RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/278 
9 March 2010 
 (10-1239) 
Dispute Settlement Body 
19 January 2010  
 
 
   
MINUTES OF MEETING 
 
Held in the Centre William Rappard
 
on 19 January 2010  
 
Chairman:  Mr. John Gero (Canada) 
  
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 .............................................................................................................. ...........3  
(b) United States – Anti-dumping measures on certain hot-rolled steel products from 
Japan:  Status report by  the United States...................................................................................5  
(c) United States – Section 110(5) of the US Copyright Act:  Status report by 
the United States .............................................................................................................. ...........6  
(d) European Communities1 – Measures affecting the approval and marketing of biotech 
products:  Status  report by the European Union ........................................................................6  
(e) United States – Laws, regulations and methodology for calculating dumping margins 
("zeroing"):  Status repor t by the Unite d States..........................................................................7  
(f) United States – Measures relating to zeroing and sunset reviews:  Status report by 
the United States .............................................................................................................. ...........8  
(g) United States – Continued existence and a pplication of zeroing methodology:  Status 
report by the United States.................................................................................................... ......8  
(h) China – Measures affecting the protection and enforcement of intellectual property 
rights:  Status report by China ................................................................................................ ..10 
2. United States – Continued Dumping and Subsidy Offset Act of 2000:  
Implementation of the recommenda tions adopted by the DSB ..........................................10  
(a) Statements by the European Union and Japan ..........................................................................10  
                                                      
1 On 1 December 2009, the Treaty of Lisbon amendi ng the Treaty on Europe an Union and the Treaty 
establishing the European Community (done at Lisbon, 13 December 2007) entered into force.  On 
29 November 2009, the WTO received a Verbal Note (WT /L/779) from the Council of  the European Union and 
the Commission of the European Communities stating that, by virtue of the Treaty of Lisbon, as of 
1 December 2009, the European Union replaces and succeeds the European Community. WT/DSB/M/278 
Page 2  
 
  3.
 United States – Measures affecting imports of certain passenger vehicle and light 
truck tyres fr om China......................................................................................................... ..12 
(a) Request for the establishment of a panel by China...................................................................12  
4. Philippines – Taxes on distilled spirits ..................................................................................13  
(a) Request for the establishment of a panel by the European Union ............................................13  
5. China – Measures affecting trading rights and distribution services for certain 
publications and audiovisual entertainment products ........................................................14  
(a) Report of the Appellate Body and Report of the Panel.............................................................14  
6. Proposed nomination for the indicative list of governmental and 
non-governmental panelists ...................................................................................................19  
7. Statement by Colombia concerning the Re port by the Director-General on the 
use of his Good Offices pertaining  to the disputes on bananas..........................................19  
8. Proposed amendments to the Working Procedures for Appellate Review........................19  
(a) Statement by the Chairman...................................................................................................... .19 
 
 
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.86) 
 (b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.86) 
 (c) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.61) 
 
(d) European Communities – Measures affecting th e approval and marketing of biotech products:  
Status  report by the European Union (WT/DS291/37/Add.24 – WT/DS293/31/Add.24) 
 (e) United states – Laws, regulations a nd methodology for calculating dumping margins 
("zeroing"):  Status report by the United States (WT/DS294/34/Add.5) 
 
(f) United States – Measures relating to zeroing and sunset reviews:  Status report by the 
United States (WT/DS322/36/Add.4) 
 (g) United States – Continued existence and app lication of zeroing methodology:  Status report 
by the United States (WT/DS350/18/Add.1) 
 
(h) China – Measures affecting the protection and enforcement of intellectual property rights:  
Status report by China (WT/DS362/14) 
  1. The Chairman
 recalled that Article 21.6 of the DSU required that unless the DSB decided 
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 establis hment of the reasonable 
period of time and shall remain on the DSB' s Agenda until the issu e was resolved.    WT/DSB/M/278 
 Page 3 
 
 
  (a) United States – Section 211 Omnibus Appropria tions Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.86) 
2. The Chairman  drew attention to document WT/DS176/ 11/Add.86, 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. 
3. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 January 2010, in accordance with Article 21.6 of the DSU.  As had been noted, a 
number of legislative proposals that would implem ent the DSB's recommendations and rulings in this 
dispute had been introduced in the First Session of the current (111th) Congress.  The Second Session of the 111th Congress had begun earlier in January.  The US administration was working with 
Congress to implement the DSB's recommendations and rulings. 
4. The representative of the European Union
 said that, at the present meeting, the United States 
was presenting its eighty-seventh status report on this dispute.  The EU hoped that the new US 
authorities would take steps to finally implem ent the DSB's ruling and resolve this matter. 
5. The representative of Cuba  recalled that, in January 2002, the DSB had adopted the Appellate 
Body Report pertaining to this dis pute and, in February of the same year, the United States had sought 
a reasonable period of time for implementation of the DSB's recommendations and rulings in this 
dispute.  However, eight years later, Members were still waiting for the respondent to meet its 
obligations.  The respondent and the complainant s hould explain what they understood by the term "a 
reasonable period of time".  It could happen in the future that Members who were under obligation to 
comply with the DSB's rulings would delay implem entation on the grounds that their authorities were 
working to resolve the matter.  Neither the United States nor the EU were in a position to demand that 
other Members should promptly comply with thei r obligations, as required by Article 21.1 of the 
DSU.  This fundamental principle had been ignored  by them for many years.  In accordance with 
Article 21.6 of the DSU, the United States was required to submit status reports on progress in 
implementation, but every month the same reports were being submitted.  They contained the same 
words and indicated only that a number of legislativ e proposals relating to Section 211, which would 
implement the DSB's recommendations and rulings, ha d been introduced in the Senate and the House 
of Representatives.  It was inappropriate to submit the same report every month.  It was obvious that 
the United States had nothing to report nor was it working to end this dispute, the cause of which was a legislation that was over ten years old.  Explo itation of the prestige of Cuban trademarks was a 
widespread phenomenon in the United States, despit e the fact that the Unite d States advocated to 
comply strictly with intellectual property rules.  In December 2009, it had been announced that a US 
federal judge had ruled in favour  of the Cuban company CUBATABACO in its lawsuit against the 
US company GENERAL CIGAR which, since 1997, had been selling in the United States COHIBA 
cigars made with non-Cuban tobacco.  This show ed how powerful US companies were exploiting 
Cuban trademarks, the difference with the case at ha nd being that BACARDI, in close collaboration 
with the US authorities, had set out to oppose the registration of the trademark and had succeeded in 
stripping Cuba of its rights.  Cuba would continue to  request the parties to take the necessary steps to 
revoke Section 211.  It was common knowledge th at the Members in question were anxious to 
harmonize new and higher standards in the enforcemen t of intellectual property rights.  Cuba called 
on all Members to work together to end this disput e.  Failure to do so could bring only discredit, 
bearing in mind that the legislation violated the fundamental principles of the most important 
multilateral agreement on intellectual property rights. 
6. The representative of Ecuador
 said that his country thanked the United States for its status 
report and fully supported the statement made by C uba.  Ecuador recalled that  Article 21 of the DSU 
expressly referred to prompt compliance with the DSB's recommendations and rulings, in particular 
with regard to issues affecting the interests of deve loping countries.  Ecuador yet, again, urged the US WT/DSB/M/278 
Page 4  
 
