DS246/16/Add.3) 
29. The Chairman  drew attention to document WT/DS246/ 16/Add.3, which contained the status 
report by the European Communities on progr ess in the implementation of the DSB's 
recommendations in the case concerning the EC's cond itions for the granting of tariff preferences to 
developing countries. 
30. The representative of the European Communities  said that in its status report submitted before 
the DSB at the present meeting, the EC had notif ied the DSB that it had fully implemented the 
relevant DSB's rulings and recommendations in th is dispute.  Despite the complex and highly 
sensitive character that a revision of a GSP system entailed, the EC had fully respected the deadline 
fixed by the Arbitrator to implement the relevant DSB's rulings and recommendations.  As the status 
report explained, following discussions within th e Council and the other EC's institutions, the new 
GSP Regulation had been adopted (Council Regula tion (EC) No. 980/2005 of 27 June 2005 applying 
a scheme of generalized tariff preferences) and had been published in the Official Journal of the 
European Union of 30 June 2005.  According to th e new GSP and in line with the time-limit fixed by 
the arbitrator, the special arrangements to combat  drug production and traffi cking of Title IV of 
Regulation (EC) No 2501/2001 and the provisions a pplied in conjunction with those arrangements 
had been repealed as of 1 July 2005.  The EC ha d thus fully implemented the DSB's recommendations 
and rulings in this dispute. 
31. The representative of the India  said that his country thanked the EC for repealing its Drug 
Arrangements and for taking measures to bring itself in to conformity with its WTO obligations within 
the reasonable period of time prescribed under the rules.  India noted that the EC had implemented 
Council Regulation 980/2005 of  27 June 2005 applying a scheme of generalized tariff preferences.  In 
essence, the new scheme consisted of a general arrange ment granted to all beneficiary countries and 
territories, a special incentive arrangement for sustainable development and good governance, and a 
special arrangement for least-developed countries.  Wh ile India was carefully examining details of the 
Council Regulation, it wished to observe, on a prel iminary basis, that WTO Members might have 
systemic concerns with the special incentive a rrangement for sustainable development and good 
governance. 
32. He noted that the EC intended to suspend all ad valorem  duties as well as specific duties 
(unless combined with an ad valorem  duty) on all products listed in Annex II of its Council 
Regulation, which originated in a country incl uded in the special incentive arrangement for 
sustainable development and good governance.  However,  in order to receive such tariff preferences, 
beneficiary countries must have ratified and e ffectively implemented specific conventions or 
committed themselves to ratify and implement spec ific conventions relate d to human and labour 
rights, narcotics and psychotropic substances, envir onment and governance principles.  He referred to 
the statement made by India at the 20 April 2004 DS B meeting where the Appellate Body Report, and 
the Panel Report, as modified by the Appellate Body Report, had been adopted in this dispute.  India 
had indicated then that the Appellate Body in th is case had disregarded the ordinary meaning of the 
term "non-discriminatory", as well as the relevant WTO jurisprudence, and had also failed to conduct WT/DSB/M/194 
Page 8  
 
an analysis of this term in the context of Ar ticle I.1 of the GATT 1994.  It had then gone on to 
interpret the term "non-discriminatory" solely on the basis of paragraph 3(c) the Enabling Clause. 
India had expressed its concern about the lack of ade quate legal basis in the Appellate Body's analysis 
for determining that developing countries could be treat ed differently by GSP donors, and the fear of a 
return to the era of special preferences that had prevailed before the GSP had been installed in the 
trading system.  He did not need to go into the reasoning India had given for that analysis again at the 
present meeting.  On this matter, Members might  refer to paragraphs 39 to 53 contained in 
WT/DSB/M/167, dated 27 May 2004.  However, he wished to point out that India had ended its 
statement inviting developing-country Members to  study questions on how to negotiate tariff 
concessions with developed countries in the light of systemic implications of the Appellate Body's 
ruling.  The manner in which the Appellate Body's  guidance had been interpreted in the new EC's 
GSP scheme brought up those questions agai n before the developing-country Members. 
33. In its attempt, which was also not a tota lly successful attempt, to comply with the strict letter  
of the Appellate Body's guidance on how to bring its  tariff preference scheme into conformity with its 
GATT obligations, the EC seemed to have disregarded the spirit  of that guidance.  The Appellate 
Body had made clear that the term "non-discriminat ory" in footnote 3 of the Enabling Clause required 
that identical treatment was available to all sim ilarly situated GSP beneficiaries.  The Appellate 
Body's guidance did not envisage that the "similarly situated beneficiaries" should be defined on the 
basis of a common commitment to a multitude of inte rnational conventions by those beneficiaries. 
34. The Appellate Body had clarified that the bu rden of proof for an "exception" fell on the 
respondent as the party asserting the affirmative of a par ticular defence.  Therefore, it would be for the 
EC to demonstrate that its new scheme complied wi th the Enabling Clause.  In particular, the EC 
would need to demonstrate that its new scheme provided, in the words of the Appellate Body, 
preferential tariff treatment that was "generalized, non-reciprocal and non-discriminatory".  In India's 
view, the new EC's scheme did not seem to meet th is clear criteria established by the Appellate Body.  
Under the Appellate Body's interpretation, donors might apply different GSP schemes to different 
recipients based on perceived need, as long as they a pplied objective criteria.  It  appeared that the EC 
had made a conscious choice to limit the benefits  under the Special Incentive Arrangement largely to 
those countries that previously benefited from the Drug Arrangements.  Therefore, it would appear 
that the Special Incentive Arrangement had not been b ased on objective criteria, but it had rather been 
designed to benefit pre-selected countries. 
35. The Appellate Body had also made clear that  a GSP scheme must "respond positively" to the 
needs of developing countries, namely to their "d evelopment, financial and trade needs".  The EC's 
new scheme required countries to ratify internati onal conventions on huma n and labour rights, 
narcotics and psychotropic substan ces, and the environment in order to avail themselves of the trade 
preferences granted by the EC.  In effect, the EC was imposing its needs that specific human rights or 
environment or labour conventions be respected by developing countries.  All WTO Members, and in 
particular, all developing countri es, should recognize that this w as a trade preference scheme that 
crossed the line from trade and imposed requirements related to extraneous policy considerations.  All 
WTO Members had the sovereign right to determin e which international conventions they would 
ratify and implement.  The EC's new tariff preference scheme – which was conditioned on the beneficiaries ratifying and implem enting such diverse international conventions – might have serious 
systemic consequences for the integrity of the multilate ral trading system. India wished to invite other 
WTO Members to reflect on this important issue and r eserved the right to return to this matter in the 
future, as necessary. 
36. The DSB took note  of the statements.  WT/DSB/M/194 
 Page 9 
 
