UNITED STATES – CONTINUED SUSPENSION OF OBLIGATIONS IN THE EC – HORMONES DISPUTE
Document: Communication from the United States on concerns regarding the Appellate Body's Report
Date: 12 November 2008
Document codes: WT/DS320/16
Complainant: EU
Respondent: U.S.
Third parties: Australia, Brazil, Canada, China, Taiwan, India, Mexico, New Zealand, Norway
Dispute stage: Appellate Body
Agreements cited: Art. I, II  GATT 1994Art. 3.7, 22, 23.1, 23.2, 21.5  Dispute Settlement Understanding (DSU)

UNITED STATES – CONTINUED SUSPENSION OF OBLIGATIONS
IN THE EC – HORMONES DISPUTE

Communication from the United States

on concerns regarding the Appellate Body's Report

 The following communication, dated 7 November 2008, is circulated at the request of the
delegation of the United States.

Body's reversal of the panel's findings and conclusions on Article 23 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes ("DSU") is a proper and legally and factually
sound correction of the errors with respect to Article 23 of the DSU in the report of the Panel in this
proceeding. However, other aspects of the Appellate Body's report, in particular the Appellate Body's
apparent perception of the proper relationship between the role of the Appellate Body in helping
resolve disputes and the role of Members in es tablishing the rules and procedures for dispute
settlement as well as the Appellate Body's treatment of certain other provisions of the DSU, raise
serious systemic and legal concerns which should be an issue for all WTO Members. Those concerns
are presented and summarized below.
2. It is first useful to recall the role that Me mbers have provided for the Appellate Body in
agreeing to its establishment. Members have explicitly agreed that the Appellate Body plays a limited
role. In particular, the "dispute settlement system of the WTO" "serves to preserve the rights and
obligations of Members under the c overed agreements, and to clarify the existing provisions of those
agreements in accordance with cu stomary rules of interpretation of public international law."
1 The
"findings and recommendations" of the Appellate Body "cannot add to or diminish the rights and
obligations provided in the covered agreements."
2 At the same time, the "Ministerial Conference and
the General Council shall have the exclusive authority to adopt interpretations of this Agreement and
of the Multilateral Trade Agreements." 3 Furthermore, any amendment to the DSU "shall be made by
consensus and these amendments shall take effect for all Members upon approval by the Ministerial
Conference."4
3. Accordingly it is clear that the Appellate Body can clarify, but not interpret or amend, any of
the covered agreements, including the DSU.

1 Article 3.2 of the DSU.
2 Article 19.2 of the DSU.
3 Article IX:2 of the Marrakesh Agreement Establishing the WTO.
4 Article X:8 of the Marrakesh Agreement Establishing the WTO.

4. Unfortunately, the report of the Appellate Body appears not only to clarify, but also to
propose amendments and interpretations, of the DSU, and thus proposes to add to or diminish the
rights and obligations of Members.
The Process to Be Followed After the DSB Has Granted Authorization to Suspend Concessions

5. In the appeal, the question was presented as to whether Article 21.5 of the DSU required the
United States to initiate a compliance panel pro ceeding in response to th e European Communities'
claim of compliance. The Appellate Body correc tly concluded that the United States was not so
required and therefore rejected the EC's claim that the United States had breached Article 21.5. There
was no need for the Appellate Body to go further.
6. Yet the Appellate Body went further. It proceeded to opine, at surprising length and detail, on
what process Members should follow in the situa tion where the DSB has authorized a Member to
suspend concessions with respect to the Member c oncerned, and the Member concerned subsequently
claims that it has complied with the DSB recommenda tions and rulings at issue (the "post-suspension
situation").
7. The Appellate Body considered that recourse to Article 21.5 compliance panel proceedings
(in which the original panelists are preferred and th e time frame is expedited) is the exclusive means
for resolving a post-suspension situation. 5 Furthermore, the Appellate Body found that there is a
responsibility for either the original respondent or the original complainant to ensure that the
suspension of concessions is not applied indefinitely. 6 As a result, either party must initiate
compliance panel proceedings as soon as possible. 7 However, recognizing that a proceeding initiated
only by the original responding party could pose a number of problems, the Appellate Body
considered that where a proceeding is brought firs t by the original responding party, the original
complainant could then bring its own, separate co mpliance proceeding and the two proceedings could
simply be assumed to result in a "review of all the issues." 8 The original complainant should act "as
soon as possible" after adoption of an implementi ng measure or after the filing of the original
respondent's Article 21.5 panel request, so that bot h matters may be referred to the original panel
wherever possible.9 The Appellate Body then set forth the rules it considered would apply regarding
the allocation and shifting of the burden of proof.10
8. The procedures suggested by the Appellate Body are deeply troubling both in terms of the
supposed textual basis on which the Appellate Body relied as well as the severity of the problems with
the procedures themselves.
9. According to the Appellate Body, Article 21.5 of the DSU is to be read to limit the procedural
options available to Members such that a Member may only have recourse to an expedited compliance
panel proceeding. The Appellate Body said that: "Article 21.5 dictates that panel proceedings
pursuant to this provision are the procedures that must be followed for adjudicating the cause of
action as framed in its opening clause." 11 The Appellate Body bases its reading on the word "shall"
together with "these dispute settlement procedures" in Article 21.5. However there are numerous
problems with the Appellate Body's reading.

