RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/189 
17 June 2005 
 (05-2570) 
Dispute Settlement Body 
19 May 2005  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 19 May 2005  
 
Chairman:  Mr. Eirik Glenne (Norway) 
  
 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 ....................................................................................................... ......8  
2. Implementation of the reco mmendations of the DSB............................................................8  
(a) European Communities – Protection of trad emarks and geographical indications for 
agricultural products and foodstuffs ........................................................................................... 9 
(b) United States – Measures affecting the cr oss-border supply of gambling and betting 
services....................................................................................................................... .................9  
3. European Communities – Export subsidies on sugar..........................................................12  
(a) Report of the Appellate Body and Reports of the Panel ..........................................................12  
4. Dominican Republic – Measures affecting the importation and internal sale of 
cigarettes ..................................................................................................................... .............20  
(a) Report of the Appellate Body and Report of the Panel.............................................................20  WT/DSB/M/189 
Page 2  
 
5.
 Proposed nomination for the indicative list of governmental and 
non-governmental panellists ..................................................................................................23  
6. United States – Final dumping determin ation on softwood lumber from Canada...........23  
(a) Statement by the United States ................................................................................................. 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.31) 
 
(b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.31) 
 (c) United States – Continued Dumping and Subsid y Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.16 – WT/DS234/24/Add.16) 
 
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.6) 
 (e) Mexico – Measures affecting telecommunications services:  Status report by Mexico 
(WT/DS204/9/Add.5) 
 
(f) European Communities – Conditions for the gr anting of tariff preferences to developing 
countries:  Status report by the European Communities (WT/DS246/16/Add.1)   
 (g) Canada – Measures relating to exports of wheat and treatment of imported grain:  Status 
report by Canada (WT/DS276/20) 
 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.31) 
2. The Chairman  drew attention to document WT/DS176/ 11/Add.31, 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 her country ha d provided a status report in 
this dispute on 4 May 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 and rulings. 
4. The representative of the European Communities  said that it was now more than one month 
before the expiry of the extended deadline for im plementation.   Two bills were pending respectively  WT/DSB/M/189 
 Page 3 
 
 
in the Senate and in the House of Representatives that would, inter  alia, repeal Section 211.  Adoption 
of these bills would bring a satisfactory solution to this dispute by removing a legislation driven by 
specific interests. 
5. The representative of Cuba  said that it was disrespectful towards the DSB that one month 
prior to the expiration of the extended deadline fo r implementation, the United States had submitted a 
status report that was exactly the same as the one that had been submitted at the previous meeting, 
showing no sign of progress in the settlement of this dispute.  It was of even greater concern to Cuba that this attitude had become a habit of the United States, despite repeated cr iticisms raised against it 
by other delegations, not only with regard to this di spute, but also with regard to three other disputes 
that were before the DSB at the present meeting.  This attitude clearly demonstrated the importance 
that the United States attached to the WTO.  Cuba  wished to remind the United States that only 42 
days were left within which the United States had to implement the DSB's recommendations and 
rulings in this dispute.  Cuba requested that the United States propose to the US Congress the only 
correct way of implementing those recommenda tions, which was to repeal Section 211. 
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.31) 
7. The Chairman  drew attention to document WT/DS184/ 15/Add.31, 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 her country had provided a status report in 
this dispute on 4 May 2005, in accordance with Ar ticle 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.  Inde ed, the United States was pleased to note that 
legislation was being introduced in the US House of Representatives that would do just that.  The US 
administration would work with the Co ngress to encourage its timely passage. 
9. The representative of Japan
 said that his country welcomed the statement made by the United 
States that a bill to amend the US anti-dumping duty statute was being introduced to the US Congress.  
Japan had waited for this over three years.  The in troduction of a bill, as foreshadowed by the United 
States, would indeed be an important step towa rd the full-fledged implementation of the DSB's 
recommendations and rulings in this dispute.  At the same time, Japan wish ed to recall that the 
reasonable period of time for  implementation by th e United States would expire on 31 July 2005. 
Japan strongly hoped that further steps would foll ow promptly and that the necessary legislative 
amendments would finally be secured.  Japan urged the United States to do its utmost for the passage 
of the new bill at the earliest opportunity.  Japan  would closely monitor the course of action and 
hoped to be further notified by the United States of any progress with regard to the implementation of 
the DSB's recommendations and rulings in this dispute. 
10. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. WT/DSB/M/189 
Page 4  
 
(c) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.16 – WT/DS234/24/Add.16) 
11. The Chairman
 drew attention to document WT/D S217/16/Add.16 – WT/DS234/24/Add.16, 
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 her country had provided a status report on 
4 May 2005, in accordance with Article 21.6 of the DSU.  On 7 February 2005, the US administration 
had proposed repeal of the Continued Dumping and Subsidy Offset Act (CDSOA) in its budget 
proposal for fiscal year 2006.  In addition, on 3 March 2005, legislation that would repeal the 
Continued Dumping and Subsidy Offset Act had been  introduced in the US House of Representatives.  
The US administration would work with the Congr ess to enact legislation, and would continue to 
confer with the complaining parties in these dis putes, in order to reach mutually satisfactory 
resolutions of these matters. 
13. The representative of the European Communities  said that in April 2005, the EC had 
informed the DSB that it had taken the first step  in its legislative process to impose retaliatory 
measures against the United States with the adoptio n of a Commission's proposal.  On 25 April, the 
EC Council had adopted this Commission's proposal.  Consequently, since 1 May 2005, the EC had 
been applying a 15 per cent additional duty on imports  of certain products originating in the United 
States.  The EC had selected the targeted products  from the indicative list co mmunicated in November 
2004 and the precise list had been notified to the DSB on 29 April 2005 in writing.  The EC regretted 
that it had to take that step.  But, since the c ondemnation of the CDSOA, the United States had not 
given any convincing signs that implementation was forthcoming.  While the EC welcomed again the 
introduction of a repealing bill in the House, it could not help, but note that this bill had received thus 
far the support of only one co-sponsor .  The EC hoped that its decision would help focus minds on the 
need to repeal the CDSOA.  This legislation gene rated a US rest-of-the-world problem.  Canada had 
also started to apply retaliation on certain US products  on 1 May 2005.  He recalled that Brazil, Chile, 
India, Japan, Korea and Mexico had also been auth orized by the DSB to suspend the application of 
tariff concessions or other obligations to the Unite d States at any time.  Canada, the EC and the six 
other Members were the major trading partners of th e United States.  All together, they represented 71 
per cent of total US exports and 64 per cent of total US imports. 
14. The representative of Canada  said that his country noted the status report of the United States 
in relation to the Continued Dumping and Subsidy Offset Act of 2000.  On 29 April 2005, Canada had 
submitted its retaliation notification to  the DSB and had requested that that notification be circulated 
to all Members.  On 1 May 2005, Canada ha d implemented retaliatory measures against the 
United States on imports of live swine, cigarettes, oys ters, and certain specialty fish originating in the 
United States.  Canada continued to express its di sappointment with the United States' failure to 
repeal the WTO-inconsistent Byrd Amendment. Canada again called upon the United States to end 
this dispute and to repeal the Byrd Amendment. 
15. The representative of Korea  said that his country also noted the statement made by the United 
States and its status report on the implementation of the DSB's rulings and recommendations in the 
case:  "United States – Continued Dumping and S ubsidy Offset Act of 2000".  As Members were 
aware, more than two years had already passed  since the DSB's finding that the CDSOA was 
inconsistent with the WTO rules, and it was well over one year since the implementation period had 
ended in December 2003.  Nevertheless, the United St ates had yet to comply with the DSB's rulings 
and recommendations.  The United States had failed to  repeal the said Act and even continued to 
make disbursements under the existing Act that had b een found to be WTO-inconsistent.  Such  non-
compliance by the leading WTO Member not only denied the rights and benefits of other Members, but also seriously undermined the effective func tioning of the WTO dispute settlement system.  No 
delegation would deny that the dispute settlement  mechanism served as a cornerstone of the WTO  WT/DSB/M/189 
 Page 5 
 
 
system enhancing the integrity and predictability of  the system and, no doubt, the effectiveness of the 
dispute settlement mechanism hinged on Members' swift and sincere compliance with the DSB's 
rulings and recommendations.  As notified to th e DSB on 29 April 2005, the EC and Canada had 
taken retaliatory measures against the United Stat es on 1 May 2005 by imposing additional duties on 
certain products originating from the United States.   Korea hoped that these measures would prompt 
the United States to faithfully implement the DSB's decision and would thereby resolve this tediously 
prolonged dispute.  Once again, Korea strongly ur ged the United States to repeal the CDSOA without 
further delay.  Otherwise, Korea would be obliged to seriously consider following the lead of the EC 
and Canada.  
16. The representative of India  said that, like other Members, India noted with concern that the 
US status report showed virtually no progress in its  efforts to repeal the Byrd Amendment except the 
referral of bill H.R. 1211 to the Committee on Ways  and Means of the US House of Representatives.  
India had obtained its rights under Article 22 of  the DSU, and was looking at all possibilities, 
although immediate full compliance by the United States of its WTO obligations was India's preferred option.  India urged, once again, the United States to  take the necessary steps required to fully comply 
with the recommendations immediately. 
17. The representative of Japan
 said that his country noted the status report of the United States 
and welcomed the fact that bill H.R.1121 to repeal  the CDSOA, which had been introduced to the US 
House of Representatives in March 2005, had been referred to the Committee on Ways and Means.  
This was a positive step by the United States toward s the resolution of this dispute, and Japan was 
eagerly awaiting the passage of the bill to repeal  the CDSOA at the earliest possible opportunity.  
Japan had taken up every opportunity to urge for the early repeal of the CDSOA.  Japan noted that the 
importance of complying with the obligations un der the WTO Agreements was well-recognized by 
the United States and had been expressly stated in recent Japan/US bilateral economic-trade talks.  
Japan strongly called on the United States to take a concerted action towards a prompt repeal of the 
CDSOA.  As from 1 May, the EC and Canada had been imposing additional duties on US products in 
view of the non-compliance by the United States with the DSB's recommendations and rulings.  Japan 
was also aware that voices had significantly been raised  in the United States to repeal the CDSOA.  At 
the moment, Japan was observing carefully ho w the US Congress might proceed with the 
consideration of bill H.R.1121.  If the current situat ion continued to prevail, Japan intended to take 
appropriate actions to address such a situation, including the exercise of its rights under the WTO 
Agreements in order to secure the implementation by the United States of the DSB's 
recommendations and rulings in this dispute. 
18. The representative of Brazil  said that his delegation wished to briefly echo the other co-
complainants to this dispute to signal that it had ta ken note of the status report by the United States 
and, like other Members, wished to urge the United States to promptly comply with the DSB's rulings 
and the recommendations.  Brazil was closely following the implementation stage of this case and 
was considering what options to follow.  Brazil wish ed to register, for the record, that retaliation was 
not Brazil's preferred option, but that option was still on the table given the US lack of implementation. 
19. The representative of Chile
 said that his country had also been authorized to take retaliatory 
measures against the United States.  Chile noted the status report submitted by the United States.  His country wished to support the previous statements ma de by other co-complainants in this dispute and 
called on the United States to comp ly with the DSB's recommendations. 
20. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. WT/DSB/M/189 
Page 6  
 