  administration and Congress to speed up compliance with the DSB's recommendations and rulings by 
repealing Section 211. 
7. The representative of China
 said that her country thanked the United States for its status 
report and its statement.  However, China was di sappointed since the report did not contain any new 
information but simply confirmed the continuation of non-compliance after more than seven years 
following the adoption of the relevant reports by the DS B.  This was inconsistent with the principle of 
prompt implementation under the DSU provisions, and undermined the authority and credibility of the 
WTO dispute settlement system.  China thus supported Cuba and urged the United States to 
implement the DSB's decision as soon as possible. 
8. The representative of Viet Nam  said that his country thanked the United States for its status 
report.  Viet Nam supported the statement made by Cuba and urged the United States to comply with 
the DSB's rulings and recommendations as soon as possible. 
9. The representative of Brazil  said that his country thanked the United States for its status 
report in this dispute.  Unfortunately, that repor t merely repeated previous reports by showing a 
complete lack of progress.  Brazil continued to be concerned about this matter, and urged the 
United States to bring its measures into conformity with WTO disciplines without delay. 
10. The representative of Paraguay  said that her country thanked the United States for its status 
report.  Paraguay supported the statements made by previous speakers, and urged the United States to 
comply with the DSB's recommendations a nd rulings by repealing Section 211.  
11. The representative of the Bolivarian Republic of Venezuela  said that, as 2009 had ended, 
many Members and the international community itself had good reason to welcome and commend the 
WTO's work and its role in achieving conciliation an d settlement of disputes.  Such praise was well 
earned given the long-awaited agreement on bananas which had brought an end to one of the most 
well-known and long-standing disputes on the DSB' s Agenda.  However, Venezuela remained 
concerned that Members insisted on maintaining measu res of a clearly discriminatory nature, such as 
Section 211.  The principle of non-discrimination was one of the cornerstones of the multilateral 
trading system and as a result of its failure to comply with the 2002 Appellate Body's rulings, the 
United States showed disregard for the DSU provisions , which continued to be viewed as one of the 
overriding achievements under the WT O.  Venezuela urged the United States to consider taking a 
sensible step and send a positive signal by accepting and implementing the Appellate Body's recommendations.  Venezuela believed that Members were aware of the severe disruption of, and 
obstacles to, Cuba's trade flows as a result of bein g prevented from registering or renewing certain 
trademarks.  The measure in question, which ha d been repeatedly denounced by Cuba and the 
overwhelming majority of the international comm unity, provided clear evidence of a breach of 
intellectual property rights and una mbiguous proof of the continuing blockade that Cuba had coped 
with since 1962.  Venezuela recalled the WTO pr inciple that every case and its settlement extended 
far beyond the parties involved. 
12. The representative of Argentina
 said that his country called on the parties, in particular the 
United States, to ensure that the DSB's recomme ndations and rulings were  fully implemented.  
Argentina reiterated its concern that  the failure to implement the decisions of the DSB undermined the 
credibility of the system.  Argentina hoped that, in 2010, this item would be removed from the DSB's Agenda, as had been the case with other long-standing disputes. 
13. The representative of Nicaragua
 said that the WTO rules did not allow one Member to 
exclude, unilaterally and indefinitely, another Member  from all the benefits of the multilateral trading 
system.  She recalled that, in 2002, the DSB had f ound Section 211 to be inco nsistent with WTO rules 
and, in particular, with the TRIPS Agreement.  Nicaragua was concerned about the lack of progress  WT/DSB/M/278 
 Page 5 
 
 
  and the lack of prompt compliance and urged the United States to comply as soon as possible with the 
DSB's recommendations and rulings. 
14. The representative of India  said that her country thanked the United States for its status report 
and its statement.  India noted that there had been no  substantive change in th e situation, and that the 
principle of prompt compliance was continuously missi ng in this dispute.  India, therefore, renewed 
its systemic concerns about non-compliance, which clearly undermined the credibility and confidence 
that Members had in the system. 
15. The representative of Mexico  said that his country thanked the United States for its status 
report and called upon the parties to seek a solutio n to the matter through the legal means provided 
under the DSU provisions.  In this connection, Mexico  wished to note that if a Member considered 
that another Member violated its rights, a new procedure under the DSU could be initiated.  This 
option was available to all Members under the DSU provisions.    
16. The representative of the United States  said that with respect to the statements made by some 
Members that this dispute raised concerns for th e dispute settlement system, Members knew well that 
the United States did not believe that those concerns were well-founded.  In the interest of time, the 
United States referred Members to its past statemen ts on this matter, for example, WT/DSB/M/273 at 
paragraph 15. 
17. The representative of Cuba  said that his delegation wished to refer to the previous statements 
made by Cuba, in which it had clearly addressed the US position, as well as the selective approach and double standard used by the United States in a pplying international law.  One year after the new 
US administration had taken office, it was time for the United States to show that it was as genuinely 
concerned about international law as it was about health care reform  and other domestic issues.  The 
United States should demonstrate its concern in deed s rather than in documents and words.  Thus, 
2010 was an opportunity for the United States to stop violating the rules of international law and, in particular, the law governing trade among nations. 
18. 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.86) 
19. The Chairman  drew attention to document WT/DS184/ 15/Add.86, 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. 
20. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 January 2010, in accordance with Article 21.6 of the DSU.  As of 
23 November 2002, the US authorities had addresse d the DSB's recommendations and rulings with 
respect to the calculation of anti-dumping margins in the hot-rolled steel anti-dumping duty investigation at issue in this dispute.  Details were provided in document WT/DS184/15/Add.3.  With 
respect to the DSB's recommendations and rulings that had not already been addressed by the US 
authorities, the US administration would work with Congress with respect to appropriate statutory measures that would resolve this matter.  
21. The representative of Japan
 said that his country thanked the United States for its statement 
and its latest status report.  Japan noted in the US report that the United States had taken certain measures to implement part of the DSB recommend ations in November 2002.  Japan hoped that the 
United States would soon be in a position to repor t to the DSB tangible progress for the remaining WT/DSB/M/278 
Page 6  
 
  part of the DSB's recommendations and rulings.  Full and prompt implementation of the DSB's 
recommendations and rulings was "essential to the effective functioning of the WTO and the 
maintenance of a proper balance of th e rights and obligations of Members".
2  Japan called on the 
United States to fully implement the DSB's recommendations in this long-standing dispute without further delay. 
22. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(c) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.61) 
23. The Chairman  drew attention to document WT/DS160/ 24/Add.61, 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. 
24. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 January 2010, in accordance with Article 21.6 of the DSU.  The US administration 
would continue to confer with the European Uni on, and to work closely with the US Congress, in 
order to reach a mutually satisfactory resolution of this matter. 
25. The representative of the European Union  said that the United States had again reported non-
compliance and her delegation was again disappointed, especially in light of the importance the United States attached to intellectual property protec tion.  The EU was aware that the United States 
was in favour of strong intellectual property prot ection throughout the world, and hoped that the 
United States would lead by example.  The EU remained ready to work with the US authorities 
towards the complete resolution of this case, a nd hoped that the financial loss suffered by the EU 
industry could be brought to an end soon. 
26. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(d) European Communities – Measures affecting the approval and marketing of biotech products:  
Status  report by the European Union (WT/DS291/37/Add.24 – WT/DS293/31/Add.24) 
27. The Chairman  drew attention to document WT/D S291/37/Add.24 – WT/DS293/31/Add.24, 
which contained the status report by the European  Union on progress in the implementation of the 
DSB's recommendations in the case concerning its measures affecting the approval and marketing of biotech products. 
28. The representative of the European Union
 said that EU regulatory procedures on biotech 
products continued to work as foreseen in the legislati on.  With the most recent authorization of four 
GM maize events, the number of GMOs authorized si nce the date of establishment of the Panel had 
risen to twenty-five.  The EU remained open to dial ogue on issues related to trade in biotech products.  
The EU and Canada had already formalized such di alogue in the mutually agreed solution reached in 
2009 (WT/DS292/40).  The EU welcomed the construc tive dialogue held with Argentina, and hoped 
that that would soon lead to a similar agreement. 
29. The representative of Argentina  said that his country welcomed the status report submitted by 
the EU.  As announced at the previous meeting, Ar gentina was working together with the EU on a 
mutually agreed solution to this dispute, but unf ortunately it had not yet been possible to reach a 
                                                      
