CANADA - CONTINUED SUSPENSION OF OBLIGATIONS IN THE EC - HORMONES DISPUTE
Document: Request for Consultations by the European Communities
Date: 10 November 2004
Document codes: WT/DS321/1; G/L/714
Complainant: EU
Respondent: Canada
Third parties: Australia, Brazil, China, Taiwan, India, Mexico, New Zealand, Norway, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. I, II  GATT 1994Art. 3.7, 22, 23.1, 23.2, 21.5  Dispute Settlement Understanding (DSU)

CANADA - CONTINUED SUSPENSION OF OBLIGATIONS IN THE
 EC - HORMONES DISPUTE

Request for Consultations by the European Communities

 The following communication, dated 8 November 2004, from the delegation of the European
Communities to the delegation of Canada and to th e Chairperson of the Dispute Settlement Body, is
circulated in accordance with Article 4.4 of the DSU.

 The European Communities hereby requests cons ultations with the Government of Canada
pursuant to Article XXII:1 of the General Agreem ent on Tariffs and Trade 1994 ("GATT 1994") and
Article 4 of the Understanding on Rules and Pr ocedures Governing the Settlement of Disputes
("DSU") regarding Canada's continued suspensi on of concessions and other obligations under the
covered agreements, after the European Commun ities has removed the measures found to be WTO-
inconsistent in European Communities – Measures concerni ng meat and meat products (Hormones)
("EC – Hormones").

 On 13 February 1998, the Dispute Settlement Body ("DSB") adopted th e panel and Appellate
Body reports in EC – Hormones. In doing so, the DSB recommended that the European Communities
bring the measures at issue into conformity with WTO rules. The Arbitrator appointed pursuant to
Article 21.3(c) of the DSU determined that th e European Communities shall have a "reasonable
period of time" until 13 May 1999 to comply with the recommendations. On 26 July 1999, Canada
obtained from the DSB the authorization to suspend obligations up to the level of 11.3 million
Canadian Dollars per year. The arbitrators acting pursuant to Article 22.6 of the DSU had previously
determined this level to be equivalent to the level of nullification or impairment suffered by Canada in
the matter EC – Hormones (Article 22.4 of the DSU). Pursuant to the DSB's authorization and since
1 August 1999, Canada applies import duties in excess of bound rates to imports from the European
Communities by imposing a 100 % ad valorem rate of duty on a list of articles that are the products of
certain EC Member States.

 The European Communities subsequently removed the measure found to be inconsistent with
a covered agreement. It adopted Directive 2003/74/EC of the European Parliament and of the Council
of 22 September 2003 amending Council Directive 96/ 22/EC concerning the prohibition on the use in
stockfarming of certain substances having a hormonal or thyrostatic action and of beta-agonists. The
Directive was published and entered into force on 14 October 2003.

 In conformity with the recommendations and ru lings of the DSB, the new EC legislation is
based on a comprehensive risk assessment, in particul ar on the opinions of the independent Scientific

Committee on Veterinary Measure s relating to Public Health.
1 The European Communities initiated
and funded a number of specific scientific studies a nd research projects. It addressed specific requests
to the United States, Canada and third countries to provide any recent scientific data and information
in their possession. It took account of the findings of various independent expert bodies.

 On 27 October 2003, the European Communities notified to the DSB the adoption,
publication and entry into force of this Directive as well as the preceding scientific risk assessment.
In the same communication, the European Communities explained that it considers itself to have fully
implemented the recommendations and rulings of the DSB in the EC – Hormones dispute and that, as
a consequence, it considers the United States' and Canada's suspension of concessions vis-à-vis the
European Communities to be no longer justified.2

 The United States and Canada disagreed and denied that the new Directive was based on
science and that it implements the DSB's recommenda tions and rulings. As announced in the DSB,
3
the United States and Canada maintained the suspen sion of their concessions in relation to imports
from the European Communities. Fu rther, the United States and Canada refused to initiate dispute
settlement proceedings under Article 21.5 of the DSU in order to obtain a review of the new
Directive's consistency with the recommendations and rulings of the DSB. They have also rejected all
proposals by the European Communities over the l ast year which sought to establish an agreed
procedure for resolving this dispute.