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.6) 
21. The Chairman
 drew attention to document WT/DS160/ 24/Add.6, 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 her country had provided a status report in 
this dispute on 4 May 2005, in accordance with Article  21.6 of the DSU.  As noted in the report, the 
US administration had been meeting with the US Congress on this matter.  The US administration would continue to consult with the Congress and confer with the EC in order to reach a mutually 
satisfactory resolution of this matter. 
23. The representative of the European Communities
 said that almost five years after the adoption 
of the Panel Report by the DSB, the United States had still not brought its Copyright Act into conformity with the TRIPS Agreement.  This was a cause of great concern for the EC, as stated on 
numerous occasions before the DSB.   The EC consid ered that action by the United States to remedy 
this unfortunate situation would be important not only  from the point of view of the EC right holders, 
but also from a more general perspective, as it w ould dispel any doubts about the US commitment to 
appropriate copyright protection.  Therefore, the EC  trusted that the United States would accord high 
priority to the resolution of this issue of systemic  importance.  Should that not be the case, the EC 
wished to recall that it had reserved its right to reactivate, at any point in time, the arbitration 
proceeding on its retaliation request. 
24. The representative of Australia
 said that at the previous DSB meeting, his delegation had 
asked whether the US delegation could provide a mo re substantive report on the status of the US 
administration's consultations to implement the DSB' s recommendations and rulings in this dispute.  
Once again, Members had received another status re port  informing them that consultations were 
continuing.  Australia asked the United States when it hoped to have some results from the 
consultations. 
25. The representative of the United States  said that, as had been indicated at the previous DSB 
meeting, her delegation had conveyed Australia's interest in this matter to the US authorities.  The US 
administration was continuing its consultations with  the US Congress, as she had indicated earlier in 
the report, but that legislative process was in the hands of its Congress.  The US administration was 
working closely with them to resolve the dispute. 
26. 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.5) 
27. The Chairman  drew attention to document WT/DS204/ 9/Add.5, 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. 
28. The representative of Mexico  said that on 2 June 2004, Mexico and the United States had 
reached an agreement on implementation in this case.  He recalled that the agreement consisted of the 
following: (i) the United States would recognize the right of Mexico to continue to prohibit international simple resale (ISR);  i.e. the use of priv ate lines to carry public traffic;  (ii) for its part, 
Mexico would eliminate, from its current Interna tional Long-Distance Rules establishing the "uniform 
settlement rate" system, the "proportionate return" syst em and the requirement that the carrier with the 
largest share of outgoing traffic to a particular count ry should be the one to  negotiate the settlement  WT/DSB/M/189 
 Page 7 
 
 
rate on behalf of all Mexican carri ers dealing with that country;  (iii) Mexico had also undertaken to 
put into effect, within thirteen months following th e adoption of the Report the regulations needed to 
authorize, under Mexican law, the issuing of permits  for resale of switched international long-distance 
telecommunications services.  As Members were aw are, since 2004 Mexico had complied with the 
first of its commitments by eliminating the aspects of its International Long-Distance Rules that the 
Report considered to be WTO-inconsistent.  He w as, therefore, pleased to inform the DSB that in 
April 2005, Mexico had issued a draft regulation fo r the marketing of telecommunications services.  
Under the provisions of this instrument, compan ies from any country established in Mexico might 
market international long-distance services in Mexico without owning public telecommunications 
networks. This new legislation, along with the am endments that, since 2004, had allowed settlement 
rates to be freely negotiated between Mexican car riers and those from any other Member, confirmed 
the competitiveness of the Mexican telecommunicati ons market.  Once his government received all 
comments on the draft, and the necessary domestic procedures for the final publication of the regulation were completed, Mexico hoped that, toge ther with the United States, it would be able to 
notify the DSB that a mutually agreed so lution to this dispute had been reached. 
29. The representative of the United States
 said that her country wished to thank Mexico for its 
status report.  The United States was pleased that Me xico had published its proposed re-sale rules for 
public comment, which the United States of course viewed as a very positive development.  The 
United States was continuing its review of the propos ed regulations, as it was continuing its review of 
Mexico's international long distance rules. The United States looked forward to consulting with 
Mexico as it continued its efforts to implem ent the DSB's recommendations and rulings. 
30. 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.1) 
31. The Chairman  drew attention to document WT/DS246/ 16/Add.1, 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. 
32. The representative of th e European Communities  said that on 20 April 2004, the EC had 
confirmed its intention to fully implement the DSB' s recommendations and rulings in this dispute.  
The reasonable period of time would expire on 1 July 2005.  Already on 20 October 2004, the 
European Commission proposed to the EC Council a new GSP regulation which would, inter alia , 
repeal the "drug arrangement" under Council Regulation (EC) No. 2501/2001.  As stated in the status report submitted to the DSB,  the proposal was cu rrently under discussion within the EC Council.  
The EC was confident that it shall honour its comm itments and shall fully respect the deadline for 
implementation. 
33. The representative of India
 said that his country wished to thank the EC for the second status 
report regarding implementation of the DSB's recomme ndations and rulings in this dispute.  India 
noted that the status report showed no progress since the first status report had been received by the DSB in April 2005.   However, the EC had until 1 July 2005 to comply with the DSB's decision.  
India assumed the EC was taking the necessary steps to  meet this deadline, and looked forward to the 
EC fully complying with the DSB's recommendations  and rulings within the reasonable period of 
time. 
34. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. WT/DSB/M/189 
Page 8  
 
(g) Canada – Measures relating to exports of wheat and treatment of imported grain:  Status 
report by Canada (WT/DS276/20) 
35. The Chairman
 drew attention to document WT/DS276/ 20, which contained the status report 
by Canada on progress in the implementation of the DSB's recommendations in the case concerning Canada's measures relating to exports of wheat and treatment of imported grain. 
36. The representative of Canada
 said that his country welcomed this opportunity to provide a 
status report on its implementation of the DSB's rulings and recommendations in this matter.  
Canada's written report had been submitted to th e DSB on 4 May 2005.  Canada had put forward 
legislation on 11 March 2005 to implement the DS B's recommendations and rulings. This legislation 
had now been passed by the House of Commons and was under consideration by the Senate.  Canada 
expected to be in full compliance with its WT O obligations by the agreed upon implementation 
deadline of 1 August 2005. 
37. The representative of the United States  said that her country thanked Canada for its status 
report and looked forward to consu ltations with Canada as it took st eps in its implementation of the 
DSB's recommendations.  At the present meeting, the United States wished to ask Canada some 
questions about the status report.  First, she ask ed if Canada could explain how the legislation 
mentioned in Canada's status report would bring it  into conformity with its WTO obligations, given 
that the legislation did not appear to address one of  the challenged measures in this dispute, Canada 
Grain Regulation Section 56(1).  In addition, the United States also understood that the proposed legislation contemplated repealing certain of the m easures at issue in this dispute. The United States 
asked if Canada could clarify whether it intended to replace the measures being repealed with other 
measures that would address entry of foreign grain into Canadian grain elevators, mixing foreign 
grain with Canadian grain, or extending the ra il revenue cap to cover foreign grain shipments. 
38. The representative of Canada
 said that the second question raised by the United States was 
rather technical and, therefore, he would convey th at question to his authorities for further response. 
He hoped to have such a response either at the ne xt DSB meeting or in discussions with the US 
delegation directly.  With respect to the first questi on, he said that this matte r had been discussed with 
the United States in the context of the discussions on a reasonable period of time for implementation. 
The legislation in question dealt with legislativ e measures.  The regulations were administrative 
decrees and they could only be addressed once the le gislative framework was in place.  As soon as the 
Act was cleared in the Canadian Parliament, his country would be in a position to promulgate the 
regulations at the administrative level and deal with  the issues at hand.  He hoped that his response at 
the present meeting answered the first question raised by the United States. 
39. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
2. Implementation of the recommendations of the DSB 
(a) European Communities – Protection of tr ademarks and geographical indications for 
agricultural products and foodstuffs 
 (b) United States – Measures affecting the cro ss-border supply of gambling and betting services 
 40. The Chairman
 recalled that, in accordance with the DS U 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  WT/DSB/M/189 
 Page 9 
 
