RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/182 
17 February 2005 
 (05-0665) 
Dispute Settlement Body 
25 January 2005  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 25 January 2005  
 
Chairperson:  Ms Amina Mohamed (Kenya) 
 
 
 Prior to the adoption of the agenda , the item concerning the Panel Report in the case on:  
"Dominican Republic – Measures Affecting the Im portation and Internal Sale of Cigarettes" 
(WT/DS302/R) was removed from the proposed agenda  following the Dominican Republic's decision 
to appeal the Panel Report.   Subjects discussed
: Page  
 
1. Surveillance of implementation of recommendations adopted by the DSB.........................2  
(a) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by 
the United States .............................................................................................................. ...........2  
(b) United States – Anti-dumping measures on certain hot-rolled steel products from 
Japan:  Status report by  the United States...................................................................................3  
(c) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report 
by the Unite d States ........................................................................................................... .........4  
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the United 
States......................................................................................................................... ..................5  
(e) Mexico – Measures affecting telecommunications services:  Status report by Mexico .............6  
2. United States – Investigation of the International Trade Commission in softwood 
lumber from Canada ............................................................................................................. ...6 
(a) Statement by the United States ................................................................................................. ..6 
3. European Communities – Se lected customs matters .............................................................7  
(a) Request for the establishment of a panel by the United States ...................................................7  
4. United States – Continued suspension of obligations in the EC - Hormones 
dispute........................................................................................................................ ................8  
(a) Request for the establishment of a pa nel by the European Communities...................................8  
5. Canada – Continued suspension of obligations in the EC - Hormones dispute ..................9  
(a) Request for the establishment of a pa nel by the European Communities...................................9  WT/DSB/M/182 
Page 2  
 
6.
 United States – Tax treatment for "Foreign Sales Corporations".....................................10  
(a) Second recourse to Article 21.5 of the DSU by the European Communities:  Request 
for the establishment of a panel ............................................................................................... .10 
7. United States – Continued Dumping and Subsidy Offset Act of 2000 ...............................11  
(a) Joint request by Australia  and the United States.......................................................................11  
(b) Joint request by Thailand and the United States.......................................................................11  
(c) Joint request by Indonesi a and the United States......................................................................11  
 
 
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.27) 
 (b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.27) 
 
(c) United States – Continued Dumping and Subsid y Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.12 – WT/DS234/24/Add.12) 
 (d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.2) 
 
(e) Mexico – Measures affecting telecommunications services:  Status report by Mexico 
(WT/DS204/9/Add.1) 
 1. The Chairperson
 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".  She proposed that the five sub-items  to which she 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.27) 
2. The Chairperson  drew attention to document WT/DS176/11/Add.27, which contained the 
status report by the United States on progress in th e implementation of the DSB's recommendations in 
the case concerning US Section 211 Om nibus Appropriations Act of 1998. 
3. The representative of the United States  said that his country had provided a status report in 
this dispute on 13 January 2005, in accordance with Ar ticle 21.6 of the DSU.  As noted in the report, 
the last US Congress had been considering a number of legislative proposals to amend or repeal Section 211 and the Senate had he ld hearings on those proposals in July 2004.  A new Congress had 
convened in January 2005 and the US  administration was working with that Congress with respect to 
appropriate statutory measures to resolve this matter. 
4. The representative of the European Communities
 said that on 17 December 2004, the EC had 
agreed with the United States to extend the time-pe riod for implementation until 30 June 2005.  It was 
most unfortunate that the United States, which was so eager to promote international protection of 
intellectual property rights, had been unable to br ing a satisfactory solution to this dispute almost  WT/DSB/M/182 
 Page 3 
 