 The issues which the European Communities would like to raise in the course of the
consultations include, but are not limited to, the following measures:

- Canada's suspension of obligations and conti nued imposition of import duties in excess of
bound rates on imports from the European Co mmunities despite the EC's removal of the
measures found to be inconsistent with the cove red agreements and notification thereof to the
DSB;
- Canada's unilateral determination that the new EC legislation is in violation of obligations
under the covered agreements; and
- Canada's failure to have recourse to dispute settlement proceedings pursuant to Article 21.5 of
the DSU in order to resolve the disagreemen t over whether the new EC legislation is
consistent with a covered agreement.
These measures are inconsistent with Canada's ob ligations under Articles I and II of GATT 1994 and
Articles 23.1; 23.2(a) and (c); 22.8 and 21.5 of the DSU.

- Canada has acted inconsistently with Artic le 22.8 of the DSU by failing to apply the
suspension of obligations only until such time as the measure found to be inconsistent with a

1 Opinion of the Scientific Committee on Veterinary Measures Relating to Public Health: Assessment of
potential risks to human health from hormone residues in bovine meat and meat products (30 April 1999);
Opinion on review of previous SCVPH opinions of 30 April 1999 and 3 May 2000 on the potential risks to
human health from hormone residues in bovine meat and meat products (adopted on 10 April 2002) and Review
of specific documents relating to the SCVPH opinion of 30 April 99 on the potential risks to human health from
hormone residues in bovine meat and meat products (adopted on 3 May 2000).

2 WTO, European Communities – Measures concerning meat and meat products (Hormones) ,
Communication from the European Communities, WT/DS26/22, WT/DS48/20, 28 October 2003.

3 DSB, Minutes of Meeting held on 7 November 2003 , WT/DSB/M/157, 18 December 2003, paras. 29-
33.

covered agreement has been removed, or th e implementing Member has provided a solution
to the nullification or impairment of benefits previously caused to Canada.
- Canada has acted inconsistently with Artic les I and II of GATT 1994 by imposing import
duties in excess of bound rates on imports fro m the European Communities. Thereby,
Canada has failed to accord an advantage granted, with respect to customs duties, to products
originating in other countries immediately and unconditionally to the like products originating
in the territory of the European Communities. By the same measure, Canada has failed to
accord to the commerce of another Member treat ment no less favourable than that provided
for in the appropriate part of the Schedule annexed to the GATT 1994. Canada has also failed
to exempt products, which are the products of territories of another Member, on their
importation into Canada's territory, from ordinary customs duties in excess of those set forth
and provided in Canada's Schedule.
- Canada has acted inconsistently with Article 23.1 of the DSU by failing to have recourse to,
and abide by, the rules and procedures of the DS U, in a situation where it seeks redress of an
alleged violation of obligations under a covered agreement.
- In the particular instance, Canada failed to have recourse to dispute settlement pursuant to
Article 21.5 DSU, in a situation where ther e is a disagreement as to the existence or
consistency with a covered agreement of measures taken to comply with DSB
recommendations and rulings.
- Canada has acted inconsistently with Article 23.2(a) of the DSU by unilaterally making a
determination to the effect that a violation is still occurring, despite the removal of the
measures. Canada has made such determinati on without recourse to dispute settlement in
accordance with the rules and procedures of the DSU and, as a consequence, in the absence of
findings contained in an adopted panel or Appellate Body report or arbitration award rendered
under the DSU.
- By applying the suspension of obligations to the new EC legislation, Canada has acted
inconsistently with Article 23.2(c) of the DSU. Canada has failed to follow the procedures set
forth in Article 22 of the DSU and to obtai n DSB authorization in accordance with those
procedures before suspending obligations unde r a covered agreement in response to the
alleged failure of another Member to implement DSB recommendations and rulings.
 The European Communities reserves the right to address additional measures and claims
under other provisions of the WTO Agreement regard ing the above matter during the course of the
consultations.

 The European Communities looks forward to receiving in due course a reply from Canada to
this request. The European Commun ities is ready to consider with Canada mutually convenient dates
to hold consultations in Geneva.