 
recommendations and rulings of the DSB. He proposed  that the two sub-items to which he had just 
referred be considered separately. 
(a) European Communities – Protection of trad emarks and geographical indications for 
agricultural products and foodstuffs 
41. The Chairman  recalled that at its meeting on 20 April 2005, the DSB had adopted the Panel 
Reports pertaining to the complaints by the United States and Australia in relation to the case on:  
"European Communities – Protection of Trademarks  and Geographical Indications for Agricultural 
Products and Foodstuffs".  He invited the EC to in form the DSB of its intentions in respect of 
implementation of the DSB's recommendations. 
42. The representative of the European Communities  said that on 20 April 2005, the DSB had 
adopted the recommendations and rulings in th e case: "European Communities – Protection of 
Trademarks and Geographical Indications for Ag ricultural Products and Foodstuffs".  The EC 
intended to fully implement the DSB's recomme ndations and rulings in this case in a manner 
consistent with its WTO obligations and it had alr eady begun to evaluate options for doing so.  The 
EC intended, in particular, to modify certain pr ovisions of its GI regime relating to agricultural 
products and foodstuffs (Re gulation 2081/1992) to make it fully compatible with the DSB's rulings 
and recommendations.  Due to the relative comple xity of the issues involved and the need for a 
satisfactory implementation, the EC would need a r easonable period of time in which to do so.  The 
EC stood ready and willing to discuss on an appropr iate reasonable period of time for implementation 
with Australia and the United States, in acco rdance with Article 21.3 (b) of the DSU. 
43. The representative of the United States  thanked the EC for its statement that it intended to 
implement the DSB's recommendations and rulings in th is dispute.  The United States was prepared to 
discuss with the EC a reasonable period of time fo r such implementation, pursuant to Article 21.3(b) 
of the DSU. 
44. The representative of Australia  said that his country welcomed the EC's confirmation of its 
intention to implement the DSB's recommendations and rulings in this dispute.  The EC had indicated 
that it would require a reasonable period of time in which to implement those recommendations and 
rulings.  Australia looked forward to discussions with the EC in the near future in order to reach an 
agreement on such a period of time. 
45. The DSB took note  of the statements, and of the information provided by the European 
Communities regarding its intentions in respect of implementation of the DSB's recommendations. 
(b) United States – Measures affecting the cross- border supply of gambling and betting services 
46. The Chairman  recalled that at its meeting on 20 April 2005, the DSB had adopted the 
Appellate Body Report in the case on:  "United St ates – Measures Affecting the Cross-Border Supply 
of Gambling and Betting Services" and the Panel Report on the same matter, as modified by the Appellate Body Report.  He then invited the Unite d States to inform the DSB of its intentions in 
respect of implementation of the DSB's recommendations. 
47. The representative of the United States
 said that her country intended to implement the DSB's 
recommendations and rulings in this dispute in a manner that respected the United States' WTO 
obligations, and it had begun to evaluate options  for doing so.  The United States would need a 
reasonable period of time in which to do this.  He r delegation stood ready to discuss this matter with 
the Government of Antigua and Barbuda, in accordance with Article 21.3(b) of the DSU. WT/DSB/M/189 
Page 10  
 
48. The representative of Antigua and Barbuda
, the Minister of Finance and the Economy of 
Antigua and Barbuda , Dr Errol Cort, said that among the responsibilities of his Ministry was the 
financial services industry, including the directorate of offshore gaming.  He said that he was honoured to be at the present meeting to represent hi s country in this important matter. First, he 
wished to express his delegation's disappointment in the statement just made by the United States.  
Prior to the present meeting, his country had had no contact or communication from the United States 
regarding its intentions in this matter.  Under Ar ticle 21.3 of the DSU, Antigua and Barbuda believed 
that it was entitled to hear at this meeting speci fically what the United States proposed to do to 
comply with the decision and what time-frame it suggested in which to accomplish that.  The 
statement of the United States at the present mee ting gave no substantive guidance as to the US 
intentions, and his country would respectfully ask the United States to be more specific in front of the 
DSB.   Failing that, at the very least, he wished to  extend an invitation to the US delegation to meet 
with his delegation following the present meeting in or der that it might promptly get the clarity to 
which his country was entitled.  Antigua expected full and complete compliance by the United States 
with the recommendations adopted by the DSB in th is case.  As noted at the previous meeting, 
Antigua and Barbuda would monitor the situation very closely to ensure timely and sufficient 
implementation by the United States.  He wished to note again how important this industry was to his 
country's delicate economy and to the betterment of  its citizens, and time was of the essence in this 
matter. 
49. At the present meeting, Antigua and Barbuda wi shed to take this opportunity to make a few 
observations.  First, his country was disturbed that  the United States, in its public pronouncements 
regarding this case, had stated that it needed only to  "clarify internet gambling restrictions in certain 
ways" or "tweak" the US Interstate Horseracing Act.   A close and thorough reading of the Appellate 
Body Report demonstrated that the United States had asserted in this dispute that it prohibited "the remote supply of gambling and betting services by an y supplier, whether domestic or foreign.  In 
other words, the United States sought to justify [its measures] on the basis that there is no 
discrimination in the manner in which the [measures] are applied to the remote supply of gambling 
and betting services."
1 
50. To comply with the ruling, the United St ates must give Antigua market access for the 
provision of gambling and betting services.  This should not be a difficult or time consuming task.  For a start, the US federal government could immediately cease sending letters and issuing statements that Antiguan operators could not lawfully do busin ess in the United States.  The United States also 
had experience governing its own domestic remote gambling industry.  If Members were not already 
aware of it, the United States had sanctioned dom estic Internet and telephone account wagering 
services that accepted hundreds of millions of dolla rs in wagers each year.  There was extensive 
remote gambling on horse races and other events and contests in the United States.  Under the rules of 
WTO law, pursuant to the Appellate Body Report, it was discriminatory for the United States to allow 
its domestic remote gambling indus try to flourish while seeking to  ban the provision of remote 
gambling services from Antigua and Barbuda. 
51. In this context, Antigua and Barbuda believed that the ruling provided the United States with 
an alternative – and that was to prohibit all domestic  remote gambling.  It  should also be noted that 
one was referring to "remote" gambling, not "internet" gambling, not "horse racing" gambling.  The distinction that the United  States impressed upon and which had been  explicitly accepted by the Panel and 
the Appellate Body was the "remote" and "non-remo te" distinction.  If "remote" gambling was bad 
enough, in the eyes of the United Stat es, to deserve prohibitio n, then it should be prohibited in the United 
States across the board, whether it cro ssed international borders or state lines or not, whether it involved 
the internet, the telephone, the post or any other method of "remote" supply.  That much was clear.  In its 
ruling, the Appellate Body had determined that the Unit ed States had met the firs t part of the Article XIV 
exception under the GATS, but had not proven that its measures were non-discriminatory under the 
                                                     
 
1 Appellate Body Report, para. 350.  WT/DSB/M/189 
 Page 11 
 
 
chapeau of Article XIV.  However, it should be obser ved that the finding in fa vour of the United States 
under the first part of the test hung by a very slender thread indeed.  In its ruling, the Appellate Body established for the first time a clear  rule for the assessment of an Ar ticle XIV claim and the respective 
burdens of the parties under it.  The Appellate Body ha d stated that first the United States had to establish a 
prima facie case of necessity under Article XIV.  At that  time, the burden shifted to Antigua to demonstrate 
that one or more "reasonably available alternatives" to an outright prohibition existed, at which time the 
burden would then be shifted back to the United Stat es to prove that these altern atives would not in fact 
work.. 
52. He noted that the Appellate Body had conc luded that: "because the United States made its 
prima facie case of necessity, and Antigua faded to identify a reasonably available alternative measure 
...  the United States demonstrated that its stat utes are 'necessary' and therefore justified, under 
paragraph (a) of Article XIV."
23  In the same paragraph of its Report, the Appellate Body also stated 
that "Antigua raised no other measure that, in th e view of the Panel, could be considered an 
alternative to the prohibitions on remote gamb ling contained in the [measures]."  However, a 
complete reading of the proceedings had revealed that  this statement by the Appellate Body was, with 
the deepest of respect, simply not correct.  Over the course of the proceedings, Antigua and Barbuda 
had raised a number of alternatives, including of co urse its own regulatory scheme, but also the fact 
that sophisticated and experienced jurisdictions  such as Ireland and the United Kingdom had seen fit 
to permit the internet gambling efforts of their li censed "bricks and mortar" operations and the fact 
that the United States itself had adopted a legislative approach to regulate conduct on the internet that 
might pose a danger to children.  His country ha d also suggested that Antiguan operators could 
engage agents in the United States who could be used to assess the iden tity and particulars of 
proposed customers in person prior to the creati on of their accounts with Antiguan operators.  
Notwithstanding the aforesaid and contrary to what ha d been stated by the Appellate Body, the Panel 
Report in fact had taken note of some of this ev idence, indeed even in the Article XIV context. 
53. Given the considerable economic a nd other resources that his tiny country had invested in this 
case, it was most disappointing that the Appellate Body had apparently chosen to overlook this 
evidence, clearly in the record and referred to by Antigua and Barbuda in its  Appellate submissions.  
Be that as it might, "reasonably available alternatives" to prohibition did exist. Finally, he wished to 
make clear to WTO Members one fact that might only be known to students of the case under consideration against the United States.  That w as from the beginning of this dispute Antigua and 
Barbuda had made it clear that it recognized that gambling and betting services should be subject to 
regulation.  Antigua and Barbuda itself regulated them  and did not deny the right of the United States 
to reasonably regulate these services to ensure th e protection of citizens.  But prohibition was not 
regulation.  In this respect, due notice must be  taken of the decision of the US Supreme Court, 
announced on 16 May 2005,  in a dispute among its states regarding cross-border wine sales.  That case was remarkably analogous to the dispute under c onsideration and, his country suspected that it 
might very well soon have an impact on the resolu tion of the dispute.  Antigua and Barbuda had 
offered the United States the opportunity to cooperate  on the regulation and oversight of gambling and 
betting services.  His country hoped that the Unite d States would accept his country's offer and work 
towards a resolution of this dispute that woul d give Antiguan operators fair, reasonable and 
responsible access to the enormous ga mbling market in the United States. 
54. The DSB took note
 of the statements, and of the information provided by the United States 
regarding its intentions in respect of implementation of the DSB's recommendations. 
                                                      