 
(g) Canada – Measures relating to exports of wheat and treatment of imported grain:  Status 
report by Canada (WT/DS276/20/Add.2) 
37. The Chairman  drew attention to document WT/DS276/20/ Add.2, which contained the status 
report by Canada on progress in the implementation of the DSB's recommendations in the case concerning Canada's measures rela ting to exports of wheat and treatment of imported grain. 
38. The representative of Canada
 said that his country was pleased to inform the DSB that 
amendments to the Canada Transportation Act a nd the Canada Grain Act and associated regulatory 
changes would come into force on 1 August 2005.  Th at would bring Canada into compliance with the 
DSB's recommendations and rulings.  In response to the questions raised by the United States at the 
20 June DSB meeting, he noted that Canada had pr ovided the United States with a copy of the new 
regulation. 
39. The representative of the United States  said that his country thanked Canada for its status 
report.  The United States appreciated the additi onal information that Canada had provided in its 
status report and at the present meeting about the re gulatory changes that Canada intended to make by 
the 1 August deadline for implementation of the DSB's recommendations and rulings. The 
United States also appreciated Canada's answers to  the US questions from the 20 June DSB meeting.  
The United States had additional questions concerni ng how Canada's new regulation would work in 
practice, which the United States would be pursuing with Canada bilaterally. 
40. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
2. European Communities – Measures aff ecting trade in commercial vessels 
(a) Implementation of the recommendations of the DSB  
41. The Chairman  recalled that in accordance with the DSU provisions, the DSB was required to 
keep under surveillance the implementation of reco mmendations and rulings of the DSB in order to 
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 of 
the DSU provided that the Member concerned shall in form the DSB, within 30 days after the date of 
adoption of the panel or Appellate Body report, of its intentions in respect of implementation of the 
recommendations and rulings of the DSB.  He recal led that at its meeting on 20 June 2005, the DSB 
had adopted the Panel Report pertaining to the case:  "European Communities – Measures Affecting 
Trade in Commercial Vessels".  He invited the EC to inform the DSB of its intentions in respect of 
implementation of the DSB's recommendations. 
42. The representative of the European Communities  said that the Council Regulation (EC) 
No. 1177/2002 establishing a Temporary Defence Me chanism (TDM) for shipbuilding had expired on 
31 March 2005.  Regarding the national schemes, th e TDM regulation was not in force anymore and 
the member States could not grant operating aid any longer.  Therefore, the EC considered that it had already brought its measures into conformity with the Panel's rulings and recommendations. 
43. The representative of Korea
 said that, after hearing what EC had stated, Korea found that EC 
had not correctly understood what the Panel had recommended in this  case.  The Panel had made the 
following statement in paragraph 8.4 of its findi ngs and recommendations:  "[T]he Panel considers 
that its recommendation does not apply to the schem es, except to the extent  that those schemes 
continue to be  operational".  That statement s eemed unusual at first glance, but it became very clear in 
the context that if the illegal schemes were still operational because they were still being 
implemented, then the recommendation applied to them .  In fact, all evidence had indicated that the 
EC member States continued to make disbursements pur suant to the illegal measures.  Just in the final 
month of the TDM's existence, the EC had authorized four of its member States to provide state aid WT/DSB/M/194 
Page 10  
 
under the TDM.  These authorizations had been gr anted to Finland on 9 March 2005, to Germany on 
16 March 2005, to Denmark on 22 Ma rch 2005 and to Poland on 30 Marc h 2005, just one day before 
the expiration date.  It was extremely unlikely that the disbursements authorized by the EC had been 
concluded before the adoption of the Report, much less by the time of the expiration of the TDM on 
31 March 2005.  Indeed, for example, the language of the Commission's authorization of the German 
state aid included the following statement:  "The  German authorities have undertaken to provide 
information on the application of the scheme at three monthly intervals, from the date of this decision, 
until and including its expiry or suspension."
1 
44. Obviously, aid authorized on 16 March 2005 th at included reporting requirements on the 
application of the scheme at three month inte rvals was still operational beyond 31 March 2005 and 
remained operational to-date.  If this was incorrect and the EC could state for the record at the present 
meeting that there would be no further app lication of the illegal measures through further 
disbursements, then all could rest assured of full compliance.  However, failing such an unambiguous 
assurance, the domestic legal authority to impl ement the schemes continued to exist and they 
continued to be operational.  Therefore, any di sbursements under such schemes were explicitly 
covered by the Panel's findings.  Yet, if that was the case and the EC stated at the present meeting that 
it would do nothing more, it would became unambiguously clear that the EC was in continuing violation of its WTO obligations and acted in defiance of the DSB's rulings and recommendations. 
Korea could only note its regret that the EC had refused to fully implement the DSB's rulings and 
recommendations in the case under consideration.  Kor ea reserved all of its rights, provided under the 
DSU in the area of compliance. 
45. The representative of the European Communities
 said that the Panel had made a clear 
distinction between the provision of aid;  i.e. the decision to grant aid and the disbursement of aid;  i.e. the action of payment of that aid.  Despite Kore a's insistence all along the procedure, the Panel had 
expressly declined to make recommendations in respect of disbursements of aid.  As to the Panel's statement that its recommendations also covere d national TDM schemes that had expired "to the 
extent that those schemes continue to be operational" , the Panel had clarified in a footnote that this did 
not concern the disbursements of funds in respect of which it had already declined to make the 
specific recommendation requested by Korea. 
46. The DSB took note
 of the statements, and of the information provided by the European 
Communities regarding implementation of the DSB's recommendations. 
3. European Communities and certain member States – Measures affecting trade in large 
civil aircraft 
(a) Request for the establishment of a panel by the United States (WT/DS316/2) 
47. The Chairman  recalled that the DSB had considered th is matter at its meeting on 13 June and 
had agreed to revert to it.  He drew attenti on to the communication from the United States contained 
in document WT/DS316/2, and invited the repr esentative of the United States to speak. 
48. The representative of the United States  said that, as discussed at the 13 June DSB meeting, 
the United States was concerned that certain measures of France, Germany, the United Kingdom, Spain, and the European Communities provided subsidi es that were inconsistent with their obligations 
under the SCM Agreement and the GATT 1994.  The subsidies at issue benefited Airbus, the 
European manufacturer of large civil aircraft.  Over its 35-year history, Airbus had benefited from massive amounts of EC member State and EC subsid ies that had enabled the company to create a full 
product line of aircraft and gain more than a 50 pe r cent share of large civil aircraft sales, at the 
                                                     
 
 1 Letter from Commissioner Neelie Kroes to German Foreign Minister Joschka Fischer. Add. of the 
authorization letters contain these reporting requirements.  WT/DSB/M/194 
 Page 11 
 