 
three years after condemnation of its legislation.  The EC had shown extreme patience in this case and 
expected that the United States would make use of  these additional six months to finally end this 
dispute. 
5. The representative of Cuba  said that, as indicated in the US status report, which had been 
circulated on 14 January 2005, the EC and the Unite d States had again agreed to extend the deadline 
for compliance with the DSB's recommendations in th e Section 211 case.  She noted that this was the 
fourth time that the United States had requested such an extension in order to meet its obligations as a 
WTO Member and to comply with the DSB decisions .  She noted that the following week three years 
would pass since the Appellate Body had made its  ruling on 2 February 2002 in relation to this 
dispute.  The most recent extension reflected not only  a remarkable lack of political will on the part of 
the United States to honour its commitments, but al so the arrogant attitude of the United States 
whenever it had been confronted with the DSB deci sions which were not to its liking.  On a number 
of occasions, the United States had announced its appare nt intention to look into the possibility of 
repealing Section 211 through a bill, but this had proved  yet again to be not more than empty rhetoric.  
Her delegation noted with concern the US lack of interest in observing WTO rules and disciplines, as 
demonstrated by its unjustified, excessive and offens ive delaying tactics, which impaired the rights of 
Members and undermined the international credib ility of the DSB;  one of the most sensitive 
institutions of the multilateral trading system.  Cuba  considered that the most recent extension was 
another deplorable action, which affected the balance of rights and obligations under the TRIPS 
Agreements and the basic WTO principles.  Cons equently, Cuba again urged the United States to 
desist from violating international law and to rep eal Section 211, which was the only solution to this 
dispute. 
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.27) 
7. The Chairperson  drew attention to document WT/DS184/15/Add.27, which contained the 
status report by the United States on progress in th e implementation of the DSB's recommendations in 
the case concerning US anti-dumping measures on certain hot-rolled steel products from Japan. 
8. The representative of the United States  said that his country had provided a status report in 
this dispute on 13 January 2005, in accordance with Article 21.6 of the DSU.  The US administration 
would work with the new Congress, which had convened this month, with respect to the 
recommendations and rulings of the DSB that had not been already addressed by the US authorities 
by 23 November 2002. 
9. The representative of Japan  said that the reasonable period of time for implementation by the 
United States of the DSB's recommendations and ru lings in this dispute had been extended three 
times.  As Japan had repeatedly underlined, prom pt and secure implementation was a cornerstone of 
the credible WTO dispute settlement mechanism.  It would be an unde rstatement to state that Japan 
was very much disillusioned by the fact that little progress had been made since the 17 December 
2004 DSB meeting and that no single bill had yet been  introduced to the US Congress to address this 
matter.  He noted that the re-extended deadline for implementation would expire on 31 July 2005.  
Japan sincerely hoped that, within the remainin g six months, the concerted action by the US 
administration and the US Congress would bring abou t the fully-fledged implementation of the DSB's 
recommendations and rulings so as to end this dispute.  If the United States fell short of 
implementation by that date, Japan would be entitled to have recourse to the DSU provisions in order 
to safeguard its rights and interest. WT/DSB/M/182 
Page 4  
 
10. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(c) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.12 – WT/DS234/24/Add.12) 
11. The Chairperson  drew attention to document WT/D S217/16/Add.12 – WT/DS234/24/Add.12, 
which contained the status report by the United St ates on progress in the implementation of the DSB's 
recommendations in the case concerning the US Conti nued Dumping and Subsidy Offset Act of 2000. 
12. The representative of the United States  said that his country had provided a status report on 
13 January 2005, in accordance with Article 21.6 of the DSU.  As noted in that report, legislation to 
bring the Continued Dumping and Subsidy Offset  Act (CDSOA) into conformity with US WTO 
obligations had been introduced in the last Congress  in June 2003 and March 2004.  In addition, on 
2 February 2004, the US administration had, once again, proposed repeal of the CDSOA in its budget proposal for fiscal year 2005.  The US administration would work with the new Congress, which had convened in January 2005, to enact legislation and would continue to confer with the complaining 
parties in these disputes, in order to reach mutually  satisfactory resolutions of these matters.  In that 
connection, the United States would be returning to a related agenda item later in the course of the 
present meeting. 
13. The representative of the European Communities
 said that the implementation period in this 
dispute had expired more than a year ago, but Members were still in a situation where the United States had to take the very first steps to comply  with the DSB's recommendations and ruling.  The 
bills mentioned in the US status report had become  void with the adjournment of the last Congress.  
The United States had, thus far, shown no willingne ss to implement the DSB's recommendations and 
worse, on several occasions, statements had been ma de questioning the need to  do anything towards 
implementation.  This directly undermined a core principle of the dispute settlement system.  The 
widespread and systemic interests affected were di sregarded for the interests of a few.  He recalled 
that eight Members representing 71 per cent of total US exports and 64 per cent of total US imports 
had now the rights to retaliate against the United St ates.  Most of the CDSOA disbursements benefited 
only a handful of companies.  The failure of the United States had resulted directly in increased 
impairment of benefits of other WTO Members.  The United States had just completed a fourth 
distribution of the collected duties.  Around US$38 4 million had been transferred from exporters to 
their direct US competitors, which put the total amount  distributed thus far at more than US$1 billion.  
The EC called on the US administration to convey to the new US Congress the need for immediate 
action in order to comply with the US WTO obligat ions.  In the absence of such immediate action the 
EC would have no other option, but to exercise its retaliation rights. 
14. The representative of Canada
 said that his country again noted the failure of the United States 
to comply with its WTO obligations with respect  to this matter.  As Members were aware, on 
23 November 2004, Canada had launched a public consultation process with Canadians on its 
retaliatory options as a result of the US continued non-compliance in this dispute.  The public 
consultations had ended on 20 December 2004.  Submissions were currently being assessed by the 
Government of Canada.  It had now been two year s since the DSB had adopted the Appellate Body's 
decision, finding the Byrd Amendment to be incons istent with the trade obligations of the United 
States.  Canada's position was clear; the path to  avoiding retaliation was to repeal the Byrd 
Amendment.  Canada again called upon the United St ates to end this dispute and to repeal its WTO-
inconsistent measure. 
15. The representative of Japan  said that, to date, the WTO-inconsistent CDSOA remained in 
effect and caused serious concerns among the WTO Membership.  The WTO dispute settlement 
mechanism had often been hailed as one of the major achievements of the Uruguay Round 
negotiations, and Members had benef ited substantially from its enhancement in comparison to the old  WT/DSB/M/182 
 Page 5 
 