2 Appellate Body Report, para. 326 
 WT/DSB/M/189 
Page 12  
 
3. European Communities – Export subsidies on sugar 
(a) Report of the Appellate Body (WT/DS265/AB/R –  WT/DS266/AB/R –
WT/DS283/AB/R) and Reports of the Panel (WT/DS265/R;  WT/DS266/R;  WT/DS283/R) 
55. The Chairman
 drew attention to the communication from the Appellate Body contained in 
document  WT/DS265/28 – WT/DS266/28 – WT/DS 283/9 transmitting the Appellate Body Report 
on:  "European Communities – Export Subsidies on Sugar", which was circulated on 28 April 2005 in 
document WT/DS265/AB/R – WT/DS266/AB/R – WT /DS283/AB/R, in accordance with Article 17.5 
of the DSU.  He reminded delegations that, in accordance with the Decision on Procedures for the 
Circulation and Derestriction of WTO Documents contained in document WT/L/452, the Appellate 
Body Report and the Panel Reports had been circul ated as unrestricted documents.  As Members were 
aware, Article 17.14 of the DSU required that:  "A n Appellate Body report shall be adopted by the 
DSB and unconditionally accepted by th e parties to the dispute unless the DSB decides by consensus 
not to adopt the Appellate Body report within 30 da ys following its circulation to Members.  This 
adoption procedure was without prejudice to the right of Members to express their views on an 
Appellate Body report". 
56. The representative of Australia  said that his country welcomed the findings of the Appellate 
Body and the Panel in this dispute and the a doption of these Reports by the DSB at the present 
meeting.  Australia thanked the Appe llate Body and the Panel for their work in relation to this dispute.  
His country also thanked the co-complainant s – Brazil and Thailand – for their cooperation 
throughout this dispute.  Australia looked forward to the EC's full and prompt implementation of the 
DSB's rulings and recommendations in this dispute.  Australia stood ready to consult with the EC at 
the earliest opportunity on a reasonable period of time for implementation.  The Appellate Body and 
the Panel had confirmed that all s ugar exported from the EC received export subsidies and that the EC 
must limit its subsidised exports of sugar to the leve ls set out in its Schedule.  This meant that instead 
of exporting at its current level of over 5 million tonnes a year, the EC would have to limit its annual 
subsidised sugar exports to 1.2 735 million tonnes, and that it would have to reduce its expenditure 
from €1.3 billion to €499.1 million a year. 
57. At the present meeting, he wished to put on the record some importa nt Panel and Appellate 
Body findings in this dispute.  First, Australia welcomed the Appellate Body's finding that the Panel 
had erred in exercising judicial economy on the co mplainants' claims under Article 3 of the SCM 
Agreement.  Second, the Reports did not require th e EC to make any chang es to the preferential 
arrangements currently enjoyed by certain ACP countr ies into its internal sugar market.  There was 
nothing to stop the EC from observing its commitm ents to the ACP countries as well as its export 
subsidy reduction commitments to Australia.  The Panel had called upon the EC to "bring its 
production of sugar more into line with domestic consumption whilst fully respecting its international 
commitments with respect to imports, including its commitments to developing countries".  Australia 
called upon the EC to implement the rulings in a wa y that did not damage access to EC markets for 
the ACP countries.  Third, the findings in this di spute did not create a de-facto ban on low priced 
exports.  As explained by the Appellate Body, Artic le 9.1(c) of the Agreement on Agriculture did not 
apply merely because export sales were made at lo w prices – rather, it required that payments be 
made, that such payments be made on the export of an agricultural prod uct, and that such payments be 
financed by virtue of governmental action.  It w as only when all three requirements were met that an 
Article 9.1(c) export subsidy existed.  Fourth, th e Reports did not blur the distinction between the 
WTO disciplines on domestic support and the WTO disciplines on export subsidies.  By contrast, and 
as stated by the Appellate Body, the findings r espected the boundary between the two disciplines – 
they were designed to ensure that WTO Member s provide both domestic s upport and export subsidies 
in conformity with the Agreement on Agriculture.  As the Appellate Body had stated, the use of 
domestic support, without limit, to provide support for exports undermined the benefits that were 
intended to accrue from a WTO Member's export s ubsidy commitments.  Th e Appellate Body had 
found that the production of C sugar was a direct consequence of the EC sugar regime.  C sugar  WT/DSB/M/189 
 Page 13 
 
 
exports equalled between 11 a nd 21 per cent of EC quota production and commanded a price 
sufficient to cover only 30 per cent of its cost of production.  Plainly, the export of C sugar was not 
some incidental effect of the EC sugar regime.  Fifth, a WTO Member could not escape its export subsidy obligations under the Agreement on Agricultur e by inserting a footnote to its Schedule that 
was inconsistent with its treaty obligations.  These Reports should serve as a caution to any WTO 
Member who, as part of the Doha Round negotia tions, sought to escape its obligations under the 
Agreement on Agriculture by the insertion of creativ e footnotes in its Schedule.  Finally, for the 
record, at no time had Australia negotiated or ag reed to the footnote as a departure from the EC's 
obligations under the Agreement on Agriculture.  Th e facts were on the Panel and the Appellate Body 
record. 
58. The representative of Brazi
l said that on 28 April 2005, in its Report on "European 
Communities – Export Subsidies on Sugar", the A ppellate Body had confirmed the findings and 
conclusions of the Panel Report of 15 October 200 4.  Both the Panel and the Appellate Body had 
concluded that the EC's sugar regime was in br each of EC's obligations under the Agreement on 
Agriculture.  Brazil welcomed the adoption of these Reports.  Brazil thanked th e Panel, the Appellate 
Body and the Secretariat for their work in this di spute.  He emphasized the importance that Brazil had 
attached to the close and constructive cooperation maintained with the other two complainants –
Australia and Thailand – throughout these proceedings. 
59. The Reports made absolutely clear that the EC  could only grant export subsidies to sugar up 
to the annual limits of 1,273,500 tonnes and €499.1 m illion. Full adherence by the EC to these export 
subsidy commitments would enlarge the sugar intern ational market by as much as five million tons 
per year, to the benefit of the competitive produ cers and exporters, developing countries most of 
them. Such a result should not be feared nor regre tted by WTO Members.  Not even by those with a 
legitimate interest in the maintenance of the pref erential access granted by the EC to sugar of ACP 
countries and of India's origin. 
60. There was absolutely nothing in  the Reports that the DSB was adopting at the present meeting 
(as well as in the cases brought by the three complain ants) that would compel the EC to change the 
conditions upon which that preferenti al access was accorded to tho se countries.  The decision to 
change those conditions was entirely in the EC's hands.  The Reports could not be construed as an 
obstacle for the EC to comply with its WTO ob ligations and preferential arrangements regarding 
sugar, or by any other commitment to support or aid those countries.  Brazil had always been aware of 
the significance of the sugar sector to the ACP sugar producing countries.  That was why Brazil 
supported the approval of the waiver that allowed fo r that preferential treatment, which had virtually 
excluded Brazil from the European sugar market to th e benefit of the ACP suppliers.  Brazil was also 
developing and strengthening tec hnical cooperation programs with the ACP countries in the field of 
sugar and ethanol producti on with a view to increase their co mpetitiveness and to add value to the 
industry output. 
61. At the present meeting, Brazil wished to briefl y highlight some of the most relevant findings 
of the Panel and the Appellate Body Reports.  With regard to footnote 1 to the EC's Schedule, he said 
that:  (i) the Agreement on Agriculture establishe d that both the budgetary outlays and the quantity 
commitment levels be specified in a Member's Sc hedule in respect of any export subsidy listed in 
Article 9.1.  There was no room for an "interpr etation that a Member is only obliged to fulfill 
'whatever commitments' it chooses to specify in its Schedule"; (ii)"it is clear that the commitments 
specified in a Member's Schedule must be in conf ormity with the provisions of the Agreement [on 
Agriculture]".  No provision under this Agreement au thorized Members to depart, in their Schedules, 
from their obligations under the Ag reement (paras. 216 and 220); (iii) "we see no basis in the Panel 
Reports for the contention of the European Comm unities and the ACP Countries that the Complaining 
Parties or the WTO Members negotiated or agreed to Footnote 1 [to EC's Schedule] as a departure 
from the European Communities' obligations under the Agreement on Agriculture." (para. 223). WT/DSB/M/189 
Page 14  
 