2 Article 3.3 of the DSU.  WT/DSB/M/278 
 Page 7 
 
 
  settlement.  Therefore, the parties to the disput e had decided, once more, to extend the reasonable 
period of time for implementation, and hoped to conc lude an agreement shortly, which would then be 
notified to the DSB and to all WTO Members.   
30. The representative the United States  said that his country thanked the EU for its status report 
and its statement.  The United States recalled its  concerns that approximately 60 biotech products 
were awaiting approval, which was more than double the number of applications pending at the time 
this dispute had been initiated in 2003.  The EU's failure to move those prod ucts through its approval 
process had the effect of blocking trade in important agricultural products produced in the 
United States.  As the United States had noted in  prior DSB meetings, the EU approval system 
contained several steps.  Although the United States had concerns about delays in all of those steps, at 
the present meeting it wished to highlight its concer ns regarding the delays at the second step of the 
EU process, after an application had been revi ewed by a scientific authority.  The second step 
involved the EU's Standing Committee on the F ood Chain and Animal Health.  The Standing 
Committee was composed of EU member State re presentatives, and it normally met on a monthly 
basis.  If the risk assessment of the scientific authority was positive, the EU Commission must submit 
an approval measure to the Standing Committee within  three months of the positive risk assessment.  
The Standing Committee must then vote on the prop osed approval measure.  The United States noted 
that the Standing Committee had not voted on a propo sed biotech approval in over three months.  Yet 
the EU's approval pipeline cont ained a number of applications that had received positive risk 
assessments more than three months ago.  One appli cation, in fact, received a positive risk assessment 
in November 2007, but had yet to be voted on by the Standing Committee.  The United States was 
concerned with this lack of activity by the St anding Committee.  Moreover, the United States noted 
with concern that the EU was not holding a meeting of the Standing Committee in January, and that the first meeting of 2010 was not scheduled until the following month.  Clearly, if the EU chose not to 
schedule the meetings provided for under its approval process, the EU could not consider applications 
in a timely manner.  The United States noted that the EU had selected a new Commission, and had 
modified its organizational structure with regard to  the operation of its biotech approval process.  The 
United States was hopeful that these changes would finally result in a biotech approval system that could operate without endemic delays.  The United States urged the EU to address those matters.   
31. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(e) United States – Laws, regul ations and methodology for calculating dumping margins 
("zeroing"):  Status report by the United States (WT/DS294/34/Add.5) 
32. The Chairman  drew attention to document WT/DS294/ 34/Add.5, 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 laws, regulations and me thodology for calculating dumping margins. 
33. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 January 2010, in accordance with Artic le 21.6 of the DSU.  As noted in that status 
report, the United States had already taken a number of steps to implement the DSB's 
recommendations and rulings in this dispute.  With regard to the remaining issues, the United States 
would continue to consult with interested parties. 
34. The representative of the European Union  said that for the sixth time since the adoption by 
the DSB of the compliance Panel Report and the Appe llate Body Report in this dispute, and nearly 
three years after the expiry of the reasonable period of time for implementation, the EU wished to ask 
the United States when it intended to put an end to zeroing.  As was the case with the five preceding 
reports, the status report by the United States c onfirmed that the United States had not taken any 
action whatsoever to correct the shortcomings in its implementation.  The Appellate Body had made WT/DSB/M/278 
Page 8  
 
  the legal situation on zeroing crystal clear.  Zeroing was prohibited in both original investigations and 
reviews.  In addition, any anti-dumping duties colle cted after the end of the implementation period 
must be calculated without zeroing, whenever th e goods in question were imported or the review 
determination made.  The only step left for the Un ited States to take was to bring itself into full 
compliance without further delay. 
35. The representative of Japan
 said that the issue of implementation in this dispute was closely 
related to the dispute on:  "US – Measures Relating to Zeroing and Sunset Reviews", in which Japan 
was a complaining party.  Thus, Japan was closel y following the situation and any new developments 
in this dispute with great interest. 
36. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(f) United States – Measures relating to zeroing and sunset reviews:  Status report by the 
United States (WT/DS322/36/Add.4) 
37. The Chairman  drew attention to document WT/DS322/ 36/Add.4, 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 measures relating to zeroing and sunset reviews. 
38. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 January 2010, in accordance with Ar ticle 21.6 of the DSU.  As noted in the status 
report, the United States had taken steps to implem ent the DSB's recommendations and rulings in this 
dispute.  With respect to the outstanding issues, the United States would con tinue to consult with 
interested parties in order to address those issues. 
39. The representative of Japan  said that his country thanked the United States for its statement 
and its latest status report.  He said that the Unite d States had stated in its report that it "will continue 
to consult with interested parties in order to address the findings contained in [the Appellate Body and 
the panel] reports" adopted by the DSB on 31 August 2009.  Japan understood the US statement as an expression of commitment by the United States to bri ng into conformity the measures found in those 
reports to be inconsistent with the Anti-Dump ing Agreement and the GATT 1994.  Japan called on 
the United States to fulfil its commitment by taking immediate and concrete action to fully comply 
with the DSB's recommendations and rulings in order to resolve this dispute. 
40. The representative of the European Union
 said that her delegation reiterated its 
disappointment over the lack of any progress by the United States on compliance with adverse rulings on zeroing in yet another dispute and recalled that immediate compliance with the DSB's 
recommendations and rulings was not an option, but an obligation under the DSU provisions. 
41. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(g) United States – Continued existence and appli cation of zeroing methodology:  Status report 
by the United States (WT/DS350/18/Add.1) 
42. The Chairman  drew attention to document WT/DS350/ 18/Add.1, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning the continued existence and applica tion of zeroing methodology by the United States. 
43. The representative of the United States  said that his country had provided a status report in 
this dispute on 7 January 2010, in accordance with Artic le 21.6 of the DSU.  As noted in that status  WT/DSB/M/278 
 Page 9 
 