 
expense of its US competitors.  And yet Airbus c ontinued to seek and receive new subsidies.  It was 
time for the subsidies to end.  Therefore, for th e reasons discussed at the 13 June DSB meeting, the 
United States again requested that the DSB establis h a panel to examine thes e matters, in accordance 
with Article 6 of the DSU, Article XXIII:2 of GATT 1994, and Articles 4, 7 and 30 of the 
SCM Agreement. 
49. Further, as described in the US panel requ est of 31 May 2005, the United States also 
requested that the DSB initiate the procedures pr ovided for in Annex V of the SCM Agreement, 
pursuant to paragraph 2 of that Annex.  The Unite d States was currently exploring options with the 
EC for naming the representative that would facilita te the information-gathering process pursuant to 
paragraph 4 of that Annex.  In past disputes, the EC had emphasized that the Chairman might have an 
important role to play in identifying appropriate candidates and in developing the procedures and 
timetable for the Annex V process.  The United States agreed with that and said that it might request 
that the Chair assist the parties in these matters. 
50. At the present meeting, the United States wished to briefly address certain erroneous 
comments that the EC had made when the US pane l request had been discussed at the 13 June DSB 
meeting.  First, the EC had criticized the United States for allegedly choosing the path of litigation 
and confrontation instead of negotiation.  There was no basis for the EC's assertion. The United States 
had been seeking for more than a year to nego tiate a new agreement to end subsidies for the 
development and production of large civil aircraft.  The United States remained ready and willing to 
negotiate such an agreement.  But the EC had onl y been willing to reduce subsidies, not end them.  
Even now, certain member States were insisting on providing new subsidies to Airbus that Airbus 
stated it did not even need. 
51. Second, the EC had described launch aid to  the new Airbus A350 as a "non-existent 
measure." But there was no question that Airbus ha d applied to the member States for launch aid for 
the A350.  Senior officials in the Airbus me mber governments had commented favorably on the 
applications, and the German government had includ ed A350 launch aid in its budget. Moreover, the 
EC had flatly refused to commit that the member States would forego launch aid for the A350.  More 
generally, the EC had made various statements at the 13 June DSB meeting that questioned the 
adequacy of the US panel request.  Although the EC  had not detailed its concerns, the United States 
considered that its request in fact complied fully w ith the requirements of Article 6.2 of the DSU.  In 
light of the detailed nature of the request and th e detailed consultations that had been held on these 
topics, the EC should fully understand the basis for US claims. 
52. The representative of the European Communities  expressed the EC's regret that the 
United States had chosen the path of litigation over th at of negotiations.  He  recalled that during the 
13 June DSB meeting the EC had noted that a number of measures referred in the US panel 
establishment request were not properly before th e panel (and had not been included in the US 
consultation request).  The EC noted that the United States had made no attempt to address the 
deficiency regarding the US panel request.  Henc e, the EC statements to this effect made on 
13 June 2005 remained fully valid.  Unfortunate ly, the EC could not agree to the simultaneous 
initiation of the Annex V procedure at this point  in time.  The United States had insisted in 
"United States – Upland Cotton" case that there must be  an agreement between the parties to that end 
and the then Chairman of the DSB had agreed with the United States.  Indeed, that practice had also 
been followed in "Korea – Shipbuilding" case.  The EC had been consulting with the United States 
with a view to reaching an agreement on the initiation of an Annex V procedure and, in particular its 
scope, modalities and the name of the facilitator, but these consultations had not yet been successful. 
53. The representative of the United States  said that the United States was surprised and 
disappointed that the EC had chosen to block the initiation of the Annex V process.  In the US view, 
there was no justification for this action.  In fact, the United States recalled that at a previous meeting WT/DSB/M/194 
Page 12  
 
of the DSB, the EC had taken an entirely diffe rent approach.  At the 15 April 2003 DSB meeting
2, the 
EC had first quoted paragraph 2 of Annex V at le ngth:  "In cases where matters are referred to the 
DSB under paragraph 4 of Article 7, the DSB shall, upon request, initiate the procedure to obtain such 
information from the government of the subsidizi ng Member as necessary to establish the existence 
and amount of subsidization …"  The EC had then  gone on to say:  "There was no condition, and 
there was a clear obligation for th e DSB to initiate the procedure."  The United States wondered what 
had caused the EC to reverse its position for the present  meeting.  Moreover, he recalled that 
paragraph 1 of Annex V stated that every Member  "shall" cooperate in the Annex V process. Given 
the EC's asserted preference for cooperation instead of confrontation, the United States would have 
expected the EC to agree to allow the Annex V process to move forward.  The United States hoped 
that the EC would reconsider its stance and allow the DSB to take the decision that paragraph 2 of 
Annex V called for.  The United States also noted that  the EC had attempted to draw a parallel to the 
Cotton dispute.  The Cotton dispute presented an entirely different situation.  There, Brazil's 
invocation of the SCM Agreement before expiration of the Peace Clause raised unique questions.  In 
particular, the US view was that the United Stat es was (in the words of the Peace Clause) "exempt 
from actions" under the SCM Agreement provisions i nvoked by Brazil;  in other words, the United 
States had considered that Brazil could not bring an action based on its SCM Agreement claims unless 
Brazil had first showed that the Peace Clause was in applicable.  The Cotton Pa nel had agreed that it 
could not make findings on Brazil's SCM claims unless Brazil had first demonstrated that the US measures were not protected by the Peace Clause. (P anel Report, para. 7.326.)  It was for that reason 
that the United States had proposed that the intere sts of both Brazil and the United States could be 
safeguarded if a decision to initiate the Annex V pro cedure in that dispute be taken only if the panel 
were first to find that the Peace Clause did not cove r the US measures at issue.  The situation in this 
dispute did not resemble the Cotton dispute at all:  the EC had no basis to argue that it was "exempt" from actions based on the provisions of the SCM Ag reement that the United States had invoked, and 
consequently no basis to argue agains t initiation of the Annex V procedure. 
54. The DSB took note
 of the statements and agreed  to establish a panel in accordance with the 
provisions of Articles 4.4 and 7.4 of the SCM Agr eement and Article 6 of the DSU, with standard 
terms of reference. 
55. The representatives of Australia , Brazil , Canada , China , Japan  and Korea  reserved their third-
party rights to participate in the Panel's proceedings. 
56. The Chairman  said, that with regard to the issue of  the procedures for developing information 
concerning serious prejudice under Annex V of th e SCM Agreement, which the United States had 
requested to be initiated pursuant to paragraph 2 of Annex V of the SCM Agreement, he wished to 
propose that the DSB take note of the statements made  by parties to the dispute regarding this matter. 
57. The DSB took note  of the statements.  
4. United States – Measures affecting trade in large civil aircraft 
(a) Request for the establishment of a panel by  the European Communities (WT/DS/317/2) 
58. The Chairman  recalled that the DSB had considered th is matter at its meeting on 13 June and 
had agreed to revert to it.  He drew  attenti on to the communication from the European Communities 
contained in document WT/DS317/2, and  invited th e representative of the European Communities to 
speak. 
59. The representative of th e European Communities  said that it was with regret that the EC had 
to move to request the establishment of a panel.  The EC had explained at the 13 June DSB meeting 
                                                      
2 WT/DSB/M/147.  WT/DSB/M/194 
 Page 13 
 
 
why it had made genuine attempts to settle the case amicably instead of pursuing the path of litigation. 
Unfortunately, the United States had not been prepared to move an inch.  That was not acceptable to 
the EC.  Indeed, this proceeding would clearly show how massively Boeing was being subsidized 
over the past 30 years in blatant violation of th e SCM Agreement and the 1992 Agreement between 
the EC and the United States.  He recalled that during the 13 June DSB meeting, the United States had 
claimed that a number of measures referred in the EC's panel request were not properly before the 
panel. At that meeting the EC had expressed its str ong disagreement.  The EC wished to reiterate once 
more its disagreement over the US claim.  He not ed that the EC's recent request for an additional 
round of consultations filed on the 27 June 2005 was without prejudice to the EC's legal position and 
rights in connection to the US claims.  The EC's so le objective was and remained through the filing of 
this consultations request to further clarify and, if possible, resolve certain  issues in an amicable 
manner. Accordingly, and without prejudice to th e ongoing consultations, the EC requested that the 
panel be established.  The EC had not been able to reach agreement with the United States on the 
Annex V procedure and intended to revert to the DSB in respect of this matter at a future meeting. 
60. The representative of the United States  said that his country was disappointed that the EC had 
again requested a panel on this matter.  The EC 's request was broad, but without merit.  The 
United States recognized that a panel would be establis hed at the present meeting in this dispute.  The 
United States intended to vigorously defend the measures at issue, but remained open to the 
possibility that the parties could resolve their disagre ements with the EC before the DSB were to issue 
its ruling.  The United States had received the new re quest for consultations that the EC had filed on 
27 June 2005, to which the EC had  just referred.   While the request covered several measures that 
had been covered in the consultations that had le d to the panel request, it also covered several 
additional measures.  The United States had made itself available to the EC for consultations 
regarding the new request and was in the process of finding a mutually agreeable date and place. 
61. The DSB took note  of the statements and agreed  to establish a panel in accordance with the 
provisions of Articles 4.4 and 7.4 of the SCM Agr eement and Article 6 of the DSU, with standard 
terms of reference. 
62. The representatives of Australia , Brazil , Canada , China , Japan  and Korea  reserved their third-
party rights to participate in the Panel's proceedings. 
5. Egypt – Anti-dumping duties on matches from Pakistan 
(a) Request for the establishment of a panel by Pakistan (WT/DS327/2) 
63. The Chairman  recalled that the DSB had considered this matter at its meeting on 
20 June 2005 and had agreed to revert to it.  At the present meeting, he wished to draw attention to the 
communication from Pakistan contained in document WT/DS327/2, and invited the representative of Pakistan to speak. 
64. The representative of Pakistan
 thanked for the opportunity to state the views of his country 
regarding its request for the establishment of a pane l, as set out in document WT/DS327/2.  This was 
the second occasion on which Pakistan's request was on the agenda of the DSB meeting, and Pakistan 
looked forward to the establishment of the panel to reso lve this dispute.  As explained at the previous 
meeting of the DSB that had considered that request , Pakistan believed that its  panel request spoke for 
itself.  He would, therefore, not repeat all of Pakistan's specific concerns regarding the Egyptian 
measure at issue other than to emphasize that in  Pakistan's view, the imposition of definitive 
anti-dumping duties was inconsistent with the oblig ations of Egypt under Article VI of GATT 1994 
and the provisions of the Anti-Dumping Agreement that  had been cited by Pakistan.  He also wished 
to reiterate that Pakistan enjoyed excellent relati ons with Egypt, and viewed this dispute as simply a 
disagreement between friends that would not affect the valued relationship between the two countries.  
Pakistan was confident that Egypt shared a common goal with Pakistan;  i.e. to assist the panel and WT/DSB/M/194 
Page 14  
 