62. With respect to C Sugar, he noted that:  (i) "C sugar is being sold on the world market by 
European Communities' sugar producers/exporters at a price that does not ev en remotely cover its 
average total cost of production." (para. 264); (ii)  "sales below total cost of production cannot be 
sustained in the long term, unless they are financed  from some other sources." (para. 266); (iii) "the 
subsidized production and export of C sugar is no t the incidental effect of the domestic support 
system, but is a direct consequence of the EC sugar regime." (para. 280). 
63. With respect to the distinction between export su bsidy and domestic suppor t, he noted that: (i) 
"if domestic support could be used, without limit, to  provide support for e xports, it would undermine 
the benefits intended to accrue through a WTO Me mber's export subsidy commitments." (para. 280). 
64. With respect to the principle of estoppel
 and good faith, he noted that: (i) "the European 
Communities has no basis on which to [...] assert th at it could have legitimately relied upon [an] 
alleged shared understanding, in deciding not to include exports of  C sugar in the base quantity levels 
in its Schedule." (para. 316); (ii) There was "nothing in the Panel record to suggest that the Complaining Parties acted inconsistently with Artic le 3.10 of the DSU or the principle of good faith." 
(para. 319). 
65. With respect to judicial economy, he said tha t; (i) "in declining to rule on the Complaining 
Parties' claims under Article  3 of the SCM Agreement , the panel precluded the possibility of a remedy 
being made available to the Complaining Parties, pur suant to Article 4.7 of the SCM Agreement [...]. 
This constitutes false judicial economy and legal er ror."; (ii) Unfortunately, the Appellate Body had 
found that there were not sufficient elements for it to  complete the legal analysis required in the case.  
Brazil respectfully disagreed and noted that had th e Appellate Body found otherwise, it would have 
concluded that the subsidies at issue were also  incompatible with the Agreement on Subsidies. 
66. Finally he expressed Brazil's expectation that th e EC would fully and promptly comply with 
the DSB's rulings and recommendations in this matter.  Brazil stood ready to consult with the EC at the earliest opportunity on a reasonable period of ti me for implementation.  In this respect, Brazil 
recalled that, in its opening statement before the Ap pellate Body, it had referred to Article 42(2) of 
EC's Regulation 1260/2001, under which the European Commission routinely adopted implementing 
rules in the sugar sector in a matter of days. 
67. The representative of Thailand
 said that her country wished to begin by thanking the members 
of the Appellate Body, the Panel and the Secretar iat for their hard work throughout the dispute 
settlement proceedings in this important case.  Thailand was pleased to propose the adoption of the 
Reports of the Panel and the Appellate Body.  Thaila nd believed that this Repo rt would provide useful 
guidance to WTO Members with respect to their obligations under export subsidy provisions of the 
Agreement on Agriculture.  On this occasion, Tha iland wished to highlight certain aspects of the 
Report that it believed to be of particular signi ficance.  First, this dispute concerned the export 
subsidies granted in respect of sugar by the EC  under its Council Regulation No. 1260/2001.  These 
subsidies had long been of concern to Thailand, and to other WTO Members.  Indeed, even within the 
EC, there had been much clamoring for change of a regime considered to be punitive to developing 
countries such as Thailand.  The findings of the Pa nel and the Appellate Body in this case should 
provide further impetus for the EC to reform its sugar regime.  The Appella te Body had upheld the 
Panel's finding that footnote 1 to Section II, Part IV of the EC's Schedule did not enlarge or otherwise 
modify the EC's commitment levels specified in th at Schedule.  The Appellate Body had also upheld 
the Panel's findings that payments in the form of low-priced sales of C beet to sugar producers were 
"financed by virtue of governmental action", within the meaning of Article 9.1(c) of the Agreement 
on Agriculture,  and that the production of C sugar receive d a "payment on the export financed by 
virtue of governmental action", within the meaning of Article 9.1(c) of the Agreement  on Agriculture, 
in the form of transfers of financial resources th rough cross-subsidization resulting from the operation 
of the EC's sugar regime.  Accordingly, the Appe llate Body had upheld the Panel's finding that the 
EC, through its sugar regime, acted inconsistently w ith its obligations under Articles 3.3 and 8 of the  WT/DSB/M/189 
 Page 15 
 
 
Agreement on Agriculture, and nullified or impaired the benefits accruing to the complaining parties 
under the Agreement on  Agriculture. Thailand welcomed these ru lings.  The Panel and the Appellate 
Body had unequivocally confirmed that the expor t subsidies granted by the EC, which had been 
challenged by the complainants, were inconsiste nt with the EC's reduction commitments under the 
Agreement on Agriculture.  These rulings were im portant for the future and integrity of the 
multilateral trading system.  Members could not, w ith impunity, insert footnotes in their Schedules 
that purported to modify or shrink their obligations.  Further, Members could not attempt to evade their obligations not to provide export subsidies by  effectively cross-subsidizing export production.  
The Appellate Body had also found that the Panel had erred in exercising judicial economy, and had 
thereby failed to discharge its obligation under Article  11 of the DSU with respect to the complaining 
parties' claims under Article 3 of the SCM Agreement .  The Appellate Body had, however, decided 
not to complete the analysis on the grounds that it  did not have sufficient facts to do so.  While 
Thailand was disappointed by the A ppellate Body's reluctance to ru le on Thailand's SCM claims and 
thus determine the implementation period, Thailand welcomed the recognition by the Appellate Body 
that the remedial regime under the SCM Agre ement essentially differed from that under the 
Agreement on Agriculture.  Thailand looked forward to  working with the EC to achieve prompt and 
effective implementation. 
68. Before closing the statement, she reiterated th at as a developing country, Thailand was fully 
aware of the need of developing countries fo r foreign earnings as an engine for economic 
development.  Thus, Thailand did not object to th e preferential treatment accorded by the EC to 
selected ACP countries.  Nevertheless, as Thailand ha d mentioned in its submissions to the Panel and 
the Appellate Body, the EC could not continue to use the trade preferences it granted to selected 
developing countries as an excuse for not abiding by its WTO obligations, to the detriment of other developing countries.  There was nothing to prev ent the EC from honouring its commitments to ACP 
without damaging other sugar exportin g countries.  In this connection, Thailand wished to reassure 
the ACP countries that the Reports pertaining to th is dispute were not intended to affect their 
preferential import arrangements with the EC.  It was possible for the EC to respect its obligations 
under both the Sugar Protocol and the WTO Agreemen ts.  Thailand did not believe that there was a 
conflict between the two sets of obligations.  Thailand   noted that the Panel had suggested that the EC 
should consider measures to bring
 its domestic production of sugar more in line with domestic 
consumption while respecting its international co mmitments under the Sugar Protocol.  Her country 
believed that this approach would protect the right s of the ACP countries, and would also guarantee 
the rights of Members under the WTO Agreement.   Thailand wished to emphasize that all WTO 
Members had an interest in an EC's regime that  was consistent with the EC's obligation under the 
WTO Agreement.  Indeed, Thailand believed that the ACP countries in particular had an interest in a 
WTO-consistent sugar regime that provided legal secu rity and that was not vulnerable to challenge.  
Thailand reiterated that it looked forward to the EC 's full and prompt implementation of the DSB's 
ruling and recommendation in this dispute. 
69. The representative of th e European Communities  said that the EC had already made public its 
intention to comply with the WTO ruling.  Howe ver, the EC considered that the Panel and the 
Appellate Body Reports raised serious systemic concerns, which deserved careful consideration by 
WTO Members.  In the EC's view, the Panel Repor t was flawed on a number of grounds.  The EC had 
hoped that the Appellate Body would subject the Panel's poor legal reasoning to a more rigorous 
review and correct the errors in the Panel's reasoning.   It was with regret that the EC noted that the 
Appellate Body had not reversed any of the findings of the Panel.  This was all the more regrettable 
because the Appellate Body's reasoning was ofte n far from persuasive and raised a number of 
important systemic concerns.  In respect of foot note 1 to the EC's export subsidy commitments, the 
Appellate Body had dismissed many of the EC's arguments with little examination.  The lack of 
examination was difficult to understand when comparis ons were made with other recent reports of the 
Appellate Body where the same or very similar issues  arose  He then referred to some examples.  As 
part of its argumentation, the EC had relied upon cover notes to draft Schedules and letters from 1994 
from Australia, which showed that in 1994 Austra lia had shared the EC's understanding of this WT/DSB/M/189 
Page 16  
 
