CANADA – CONTINUED SUSPENSION OF OBLIGATIONS IN THE EC – HORMONES DISPUTE
Document: Request for the Establishment of a Panel by the European Communities
Date: 14 January 2005
Document codes: WT/DS321/6
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 the Establishment of a Panel by the European Communities

 The following communication, dated 13 January 2005, from the delegation of the European
Communities to the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2
of the DSU.

 The European Communities hereby requests the establishment of a panel pursuant to
Articles 4.7 and 6 of the Understanding on Rule s and Procedures Governing the Settlement of
Disputes ("DSU") and Article XXIII of the General Agreement on Tariffs and Trade 1994
("GATT 1994"). This request concerns Canada's continued suspension of concessions and other
obligations under the covered agreements, without recourse to the procedures established by the DSU,
after the European Communities has removed the measures found to be inconsistent with WTO law in
case DS48, European Communities – Measures concerni ng meat and meat pr oducts (Hormones)
("EC – Hormones").
1

1. THE HISTORY OF THE DISPUTE

 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 equiva lent to the level of nullification or impairment (Article 22.4 of the
DSU) suffered by Canada at the time of its rec ourse to arbitration in May 1999. On 1 August 1999
and pursuant to the DSB's authorization, Canada introduced 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.
2

 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

1 At its meeting on 13 February 1998, the Dispute Settlement Body adopted the Appellate Body report
(WT/DS48/AB/R) and the panel report (WT/DS48/R/CAN), as modified by the Appellate Body report, DSB,
Action by the DSB, WT/DS48/11, 19 February 1998.
2 The measures were adopted as the "European Union Surtax Order", P.C. 1999-1323, 28 July 1999,
published in Canada Gazette Part II, Vol. 133, No. 17, SOR/99-317.

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 and the covered agreements,
the new EC legislation is based on comprehensive risk assessments, in particular on the opinions of
the independent Scientific Committee on Veteri nary Measures relating to Public Health.
3 The risk
assessments focussed on potential risks to human he alth from hormone residues in bovine meat and
meat products, in particular such risks arising from residues of si x hormonal substanc es: oestradiol
17β, testosterone, progesterone, trenbo lone acetate, zeranol and melengest rol acetate. In carrying out
the risk assessments, the European Communities initiated and funded a number of specific scientific
studies and research projects. It addressed specific requests to the United States, Canada and third
countries to provide any recent scientific data and in formation in their possession. It took account of
the findings of various independent expert bodies.

 In light of the risk analyses carried out, the European Communiti es concluded that the
avoidance of intake of oestradiol 17 β is of absolute importance to human health and that,
consequently, the placing on the market of meat cont aining this substance should be prohibited. With
respect to testosterone, progesterone, trenbolone acetate, zeranol and melengestrol acetate, and on the
basis of the available pertinent scientific informa tion reflected in the above-mentioned risk analyses,
the European Communities provisionally prohibited the placing on the market of meat containing
these substances because the relevant scientific evidence was insufficient.

 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 assessments.
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 Canada's suspension of concessions vis-à-vis the European Communities
to be no longer justified.
4

 Canada disagreed and denied that the new Directive was based on science and that it
implemented the DSB's recommendations and rulings. Canada formally stated in the DSB that it
considered the new Directive to be inconsistent with the European Communities obligations under the
SPS Agreement
5 and that it would continue to impose reta liatory duties on certain products from the
European Communities.6

2. THE OBJECT OF THE DISPUTE

 Despite its judgment that the European Commun ities' new Directive is inconsistent with the
SPS Agreement (formally communicated to the Members of the WTO in the DSB), 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 recommend ations and rulings of the DSB. Canada also

3 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).
4 European Communities – Measures concerning meat and meat products (Hormones) ,
Communication from the European Communities, WT/DS26/22, WT/DS48/20, 28 October 2003.
5 DSB, Minutes of Meeting held on 7 November 2003, WT/DSB/M/157, 18 December 2003, para. 30.
6 See id., para. 33.

rejected several proposals extended to it by th e European Communities to establish an agreed
procedure for resolving this dispute. At th e same time (and as announced in the DSB), Canada
maintained the suspension of its obligations in relation to imports from the European Communities
and continued to impose import duties in excess of bound rates on imports from the European
Communities.

 This conduct by Canada is in consistent with Canada's oblig ations under Articles I and II of
GATT 1994 and Articles 23.1; 23.2(a) and (c); 3.7; 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 concessions or other obligations onl y until such time as the measure found to be
inconsistent with a covered agreement has been removed, or the implementing Member has provided
a solution to the nullification or impairment of benefits previously caused to Canada.

 Canada has acted inconsistently with Ar ticles I and II of GATT 1994 by imposing import
duties in excess of bound rates on imports from the Eur opean Communities. In violation of Article I
of GATT 1994, Canada has failed to accord an advant age granted, with respect to customs duties, to
products originating in other countries immedi ately and unconditionally to the like products
originating in the territory of the European Communi ties. Inconsistent with Article II:1(a) of GATT
1994, Canada has failed to accord to the commerce of another Member treatment no less favourable
than that provided for in the appropriate part of the Schedule annexed to the GATT 1994 and,
inconsistent with Article II:1(b) of GATT 1994, Cana da 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 DSU, 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 of the DSU, in a situation where there 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. In a situation where it
sought redress of an alleged violation of obligatio ns under a covered agreemen t, Canada unilaterally
made a determination to the effect that the new EC legislation is in violation of the European
Communities' obligations under the covered agreements, despite the removal of the measures found to
be inconsistent. Canada made such a determination 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 Appella te Body report or arbitration award rendered under
the DSU.

 By applying the suspension of concessions or other obligations against the new EC
legislation, Canada has acted inc onsistently with Articles 23.2(c) and 3.7 of the DSU. Canada has
failed to follow the procedures set forth in Article 22 of the DSU and to obtain DSB authorization in
accordance with those procedures before suspending concessions or other obligations under a covered
agreement in response to the alleged failure of another Member to implement DSB recommendations
and rulings. Simultaneously, Canada has suspe nded the application of concessions or other
obligations under the covered agreements on a discriminatory basis vis-à-vis the European
Communities, without ongoing authorization by the DSB of such measures.

3. REQUEST FOR THE ESTABLISHMENT OF A PANEL

 On 8 November 2004, the European Communities requested consultations with Canada with a
view to reaching a mutually satisfactory solution of the matter. The request was circulated in
document WT/DS/321/1 dated 10 November 2004. Th e consultations were held on 16 December
2004 in Geneva. They have a llowed a better understanding of the respective positions but have not
led to a satisfactory resolution of the matter.

 Therefore, the European Communities respectfully requests that a panel be established, with
the standard terms of reference, to consider th e above complaint with a view to finding that the
conduct by Canada is inconsiste nt with Canada's obligations under the DSU and the GATT, in
particular, but not necessarily exclusively, under Articles I and II of GATT 1994 and Articles 23.1;
23.2(a) and (c); 3.7; 22.8 and 21.5 of the DSU.

 The European Communities asks that this request be placed on the agenda for the meeting of
the Dispute Settlement Body to be held on 25 January 2005.