expedite the proceedings, with a view to finding  a positive solution to this dispute.  Pakistan, 
therefore, hoped that the establishment of the Panel at the present meeting would serve as the first step 
in a harmonious consideration and resolution of the i ssues raised in Pakistan's panel request regarding 
Egypt's measure. 
65. The representative of Egypt
 said that Pakistan's decision to pr oceed further with its request for 
the establishment of a panel could not but cause great disappointment to Egypt since it considered that 
this action was both unnecessary and unproductive fo r both Members.  Egypt found it particularly 
regrettable that Pakistan had decided to pro ceed to litigation without further engaging in any 
meaningful dialogue, which would, without doubts,  address more constructively its concerns.  While 
Egypt understood that Pakistan intended to persist with its request for a panel establishment at the 
present meeting, it remained open to further consulta tions.  As indicated on 20 June 2005, on the first 
occasion when Pakistan had brought its request fo r the establishment of a panel before the DSB, 
Egypt believed that some of the issues that had been cleared through consultations were still included 
in the panel request.  In addition, Egypt considered that Pakistan's request for establishment of a panel 
had failed to fully satisfy all the requirements of Arti cle 6.2 of the DSU.  Furthermore, the request was 
deemed premature since judicial proceedings were  still pending before an E gyptian court.  For all 
these reasons, Egypt had no other option than to ex press its disagreement with the establishment of a 
panel.  It nonetheless remained ve ry confident that the panel that would be established would confirm 
that the anti-dumping measures imposed on matches in boxes imported from or originating in Pakistan, were consistent with  the relevant provisions of Ar ticle VI of GATT 1994 and of the 
Anti-Dumping Agreement. 
66. The DSB took note
 of the statements and agreed  to establish a panel in accordance with the 
provisions of Article 6 of the DSU w ith standard terms of reference. 
67. The representatives of  China , the European Communities , Japan  and the United States  
reserved their third-party rights to pa rticipate in the Panel's proceedings. 
6. Japan – Measures affecting the importation of apples:  Recourse to Article 21.5 of the 
DSU by the United States 
(a) Report of the Panel (WT/DS245/RW) 
68. The Chairman  recalled that at its meeting on 30 July 2004, the DSB had decided, in 
accordance with Article 21.5 of the DSU, to refer to the original Panel the matter raised by the 
United States concerning Japan's implementation of the DSB's recommendations in this case.  He noted that the Report of the Panel contained in document WT/DS245/RW had been circulated on 
23 June 2005 as an unrestricted document, in accordance with the Decision on Procedures for the 
Circulation and Derestriction of WTO Document s contained in WT/L/452.  The Report was now 
before the DSB for adoption of the request of the United States.  This adoption procedure was without 
prejudice to the right of Members to express their views on the Panel Report. 
69. The representative of the United States
 said that his country was pleased to request the 
adoption of the compliance Panel report in this matter, and wished to thank the Panel and the 
Secretariat for their hard work in preparing this clear and well-reasoned Report.  The United States 
was pleased that the Panel had agreed that Japan's  revised measures relating to US apple fruit were 
maintained without sufficient sci entific evidence within  the meaning of Article 2.2 of the SPS 
Agreement, and were not based on a risk assessment  within the meaning of Article 5.1 of the SPS 
Agreement. The United States was also pleased th at the Panel had found that Japan's revised 
restrictions were in breach of Article 5.6 of th e SPS Agreement because there was a different measure 
– namely restricting imported fruit to mature, sympto mless apple fruit – that met the requirements of 
Article 5.6.  In particular, the United States wish ed to highlight the thoroughness and clarity with 
which the Panel had undertaken its analysis.  Th e Panel had carefully examined and had made  WT/DSB/M/194 
 Page 15 
 
 
findings on all aspects of Japan's revised measures, thereby providing a clear road-map to the further 
steps Japan must undertake to bring these measures into  compliance.  In so doing, the Panel had fully 
and admirably performed its task of assisting the parties to resolve their dispute through a clearly 
enunciated explanation of the legal rights of each .  In complex disputes involving sanitary and 
phytosanitary measures, that clarity could be particularly important.  The United States hoped that 
Japan would now bring itself into compliance, bu ilding on the foundation towards a positive solution 
established by the Panel Report.  In that connecti on, he noted that the United States and Japan had 
requested a further suspension of the Article 22.6 arbitration in this dis pute until 31 August 2005, to 
allow Japan to undertake necessary domestic procedur es.  Again, the United States wished to thank 
the Panel and Secretariat for their efforts in producing this very helpful Report. 
70. The representative of Japan  said that, at the present meeting, his delegation would wish to 
make a short statement, but somewhat longer vers ion of that statement would be submitted to the 
Secretariat after the meeting, with the permission of  the DSB Members.  He said that Japan wished to 
express its gratitude to the Panel and the Secretaria t for all their efforts.  Having said that, Japan 
wished to express its disappointment with the findi ngs of the Panel.  He would touch upon two points 
amongst others.  First, regard ing the conditions of studies, Japan had undertaken studies to 
demonstrate that, amongst others, mature, sympto mless apples could harbour endophytic bacteria, 
which would eventually lead to the establishment and spread of fire blight disease. These studies, 
proximate to the highest degree, had had to be done in a laboratory, in order to prevent a potential risk 
of fire blight bacteria from accidentally spreading to the unique, fire blight-free natural conditions of 
Japan. The Panel had, however, ruled that these new studies did not provide sufficient scientific 
evidence to establish the ri sk of fire blight in  natural conditions.  Japan did not subscribe to such 
judgment.  The second point concerned the US me asures.  Japan had argued that, as had been 
demonstrated by the presence of codling moth in  shipments to Chinese Taipei, the United States 
export control could involve a human error and thus was not 100 per cent reliable.  It was regrettable 
that this argument had not been duly taken into account. 
71. Nevertheless, Japan noted that the Panel had recognized some of the elements of Japan's 
revised phytosanitary measures. Also the Panel had confirmed that Japan would be entitled to verify 
that only mature, symptomless apples would be act ually exported to Japan from the United States.  
Although Japan was disappointed with the Panel's findings, it had decided not to appeal.  Japan accepted that this Panel Report would be adopte d at the present meeting.  Japan had always 
emphasized the importance of the proper functioning  of the DSU and the faithful implementation of 
the DSB's recommendations and rulings.  Once adopted, in view of the gravity of its obligation, Japan 
would sincerely address the implementation of the DSB's recommendations and rulings in a manner 
consistent with Japan's obligations under the WT O Agreements.  Likewise, Japan hoped that other 
Members would commit themselves to securing full-fledged implementation of the DSB's recommendations and rulings to enhance the integrit y of the WTO system as a whole.  Japan also 
wished to inform the DSB that in order to secure compliance in a mutually acceptable manner, Japan 
and the United States had agreed to suspend th e arbitration under Article 22.6 of the DSU until 
31 August 2005.  Japan and the United States had subm itted the joint request to this effect to the 
Chairman of the Arbitrator on 18 July 2005. 
72. The Chairman
 said that in light of Japan's request, he wished to ask if Members could agree 
that a longer version of Japan's statement pertaini ng to the agenda item under discussion be sent to the 
Secretariat in order to be reflected in the minutes of the present meeting. 
73. The representative of the United States  thanked the Chairman for asking the question and said 
that he had in fact wished to take the floor on precisely that point.  The United States had taken note 
of Japan's request.  However, the United States c onsidered that the minutes of the meeting should 
reflect what had actually been stated at the DSB meeting, which was the practice throughout.  That 
being said, if the Japanese delegation wished to ci rculate a longer statement to the DSB Members as a 
separate document that would of course not raise the same concern. WT/DSB/M/194 
Page 16  
 