 
system under the GATT.  Yet, instances of non- compliance such as the one related to CDSOA 
jeopardized the basis on which the rules-based WTO system had been found.  In this light, Japan 
urged the United States to stand by the basic tenets of the WTO and to protect the interest of the WTO 
trading system.  A prompt repeal of the CDSOA was imperative. The United States must act on its commitment towards meeting its WTO obligations.  Only through adherence to the WTO rules, the 
United States could preserve the credibility of the di spute settlement mechanis m.  Japan wished to 
remind the United States that, together with the ot her seven complaining parties, it had now been 
entitled to suspend concessions  or other obligations vis-à-vis  the United States, pursuant to Article 22 
of the DSU. 
16. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.2) 
17. The Chairperson  drew attention to document WT/DS160/24/Add.2, which contained the 
status report by the United States on progress in th e implementation of the DSB's recommendations in 
the case concerning Section 110(5)  of the US Copyright Act. 
18. The representative of the United States  said that his country had provided a status report in 
this dispute on 13 January 2005, in accordance with Ar ticle 21.6 of the DSU.  As noted in the report, 
the US administration had been consulting on this  matter with the new Congress, which had convened 
in January 2005.  The US administration would cont inue to work with the Congress and confer with 
the EC in order to reach a mutually satisfactory resolution of this matter. 
19. The representative of th e European Communities  said that the US status report, once again, 
indicated that the US administration had been consulting with the US Congress, and that it would continue to confer with the EC in order to reach  a mutually satisfactory resolution.  Unfortunately, 
this was not the first time in this case, or indeed in other disputes, that such an uninformative report 
had been submitted.  He recalled that, three y ears ago,  the EC had concluded a temporary 
arrangement with the United States in this case.  The purpose of that arrangement was to give more 
time to the US Congress to introduce the necessary ch anges to Section 110(5) of the US Copyright 
Act, while providing in the meantime some relief to EC copyright holders.  As the EC was aware, 
throughout the period in which that arrangement had been applicable, there had been no initiative by 
the US administration, or indeed, by the US Congress to introduce changes in the US legislation.  This 
was, of course, extremely worrying due to system ic implications which had gone well beyond this 
case.  Therefore, the EC hoped and expected that the US administration would convey to the US 
Congress the need to comply urgently with the US obligations under the TRI PS Agreement.  As the 
EC had stated at the previous DSB meeting, the lack of implementation by the United States of the 
DSB's rulings was undermining efforts to ensure full compliance with the TRIPS obligations, an 
objective that the United States, the EC and all WTO Members shared.  The EC recalled that it had 
reserved its right to reactivate, at any point in time , arbitration proceedings with regard to its request 
for retaliation against the United States pertaining to  this case.  The EC hoped, however, that a more 
productive approach to this dispute would prevail as a result of the necessary actions by the United 
States. 
20. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. WT/DSB/M/182 
Page 6  
 
(e) Mexico – Measures affecting telecommunications services:  Status report by Mexico 
(WT/DS204/9/Add.1) 
21. The Chairperson
 drew attention to document WT/DS204/ 9/Add.1, 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. 
22. The representative of Mexico
 said that on 13 January 2005, pursuant to Article 21.6 of the 
DSU, his country had submitted the most recent st atus report regarding implementation in the case: 
"Mexico – Measures Affecting Telecommunications Se rvices" (WT/DS204).  In that status report, 
Mexico provided information regarding the notifica tion of an agreement on implementation that had 
been reached by Mexico and the United States.  Pu rsuant to that agreement, a reasonable period of 
time for implementation by Mexico, which was 13 mont hs, would expire in July 2005.  Mexico had 
complied with the first phase of that agreement, which had been notified accordingly to the DSB.  
Furthermore, Mexico was drafting regulations for the establishment of comm ercial agencies.  Once 
that process was completed, Mexico would fu lly comply with the DSB's recommendations and 
rulings. 
23. The representative of the United States  said that his country wished to thank Mexico for its 
status report and looked forward to continuing consul tations with Mexico as it worked to complete its 
implementation of the DSB's recommendations. 
24. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
2. United States – Investigation of the International Trade Commission in softwood lumber 
from Canada 
(a) Statement by the United States 
25. The Chairperson  said that this item was on the agenda of the present meeting at the request of 
the United States and invited the representative of the United States to make a statement. 
26. The representative of the United States  said that his country was pleased to report that it had 
implemented the DSB's recommendations and rulings in  this dispute, as adopted at the 26 April 2004 
DSB meeting.  In July 2004, the US Internati onal Trade Commission had undertaken a four-month 
process that involved reopening its administrativ e record in the "Softwood Lumber from Canada" 
investigation to gather additional information, hol ding a public hearing, providing interested parties 
three opportunities to submit written comments, and e ngaging in additional analysis.  That process 
had concluded with a new determin ation in November 2004, which ha d found that "an industry in the 
United States is threatened with material injury by  reason of imports of soft wood lumber from Canada 
found to be subsidized and sold in the United States  at less than fair value (LTFV)".  In December 
2004, the US anti-dumping and countervailing duty or ders on softwood lumber from Canada had been 
amended to reflect the new determination. 
27. The representative of Canada  said his delegation welcomed the US statement on 
implementation a day ahead of schedule.  Canada wi shed to thank the Panel and the Secretariat for 
their work on the dispute between Canada and the United States regarding softwood lumber, in this 
case the softwood lumber injury case.  He recalled that at its special meeting on 26 April 2004, the 
DSB had adopted the Panel Report in the case "Unite d States – Investigation of the International 
Trade Commission in Softwood Lumber from Canada".  In its Report, the Panel had found that the threat of injury determination by the US Intern ational Trade Commission (ITC) was inconsistent with 
the US obligations under the Anti-Dumping Agreem ent and the SCM Agreement.  The Panel had 
found that the US ITC determination that there w ould be a likely imminent substantial increase in  WT/DSB/M/182 
 Page 7 
 