footnote, and had not understood the footnote as it  now pretended to.  The Appellate Body had 
dismissed these arguments by simply stating, withou t any further explanation, that "the Complaining 
parties have rebutted the[se] interp retations", (para. 180).  How they had been rebutted, or why the 
Appellate Body found those rebuttals convincing had ne ver been explained.  By contrast, in the "US – 
Gambling" dispute, the Appellate Body had examin ed in detail cover-notes from the United States 
(para. 206).  Another example was with respect to  the Appellate Body's treatment of the "Modalities 
Paper", the basis for the scheduling of agricultura l commitments.  The Appellate Body had essentially 
dismissed the relevance of the "Modalities Paper" in two sentences (para. 199).  However, in the "US 
– Gambling" case,  the Appellate Body had analyzed  in some detail the 1993 Scheduling Guidelines 
for the GATS negotiations, which could be consid ered the equivalent doc ument to the "Modalities 
Paper" (paras. 202 and 203).  Further, the EC had re lied before both the Panel and the Appellate Body 
on the Schedules of other Members who had schedul ed only one form of export subsidy commitment 
(either a budgetary outlay or quantity commitment).  However, this was nowhere analyzed in the 
Appellate Body Report.  Again, the contrast with the "US – Gambling" report was striking.  There the 
Appellate Body had consecrated two full pages of an alysis to the Schedules of other parties (paras. 
182-186).  These differences in treatment should be of  concern to all because the Appellate Body's 
hard-won reputation depended, inter alia , on Members' confidence that  it would apply detailed legal 
reasoning equally to all Members on a consistent basis.  That report was not, in the EC's view, 
sufficient in this respect.  These were not the only co ncerns with the Appellate Body's reasoning.  For 
instance, the EC could see no reason, why, alone  among the covered agreem ents, the Agreement on 
Agriculture contained a self-standing dynamic ob ligation to reduce export subsidy commitments 
rather than to respect the obligations set out in the schedules, which had been subject to a formula 
agreed in a "Modalities Paper". 
70. Another concern was the Appellate Body's use of  Article 9.2(b)(iv).  Much of the Appellate 
Body's reasoning was based on this provision, which the Appellate Body had considered that the EC 
had not disputed that the Appellate Body had used  this provision.  However, the EC had in fact 
expressly stated in its Appellant's submission (footno te 91) that it had not agreed with the Panel's 
finding that it had used this provision.  Turning to  C sugar, the EC had hoped that the Appellate Body 
would use this opportunity in order to correct, or at least limit, the unintended consequences of its 
earlier and, in the EC's view, insufficiently cons idered interpretations of Article 9.1(c) of the 
Agreement on Agriculture in the "Canada – Dairy"  cases.  Unfortunately, the Appellate Body had 
chosen not to use this opportunity to address these deficiencies.  This Report had gone even further 
than "Canada – Dairy" and should be a cause of grea t concern for all Members.  The Appellate Body 
has redrawn the boundary between domestic support  and export subsidies in a manner which could 
not have been anticipated by any Member at th e time of the conclusion of the WTO Agreement.  
Furthermore, it had done so according to one criteri on (cost of production) which would be extremely 
difficult to enforce in practice, both for the author ities of the Member concerned and for panels, and 
which made Members responsible for the actions of private parties over which they had no control. 
71. The Appellate Body's reading of the term "payment" as encompassing a purely internal 
allocation of resources within the same economic entity, where no money or goods changed hands, 
could not be reconciled with the ordinary meaning of that term.  The Appellate Body's reading was 
based on little else than its perception of what it described as the EC's "formalistic" position could 
lead to "circumvention".  The Report, however, had not substantiated this perception.  This way of 
reasoning assumed what it purported to demonstrate;  i.e. that exports of C sugar benefitted from 
export subsidies. Moreover, Article 10.1 of the Agreement on Agriculture already addressed 
specifically the possibility that Members might  seek to circumvent their commitments. The 
complainants, however, never argued that the allege d "cross-subsidization" was an "export subsidy" 
within the meaning of that provision.  The EC  found even more troubling the Appellate Body's 
holding that the existence of a subsidy did not re quire a benefit.  The existence of a benefit was 
inherent in the notion of subsidy.  Indeed, it was a matter of common sense – as well as of definition of a subsidy in the SCM Agreement that  there could be no subsidy without a
. benefit.  The only reason 
given by the Appellate Body was that the term "benefit" was not expressly mentioned in  WT/DSB/M/189 
 Page 17 
 
 
Article 9.1(c).  The EC noted that, by the same toke n, terms such as "cross-subsidization" or "cost of 
production" did not appear anywhere in the Agreem ent on Agriculture.  The EC regretted that the 
Appellate Body had not given greater consideration to this important i ssue, in particular by examining 
the detailed contextual arguments submitted by the EC and some third parties.  Likewise, the EC 
regretted that the Appellate Body had not addressed  in a meaningful manner the extensive arguments 
and undisputed evidence submitted by the EC to the effect  that by bringing this dispute with respect to 
the exports of C sugar the complainants had acted in consistently with the principle of good faith and 
Article 3.10 of the DSU and, subsidiarily, that th e complainants could not claim any nullification or 
impairment because, at the time of the conclusion of the WTO Agreement they had no expectations 
that the EC would cease its exports of C sugar.  Th e participants in the Uruguay Round had agreed to 
reduce export subsidies by 21 per cent.  Yet, as a re sult of the Appellate Body's ruling, the EC would 
have to reduce its exports of sugar by 72 per cent.   The complainants knew only too well that the EC 
had never agreed to such reduction.  Interpretati ons of the Appellate Body, which had effectively 
modified the value of concessions to such an extent  after a long time,  might deter the negotiation of 
further concessions.  
72. The representative of Mauritius , speaking on behalf of the 14 ACP countries , which had 
participated in the proceedings of the Panel a nd the Appellate Body, said that the Members in 
question were deeply disappointed and concerned with the decision of the Appellate Body to uphold 
certain findings of the Panel in the case on the EC  sugar regime.  This would have a serious socio-
economic impact on the weak and vulnerable ACP c ountries and would be against the letter and spirit 
of the WTO and the Marrakesh Agreements.  Alrea dy one ACP country, St K itts and Nevis was being 
forced out of sugar;  nobody wished to have the WTO Organization where small Members had only 
the exit route.  This would seriously undermine the confidence of the small and vulnerable economies 
in the multilateral trading system.  The ACP countri es concerned participated actively as third parties 
throughout the Panel and appeal proceedings. They  had strongly presented their case against the 
upholding of the claims of the complainants, whic h would adversely affect the trade and economic 
benefits derived from the export of sugar to the EC under the Sugar Protocol.  It was to be noted that 
the quantity of sugar the ACP countries exported to the EC since 1975 had not increased and they 
were not in any way responsible for the imbalance in the world market.  In fact, the decreased level of 
world market price arose because of the world market  was a residual market, used by large producers 
to dump their increasing surpluses.  In making their case, the ACP countries had emphasized the 
socio-economic importance and the mu ltifunctional role that the sugar industry continued to play in 
their respective countries.  The benefits they derived from this important long-standing trading 
relationship with the EC was critical for the survival  of their fragile sugar industries and the livelihood 
of hundreds of thousands of poor farmers without alternative sources of income.  But, the pleas of the ACP countries concerned had not been heard by the Panel and the Appellate Body.  This insensitivity 
was regretted. The ACP countries, however, drew  some comfort from the assurances that the 
European Commission would continue to defend the valid interest of sugar producers and consumers 
in both the EC and ACP countries and the statement of  Commissioner Boel to the effect that "the ACP 
countries' strong intervention in the case shows their concern at the effect this ruling could have on 
their preferential access to the EU market .  The Commission shares this concern". 
73. The ACP countries equally noted that the compla inants had, on several occasions, indicated 
that they would do nothing against the interests of  the ACP.  They expected them to uphold their 
commitments when the findings of the Panel woul d be implemented and moreover, accept that the 
ACP be involved in any negotiations on impl ementation.  They strongly believed that
 the Appellate 
Body's rulings would have systemic implicati ons for the three pillars which underpinned the 
Agreement on Agriculture.  The Appellate Body Repor t had created an element of uncertainty which 
now needed to be addressed in the ongoing Doha Round negotiations.  The ACP countries had always 
held the view that the complainan ts' grievances could have been b est addressed in the ongoing Doha 
Round, thus ensuring a balance between the rights a nd obligations of all Members.  The Appellate 
Body's decision not to make a ruling on the compla inants' claim under the SCM Agreement had given 
them some degree of satisfaction.  They had also  noted the statement by the European Commission WT/DSB/M/189 
Page 18  
 
that it would comply with the findings and recomme ndation of the Appellate Body and that it would 
honour its international commitments.  In this  respect, the ACP countries wished to recall the 
suggestion made by the Panel on the concerns a nd interests expressed by the ACP third-parties 
regarding the continued preferential access to the EC's  market for their sugar exports.  In this regard, 
the Panel had noted the statement made by the EC on  14 July 2004 that the EC "fully stands by its 
commitments to ACP countries and India" and that, with the reform of its sugar regime, the ACP 
countries and India would "get a clear perspective,  keep their import preferences and retain an 
attractive export market".  The Appellate Body ha d not modified this suggestion and it therefore 
stayed. 
74. It is noteworthy that the Appellate Body ha d recognized that the footnote regarding ACP 
sugar indeed had an effect and it had not agreed with  the Panel that the footnote was of no legal effect.  
This would have to be taken into account in the re form of the EC sugar regime and the ACP countries 
had legitimate expectations in getting fully involved with the EC in the shaping up of the reform.  It 
had been often stated that the ACP was averse to change and was overly dependent on preferences.  
The complainants and indeed th e WTO membership as a whole, had recognized the ACP specific 
situation and constraints, which were inherent and permanent features of their vulnerable small 
economies. The ACP countries appreciated this r ecognition and understanding.  The ACP countries 
had always underscored that they were not against the reform of the EC's sugar regime.  However, 
they wished a reform which was fair and equitable to all stakeholders and which would fully comply 
with the legal, moral and political commitments of the EC vis-à-vis  the ACP sugar supplying 
countries, in particular its commitments under the ACP-EC Sugar Protocol and Article 36(4) of the 
Cotonou Agreement, which called for safeguarding of  the benefits to the ACP countries while taking 
into account the special legal status of the Protocol.  The ACP countries had no doubt that the EC would take this fully into account, along with th e Appellate Body's findings and recommendations as 
well as the important suggestion made by the Panel in paragraph 8.8 of its Report, while considering 
proposals for the reform of the EC sugar regime. 
75. The representative of Canada
 said that his delegation wished  to join other Members in 
thanking the Panel, the Appellate Body and the respectiv e Secretariats for their work in this dispute.  
At the present meeting, he wished to make two substantive comments in respect of the Appellate 
Body Report.  He recalled that during the Appella te Body proceedings, Canada had expressed its 
concern that upholding the Panel's finding that "payme nts" "on the export" of a product needed not be 
"contingent on" the export but, rather, must be  "in connection" with exports, would blur the 
distinction between the disciplines on domestic support and on export subsidies, which was an 
essential feature of the Agreement on Agriculture, and would expose bona fide  domestic support to 
challenges.  Canada was pleased to note that, in ke eping with the export subsidy disciplines set out in 
the Agreement on  Agriculture, the Appellate Body had emphasi zed that its findings of violation had 
been based in part on the formal EC requirement th at C sugar be exported.  Nevertheless, Canada had 
also a number of serious reservations about the reas oning used by the Appellate Body in this case.  
Canada was disappointed with the Appellate Body's decision to, in essence, simply update "Canada – 
Dairy" without further consideration of its flaws.  Here again, Members should be concerned with the 
Appellate Body's approach.  The Appellate Body ha d broadened the scope of a "cross-subsidization" 
standard that could be found nowhe re in the Agreement on Agriculture.  Canada did not see how this 
standard – where no benefit was required – and its a pplication in Article 9.1(c) could be reconciled 
with the existing subsidy disciplines in the WT O Agreement.  The Agreement on Agriculture 
recognized that some spill-over betw een domestic support and export pr oduction could occur.  Yet the 
"cross-subsidization" standard used  provided very little guidance to Members on how to manage 
lawful domestic support, a fact made all the more  challenging given that a single private party's 
internal reallocation of resources could be consider ed a subsidy.  In Canada's view, the Appellate 
Body had clearly turned Article 9.1(c) into an  anti-dumping provision, with none of the guidance 
offered by the Anti-Dumping Agreement.  At the present meeting, he also wished to make one 
comment on the statement made by Thailand and Br azil with respect to judicial economy. These 
countries had noted that the Appellate Body ha d made its finding on judicial economy and had  WT/DSB/M/189 
 Page 19 
 