 
  report, the United States had taken steps to implem ent the DSB's recommendations and rulings in this 
dispute.  With regard to the remaining issues, the United States would continue to consult with interested parties. 
44. The representative of the European Union
 said that it was the third time that the issue of US 
zeroing was on the Agenda of the present meeti ng under the item on surveillance of implementation 
of recommendations adopted by the DSB.  Most worr yingly, it was also the third time, at the present 
meeting, that the DSB was considering a situ ation where the reasonable period of time for 
implementation had expired but, despite a clear lega l obligation to the contrary, the United States had 
not brought itself into compliance.  The EU commended the fact that the United States would "continue to consult with interested parties, in order to address the other recommendations and rulings 
of the DSB", but reminded the United States that it was required, as a WTO Member, to complete 
those actions and bring itself into full compliance duri ng, not after, the reasonable period of time.  The 
EU reiterated its deepest disappointment over the f act that practically nothing had been done during 
the reasonable period of time agreed to address the relevant issues in this case.  The status report 
presented by the United States, once again, only re ferred to proceedings under Section 129(b) of the 
Uruguay Round Agreements Act that would implement the DSB's recommendations and rulings with 
respect to four final determinations (Purif ied Carboxymethylcellulose from Sweden;  Final 
Determination of Sales at Less Than Fair Valu e:  Purified Carboxymethylcellulose from the 
Netherlands;  Final Determination of Sales at Less Th an Fair Value:  Purified Carboxymethylcellulose 
from Finland;  and Final Determination of Sales at Less Than Fair Value:  Chlorinated Isocyanurates 
from Spain).   
45. In addition to the fact that the United States ha d failed to conclude the proceeding before the 
end of the reasonable period of time, there were  a number of glaring substantive failures in 
implementation.  First, as the EU suspected, the pr oceeding only covered the orig inal investigations in 
the four cases above.  Indeed, the preliminary determ inations only referred to the panel report in this 
dispute and no reference had been made in the Sec tion 129 proceeding to the findings of the Appellate 
Body Report adopted by the DSB on 19 February 2009 .  In each original investigation, the US 
Department of Commerce had re-examined the dumping margin with the use of the zeroing 
methodology.  However, subsequent administra tive reviews had been concluded in those cases, 
involving the use of the zeroing methodology.  It was well established in WTO case law that such subsequent reviews fell within the scope of impl ementation and, therefore, the relevant dumping 
margins should be recalculated without zeroing, ye t the Department's preliminary findings had 
completely failed to address them.  Second, the Section 129 proceeding thus  far covered measures 
relating to only four of the 18 anti-dumping cases challe nged by the EU in this dispute.  The Appellate 
Body Report had concluded that, inter alia , the use of zeroing by the United States in measures 
covering 34 administrative reviews and eight sunset  reviews was in breach of WTO rules and yet 
none of these were covered by the preliminary findings of the Section 129 proceeding.  Third, as 
regards four of the cases – Ball Bearings and Parts Thereof from Italy (Case II), Ball Bearings and 
Parts Thereof from Germany (Case III), Ball Bearings  and Parts Thereof from France (Case IV), and 
Stainless Steel Sheet and Strip in Coils from Germany (Case VI), the Appellate Body had explicitly ruled the use of zeroing in all future reviews to be WTO-inconsistent.  Furthermore, for the other 
cases, established case law made it cl ear that reviews conducted subse quent to the challenged measure 
must be free of zeroing.  Again, those issues ha d not been addressed in the preliminary findings.  
Finally, the Panel and the Appellate Body Reports had also made it clear that the United States was 
required, at the end of the reasonable period of time (19 December 2009), to recalculate the cash 
deposit rates for each measure without zeroing.  Furthermore, from this date onwards, the 
United States was only allowed to liquidate duties at  non-zeroed rates.  In addition, the calculation of 
the dumping margin in ongoing and future reviews must be free of zeroing.  None of these 
considerations appeared to have been addressed  in the Section 129 proceeding up to now. WT/DSB/M/278 
Page 10  
 
  46. The representative of Japan
 said that the issue of implementation in this dispute was closely 
related to the one in Japan's zeroing dispute w ith the United States.  Thus, Japan was closely 
following the situation and any new developmen ts in this dispute with great interest. 
47. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(h) China – Measures affecting the protection and en forcement of intellectual property rights:  
Status report by China (WT/DS362/14) 
48. The Chairman  drew attention to document WT/DS362/ 14, which contained the status report 
by China on progress in the implementation of th e DSB's recommendations in the case concerning 
China's measures affecting the protection and enforcement of intellectual property rights. 
49. The representative of China  said that the DSB had adopted the Panel Report in this dispute at 
its meeting on 20 March 2009.  On 15 April 2009, Ch ina had informed the DSB of its intention to 
implement the DSB's recommendations and rulings.  On 29 June 2009, China and the United States 
had agreed and notified the DSB that the reasonabl e period of time for implementation shall be 12 
months and would expire on 20 March 2010.  A lot of  work related to implementation had, thus far, 
been done by China.  The legislative proposals rela ting to the amendment of the Copyright Law of 
China and the Regulations for Customs Protection of Intellectual Property Rights had already been submitted to the State Council for due examinati on.  China would continue working on the 
amendment of the measures, according to its domestic legislative procedures, that would resolve this 
matter. 
50. The representative of the United States
 said that his country thanked China for its status report 
and its statement and looked forward to China's implementation of the DSB's recommendations and 
rulings in connection with this matter by 20 Marc h 2010, which was the expiration of the reasonable 
period of time for China to comply in this dispute. 
51. The representative of the European Union  said that the Panel in this dispute had 
recommended that China bring its Copyright law a nd Customs measures into conformity with its 
obligations under the TRIPS Agreement.  The EU was glad that China had already submitted the 
relevant legislative proposals to the State Council.   The EU called on China to carefully implement 
the recommendations in order to remove what constituted significant shortcomings in China's 
intellectual property rights regime.  The EU trusted that China would adopt measures that were in full 
compliance with its obligations and that this dis pute would contribute to the improvement of China's 
intellectual property rights framework.  The EU re cognized the efforts deployed thus far by the 
Chinese government to improve the protection and en forcement of intellectual property rights.  The 
EU looked forward to further cooperating with China in order to reduce infringement levels and to 
ensure a strong and legally certain environmen t for intellectual property rights in China. 
52. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
2. United States – Continued Dumping and Subsid y Offset Act of 2000:  Implementation of 
the recommendations adopted by the DSB 
(a) Statements by the European Union and Japan 
53. The Chairman  said that this item was on the Agenda of the present meeting at the request of 
the European Union and Japan.  He then i nvited the respective representatives to speak.  WT/DSB/M/278 
 Page 11 
 
 
  54. The representative of Japan  said that, in December 2009, US Customs and Border Protection 
issued the CDSOA Annual Reports for FY2009.3  According to the Reports, some US$248 million 
had been disbursed for FY2009.  These latest dist ributions showed that the CDSOA still remained 
operational.4  Japan urged the United States to stop illegal distributions and repeal the CDSOA, not 
just in form but in substance, so as to resolve this  dispute once and for all.  According to Article 21.6 
of the DSU, the United States was under obligation to  provide the DSB with a status report in this 
dispute "until the issue is resolved".  Japan  reserved all its rights under the DSU until the 
United States came into full compliance. 
55. The representative of the European Union  said that, as in many previous meetings, the EU 
wished to ask the United States when it would e ffectively stop the transfer of anti-dumping and 
countervailing duties to its industry and finally put an  end to the condemned measure.  The EU also 
renewed its call on the United States to abide by its  clear obligation under Article 21.6 of the DSU 
and to submit status reports in this dispute. 
56. The representative of Brazil  said that his country, once again, thanked the EU and Japan for 
keeping this item on the DSB's Agenda.  As had been  stated at previous DSB meetings, Brazil was of 
the view that the United States was under obligation to  submit status reports in this dispute until such 
time as no more disbursements were made, pursuant to  the Byrd Amendment.  Only then the issue 
could have been "resolved" within the meaning of  the DSU and the United States would have been 
released from its obligation to provid e status reports in this dispute. 
57. The representative of Canada  said that her country agreed with the EU and Japan that the 
Byrd Amendment remained subject  to the surveillance of the DS B until the United States ceased to 
administer it. 
58. The representative of India  said that her country thanked th e EU and Japan for, once again, 
maintaining this issue before the DSB.  India shar ed the concerns expressed by them on this matter.  
India remained disappointed at the US maintenanc e of the WTO-inconsistent disbursements.  As 
mentioned by previous speakers, the CDSOA remain ed fully operational, allowing for disbursements 
by the US administration to its domestic industry.  This fact continued to raise concerns to WTO 
Members.  India had repeatedly pointed out that the disbursements made by the United States to its 
industry under the Byrd Amendment continued to affect the rights of WTO Members.  This non-compliance by Members led to a growing lack of credibility of the WTO dispute settlement system.  India agreed with the EU and Japan that the Byrd Amendment remained subjec t to the surveillance of 
the DSB until the United States ceased to administer it. 
59. The representative of China
 said that her country thanked th e EU and Japan for, once again, 
raising this matter at the DSB meeting.  China sh ared the concerns expressed by previous speakers 
and joined them in urging the United States to comply fully with the DSB's rulings. 
60. The representative of Thailand  said that his country thanked the EU and Japan for, once 
again, bringing this item before the DSB.  Tha iland urged the United States to cease disbursements 
under the Continued Dumping and Subsidy Offset Act and to provide status reports until such actions 
were taken and this matter was fully resolved. 
                                                      