 
imports of softwood lumber products  from Canada, was not one that could have been reached by an 
objective and unbiased investigating authority.  As th e US ITC's causation analysis was based on this 
same finding, the Panel had also found it to be  inconsistent with the previously-mentioned 
Agreements.  Consequently, the DSB had recommended  that the United States bring its measures into 
conformity with its obligations under the Anti- Dumping and the SCM Agre ements.  Canada was 
reviewing the results of the US im plementation and was aware of the time-lines going forward in this 
case.  Canada would inform the DSB in due course of its response to the statement made by the United States that it had implemented the DSB's rulings and recommendations. 
28. The DSB took note
 of the statements. 
3. European Communities – Selected customs matters 
(a) Request for the establishment of a panel by the United States (WT/DS315/8) 
29. The Chairperson  drew  attention to the communication from the United States  contained in 
document WT/DS315/8, and invited the representative of the United States to speak. 
30. The representative of the United States  said that it was with regret that the United States had 
to ask the DSB, at the present meeting, to establish a panel in this dispute.  As described in its panel 
request, there were two principal issues in the dispute.   The first was the EC's failure to administer its 
customs laws in an uniform, impartial and reasonabl e manner, as required by Article X:3(a) of the 
GATT 1994.  The second was the EC's failure to maintain a forum for the prompt review and 
correction of administrative action relating to cust oms matters, as required by Article X:3(b) of the 
GATT 1994.  The EC was a WTO Member in its ow n right and, accordingly, was subject to the 
obligations under the GATT 1994.  However, the EC ha d failed to administer its customs laws and to 
provide for review and correction of customs decisi ons in a manner consistent with Article X of the 
GATT 1994.  Customs law in the EC had been administered by member State authorities.  Many key aspects of customs law administration had been left to member State discretion, reviewable by national courts.  Review by an EC forum – the Eu ropean Court of Justice – might be available only 
after years of domestic litigation.  This system  amounted to a trade barrier, and an especially 
burdensome one for small and medium-sized companies, which often lacked the resources necessary 
to find the most appropriate way to navigate the EC's complex system.  The problem was widespread 
and systemic.  The United States had discussed these issues in detail with the EC during consultations 
on 16 November 2004.  In fact, these consultations ha d been the most recent in a series of attempts 
over the past seven years to have the EC address the question of customs administration.  Regrettably, 
these consultations had not yielded a resolution of th is dispute.  While the United States remained 
open to addressing its concerns through further discu ssions with the EC, it believed that the only way 
to make progress at this time was to ask for the establishment of a dispute settlement panel. 
31. The representative of the European Communities
 said that the EC strongly regretted the 
refusal of the United States to engage in a meaningf ul dialogue on this issue, and instead had proceed 
to litigation.  Contrary to what the United States cl aimed, the issues subject to this dispute had not 
been raised in the relevant bilateral or multilatera l fora in the past.  The exact nature of the US 
concerns remained unclear to the EC.  The Unite d States had failed – before, during and after the 
WTO consultations – to provide a single example of real and practical problems for US operators 
resulting from the application of EC customs meas ures.  When the United States had published this 
case in the Federal Register, the US authorities had received only three submissions from the US 
industry, none of which constituted any evidence in support of the US allegations of lack of 
uniformity in the application of EC customs measures.   The failure of the United States to identify any 
concrete problems had made it impossible to explore an amicable solution to this dispute.  He said 
that the United States seemed to allege that th e EC should establish a single centralized customs 
administration in order to ensure uniformity in cu stoms treatment across the EC.  The United States 
also seemed to claim that the EC must provide for immediate review of customs decisions at the EC WT/DSB/M/182 
Page 8  
 