 
refused to complete the analysis on the basis that th ere were no facts on the record.  In this context, 
there was another basis mentioned by the Appellate  Body, which was of systemic importance.  The 
Appellate Body noted that the relationship be tween the SCM Agreement and the Agreement on 
Agriculture was a particularly sensitive one that Members and the disputing parties had not had the 
chance to fully argue this issue before the Appella te Body. In this sense, the Appellate Body had 
recognized the sensitivity that had been expressed in the DSB with respect to arguments that did not 
have full airing before the Appellate Body.  Thus, Me mbers needed to be mindful of the sensitivity of 
the Appellate Body to that concern. Finally, Canada  would urge the EC to take every action necessary 
to minimize the adverse impact that the implem entation of this Report could have on the ACP 
countries and India. 
76. The representative of St. Kitts and Nevis  said that his country, as a third party to this dispute, 
fully supported the statement made by Mauritius on behalf of the ACP countries.   Indeed St. Kitts 
and Nevis, as a small and vulnerable Member of  the WTO, with a population of approximately 
45,000, had now the difficult task of minimi zing and hopefully averting economic and social 
dislocation by planning transiting mechanisms out of sugar and of finding new opportunities in sugar 
where available.  The task ahead was difficult and even  more so to explain to dislocated farmers.  His 
country was reminded of the negative affects that loss of market for bananas caused on the economy 
of its sister island Dominica.  St. Kitts and Nevis lo oked forward to their attempts at adjustment being 
taking fully into account. 
77. The representative of India  said that his country had participated as a third party in this 
dispute.  India thanked the members of the Panel a nd the Secretariat for their hard work in producing 
the Report which had come up for adoption at the pr esent meeting.  India noted with satisfaction the 
disagreement of the Appellate Body with the Panel' s finding that the footnote in EC's Schedule had no 
legal effect;  Schedules of Members were treaty term s and had to be given their legitimate meaning in 
harmony with the rest of the treaty.  India also expressed satisfaction that the Appellate Body had 
upheld the objective of security and predictability of the dispute settlement system by maintaining the 
same average cost of production benchmarks under Article 9.1 of the Agreement on Agriculture in 
this case as it had developed in the "Canada – Dairy"  cases.  India wished to point out another issue, 
more recently arising more frequently, that had a sy stemic implication on the working of the dispute 
settlement mechanism.  This related to the need for a remand provision in the DSU.  In this dispute, 
the Appellate Body had had to declare the Panel's use of the judicial economy with respects to the complainants' claims under Article 3 of the SCM Ag reement as a "false judicial economy" and thus an 
error on the part of the Panel.  However, while a ttempting to complete the legal analysis thereafter, 
the Appellate Body had expressed its inability to comp lete the legal analysis because they had not had 
on the record the requisite factual findings by the Panel among other reasons.  This clearly called for a 
remand provision in the DSU.  A contribution by so me countries in the Special Session of the DSB,  
including India, had raised this as a systemic issue needing resolution.  India invited Members to work 
on progress on this issue in the Speci al Session.  Finally, India noted with satisfaction that the Panel, 
in its suggestions under Article 19.1 of the DSU, had suggested to the EC that in bringing its exports 
of sugar into conformity with its obligations, the EC considered measures to  bring its production of 
sugar into line with domestic consumption whilst fu lly respecting its international commitments with 
respects to imports from developing countries.  That would include the commitments towards the ACP countries and India.  India noted with satisfact ion the EC's statement made in July 2004, which 
had also been quoted at the present meeting by Mauritius. 
78. The representative of Brazil
 said that his delegation wished to  refer to the point raised by 
Canada with regard to judicial economy. He then re iterated what he had already stated in his earlier 
statement, namely that: "Unfortunately the Appe llate Body found that there were not sufficient 
elements for it to complete the legal analysis require d in the case". He said that in his statement he had 
not mentioned facts, but elements. He hoped that th e clarification that he had just provided would 
respond to Canada's concern. WT/DSB/M/189 
Page 20  
 
79. The DSB took note
 of the statements, and adopted  the Appellate Body Report contained in 
WT/DS265/AB/R – WT/DS266/AB/R – WT/DS283/AB /R and the Panel Reports contained in 
WT/DS265/R;  WT/DS266/R;  WT/DS283/R, as modified by the Appellate Body Report. 
4. Dominican Republic – Measures affecting the importation and internal sale of cigarettes 
(a) Report of the Appellate Body (WT/DS302/AB /R) and Report of the Panel (WT/DS302/R) 
80. The Chairman  drew attention to the communication from the Appellate Body contained in 
document WT/DS302/11 transmitting the Appellate Body Report on:  "Dominican Republic – 
Measures Affecting the Importation and Internal Sale  of Cigarettes", which had been circulated on 
25 April 2005 in document WT/DS302/AB/R, in accord ance with Article 17.5 of the DSU.  He also 
wished to remind delegations that, in accordance with the Decision on Procedures for the Circulation 
and Derestriction of WTO Documents contained in  document WT/L/452, the Appellate Body Report 
and the Panel Report pertaining to this case had b een circulated as unrestricted documents.  He 
recalled that Article 17.14 of the DSU required that:  "An Appellate Body report shall be adopted by 
the DSB and unconditionally accepted by the part ies 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 prej udice to the right of Me mbers to express their 
views on an Appellate Body report". 
81. The representative of Honduras  said that his country wished to take this opportunity to thank 
the Panel and the Appellate Body for the time and ef fort they had devoted to this dispute settlement 
proceeding.  Honduras was not a frequent complain ant in WTO dispute settlement proceedings.  
However, given the lack of compliance by the Do minican Republic of its WTO obligations, Honduras 
had been forced to seek the establishment of a panel.  Honduras noted that its position had been 
vindicated in a large manner, not only by the Pane l but also by the Appellate Body.  Honduras was 
pleased that it had prevailed in the vast majority of its claims, which constituted the main motivation 
to pursue this dispute.  Honduras had challenged the requirement that both imported and domestic 
cigarette packages had to have a st amp tax affixed in the territory of the Dominican Republic, with 
resulting additional procedures and costs for imported ci garettes.  The Panel had held that a formally 
identical requirement on imported and domestic goods, such as the tax stamp requirement imposed by 
the Dominican Republic, might nevertheless result in  less-favourable treatment to imported products; 
and had found that there was a de facto  violation of Article III:4 of GATT 1994.   The Dominican 
Republic had conceded the inconsistency of its m easure by not appealing the Panel's findings under 
Article III:4, but had only appealed the Panel's in terpretation and application of the "necessity" test 
made by the Panel under Article XX(d) of GATT 1994. 
82. The Appellate Body had upheld the Panel's findi ng that the stamp tax requirement was not 
"necessary" within the meaning of Article XX(d), t hus confirming that the measure of the Dominican 
Republic violated the GATT 1994.  The Panel had al so found that the Dominican Republic's two per 
cent transitional surcharge for economic stabiliza tion was an "other duty or charge" that was 
inconsistent with Article II:1(b) of GATT 1994.  It  had also found that the Dominican Republic's 10 
per cent foreign exchange fee was an "other duty or charge" which was inconsistent with Article 
II:1(b) of GATT 1994.  Furthermore, the Panel had found that the foreign exchange fee could not be 
justified under Article XV:9(a) of GATT 1994 becau se it did not constitute an exchange restriction 
within the meaning of Article XV:9(a).  The Pane l had also made findings of inconsistency with 
Article III:2 and Article X:3 with respect to cert ain rules and administrative practices used by the 
Dominican Republic to determine its tax base for imported cigarettes.  These findings had not been 
appealed by the Dominican Republic. 
83. Despite the fact that in general Honduras was ve ry pleased with the rulings made by the Panel 
and the Appellate Body, it wished to express a part icular concern related to the manner in which the 
bond requirement had been examined.  The Panel had concluded that Hondur as had not established  WT/DSB/M/189 
 Page 21 
 