3 CDSOA 2009 Annual Reports dated 10 December 2009.  See US Customs and Border Protection's 
website at: 
http://www.cbp.gov/xp/cgov/trade/prio rity_trade/add_cvd/cont_dump/cdsoa _09/report/fy09_a nnual_report.xml  
4 In the words of the US Customs, "the distribution process will continue for an undetermined period".  
See US Customs and Border Protection's website at: 
http://www.cbp.gov/xp/cgov/tr ade/priority_trade/add_cvd/cont_dump/cont_dump_faq.xml  WT/DSB/M/278 
Page 12  
 
  61. The representative of the United States
 said that, as his country had already explained at many 
previous DSB meetings, the US President had signed the Deficit Reduction Act into law on 
8 February 2006.  That Act included a provisio n repealing the Continued Dumping and Subsidy 
Offset Act of 2000.  Thus, the United States had ta ken all actions necessary to implement the DSB's 
recommendations and rulings in these disputes.  Th e United States recalled that Members, including 
the EU and Japan, had acknowledged during some previous DSB meetings that the 2006 Deficit 
Reduction Act did not permit the distribution of  duties collected on goods entered after 
1 October 2007.  The United States did not, theref ore, understand the purpose for which the EU and 
Japan had inscribed this item at the present meetin g.  With respect to comments regarding further 
status reports in this matter, as the United States had taken all steps necessary to implement the DSB's 
recommendations and rulings in these disputes, the United States failed to see what purpose would be 
served by the further submission of status re ports repeating the progress it had made in the 
implementation of the DSB's recommendations and rulings. 
62. The DSB took note  of the statements. 
3. United States – Measures affecting imports of certain passenger vehicle and light truck 
tyres from China 
(a) Request for the establishment of a panel by China (WT/DS399/2) 
63. The Chairman  recalled that the DSB considered this matter at its meeting on 
21 December 2009 and had agreed to revert to it.  He then drew attention to the communication from 
China contained in document WT/DS399/2, and i nvited the representative of China to speak. 
64. The representative of China said that, in accordance with relevant provisions of the DSU, the 
GATT 1994 and the Safeguard Agreement, China wa s requesting the DSB to establish a panel to 
examine certain US measures affecting imports of certain tyres from China.  The legal basis for 
challenging those measures were elaborated in Ch ina's panel request (WT/DS399/2).  As had been 
stated at the previous DSB meeting, the Chinese government deeply regretted the US decision to 
impose restrictions on Chinese tyres and believed that it was a departure from the international 
consensus of G20 leaders to fight against protectio nism.  Since the US decision itself ran short of 
factual basis and breached the US obligations unde r the WTO, China, once again, urged the United 
States to promptly withdraw its measures.  China believed that the panel would make an impartial 
determination in this case. 
65. The representative of the United States  said that his country was disappointed that China had 
chosen to move forward with its request for pa nel establishment a second time.  The United States 
remained confident that its measure  was consistent with its WTO ob ligations and, specifically, with 
the product-specific safeguard mechanism provided for in Section 16 of China's Protocol of 
Accession.  The United States was not the first WT O Member to impose a product-specific safeguard 
on Chinese products, but it was the first that China ha d challenged in the WTO for that reason.  The 
United States found it regrettable that China, which had benefited so greatly from its exports to the 
United States, would dispute this safeguard.  The United  States recalled that in just four years, US tyre 
imports from China had more than tripled by volu me, with the value of those imports rising to 
US$1.8 billion.  In those same four years, US production fell by more than 25 per cent while 14 per cent of US workers in the industry had lost their j obs.  Those facts alone showed that China's claims 
lacked merit.  The special safeguard mechanism wa s agreed to by all WTO Members and China, as 
part of China's accession to the WTO.  When Me mbers negotiated China's WTO accession, they had 
agreed to allow China to phase in some of its oblig ations.  For example, China had been allowed three 
years to reduce certain tariffs.  In return for the flexibility to phase in obligations and, in recognition 
of the fact that China's economy was, and rema ined, in transition to a market economy, WTO 
Members negotiated the ability to use this temporar y mechanism if Chinese imports surged.  This  WT/DSB/M/278 
 Page 13 
 
 
  mechanism was thus a key part of the bargain th at permitted China to become a WTO Member.  The 
United States rejected the notion that having recourse to this bargain through the proper application of 
the safeguard mechanism was unfair, unreasonable,  or protectionist, as China had asserted at the 
previous DSB meeting.  The United States understood that a panel would be established at the present 
meeting and it intended to defend its  measures vigorously before that panel.  The United States was 
confident that a panel would agree that it had acted  consistently with its WTO obligations when it had 
imposed remedies to stop the harmful surge of Chinese tyre imports. 
66. The representative of China  said that her delegation wished to respond the statement just 
made by the United States.  She said that China's request did not mean that China did not want to 
honour its commitments for entering the WTO.  Sect ion 16 of China's Protocol of Accession provided 
a legal basis for taking any action under that provision.  What China was challenging was whether or 
not the United States was in compliance with the legal basis under Section 16.  
67. 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. 
68. The representatives of the European Union , Japan , Chinese Taipei , Turkey  and Viet Nam  
reserved their third-party rights to pa rticipate in the Panel's proceedings. 
4. Philippines – Taxes on distilled spirits 
(a) Request for the establishment of a panel by the European Union (WT/DS396/4) 
69. The Chairman  recalled that the DSB had considered this matter at its meeting on 
21 December 2009 and had agreed to revert to it.  He drew attention to the communication from the 
European Union contained in document WT/DS 396/4, and invited the representative of the 
European Union to speak. 
70. The representative of the European Union  said that, regrettably, her delegation found itself 
left with no choice but to request, for a second time, the establishment of a panel in this dispute.  The EU noted that there had been no indications th at the long-standing tax discrimination would be 
remedied any time soon.  Much to the contrary , recent statements both by members of Congress and 
the Philippine Government had clearly indicated th at there was no prospect of passing a bill that 
would bring a solution to this problem.  The EU no ted that this was a case of a long-standing tax 
discrimination that had only worsened over the years.  At present, imported spirits were subject to an 
excise tax 10 to 15 times higher than the tax imposed  on domestic spirits.  This prevented EU spirits 
producers from benefiting from the growing demand for spirits in the Philippine market.  Furthermore, it was estimated that EU exports to  the Philippines had more than halved between 2004 
and 2007, as a result of the increasing discrimination.   The EU believed that the Philippines excise tax 
regime was in clear violation of Article III:2 of the GATT 1994.  With this request for the 
establishment of a panel the EU was seeking the reestablishment of a level playing field by ensuring Philippines's observance of its WTO obligations. 
71. The representative of the United States
 said that, as his country had stated at the previous 
DSB meeting, the United States had been closely fo llowing this issue and was also concerned about 
the Philippine excise tax system and its effect on market a ccess for US exports of distilled spirits.  
This was an issue that the United States had raised  with the Philippines many times but, regrettably, 
without result.  In light of its concerns, on T hursday, 14 January 2010, the United States had filed a 
request for dispute settlement cons ultations.  The United States urged the Philippines to address the 
concerns that had been raised, and hoped that the Philippines would take action soon to level the 
playing field for imported and domestic spirits in the Philippine market. WT/DSB/M/278 
Page 14  
 