level, as opposed to the review of those decisions  by member States authorities and tribunals.  These 
were questions regarding the distribution of competen ces in the administration of customs rules within 
the internal legal order of a WTO Member which had gone well beyond of what was required by the 
WTO rules.  The EC had in place harmonized cu stoms rules and institutional and administrative 
measures – enforced by the EC Commission and the Eu ropean Court of Justice – to prevent divergent 
practices.  These ensured effective co-ordinati on between  the EC member States and uniform 
customs treatment in all member States.  The EC c onsidered, therefore, that it was fully in compliance 
with all WTO rules relating to customs matters.  Th e EC accordingly objected  to the establishment of 
a panel  requested by the United States. 
32. The DSB took note
 of the statements and agreed  to revert to this matter. 
4. United States – Continued suspension of obligations in the EC - Hormones dispute 
(a) Request for the establishment of a panel by the European Communities (WT/DS320/6) 
33. The Chairperson  drew attention to the communication from the European Communities 
contained in document WT/DS320/6, and  invited th e representative of the European Communities to 
speak.  
34. The representative of the European Communities  said that the dispute under consideration 
was about the US ongoing suspension of obligations under the WTO Agreement vis-à-vis  the EC and 
the continued imposition by the United States of ta riff duties in excess of bound rates on imports from 
the EC.  He further stated that the dispute was al so about the US unilateral determination of alleged 
non-compliance by the EC and the US failure to invoke Article 21.5 of the DSU for settling the existing disagreement with the EC regarding impl ementation in the EC – Hormones dispute.  He 
recalled that on 27 October 2003, the EC had notifie d the DSB of the adoption of its new Hormones 
Directive.  As the EC had explained at that time , this Directive had removed the measure found to be 
inconsistent with the WTO Agreement in the EC – Hormones dispute, since it had been preceded by a 
thorough and independent scientific risk assessment,  in particular through the opinions of the 
independent Scientific Committee on Veterinary Measures relating to Public Health.  He recalled that 
at the 7 November 2003 DSB meeting the United Stat es had disagreed with the EC's position.  It had 
expressly denied that the new Directive was based  on science and that it had implemented the DSB's 
recommendations and rulings. Despite that disagreem ent, the United States had refused to initiate 
dispute settlement proceedings under Article 21.5 of  the DSU in order to obtain a multilateral review 
of the new Directive's compliance with the DSB's recommendations and rulings.  The United States 
had also refused to accept the EC's offer for a mutu ally agreed procedure in the WTO to resolve the 
disagreement over compliance. 
35. As announced in the DSB, to date, the United St ates maintained the suspension of obligations 
in relation to imports from the EC.  The EC had in itiated this dispute because it had no other option.  
The challenge by the EC of the US sanctions dem onstrated the EC respect for the WTO as the proper 
forum to resolve trade disputes instead of the uni lateral maintenance of sanctions. Specifically, the 
application of sanctions beyond the moment at which the respondent removed the measure found to 
be inconsistent with a covered ag reement obviously violated Article 22.8 of the DSU.  The imposition 
of import duties in excess of bound rates on imports  from the EC, without continuing authorization 
from the DSB to suspend obligations, was inconsiste nt with Articles I and II of the GATT 1994.  The 
United States continued to suspend obligations and to impose excess duties and had unilaterally made 
a determination to the effect that there was a viol ation of obligations under a covered agreement.  
Without recourse to the DSU provisions in such a si tuation, the US course of action was inconsistent 
with Article 23 of the DSU.  In the given situ ation where there was a disagreement as to the 
consistency with a covered agreement of measures taken to comply with the DSB's recommendations 
and rulings, Article 21.5 of the DSU obliged the parties to have recourse to dispute settlement  WT/DSB/M/182 
 Page 9 
 