74. The representative of the European Communities
 said that, with regard to the procedural 
point, he supported the statement made by the US re presentative that the record of the meeting should 
reflect what had been stated at that meeting, but  that did not prevent a Member from circulating a 
longer statement as a separate document.  With regard  to the substance, he said that the EC,  which 
had participated as a third party in this dispute, w ould also like to thank the Panel for its Report.  The 
EC trusted that Japan would revise its SPS practices in  a manner consistent with the Panel's ruling.  In 
so far as fire blight was concerned, apple fruit from all origins should of course benefit from the same 
conditions for import. 
75. The Chairman  said that, with regard to the procedural question, Japan's long statement 
pertaining to the agenda item under consideration could be circulated as a relevant DS document. He 
hoped that the procedure that he had just proposed  would not raise problems to other Members and 
asked if that was agreeable to all Members. 
76. It was so agreed.3 
77. The DSB took note  of the statements and adopted  the Panel Report contained in 
WT/DS245/RW. 
7. United States – Countervailing duty inv estigation on dynami c random access memory 
semiconductors (DRAMS) from Korea 
(a) Report of the Appellate Body (WT/DS296/AB /R) and Report of the Panel (WT/DS296/R) 
78. The Chairman  drew attention to the communication from the Appellate Body contained in 
document WT/DS296/8 transmitting the Appellate Body Report in the case on:  "United States – Countervailing Duty Investigation on Dynamic Ra ndom Access Memory Semiconductors (DRAMS) 
from Korea", which had been circulated on 27 June 2005 in document WT/DS296/AB/R, in 
accordance with Article 17.5 of the DSU.  He also  wished to remind delegations that, in accordance 
with the Decision on Procedures for the Circulati on and Derestriction of WTO Documents contained 
in document WT/L/452, the Appellate Body Report and the Panel Report pertaining to this case had 
been circulated as unrestricted documents.  As Members were aware, Article 17.14 of the DSU 
required that:  "An Appellate Body report sha ll be adopted by the DSB and unconditionally accepted 
by the parties to the dispute unless the DSB decid es by consensus not to adopt the Appellate Body 
report within 30 days following its circulation to  Members.  This adoption procedure is without 
prejudice to the right of Members to express their views on an Appellate Body report". 
79. The representative of the United States
 said that at the outset, on behalf of the United States, 
he wished to express his country's gratitude to the members of the Appellate Body and the Secretariat 
for producing a report of very high caliber.  By way of background, he said that this dispute involved 
a countervailing duty proceeding in which the US Department of Commerce had determined that the Government of Korea subsidized Hynix – a Korean  producer of DRAMS – by entrusting or directing 
Hynix's creditors to bail out that financially troubled company.  The Panel had found that that determination was inconsistent with provisions of the SCM Agreement, essentially based on the 
Panel's conclusion that the Commerce Department l acked sufficient evidence.  The Appellate Body 
had reversed the Panel's finding.  While the Unite d States was obviously pleased with this overall 
result, it was equally pleased by the thorough and professional manner in which the Appellate Body 
had analyzed the Panel's numerous errors. 
80. While there was much to talk about in this Re port, at the present meeting, he wished to 
mention only two aspects.  First, there was the Appe llate Body's finding that the Panel had failed to 
comply with its obligations under Article 11 of the DSU by engaging in a de novo  review.  According 
                                                     
 
3 Japan's statement was subsequently circulated in document WT/DS245/19.  WT/DSB/M/194 
 Page 17 
 
 
to the Appellate Body, at paragraph 190 of the Re port, the Panel had erred when it "went beyond its 
role as the reviewer of the investigating aut hority's decision, and, instead, conducted its own 
assessment, relying on its own judgment, of mu ch of the evidence before the USDOC."  The 
Appellate Body's analysis should serve as an importa nt reminder to future panels in trade remedy 
disputes that their task was a limited one.  They we re not to redo the work of domestic authorities, but 
instead they were to ask simply whether the dete rmination made by domestic authorities was one that 
an objective and impartial decision maker could have made – not woul d have or should have made – 
based on the evidence before it. 
81. The second aspect of the Report that he wished to mention concerned the Appellate Body's 
realistic appreciation of the evidence before th e Commerce Department.  Unlike the Panel, the 
Appellate Body had recognized that evidence of  entrustment or direction was likely to be 
circumstantial in nature, and that that evidence ha d to be considered in its totality.  Any other 
approach would render the SCM Agreement a nullity in  a situation, such as the Hynix bailout, where a 
government chose the less transparent method of s ubsidization through private bodies.  One example 
would suffice to illustrate the point.  The Comm erce Department record included an investment 
prospectus filed with the US Securities and Exch ange Commission by one of Hynix's creditors – 
Kookmin Bank – which warned potential investors th at the Government of Korea interfered in the 
Bank's lending decisions and caused it to make  loans that it otherwise would not make. 
82. However, even though the Panel had agreed with  the United States that there was evidence of 
a Korean Government policy to save Hynix, the Panel had discounted the prospectus, essentially because the document did not identify Hynix by name .  The Appellate Body had correctly noted the 
Panel's superficial consideration of this rath er important piece of evidence, concluding at 
paragraph 155 that the relevance of the admission in  the prospectus should have been considered in 
the broader context of the government policy to save Hynix, instead of in isolation. 
83. In sum, the Appellate Body Report was eminently  worthy of adoption by the DSB.  Finally, 
while the Appellate Body had found numerous erro rs regarding the Panel's analysis of subsidy 
identification issues, he wished to note that the Panel's analysis of injury issues was on a much firmer 
footing.  With one exception, the Panel had rejected  Korea's claims that the US authorities had acted 
inconsistently with the SCM Agreement in determ ining that imports of subsidized Hynix DRAMS 
caused injury to the US DRAMS industry.  The Un ited States was also pleased to have the Panel's 
findings of consistency of the US me asure adopted at the present meeting. 
84. The representative of Korea
 said that the statement to be made by his delegation at the present 
meeting was about 20 pages.  However, like Japan, wh ich had just shown how to treat such a situation 
in a more cooperative way, Korea would also wish to circulate a long version of that statement as a 
DS document and would only make a short statement for the record. 
85. The Chairman  said that, in line with the procedure followed under the previous agenda item, 
he wished to propose that Korea's long statement pertaining to the agenda item under discussion be 
circulated as a DS document and that a short statement to be made at the present meeting be reflected 
in the minutes. 
86. It was so agreed .4 
87. The representative of Korea  said that first his country wished to thank all involved in the 
proceedings for their hard work.  In Korea's view, the Panel Report was a thorough and acceptable 
review of the facts and law in general.  Howe ver, Korea had grave reservations regarding the 
Appellate Body Report. With regard to the Appellate Body's de novo  fact-finding, he said that first of 
all, the Appellate Body had carried out de novo  review of the facts in a manner inconsistent with 
                                                      