  72. The representative of the Philippines
 said that his country regretted that the EU had chosen to 
renew its request to the DSB to establish a panel in this matter and noted the US statement, as well as 
the US request for consultations on this matter.  The Philippines reiterated, for the record, that it was 
fully committed to a rules-based multilateral tr ading system and accorded utmost importance to 
complying with all its obligations under the WTO Ag reements.  The Philippines firmly believed that 
its excise tax regime was fully consistent with its WT O obligations, and remained of the view that this 
matter could have been resolved to the mutual satisf action of all the parties if the respective interests, 
legitimate sensitivities, and policy objectives of all sid es had been taken into account to balance their 
respective interests. 
73. 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. 
74. The representatives of Australia , China , Mexico , Chinese Taipei , Thailand  and the 
United States  reserved their third-party rights to participate in the Panel's proceedings. 
5. China – Measures affecting trading rights and distribution services for certain 
publications and audiovisual entertainment products 
(a) Report of the Appellate Body (WT/DS363/AB/R ) and Report of the Panel (WT/DS363/R and 
Corr.1) 
75. The Chairman  drew attention to the communication from the Appellate Body contained in 
document WT/DS363/13 transmitting the Appellate Bo dy Report on:  "China – Measures Affecting 
Trading Rights and Distribution Services for Cert ain Publications and Audiovisual Entertainment 
Products", which had been circulated on 21 December 2009 in document WT/DS363/AB/R, in 
accordance with Article 17.5 of the DSU.  He remi nded Members that the Appellate Body Report and 
the Panel Report pertaining to this dispute had been  circulated as unrestricted documents.  He said 
that, as Members were aware, Article 17.14 of th e DSU required that:  "An Appellate Body report 
shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the 
DSB decides by consensus not to adopt the Appellate Body report within 30 days following its 
circulation to Members.  This adoption procedure is without prejudice to the right of Members to 
express their views on an Appellate Body report".  
76. The representative of the United States  said that his country thanked the members of the 
Panel, the Appellate Body, and th e Secretariat staff assisting them for their hard work during this 
proceeding.  The United States had been concerned fo r some time with China's restrictions on trading 
rights, market access, and distributors for a wide range of copyright-intensive products, including 
reading materials, audiovisual home entertainm ent products such as DVDs, sound recordings, and 
theatrical films.  The United States was pleased that the Panel had found in favour of the United States 
on the vast majority of its claims, and that the A ppellate Body had upheld each of the Panel's findings 
challenged by China.  Many of the Panel and Appe llate Body findings were of great importance and 
would provide useful guidance to Members.  At the present meeting, the United States wanted to 
highlight three areas of particular interest.  Th e first aspect involved China's requirement that the 
relevant products be imported ex clusively through a limited number of state-owned enterprises.  The 
Panel had found this requirement inc onsistent with the trading rights commitments in China's Protocol 
of Accession.  In so finding, the Panel had confirmed that China's trading rights commitments extended to foreign-invested enterprises and fore ign individuals and enterprises, including those not 
invested or registered in China.  The Panel, in  a finding upheld by the Appellate Body, had further 
confirmed that theatrical films, DVDs and sound r ecordings were goods subject to China's trading 
rights commitments.  As the Panel and the Appellate Body had correctly found, the goods relevant to 
the US claim were integrated products consisting of  a physical medium containing content, and thus 
within the scope of China's trad ing rights commitments.  The Appellate Body had also properly  WT/DSB/M/278 
 Page 15 
 
 
  rejected the assertion that these products were mere accessories to a series of  services through which 
the physical goods were commercially exploited.  Had this argument by China been accepted, it 
would have exempted the vast majority of goods from the WTO's goods disciplines simply because those goods were used to provide a service.  The United States applauded the findings of the Panel 
and Appellate Body on these issues. 
77. The United States was also gratified that both the Panel and the Appellate Body had agreed 
with it that China's trading rights restrictions were  not justified by Article XX(a) of the GATT 1994.  
The Panel and Appellate Body had concluded that Ch ina's restrictions were not necessary for China to 
accomplish its specific policy goals.  The United St ates was pleased with those findings and hoped 
that China would bear them in mind as it moved forward with implementation.  However, the 
United States noted its concern with one aspect of  the Appellate Body's discussion of the "necessity" 
analysis under Article XX(a).  In particular, the Appe llate Body had referred to  a panel's examining an 
alternative that was "consistent (or less inconsistent)"
5 with the covered agreements.  The reference to 
"less inconsistent" was difficult to understand.  In th e first place, the parties and the Panel accepted 
that the alternative proposed by the United States was WTO-consistent (e.g., Panel Report, 
para. 7.907).  Moreover, both parties'  submissions had also referred to  the discussion in the Appellate 
Body report on "US - Gambling" of the need to ex amine "WTO-consistent alte rnative measures".  The 
United States had difficulty seeing any basis under the WTO Agreement for ranking degrees of inconsistency with a Member's WTO obligations, an d considered the formulation found in the "US - 
Gambling" report to be the better approach.  The Unit ed States also noted that the Appellate Body had 
found that Article XX(a) of the GATT 1994 could, in principle, be a defence to a trading rights claim 
under paragraph 5.1 of China's Accession Protocol.  The United States was so mewhat surprised that 
the Appellate Body had undertaken an interpretati on of paragraph 5.1, which had not been addressed 
in the parties' appellate submissions, and which was,  at most, the subject of a contingent appeal for 
which the contingency had never been triggered.  The United States also noted that the Appellate 
Body's discussion of this issue was not entirely cl ear.  That discussion listed factors that "may" be 
relevant, and used terminology not found in the Protocol whose precise meaning was not immediately 
apparent.  Clearly there would need to be further discussion of these issues.   
78. Second, with respect to distribution services, the Panel had also agreed with the United States 
on virtually all of its claims under the GATS.  The United States especially welcomed the Panel's 
finding, which had been upheld by the Appellate Body, that China's services commitments for sound 
recording distribution services included the electroni c distribution of sound recordings.  The Panel 
and the Appellate Body findings had confirmed that a Member's services commitments cover all 
means of supplying a service unless otherwise specified in the Member's schedule.  A contrary finding 
would have diminished significantly the value of services commitments in an ever-innovating world.   
79. Finally, the United States wished to turn to its claims under the GATT 1994.  With respect to 
reading materials, the United States was pleased that the Panel had found that certain critical 
restrictions on the distribution of imported reading materials inside China were inconsistent with the 
national treatment obligation of Article III:4 of the GATT 1994.  In the context of the US GATT 
claim related to theatrical films, the United States noted the Panel's reliance on China's statements that 
China did not limit distribution of imported theatrical films to two state-owned distributors.  The United States welcomed the assurances from China that imported films would be able to take advantage of the complete film distribution networ k available to Chinese films.  The United States 
would be monitoring developments in China in this  connection.  With respect to sound recordings, 
however, the United States was disappointed that th e Panel declined to find that China's measures 
were inconsistent with Article III:4 of the GATT 1994.  Those measures set up a legal regime in 
which imported sound recordings were subjected to  a more onerous and lengthy content review 
process than their domestic counterparts.  This  regime presented precisely the type of product 
                                                     