 
procedures.  The United States had regrettably failed to  honour this obligation.  Therefore, the EC was 
requesting the establishment of a panel at the present meeting.  
36. The representative of the United States  said that his country regretted that the EC had chosen 
to request the establishment of a panel.  The Unite d States was in the course of reviewing the studies 
and documents referred to in the EC's panel requ est in support of its measure.  To date, the United 
States failed to see how the revised EC's measure could be considered to implement the DSB's 
recommendations and rulings in this matter.  To a ssist in its review of the EC's new measure, on 
13 December 2004, the United States had requested, pursuant to Article 5.8 of the SPS Agreement, 
that the EC provide an explanation of the reasons for the restrictions contained in its new measure.  As 
of the present meeting, the United States had received no response to that request.  The United States 
noted that the EC appeared to argue in its panel request that, through its unilateral declaration of 
compliance, the EC had somehow invalidated the DS B's authorization to suspend concessions or other 
obligations in this dispute.  This was not a plausi ble interpretation of the DSU.  The actions taken by 
the United States pursuant to the DSB's authori zation were entirely consistent with US WTO 
obligations.  In light of these considerations, the United States was not in a position to accept the 
establishment of a panel at present meeting. 
37. The DSB took note  of the statements and agreed  to revert to this matter. 
5. Canada – Continued suspension of obligations in the EC - Hormones dispute 
(a) Request for the establishment of a panel by the European Communities (WT/DS321/6) 
38. The Chairperson  drew attention to the communication from the European Communities 
contained in document WT/DS321/6, and invited the representative of the European Communities to 
speak. 
39. The representative of the European Communities  said that the EC would not wish to reiterate 
the comments made under the previous agenda item,  given that the background to both disputes was 
the same.  The EC was well aware of Canada's di sagreement with the scientific conclusions resulting 
from the EC's independent risk assessment.  Desp ite that disagreement on the substance, the EC 
would have expected Canada to take a different approach on the procedure to solve the disagreement 
on compliance.  Like the EC, Canada had traditiona lly been a strong supporter of multilateralism and 
the WTO dispute settlement system.  He then drew attention to an extract from Canada's third-party 
submission to the Panel in the case "United States – Section 301" which read as follows:  "A Member 
that makes a determination unilaterally that anothe r Member has failed to bring a measure found to be 
inconsistent with a covered agreem ent into compliance with that agreement (also) violates Article 23 
in that the DSU establishes a procedure for determ ining the consistency of the measure.  Such a 
unilateral determination of non-compliance without  recourse to the DSU procedures amounts to a 
determination that a violation has occurred other than through recourse to DSB dispute settlement 
procedures."  Like the United States, Canada had re fused to initiate disput e settlement proceedings 
under Article 21.5 of the DSU in order to obtain a multilateral review of the new EC Directive's 
compliance with the DSB's recommendations and ruli ngs.  Canada had also refused to accept the EC's 
offer for a mutually agreed pro cedure in the WTO to resolve the disagreement over compliance.  As 
announced in the DSB, to date, Cana da maintained the suspension of obl igations in relation to imports 
from the EC.  As indicated before, the EC believed that this course of action was inconsistent with 
Canada's obligations under Articles I and II of th e GATT 1994 and Articles 23, 22.8 and 21.5 of the 
DSU.  He did not wish to repeat the legal argum ents supporting this view, which were equally valid 
for Canada.  Therefore, the EC was requesting the establishment of a panel at the present meeting.  
40. The representative of Canada  said that his country was puzzled by the EC's position in respect 
of this issue.  Canada's measures had been taken pursuant to an authorization from the DSB.  The EC 
had not challenged that proposition.  Canada was authorized to ta ke these measures because the EC WT/DSB/M/182 
Page 10  
 
had expressly failed to bring itself into compliance within a reasonable period of time.  The EC had not challenged this fact either.  And while the EC  had referred to Article II of the GATT 1994 in its 
earlier statement with respect to the case against the United States, the EC was well aware that the 
DSB's authorization to retaliate remained in force and had not been abrogated or invalidated by this 
party.  The EC now asserted that it was in complian ce.  And it had stated that it was in compliance 
because of its own notification to the DSB.  But it had neither sought nor had received a multilateral 
determination that this was the case.  The EC had thus asserted that its unilateral determination and 
declaration of compliance should override and a nnul the authorization of the DSB to suspend 
concessions in this case.  And it had now proposed  to seek a panel to justify its own unilateral 
determination.  Canada would i ndeed be happy to discuss further with the EC the reasons why it 
considered itself to be in compliance with its ob ligations under the WTO Agreement.  But it could not 
accept that the EC's unilateral declaration of co mpliance somehow invalidated Canada's multilateral 
authorization to suspend concessions.  With respec t to the statement made by the EC on Canada's 
commitment to multilateralism, he said that Canada  remained committed to multilateralism.  Canada 
rejected the EC's approach and did not consent to the EC's request for the establishment of a panel. 
41. The DSB took note
 of the statements and agreed  to revert to this matter. 
6. United States – Tax treatment for "Foreign Sales Corporations" 
(a) Second recourse to Article 21.5 of the DSU by the European Communities:  Request for the 
establishment of a panel (WT/DS108/29) 
42. The Chairperson  drew attention to the communication from the European Communities 
contained in document WT/DS108/29 , and invited the representative of the European Communities  
to speak. 
43. The representative of the European Communities  said that the repeal of the FSC/ETI bill 
represented a major and welcome step towards solvi ng this long-standing dispute.  Although it had 
taken more than four years to arrive at this resu lt, and there were still issues that raised important 
concerns, the EC appreciated the effort put into this by relevant parties in the United States and 
notably in the US Congress.  The EC Commission had accordingly proposed to the EC Council to 
suspend the EC Council Regulation 2193/2003 applyi ng additional duties on a number of US products 
in recognition of that fact.  This suspension was w ithout prejudice to its rights under Article 22 of the 
DSU.  The repeal Act, however, included transiti onal and grandfathering pr ovisions, which appeared 
to be WTO-incompatible.  In particular, the repeal  Act provided that FSC/ETI  benefits would still be 
available to US exporters up to the end of 2006 and, in some cases, for an un limited period thereafter.  
As Members were aware, similar provisions had been condemned in the past.  The EC strongly 
believed that if there was a divergence of views between WTO Members on whether measures taken to comply with a WTO ruling were consistent with  the WTO Agreement, such disagreement must be 
resolved through the WTO dispute settlement syst em in accordance with the standard dispute 
settlement procedures (i.e. compliance panel unde r Article 21.5 of the DSU).  A WTO dispute 
settlement procedure on the repeal Act had, therefor e, been initiated.  The EC hoped that since this 
was a compliance panel, the United States would accept in this case, as in other previous cases, to 
have such a panel established already at the present meeting.  He stressed that the EC's request to 
establish a panel was without prejudice to the EC's  continuous readiness to explore with the United 
States ways to end  this long-standing dispute. 
44. The representative of the United States
 said that on 24 November 2004, his country had 
informed the DSB of the enactment by the United States of the American Jobs Creation Act of 2004 
(AJCA).  The AJCA had repealed the tax exclusion of the "FSC Repeal and Extraterritorial Income 
Exclusion Act of 2000" (ETI Act).  It had thereb y withdrawn the subsidy that had previously been 
found to exist and brought the measure in question into  conformity with US WTO obligations.  As the 
United States had previously explained, the AJCA was the most significant piece of US tax legislation  WT/DSB/M/182 
 Page 11 
 