4  Korea's statement was subsequently circulated in document WT/DS296/9. WT/DSB/M/194 
Page 18  
 
Article 17.6 of the DSU. The key to understanding of the issue was to first note the method of analysis 
pursued by the US Department of Commerce (D OC).  The USDOC had taken two particularly 
important steps.  It had relied upon a "totality-of-t he-evidence" approach and linked several distinct 
transactions together in a "single program" to s upport the approach.  The Panel had looked at a 
number of critical pieces of evidence upon which th e USDOC had relied.  There were approximately 
ten such pieces of evidence for the alleged financ ial contribution in this case.  The Panel had found 
that nine of these ten were impugned in various ways .  The one piece of evidence that had been left 
standing was the supposed entrustment or direction of a Korean bank called KFB.  However, even 
with that one piece of affirmed evidence of entr ustment or direction, th e Panel had overturned the 
DOC's subsidy determination.  Taken individually  or collectively, the Panel had found that the 
evidence was not compelling and that objective a nd unbiased investigating authority could not have 
reached an affirmative conclusion on that basis.  Th e United States had appealed on this issue whether 
the Panel had improperly found that each and every individual piece of evidence, not totality-of-the-evidence, had to demonstrate entrustment or directi on in and of itself.  It was a most remarkable 
appeal, because the Panel had not done what the US had stated it had done.  In Korea's view a fair 
reading of the Panel's language and context di d not support the US arguments. Unfortunately, the 
Appellate Body had also ignored the plain language of the Panel Report and ha d reversed the Panel's 
factual findings. 
88. Korea wished to further recall the point regarding the so-called "single program" approach of 
the DOC.  That was, in making its totality of th e evidence analysis, the DOC had linked all of the 
financial contributions together even though there was a qualitative difference.  The Panel had found 
this to be critically important and Korea had argued that it was a keystone upholding the whole edifice 
of the DOC determination.  However, the Appella te Body had not even bothered to address this 
critical issue.  In its partial approach to the ev idence, the Appellate Body had examined only a few 
instances – not "many" as it purported to do – and ha d then only focused on the weakest language of 
the Panel.  If the Appellate Body was going to engage in this sort of in-depth factual analysis it must 
do so in a comprehensive manner.  It had looked at  a few instances and had simply stopped  there and 
had drawn a generalized conclusion. 
89. There was another instance of de novo  fact-finding.  Paragraph 156 of the Appellate Body 
Report mentioned that "Kookmin Bank ... acknowledge d making loans in pursuit of government 
policy."  That was a factually inaccurate statement.  That was not what had actually been stated; it was 
not even what the DOC had found, nor what the United States had argued before the Panel and 
Appellate Body.  Rather, the quoted document made  conditional statements about what might happen 
in the future.  There was no such  acknowledgement by Kookmin Bank w ith respect to past actions.  
This was raw fact-finding by the Appellate Body th at had not only ignored the thrust of the Panel's 
factual weighing and analysis, but ha d flatly misstated a critical fact. 
90. The Appellate Body had repeated the fundame ntal error in its discussion of the supposed 
attendance of government officials at a meeting of H ynix's Creditors' Council.  In paragraph 147 of its 
Report, the Appellate Body made a factual finding  that the attendee was a Vice Chairman of the 
Korean government agency that participated in financial regulatory policy.  However, the actual 
attendee at the meeting had been technical specialis ts, not civil servant, whose main functions were 
examining and auditing financial ins titutions.  That distinction could make a substantial difference in 
what inferences one were to draw from the attendance of such a person at a meeting of the Creditors' 
Council. 
91. The Panel, once again, had not actually made a fact-finding resolving this disputed fact; 
instead, the Panel had construed the facts in the manner most favourable to the United States before 
ruling against the United States.  Incredibly, the Appellate Body had even acknowledged that that  
was a disputed fact, but then had stated that it would continue with the assumption that it was a 
government official "similarly" to what the Panel had done.  But this was not similar in any way.  
Indeed, it was exactly the opposite of what the Pane l had done.  Once again, the Appellate Body had  WT/DSB/M/194 
 Page 19 
 
 
construed a disputed fact against Korea and then ha d proceeded to rule for the United States.  This 
was simply unacceptable for the Appellate Body to engage in such unfair and improper fact-finding. 
92. There was an important question as to whether so me of the creditor banks had actually taken 
part in the October 2001 restructuring program that  had been countervailed by the DOC.  However, 
despite DOC argument, several of the banks, incl uding wholly government-ow ned banks, had refused 
to participate in that restructuring.  They had exer cised their appraisal rights and, when they had been 
offered a deal on their Hynix debt, had disagreed with  the terms of the deal and asked for mediation.  
All parties, the Panel and the Appella te Body had known at that point that there was not at this time 
any dispute about the real situation.  These ba nks had not participated.  Thus, the DOC had 
countervailed transactions that had not occurred.  The only question was whether or not there was 
evidence in the record that the DOC had ignored in  this regard.  The Panel had found that there was 
such evidence, not one, three eviden ces in the record, all of which had not been considered by the 
Appellate Body.  The Appellate Body had rested its c onclusion on the fact that the Korean respondent 
had not clearly responded in their questionnaire that there had been mediation.  However, the Panel 
had explicitly taken into consid eration that the questionnaire responses should have been more 
complete, but had found that, nonetheless, the evid ence was clear that the DOC determination had 
been fundamentally undermined.  What the Panel had stated in evaluating this factual aspect of the 
dispute was not even acknowledged in the Appellate Bo dy Report.  As had been shown, the Appellate 
Body had construed disputed facts in favour of th e United States and then had ruled for the United 
States.  Because it violated the basic principles of ap pellate review to construe disputed facts in favour 
of the prevailing party, one could only conclude that the Appellate Body had engaged in its own de 
novo  fact-finding.  On critical issues such as the ques tion of whether there was evidence of mediation, 
the Appellate Body had gone directly into the case record and had reversed the Panel's conclusions. 
93. With regard to Korea's cross-appeal, he said that de novo fact finding was not the only 
misjudgement of the Appellate Body in this case.  He then enumerated others done by the Appellate 
Body.  First, Korea had appealed that that a privat e body could not be entrusted or directed "to carry 
out" a governmental financial contribution if, in fact, the private body had not carried it out.  The 
United States, supporting the Panel's contrary findi ngs, had argued that the Panel had made this 
finding as part of a broader context, based on a tota lity of the evidence.  That argument had been 
directly contrary to the US arguments underlying the main portion of its own appeal to the effect that the Panel had looked at each piece of evidence in isolation.  The Appellate Body seemed to have 
completely missed it in its own analysis. 
94. With regard to the evidentiary standard applied by the Panel, he said that the next issue was 
whether the Panel had imposed too strict an evidentia ry standard on the United States by stating that 
the evidence proving entrustment or direction had to be "probative and compelling."  The Appellate 
Body had upheld the Panel's description of the evid entiary standard and the manner in which it had 
been applied.  That very improper standard of "compelling evidence" had actually been imposed by 
the DOC against Korea during the investigative process.   At the preliminary determination stage, the 
DOC had created a presumption of guilt against the Korean respondents based on historical findings involving other producers and other banks.  Then, in the final determination, the US DOC had stated that Korea had failed to rebut this presumption w ith "compelling evidence."  Korea had to mention 
that point because, unbelievably, the Appellate Body  Report was absolutely silent in this regard. 
95. With regard to Article 22.5 of the SCM Agreement and ex post facto  arguments, he said that 
the last issue was the interpretation of Article 22.5 of the SCM Agreement.  Among other things, 
Article 22.5 required that investigating authorities i ssue a public report that contained "all relevant 
information on the matters of fact and law and reasons " for an affirmative determ ination.  On this and 
other bases, the Panel had rejected some evidence offered by the United States as ex post facto  
rationalizations, because it was not contained or refere nced in the report of the DOC's determination.  
Regrettably, the Appellate Body had reversed th e Panel's finding.  The Appellate Body seemed to 
consider it too burdensome on investigating authoriti es to require that they provide "all" of their WT/DSB/M/194 
Page 20  
 