 
that the bond requirement accorded treatment le ss-favourable to imported cigarettes than that 
accorded to like domestic cigarettes in violation of  Article III:4. The Appella te Body had upheld the 
findings of the Panel, but on the basis of a light ly different reasoning that in Honduras' opinion was 
problematic and created a systemic concern. 
84. According to the Appellate Body, if the existence of " a detrimental effect  [on foreign 
products] is explained by factors or circumstances unrelated to the foreign origin of the product", 
there was no violation of Article III:4 of GATT 1994.   This reasoning applied to that matter at hand 
had led the Appellate Body to conclude that " ...  the difference between the per-unit costs of the bond 
requirement does not depend on the foreign origin  of the imported product".  Such an approach 
represented a departure from previous GATT and WTO jurisprudence on national treatment 
obligation under Article III:4.  In previous cases de facto  claims had been established against 
measures that made no distinction based on the or igin of the product, the measures nevertheless 
resulted in less-favourable treatment for the imported products.  In effect, in the same proceedings, 
Honduras had prevailed in relation to th e tax stamp requirement in spite of the fact that the text of the 
legislation established it without making distinc tion to the origin of the product, it constituted 
however a de facto violation of Article III:4. 
85. In the same way, in the "Chile – Alcohol" case, the Appellate Body had found that different 
level of taxes imposed in accordan ce with the alcohol content of the liquor was in violation of 
Article III:2 because it discriminated against importe d liquor which had a higher alcohol content.  
Similarly, in the "Canada – Autos" case,  the Panel had found that although the criteria for Canada 
granting an import duty exemption was not specifically  based on nationality or on the foreign origin 
of the product, it had nevertheless resulted in less-favourable treatment being granted to other 
Members. WTO jurisprudence had consistently looked  to the application of the measure, its operation 
and its effects on conditions of competition in the re levant market in order to determine whether less-
favourable treatment was provided to imported products .  Given the Appellate Body's statement in the 
above-mentioned Cigarettes case, it would be  more difficult to bring a successful de facto national 
treatment claim in future.  This issue was of system ic concern to all Members.  Despite this specific 
concern, Honduras was pleased that its claims ha d been upheld.  Honduras was pleased to seek 
adoption at the present meeting of the Panel and the Appellate Body Repor ts.  Honduras called upon 
the Dominican Republic to implement the DSB's ru lings and recommendations in a prompt manner.  
Honduras was ready to discuss with the Dominican Re public the implementation period that it would 
require to bring their measures into conformity, in the shortest period possible under the Dominican 
Republic's legislation. 
86. The representative of the Dominican Republic  said that her country wished to thank the 
members of the Appellate Body, the Panel and the WTO Secretariat for the time and effort taken in 
settling the dispute between the Dominican Republic and Honduras.  In that regard, her country 
welcomed the Reports of the Panel and the Appella te Body, but maintained certain reservations on 
some aspects of the reports. With regard to th e substance of the Reports, the Dominican Republic 
wished to point out that, of the six measures in the claims by Honduras, the Panel and the Appellate 
Body had found that three were consistent with the WTO rules.  The Dominican Republic was satisfied, and attached great importance to the findi ngs of the Panel and the Appellate Body that the 
bond requirement for importers a nd domestic producers of cigarett es was not inconsistent with 
Article XI:1 or, alternatively, with Article III:4 of the GATT 1994, which confirmed that the 
Dominican Republic had imposed that requirement in a manner consistent with the WTO rules and 
without discrimination. The Dominican Republic also noted with satisfaction that the Panel abstained 
from making any recommendation to the DSB on the measure concerning determination of the tax 
base for the Selective Consumption Tax in the Do minican Republic, since the measures complained 
of by Honduras were not in force at the time th e Panel had been established.  The Panel's decision 
meant that the Dominican Republic had not contra vened any GATT or WTO provision in respect of 
the application of this measure.  With regard to the inconsistency of the tax stamp requirement with 
the WTO rules, the Dominican Republic regretted the finding of the Panel and the Appellate Body WT/DSB/M/189 
Page 22  
 
that the tax stamp requirement was not justifie d under Article XX(d) of the GATT 1994.  In her 
country's view, this requirement was a necessary measu re to ensure the enforcement of the Dominican 
Republic's tax laws and regulations , and to prevent the smuggling of cigarettes. In conclusion, as a 
Member with great faith in the multilateral tradi ng system and respect for GATT and WTO rules, the 
Dominican Republic called on the DSB to adopt th e Reports contained in documents WT/DS302/R, 
dated 26 November 2004, and WT/D S302/AB/R, dated 25 April 2005. 
87. The representative of the European Communities
 said that the EC wished to thank the Panel 
and the Appellate Body as well as the Secretariat for their work on this dispute, in which the EC had 
participated as a third party because of the high system ic importance of several of the issues raised.  In 
respect of the GATT Article XX defence invoked by the Dominican Republic to justify its tax stamp 
requirement, the EC was overall satisfied with the analysis by the Panel.  However, the EC was 
concerned about the superficial way the Appellate  Body had dealt with some of the arguments 
brought forward on appeal.  The EC failed to see th at the Appellate Body had adequately addressed 
the new arguments.  In the EC's view, the Appellate Body should treat the parties' arguments very carefully.  In relation to the way in which Article  III:4 of GATT 1994 had been applied in this case, 
first, the EC had some comments on the Appellate Body's reasoning in paragraph 96 of its Report.  
There, the Appellate Body had considered it to be insufficient for a finding of less-favourable 
treatment if a detrimental effect on a given impor ted product was due to factors unrelated to the 
foreign origin, such as the market share of the given importer in this case.  Thus, a per-unit cost that 
was higher for a given importer than for some do mestic cigarettes during a particular period was 
insufficient, as this effect did not depend on the foreign origin.  The EC was somewhat concerned 
about the Appellate Body's referenc e to what was and what was not "related to" or "dependent on" a 
product's "foreign origin".  It must be clear that  a de facto less-favourable  treatment of imports 
contravened Article III:4 of GATT 1994, as the Appe llate Body had also acknowledged repeatedly in 
its jurisprudence.  Thus, it would seem that one should read the Appellate Body's reasoning in the 
light of its statements that detrimental effects ex isted for the given importer in this case, as compared 
to two domestic producers.  The EC agreed, if th is was to be understood along the lines of previous 
Appellate Body jurisprudence that less-favourable treatment must exist for "the group of like 
imported products" as compared to "the group of li ke domestic products".  The EC was not certain 
whether anything more should be read into the Appe llate Body's reference to what was and what was 
not "related to" or "dependent on" a product's "foreign origin".  In the present case, there was no reason to believe that foreign manufacturers, as a group, had smaller market shares than the group of 
domestic manufacturers.  Accordingly, there was no b asis to find de facto less-favourable treatment in 
this case, as opposed to the situation that pr evailed in the alcoholic beverages cases. 
88. Second, the EC wondered why the Appellate B ody had not examined, in its Article III:4 
analysis, the fact that the identical bond require ment for imports and domestic products secures taxes 
to a different extent for those two groups, gi ven that domestic producers faced the Selective 
Consumption Tax only some time after the sale, whereas imports faced this tax upon importation.  
Beyond all issues of tax reassessment and readjustment, as well as the purpose of securing other taxes as well, it seemed to the EC that this difference between imported cigarettes and domestic cigarettes 
was an uncontested fact in this dispute.  Therefore,  it would have seemed justifie d to consider this fact 
in the "less-favourable treatment" an alysis, irrespective of what it would have meant for the overall 
result on this point. Finally, the EC would also like to make one remark on the Panel Report with 
regard to an issue that had not been appealed. The EC agreed with the Panel's result that Article III of 
GATT 1994, not XI, applied to the bond requirement.  Since this was an internal measure, the EC 
considered that the conclusion that Article XI was inapplicable was rather straightforward, so it was 
not entirely clear why the Panel had considered it w as necessary to make so many additional findings 
on Article XI.  Among these (notably in paragraphs 7.258, 7.261 and 7.263) were some statements 
which could be read to suggest that indirect rest rictions on importation or exportation were perhaps 
not covered by Article XI.  The EC had doubts in that regard given that indirect restrictions were also 
restrictions and, therefore, reser ved its judgment on this question.  WT/DSB/M/189 
 Page 23 
 
 
89. The DSB took note  of the statements, and adopted  the Appellate Body Report contained in 
WT/DS302/AB/R and the Panel Report contained in WT/DS302/R, as modified by the Appellate 
Body Report. 
5. Proposed nomination for the indicative list of governmental and non-governmental 
panellists (WT/DSB/W/286) 
90. The Chairman  drew attention to document WT/DSB/W /286, which contained an additional 
name proposed for inclusion on the indicative lis t of governmental and n on-governmental panellists, 
in accordance with Article 8.4 of the DSU.  Unless there was any objection, he proposed that the DSB 
approve the name contained in document WT/DSB/W/286. 
91. The DSB so agreed . 
6. United States – Final dumping determin ation on softwood lumber from Canada  
(a) Statement by the United States 
92. The representative of the United States , speaking under "Other Business", said that her 
country was pleased to report that it had implemen ted the DSB's recommendations and rulings in the 
case "United States – Final Dumping Determination on Softwood Lumber from Canada", as adopted 
at the DSB meeting of 31 August  2004.  She said that on 15 April 2005, the US Department of 
Commerce had issued a new final determination, in which it had calculated new rates of dumping 
with respect to its antidumping duty investigation on certain softwood lumber products from Canada.  
In its new determination, the Department of Co mmerce had revised its calculations in a manner 
consistent with the DSB's recommendations and ru lings.  On 27 April 2005, the Department of 
Commerce's new determination had been implemented as a matter of US law.  Accordingly, the 
dumping margins calculated in the Department of Commerce's new determinat ion applied to entries 
of softwood lumber from Canada that were entere d, or withdrawn from warehouse for consumption, 
on or after that date that otherwise would have b een subject to the original investigation margins. 
93. The DSB took note  of the statement.  
94. Prior to the closure of the meeting , the Chairman  said that he wished to say a few words to the 
US Ambassador, Ms Linnet Deily, since this was th e last DSB meeting that she was attending in her 
present capacity.  He said that by consistently repr esenting her country in person at meetings of the 
DSB she had not only contributed in substance, but  had also signalled the importance which she and 
her country attached to the DSB.  He thanked her wholeheartedly for this and wished her all the best 
for the future. 
 
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