 
in 20 years.  Because the repeal of the ETI provisi on was a significant change to the US tax law, the 
ETI repeal bill included rules to provide a smooth a nd orderly transition.  The transition rules in the 
ETI repeal bill were consistent with transition rul es typically provided in tax legislation that made 
changes of this magnitude.  These transition rules were intended to prevent the legislation from 
having a retroactive effect on ta xpayers who had entered into a rrangements in reliance on then-
applicable law.  Transition rules were a common feature of US tax legislation and, the United States 
believed, of tax legislation of other Members.  US Congressional leaders had consulted frequently 
with the EC over the course of the legislative effo rt, including on the transition rules.  The United 
States had asked the EC to identify any particular commercial problem caused by the transition rules, 
and the EC had never identified any.  Therefore,  the United States was particularly surprised and 
disappointed with the EC's criticisms and its de cision to prolong this dispute by requesting the 
establishment of yet another panel.  Therefore, the United States was not in a position to accept the 
establishment of a panel at the present  meeting. 
45. The DSB took note  of the statements and agreed  to revert to this matter 
7. United States – Continued Dumping and Subsidy Offset Act of 2000  
(a) Joint request by Australia and the United States (WT/DS217/44) 
(b) Joint request by Thailand and the United States (WT/DS217/45) 
(c) Joint request by Indonesia and the United States (WT/DS217/46) 
46. The Chairperson  proposed that the three sub-items to which she had just referred be 
considered together since they pertained to th e same matter. She then drew attention to the 
communication from Australia and the United St ates contained in document WT/DS217/44 and 
invited the representative of Australia to speak. 
47. The representative of Australia  said that in document WT/DS217/44 her country and the 
United States had informed the DSB of an Understa nding reached with respect to the dispute "United 
States – Continued Dumping and Subsidy Offset Act of 2000" (WT/DS217).  As set out in that document, Australia requested, jointly with the Unit ed States, that the DSB adopt the draft decision 
contained in WT/DS217/44.  The Understanding r eached between Australia and the United States 
recognized that the United States remained in non- compliance with the recommendations and rulings 
of the DSB in this dispute, and that Australia was entitled to request authorization from the DSB to 
suspend concessions or other obligations, pursuant to Article 22.2 of the DSU.  Nevertheless, because 
Australia did not wish to proceed to seek authoriza tion to retaliate at this point, the Understanding and 
the requested DSB decision were designed to preserve  the respective rights of both parties at this 
point in time.  Consequently, as set out in docum ent WT/DS217/44, Australia requested, jointly with 
the United States, that at the present meeting th e DSB "take note of the Understanding reached 
between Australia and the United States and agr ee that, upon a request by Australia, the DSB shall 
grant Australia authorization to suspend concessions  or other obligations unless (i) the DSB decides 
by consensus not to do so or (ii) the United Stat es objects to the level of suspension proposed or 
claims that the principles and procedures in DSU Article 22.3 have not been followed, referring the 
matter to arbitration under Article 22.6 of the DSU". 
48. The Chairperson
 drew attention to the communication from Thailand and the United States 
contained in document WT/DS217/45 and invite d the representative of Thailand to speak. 
49. The representative of Thailand  said that, first of all, his country was grateful for the 
opportunity to include this item on the agenda of  the present meeting. In  document WT/DS217/45, 
Thailand and the United States had informed the DSB of an Understanding reached with respect to the 
dispute "United States – Continued Dumping and S ubsidy Offset Act of 2000" (WT/DS217).  As set WT/DSB/M/182 
Page 12  
 