relevant supporting information in their reports.  Wh at was required was not "all information"; it was 
"all relevant  information".  This was not a great burden.  It was simple transparency and fairness.  By 
the Appellate Body's decision, as of now, "all" no l onger meant "all."  So what did it mean?  Did it 
mean "none" or did it mean "some".  It was very clear.  "All" relevant information" had to be 
provided.  Regrettably, that clear notion had been blurred by the Appellate Body. 
96. Finally, he said that Korea had regrettably concluded that it could not support the flawed 
findings of the Appellate Body.  Th e Appellate Body's analysis was outside the bounds of Article 17.6 
of the DSU and, as such, was ultra vires .  Korea commended the Panel Report to Members for 
adoption.  In any event, at the very least, the US countervailing duty order had been found 
inconsistent with the United States' obligations under Article 15.5 of the SCM Agreement and should 
be brought into conformity without delay. 
97. The representative of th e European Communities
 said that the EC welcomed the decision of 
the Appellate Body, which brought very useful and thoughtful guidance on the key notions of the 
SCM Agreement that were entrustment or dir ections of a private body for the purpose of 
Article 1.1(a)(1)(iv) of the SCM Agreement.  Th at provision was intended to prevent circumvention 
of subsidy disciplines by government by way of priv ate bodies, for e.g. banks.  In order for it to be 
effective, it was crucial to give the appropriate meani ng to the terminology.  The AB had done that.  It 
was clear to the EC that the Panel in this disput e had applied an incorrect standard.  The reliance on 
the export restraints Panel's notions  of "delegation" and "command" as  replacements for "entrust" and 
"direct";  used in the SCM Agre ement, was clearly not appropriate.  Entrust encompassed "giving 
responsibility";  command "exercising au thority, informing, guiding".  This might be done by way of 
a delegation or by way of a command, but also by  m u c h  m o r e  s u b t l e  w a y s .   I n  o t h e r  w o r d s ,  
entrustment or direction by a government might  be implicit as well as explicit.  The Panel's 
interpretation restricted the meaning of the two te rms into a definition that was much too narrow and 
would seriously have affected the effectiveness of the WTO rules.  The Appellate Body's conclusion 
that these terms had a broader scope had rightly corrected this. 
98. The EC also particularly welcomed the endorsement by the Appellate Body of the "totality of 
the facts" approach.  There were many non-transparen t ways in which governments might intervene.  
In practice, an investigating authority would not al ways be able to obtain documentary evidence that 
by itself proved that the government had directed or entrusted a private body.  Indeed, it was rare that 
a "smoking gun" would be conveniently available.  Ra ther the investigating authority must be allowed 
to rely on the totality of the facts and evidence av ailable, including circumstantial evidence.  It was 
generally only by looking at the pieces of evidence in interaction with one another and giving them 
due weight, that an investigating authority c ould reasonably be in position to establish whether 
entrustment or direction existed.  Requiring that  a piece of evidence taken in isolation must be 
sufficient to establish entrustment or direction would have effectively reduced Article 1.1(a)(1)(iv) to 
a purely theoretical rule.  The EC would finally note that this case illustrated once again the need for a 
remand process.  The present rules led to an unsatis factory situation when, as in the present dispute, 
the Appellate Body had reversed the Panel's finding, but could not complete the analysis, thus leaving 
part of the dispute unanswered.  The EC hoped th at this could be appropriately addressed in the 
ongoing negotiations. 
99. The representative of Canada  noted the observations made by other Members.  In respect of 
the "US – Export Restraints" panel report, Canada pointed out that that panel had referred to "a notion  
of delegation or command" in its interpretation of "ent rusts or directs" in Article 1.1(a)(1)(iv) of the 
SCM Agreement.  For that reason, nothing in  the Appellate Body's findings in the case under 
consideration vitiated or undermined the central findi ngs of the panel in "US – Export Restraints".  
Moreover, in respect of the comments that the Appellate Body had exceeded its jurisdiction by 
looking into the "case record", Canada noted that one of the claims before the Appellate Body was 
that the Panel had not "objectively assessed" the evid ence before it, as required by Article 11 of the 
DSU.  In determining whether the Panel had objec tively assessed the evidence before it, the Appellate  WT/DSB/M/194 
 Page 21 
 