 
5 AB Report, para. 318. WT/DSB/M/278 
Page 16  
 
  discrimination that the GATT's national treatment obligation addressed.  The US panel request set 
forth a claim that the relevant Chinese measures were inconsistent with Article III:4 of the GATT 
1994.  However, the Panel had found that the questi on of whether the measures affected the "use" of 
the imported products was outside of  its terms of reference becau se the US panel request did not 
include the word "use".  The United States had seri ous concerns about that finding.  The Panel's 
reasoning, contrary to what Article 6.2 of the DS U required, would suggest that a complaining party 
must set forth its arguments in support of its claim in a panel request, rather than just setting forth its 
claims.  Although the Panel had declined to fi nd that China's measures with respect to sound 
recordings were inconsistent with Article III:4 in  part based on its narrow reading of the US panel 
request, the Panel noted the measures' inherent discrimination between imported and domestic 
products.  Accordingly, as China considered refo rms to its content review regime for sound 
recordings, the United States trusted that Chin a would keep the Panel's understanding of these 
measures in mind and ensure that its re gime avoided any discrimination.   
80. In sum, while the United States did not agree with  all aspects of the findings in the reports, it 
was nonetheless pleased to request the adoption of th e Panel and the Appellate Body Reports at the 
present meeting.  China had repeatedly affirmed its intention to act consistently with WTO rules and 
to respond swiftly to any findings of non-compliance.   In that spirit, and in light of the pressing 
barriers to market access for the relevant products a nd distributors of those products, the United States 
looked forward to China moving promptly to im plement the DSB's recommendations and rulings 
upon adoption of the Reports.   
81. The representative of China
 said that her country thanked the Appellate Body, the Panel and 
the Secretariat for their hard work and dedication during the Panel and the Appellate Body stages of 
this dispute.  China appreciated the Appellate Body 's confirmation that it had the right to invoke the 
general exception clauses, Article XX of GATT 1994.  China firmly believed that Article XX of the 
GATT 1994 was certainly applicable to all commitments  related to trade in goods in the Protocol of 
Accession and reports of any new WTO Member.  This was a serious systematic issue and must be 
handled very cautiously so as to guarantee that both old and new WTO Members had equal rights to 
invoke general exception provisions.  China was also pleased to see that, in many critical respects, the 
Panel had agreed with China and had rejected a la rge number of the US claims.  China wanted to 
emphasize that because the cultural product was natu rally embedded with not only commercial values 
but also cultural values, the administration of trad e in cultural products should be different from the 
regulation of general goods.  China was disappointed  that the Appellate Body had not upheld its 
claims on trade right issues and network music issu es.  China thanked for the opportunity to express 
its views on the Reports in this matter.  China w ould be examining the Appellate Body Report and the 
Panel Report carefully and prudently and would inform  the DSB of its intentions in respect of the 
implementation of the DSB's  recommendations and ru lings, as provided for under Article 21.3 of the 
DSU. 
82. The representative of the European Union  said that her delegation ha d followed this dispute 
with great interest and had participated in the proceedings as a third party.  Beyond the specific 
recommendations in the Panel and the Appellate Body Reports, the EU welcomed the important 
clarifications offered by the Panel and the A ppellate Body on some key WTO provisions, which 
would be essential for the future operation of the WTO Agreements.  On th e specific interpretative 
questions addressed in the Reports, the EU underlined  the importance of the interpretations regarding 
China's Accession Protocol.  The Panel had made it clear that, on the basis of China's Accession 
Protocol obligations, all enterprises in China, in cluding foreign-invested enterprises registered in 
China, had the right to import into China all goods cove red by the dispute.  It had also made clear that 
this obligation did not detrimentally affect Chin a's right to regulate trade in a WTO-consistent 
manner, so that "China's right to regulate trade ta kes precedence over China's ob ligation to ensure that 
all enterprises in China have the ri ght to trade".  However, the Pane l had chosen not to rule on the 
availability of Article XX(a) of the GATT 1994 as a defence against China's breaches of its trading  WT/DSB/M/278 
 Page 17 
 
 
  rights obligations, although it had in its arguendo an alysis concluded that the relevant measures were 
not "necessary" to protect public morals in Chin a.  The EU commended the Appellate Body for 
having ruled on the availability of Article XX(a) as a de fence in this case.  As the Appellate Body had 
rightly pointed out, and in line with the EU's s ubmission to the Appellate Body, sticking to the 
arguendo approach would have been at odds w ith the objective of promoting security and 
predictability through dispute settleme nt, and may have not assisted in the resolution of the dispute, in 
particular because of the risks involved with creating uncertainty with respect to China's 
implementation obligations.  Although the EU had argued in favour of a slightly more refined 
approach, in line with the Panel's view that China's "right to regulate trade" would, in a particular 
case, permit China to regulate who could be importers  or exporters of the relevant goods, where this 
regulation of importers or exporters "is incidental  (or necessary) to the regulation of the relevant 
goods" (Panel Report, para. 7.276), the EC noted th e Appellate Body's conclusion on whether China's 
right to regulate trade included regulations on the ri ght to trade.  The Appellate Body had confirmed 
this for the measures at issue because the provisions  that China sought to justify under Article XX had 
a clearly discernible, objective link to China's regulati on of the relevant products, and fell, as a result, 
within the scope of China's right to regulate trade.   Accordingly, the existence of such objective link 
in a specific case would need to be established thro ugh a careful scrutiny of the relevant measure in 
future cases.  The Panel and the Appellate Body had found, in respect of a large number of the claims 
made by the United States, that China had acted in consistently with its WTO obligations, be it under 
the Accession Protocol, the GATS or the GATT 1994 .  The EU called on China to expeditiously 
implement the recommendations in order to remo ve what constituted impor tant shortcomings in 
China's import and distribution regime.  The EU remained convinced that China could develop and 
implement its cultural policies within the boundaries set by its WTO obligations. 
83. The representative of Japan  said that his country thanked the Appellate Body and the Panel 
for their time and efforts devoted to this disput e and for their respective Reports.  Even though this 
dispute had presented complex issues of facts and ra ised difficult legal questions, the Panel's and the 
Appellate Body's analysis were thorough, and th eir overall findings were sound and well-reasoned.  
The Reports would provide a useful guidance for th e future implementation efforts by China and for 
the ultimate resolution of this dispute.  Japan wi shed to briefly comment on one particular issue 
contained in the Appellate Body Report, namely its decision to examine, and rule on, the issue of the 
availability of a defence under Article XX(a) of th e GATT 1994 by virtue of the introductory clause 
of paragraph 5.1 of China's Protocol of Accession.  The Panel, recognizing that this issue "presents 
complex legal issues"6, had prudently taken a so-called "argue ndo approach" and eventually had not 
resolved the issue because the meas ures at issue could not be justified under Article XX(a) anyway.  
Most of the participants in this appeal, including Japan, had called for caution to be exercised by the 
Appellate Body on this issue.  Nevertheless, th e Appellate Body had ruled on this issue upfront.  
Japan wished to offer some ob servations in this respect.   
84. First, Japan recalled that the Panel's "arguendo approach" or its decision not to rule on the 
availability of Article XX(a) defence had not been a ppealed by either participant.  Instead, China's 
request for the Appellate Body to rule on this issu e had been made conditional on the reversal of the 
Panel's findings on the "necessity" of the measures at issue and as a part of the request for completing 
the analysis.7  Since the Appellate Body had upheld th e Panel's finding on the "necessity", this 
condition had not been met.  Second, the Appellate  Body noted that the availability of Article XX 
defence in this dispute was "an issue of legal inte rpretation falling within the scope of Article 17.6 of 
the DSU".8  However, since the Panel had not made any finding on this issue, there was no "legal 
interpretation developed by the panel"9 that the Appellate Body could review.  This meant that the 
                                                      
6 Panel Report, para. 7.743. 
7 AB Report, para.211 and Annex 1 (Notification of an Appeal by China), para. 1. 
8 AB Report, para.215. 
9 Article 17.6 of the DSU. WT/DSB/M/278 
Page 18  
 