out in that document, Thailand was requesting, jointly with the United States, that the DSB adopt the draft decision contained in WT/DS217/45.  The U nderstanding reached between  the United States and 
Thailand coincided in terms of format and subs tance with the Understanding reached between the 
United States and Australia as well as the one between  the United States and Indonesia.  It recognized 
that the United States remained in non-compliance with the recomme ndations and rulings of the DSB 
in this dispute, and that Thailand was entitled to  request authorization from the DSB to suspend 
concessions or other obligations pursuant to Article 22.2 of the DSU.  However, as Thailand decided 
to refrain from seeking authorization to retaliate  against the United States at this stage, the 
Understanding and the requested DSB decision were designed to preserve the respective rights of both parties at this point in time.  In this regard, as set out in document WT/DS217/45, Thailand requested, 
jointly with the United States, that at the presen t meeting the DSB "take note of the Understanding 
reached between Thailand and the United States and agree that, upon a request by Thailand, the DSB 
shall grant Thailand authorization to suspend c oncessions or other obligations unless (i) the DSB 
decides by consensus not to do so or (ii) the United States objects to  the level of suspension proposed 
or claims that the principles and procedures in DS U Article 22.3 have not been followed, referring the 
matter to arbitration under Article 22.6 of the DSU". 
50. The Chairperson
 drew attention to the communication from Indonesia and the United States 
contained in document WT/DS217/46 and invite d the representative of Indonesia to speak. 
51. The representative of Indonesia  recalled that on 11 January 2005, Indonesia and the United 
States had agreed to an Understanding with respect to the dispute "United States – Continued Dumping and Subsidy Offset Act of 2000" (WT/DS217).  Accordingly, Indonesia and the United 
States, at the present meeting, jointly requested th e DSB to adopt the draft decision as contained in 
document WT/DS217/46.  Furthermore, Indonesia ask ed that "the DSB take note the Understanding 
reached by the United States and Indonesia and agree that, upon a request by Indonesia, the DSB shall 
grant Indonesia authorization to suspend concession or other obligation unless (i) the DSB decides by 
consensus not to do so or (ii) the United States objec ts to the level of suspension proposed or claims 
that the principles and procedures in DSU Article 22. 3 have not been followed, referring the matter to 
arbitration under Article 22.6 of the DSU". 
52. The  Chairperson
 invited the representative of  the United States to speak. 
53. The representative of the United States  said that his country joined Australia, Indonesia, and 
Thailand in requesting that any consideration by th e DSB of a request for authorization to suspend 
concessions or other obligations by one of these Members be in accordance with the joint requests 
submitted to the DSB.  Those documents provide d that upon request of Australia, Indonesia, or 
Thailand, "the DSB shall grant authorization to su spend concessions or other obligations unless (i) the 
DSB decides by consensus not to do so, or (ii) the United States objects to the level of suspension 
proposed or claims that the principles and procedur es in DSU Article 22.3 have not been followed".  
The latter action would refer the matter to arbitrati on under Article 22.6 of the DSU.  Decisions to be 
taken at the present meeting would assist the parties in their efforts to resolve procedural issues in this 
dispute in a mutually agreeable manner.  The Un ited States appreciated the DSB's support in this 
regard. 
54. The representative of Japan  said his country had no objection with regard to the decisions to 
be taken by the DSB at the present meeting, as set out in documents WT/DS217/44, WT/DS217/45 and WT/DS217/46.  However, in light of its system ic interest, Japan wished to make the following 
statement for the record.  Japan noted that a similar Understandi ng had been reached in another 
dispute involving Malaysia and the United States (DS58).  However, at that time, no DSB decision had been sought.  At the present meeting,  the DSB wa s requested to take decisions as described in the 
respective requests.  In the draft decisions pertaining to this dispute, the phrase "upon a request by" 
was used.  In Japan's view, that phrase could suggest that the authority of the DSB to take a decision 
derived solely from the three requests lodged by th e respective Members.  Japan, however, understood  WT/DSB/M/182 
 Page 13 
 
 
that the authority of the DSB to take a decision to  grant authorization to suspend concessions or other 
obligations derived from the relevant DSU provisions. 
55. The  DSB took note  of the statements.  
56. The  Chairperson  proposed that:  "The DSB take not e of the Understanding reached between 
Australia and the United States and agree that, up on a request by Australia, the DSB shall grant 
Australia authorization to suspend concessions or  other obligations unless (i) the DSB decides by 
consensus not to do so or (ii) the United States objec ts to the level of suspension proposed or claims 
that the principles and procedures in DSU Article 22 .3 have not been followed, referring the matter to 
arbitration under Article 22.6 of the DSU." 
57. The DSB so agreed . 
58. The  Chairperson  proposed that:  "The DSB take not e of the Understanding reached between 
Thailand and the United States and agree that, upon a request by Thailand, the DSB shall grant 
Thailand authorization to suspend concessions or other obligations unless (i) the DSB decides by 
consensus not to do so or (ii) the United States objec ts to the level of suspension proposed or claims 
that the principles and procedures in DSU Article 22 .3 have not been followed, referring the matter to 
arbitration under Article 22.6 of the DSU." 
59. The DSB so agreed . 
60. Finally, the Chairperson  proposed that:  "The DSB take note of the Understanding reached 
between Indonesia and the United States and agree that, upon a request by Indonesia, the DSB shall grant Indonesia authorization to suspend concessions  or other obligations unless (i) the DSB decides 
by consensus not to do so or (ii) the United Stat es objects to the level of suspension proposed or 
claims that the principles and procedures in DSU Article 22.3 have not been followed, referring the 
matter to arbitration under Article 22.6 of the DSU." 
61. The DSB so agreed
. 
__________