 
Body had no choice but  to examine the case record.  In doing so, it was not making new findings of 
fact.  Rather, it was determining whether the Pane l had based its findings of fact on the evidence 
before it.  In the context of trade remedies, this  would necessarily have to be done on the basis of the 
evidence before the investigating authority;  i.e. th e case record.  Finally, Canada asked Members to 
reflect on whether the Panel had correctly determin ed that Article 1 of the SCM Agreement, which 
was a definition provision, was capable of being "v iolated", and whether its exercise of judicial 
economy in respect of Articles 10 and 19.4 of the SCM Agreement were appropriate. 
100. The DSB took note  of the statements, and adopted  the Appellate Body Report contained in 
WT/DS296/AB/R and the Panel Report contained in WT/DS296/R, as modified by the Appellate 
Body Report. 
8. United States – Section 211 Omnibus Appropriations Act of 1998 
(a) Joint request by the European Communities and the United States (WT/DS176/16) 
101. The Chairman  drew attention to the communication from the European Communities and the 
United States contained in document WT/DS176/16 and invited the representative of the European 
Communities to speak. 
102. The representative of the European Communities  said that, as already mentioned earlier in the 
course of the present meeting, the EC noted its disappointment that the United States had failed to comply with a DSB's ruling and recommendation.  However, the EC did not wish to request the 
authorization to suspend the application of concessions  or other obligations to the United States at this 
stage.  The EC had chosen instead to conclude an agreement with the United States preserving each 
other's rights in the future.  He noted that a copy of  this agreement had been circulated on 1 July 2005 
as document WT/DS176/16.  The EC together with the United States requested that the DSB adopt 
the draft decision attached to the understa nding between the EC and the United States. 
103. The representative of the United States
 said that his country joined the EC in requesting that 
any consideration by the DSB of a request for authorization to suspend concessions or other 
obligations by the EC be in accord ance with the joint request subm itted to the DSB.  That document 
provided that;  "upon a request by the EC, the DS B shall grant the EC authorization to suspend 
concessions or other obligations unless (i) the DSB decides by consensus not to do so or (ii) the 
United States objects to the level of suspension propo sed or claims that the principles and procedures 
in DSU Article 22.3 have not been followed".  Th e latter action would refer the matter to arbitration 
under Article 22.6 of the DSU.  This decision would assi st the parties in their efforts to resolve this 
dispute in a mutually agreeable manner.  The Un ited States appreciated the DSB's support in this 
regard. 
104. The representative of Cuba  said that her country noted with concern the Understanding 
between the EC and the United States (WT/DS176/16), containing a decision which, apart from ending the dispute under consideration without im plementation of the DSB's recommendations and 
rulings, was unclear in content. The wording of the text, particularly the phrases "at this stage" and "at 
some future date", was vague.  She asked  whethe r the implication of that was that Members now had 
to wait another three years for the DSB's rulings to be implemented.  Settlements of this kind should be a matter of concern to all WTO Members. As Cuba had stated previously, the provisions of 
Section 211 of the Omnibus Appropr iations Act of 1998 were inconsis tent with the TRIPS Agreement 
and were designed to harm Cuba's legitimate intere sts.  Cuba deplored the fact that a settlement 
should be sought that overlooked th e recommendations adopted by the DS B adopted in relation to this 
dispute more than three years ago.  Cuba reserved the right to take appropriate measures under the 
relevant WTO provisions. 
105. The DSB took note
 of the statements.  WT/DSB/M/194 
Page 22  
 
106. The Chairman
 proposed that:  "The DSB take note of the Understanding reached between the 
European Communities and the United States and agree that, upon a request by the European 
Communities, the DSB shall grant the European Communities authorization to suspend concessions 
or other obligations unless (i) the DSB decides by c onsensus not to do so or (ii) the United States 
objects to the level of suspension proposed or cl aims that the principles and procedures in DSU 
Article 22.3 have not been followed, referring th e matter to arbitration under Article 22.6 of the 
DSU." 
107. The DSB so agreed .  
9. United States – Anti-dumping measures on certain hot-rolled steel products from Japan 
(a) Joint request by Japan and the United States (WT/DS184/19) 
108. The Chairman  drew attention to the communication from Japan and the United States 
contained in document WT/DS184/19 and inv ited the representative of Japan to speak. 
109. The representative of Japan  said that on 7 July 2005, Japan and the United States had reached 
an understanding with respect to the dispute "U nited States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan" (DS184) and had jointly informed the DSB of this 
understanding, which had been circulated as documen t WT/DS184/19.  Regrettably the United States 
remained in non-compliance with the DSB's recommendations and rulings in this dispute and the 
agreed-upon reasonable period of time for the Un ited States to secure the implementation would 
expire on 31 July 2005.  However, on the basis of recognition and trust that the United States would 
continue to work to bring its measures into conf ormity with the DSB's recommendations and rulings, 
Japan would not, at this stage, request author ization from the DSB to suspend application of 
concessions or other obligations, as stipulated in  Article 22.2 of the DSU.  The Understanding 
between Japan and the United States recognized that Jap an retained its right to be granted the DSB's 
authorization to suspend concessions or other oblig ations towards the United States, pursuant to 
Article 22.2 of the DSU at any future date.  Cons equently, Japan requested, jointly with the United 
States, and as set out in document WT/DS184/19, that the DSB "take note of the Understanding 
reached between Japan and the United States and ag ree that, upon a request by Japan, the DSB shall 
grant Japan authorization to susp end concessions or othe r obligations unless (i) the DSB decides by 
consensus not to do so or (ii) the United States objec ts to the level of suspension proposed or claims 
that the principles and procedures in DSU Article 22 .3 have not been followed, referring the matter to 
arbitration under Article 22.6 of the DSU." 
110. The representative of the United States  said that his country joined Japan in requesting that 
any consideration by the DSB of a request for authorization to suspend concessions or other 
obligations by Japan be in acco rdance with the joint request subm itted to the DSB.  That document 
provided that: "upon a request by Japan, the DS B shall grant Japan authorization to suspend 
concessions or other obligations unless (i) the DSB decides by consensus not to do so or (ii) the 
United States objects to the level of suspension propo sed or claims that the principles and procedures 
in DSU Article 22.3 have not been followed."  Th e latter action would refer the matter to arbitration 
under Article 22.6 of the DSU.  This decision would assi st the parties in their efforts to resolve this 
dispute in a mutually agreeable manner.  The Un ited States appreciated the DSB's support in this 
regard. 
111. The representative of Mexico  noted that, both under the present agenda item and  the previous 
one, two draft decisions had been submitted before the DSB.  Mexico supported any initiatives which 
would permit Members to reach agreements in their own disputes because the DSU provisions had 
enough flexibility for that to take place.  Mexico also believed that absent compliance, the best 
outcome was to find a mutually agreed solution.  However, any such initiatives should be discussed  WT/DSB/M/194 
 Page 23 
 
 
by Members and, in future, if similar situations we re to arise, the DSB Members should be consulted, 
at least informally, prior to taking a decision on such matters. 
112. The DSB took note  of the statements.  
113. The Chairman  proposed that:  "The DSB take note of the Understanding reached between 
Japan and the United States and agree that, upon a request by Japan, the DSB shall grant Japan 
authorization to suspend concessions or other oblig ations unless (i) the DSB decides by consensus not 
to do so or (ii) the United States objects to the le vel of suspension proposed or claims that the 
principles and procedures in DSU Article 22.3 ha ve not been followed, referring the matter to 
arbitration under Article 22.6 of the DSU." 
114. The DSB so agreed .  
10. Appointment of Appellate Body members 
115. The Chairman  recalled that, at the DSB meeting held  on 20 June 2005, he had reminded 
delegations that the terms of office of three Appe llate Body Members – Messrs. Luiz Olavo Baptista, 
John Lockhart, and Giorgio Sacerdoti – would expire  on 11 December 2005.  He had also indicated 
that all three individuals had expressed interest  in serving a second term.  He had undertaken to 
conduct informal consultations w ith delegations regarding the pos itions on the Appellate Body 
currently held by Messrs. Baptista, Lockhart, and Sacerdoti.  He had invited delegations with an 
interest in this matter to contact him by 15 July  2005.  Between 21 June and 15 July, he had been 
contacted by a number of delegations.  At the presen t meeting, in the light of his consultations, and 
consistent with the process discussed during the 20 June 2005 DSB meeting, he wished to propose that a decision on the reappointment of Messrs. Ba ptista, Lockhart, and Sacerdoti be taken by the 
DSB at its meeting on 27 September 2005.  He asked if there was any objection to the approach that 
he had just proposed. 
116. The representative of the European Communities
 said that the EC welcomed the Chairman's 
report and was pleased to note that there was ge neral support among Members for the reappointment 
of Messrs. Baptista, Lockhart and Sacerdoti. 
117. The Chairman  proposed that the DSB take note of the statements and said that he would 
proceed along the lines discussed. 
118. The DSB took note  of the statements.  
__________