  Appellate Body had reviewed this complex issue of law de novo  and had decided on it in the first 
instance.  Furthermore, the availability of an Artic le XX defence by virtue of the introductory clause 
of paragraph 5.1 of China's Protocol of Accessi on presented a novel issue of law, which had never 
been raised in previous disputes, and had never b een examined, let alone decided, by panels or the 
Appellate Body before.  Apart from the propriety of  the analysis developed by the Appellate Body on 
this issue, which Japan would not address at the present meeting, there would be a risk that the 
complex issue of law, the novel one in particular , could be prematurely, and possibly improperly, 
decided by adjudicative body of appellate jurisd iction in situations where the issue was not well 
presented by the parties and not fully explored or de veloped by lower tribunals.  In this respect, Japan 
noted that, under the DSU, the time available for a ppellate reviews was extremely limited.  Third, the 
"arguendo approach" adopted by the Panel in this di spute was what the Appellate Body had taken in 
"US – Shrimp (Thailand)/US – Customs Bond Directive" disputes.
10  And most, if not all, of the 
rationales developed by the Appellate Body in ab andoning the "arguendo approach" in this dispute, 
including the concern about possible uncertainty with respect to the scope of implementation 
obligations11, appeared to be equally applicable to thes e previous disputes.  Even assuming that this 
change in the analytical approach did not amount  to a departure from the legal interpretations 
previously made by the Appellate Body in simi lar situations, which, the Appellate Body had 
explained, must be made  with "cogent reasons"12, Japan wished to know what would be the difference 
between the "US – Shrimp (Thailand)/US – Customs Bond Directive" cases, on the one hand, and the 
present case, on the other, that justified the change in its analytical approach.  Fourth, Japan was not 
sure that ruling on the availability of Article XX de fence would provide certainty or clarity regarding 
the scope of China's implementation obligations and would "assist in the resolution of this dispute".13  
In the discussion of "reasonably available altern ative measure" in the context of the "necessity" 
analysis under Article XX(a), the United States had proposed several "WTO-consistent alternatives to 
achieve [China's] content review objectives that do not restrict the right to import".14  At least one of 
them, "the proposal that the Chinese Government be given sole responsib ility for conducting content 
review"15 had been examined and found to be a genui ne alternative measure that was "reasonably 
available" to China under Article XX(a) by the Panel and the Appellate Body.16  The measures thus 
proposed by the United States, which were presumably WTO-consistent17 measures, or otherwise 
less-trade restrictive ones, which could be reasonabl y available to China and thus be justifiable under 
Article XX, would provide a good basis and useful  guidance for China's implementation actions.  
However, by ruling that a defence under Article XX was available to China, the Appellate Body had 
implicitly indicated that there would be another unspecified category of measures that were WTO-
inconsistent (and possibly more trade-restrictive) but could be justifiable under Article XX in this 
dispute.  This could encourage China to explore such category of WTO-inconsistent and presumably 
more trade-restrictive measures, rather than to turn to arguably WTO-consistent (or less trade-
restrictive) measures which had been discussed dur ing these proceedings, as its implementing actions.  
This, in turn, could create a future disagreement between the parties as to the WTO-consistency of 
such measures taken to comply.  In Japan's view, the resolution of the availability of Article XX 
defence should have been saved for another day wh en the resolution of the issue was absolutely 
necessary and the issue would be more properly presented and fully explored. 
                                                      
10 AB Report:  "US - Shrimp (Thailand)/US - Customs Bond Directive", para. 310. 
11 AB Report, para. 215. 
12 AB Report:  "US - Stainless Steel" (Mexico), para. 160. 
13 AB Report, para. 215. 
14 Panel Report, para. 7.873. 
15 See, e.g. AB Report, para. 312. 
16 Panel Report, para. 7.908;  AB Report, para. 332. 
17 Panel Report, para. 7.907.  WT/DSB/M/278 
 Page 19 
 
 
  85. The DSB took note  of the statements, and adopted  the Appellate Body Report contained in 
WT/DS363/AB/R and the Panel Report contained in  WT/DS363/R and Corr.1, as modified by the 
Appellate Body Report. 
6. Proposed nomination for the indicative list of governmental and non-governmental 
panelists (WT/DSB/W/419) 
86. The Chairman  drew attention to document WT/DSB/W /419, which contained an additional 
name proposed for inclusion on the indicative list of  governmental and non-governmental panelists, in 
accordance with Article 8.4 of the DSU.  He propo sed that the DSB approve the name contained in 
document WT/DSB/W/419. 
87. The DSB so agreed . 
7. Statement by Colombia concerning the Report  by the Director-General on the use of his 
Good Offices pertaining  to the disputes on bananas 
88. The representative of Colombia , speaking under "Other Business", said that his country 
thanked the Director-General and his team for us ing their good offices to facilitate an agreement 
between certain Latin American Members and th e EU, on the EU regime for the importation of 
bananas.  The outcomes of that facilitation were f undamental for agreeing to the terms and conditions 
that would allow several disputes pending before the WTO to be settled shortly.  The "Geneva Agreement on Trade in Bananas", presented to Members at the 17 December 2009 General Council 
meeting, stated that the disputes and claims referred to therein sha ll be settled upon Certification that 
the specified tariff cuts had been bound.  Colomb ia, therefore, understood that the report by the 
Director-General, contained in WT/DS361/2 – WT /DS364/2 of 22 December 2009, addressed to the 
Chairman of the DSB and later circulated to Memb ers, did not prejudice or impair Colombia's rights 
under the WTO Agreement, including rights deriving from the disputes and claims identified in paragraph 5 of the "Geneva Agreement on Trad e in Bananas", under the terms specified in 
paragraph 6 thereof. 
89. The DSB took note
 of the statement. 
8. Proposed amendments to the Working Procedures for Appellate Review 
(a) Statement by the Chairman 
90. The Chairman , speaking under "Other Business", said that, as he had announced at the outset 
of the present meeting, he wished to make a statement under "Other Business" concerning a communication addressed to him, dated 16 Decemb er 2009, from the Appellate Body regarding 
several proposed amendments to the Working Proced ures for Appellate Review.  Due to the holidays, 
that communication, which contained the text of the proposed amendments and an explanation 
regarding those amendments, had only been circulat ed to Members on 12 January 2010 in document 
WT/AB/WP/W/10.  A copy of this communication was available outside the meeting room.  The 
Appellate Body had also sent a similar communicati on to the Director-General on 16 December 2009.  
For Members' information, a copy of the Direct or-General's response to the Appellate Body's 
communication was available as a room document at the present meeting.  The proposed amendments 
to the Appellate Body's Working Procedures relate d to three matters:  (i) the timeline for written 
submissions;  (ii) electronic filing and service of documents;  and (iii) cons olidation of Appellate 
proceedings.  In this regard, he noted that these proposals were separate from, and without prejudice 
to, any amendments to the Working Procedures that might be needed once negotiations on the 
improvements to, and clarifications of, the DSU had been completed.  As for the process to be 
followed in this situation, he recalled that, under Article 17.9 of the DSU:  "Working procedures shall WT/DSB/M/278 
Page 20  
 
  be drawn up by the Appellate Body in consultation with the Chairman of the DSB and the Director-
General, and communicated to Members for their in formation".  In addition,  in accordance with the 
decision of the DSB of 19 December 2002, contained in document WT/DSB/31 concerning "Additional Procedures for Consultations Between  the Chairperson of the DSB and the WTO 
Members in Relation to Amendments to the Wo rking Procedures for Appellate Review", "the 
Chairperson of the DSB shall provide Members w ith an opportunity to comment on the proposed 
amendments, including in writing.  The Chairper son shall place an item on the agenda of an 
appropriate DSB meeting in which Members can discu ss in that context the proposed amendments".  
Pursuant to the above, the Appellate Body had asked him, as Chairman of the DSB, for assistance in 
obtaining the views of Members on the proposed amendments.  Since those proposed amendments 
had only been circulated to Members the previous  week, he thought that Members would want some 
time to examine them carefully.  Therefore, be fore the matter was formally placed on the DSB 
Agenda, it would seem appropriate to allow a pe riod of time for reflection and, as appropriate, 
informal consultations.  Thereafter, the DSB would n eed to revert formally to this matter at which 
time it would seem that the Chair should make a specific proposal as how to proceed, taking into 
account past practice and the 19 December 2002 DSB decision. 
91. The DSB took note
 of the statement. 
__________