5 Paragraph 345 of the Appellate Body Report.
6 Paragraph 348 of the Appellate Body Report.
7 Paragraph 348 of the Appellate Body Report.
8 Paragraph 355 of the Appellate Body Report.
9 Paragraph 354 of the Appellate Body Report.
10 Paragraphs 360-365 of the Appellate Body Report.
11 Paragraph 336 of the Appellate Body report.

10. First, the Appellate Body ignores the fact th at Article 21.5 specifies that "these dispute
settlement procedures" include "resort to the original panel." In other words, expedited compliance
panel proceedings are only one of the "procedures" available under Article 21.5. The Appellate Body
reads the word "including" out of Article 21.5. Instead, the Appellate Body appears to be reading
"including" as "except that"; in other words, th e Appellate Body would have the DSU apply, except
that the only proceeding available is a compliance panel proceeding.12
11. But the Appellate Body is not even consistent in its reading. The Appellate Body also finds
that "these dispute settlement procedures" include the consensual forms13 of dispute settlement.14 The
Appellate Body cannot have it both ways – either the reference in Article 21.5 to "these dispute
settlement procedures" is a referenc e only to expedited compliance pane l proceedings or it refers to a
range of procedures. Nothing in Article 21.5 pr ovides that "these dispute settlement procedures"
refers to expedited compliance panel proceedings plus consensual forms of dispute settlement.
12. Second, if "these dispute settlement procedures" in truth did limit the procedures only to the
expedited compliance panel proceedings referred to in Article 21.5, then there would be no appeal
from such compliance panel proceedings. The lan guage on which the Appellate Body relied nowhere
includes an appeal among "these dispute settlement proceedings." Under the Appellate Body's
reasoning, therefore, Article 21.5 precludes appeals. Yet there have been numerous appeals from
compliance panel proceedings under Article 21.5.
13. Third, the Appellate Body's finding on the exclusivity of Article 21.5 compliance panel
proceedings for resolving post-suspension disputes also contradicts the Article 22.6 Arbitrator in EC –
Hormones. According to the Arbitrator, both "ord inary" panel proceedings and Article 21.5
compliance panel proceedings could be legitimate av enues for the EC to challenge US suspension of
concessions. As the Arbitrator explicitly explained to the EC in the Arbitrator's award:
"In the event of a future dispute on this issue, we note that the EC could start normal
– or arguably even expedited – DSU pro cedures challenging the consistency of the
level of US suspension with Article 22.4."
15
In this proceeding, the EC was following one of th e procedures explicitly approved by the Arbitrator.
The Arbitrator's decision is "final" 16 and in this sense is institu tionally on an equal level as an
Appellate Body report. Yet the Appellate Body h as now explained that this procedure was not open
to the EC. The Appellate Body has thus set up a contradiction within the WTO dispute settlement
system.

14. Fourth, the problem goes beyond what has been sai d so far. The Appellate Body's reading of
Article 21.5 also contradicts its own finding that the Hormones – Sanctions panel, which was
established as an "ordinary" panel, had jurisdiction to consider the substance of the EC's claim of
compliance. In fact, it was the Appellate Body's ow n understanding that, had it considered itself able

12 For example, in footnote 772 of its Report, the Appellate Body contemplates that Article 9, which is
not a procedure under Article 21.5, would be available.
13 For example, good offices, conciliation, or media tion under DSU Article 5, or arbitration under
Article 25 of the DSU.
14 See paragraph 340 of the Appellate Body report.
15 Arbitrator Award, European Communities – Measures Concerning Meat and Meat Products
(Hormones) – Recourse to Arbitration by the European Communities, WT/DS26/ARB, circulated 12 July 1999,
para. 82.
16 Article 22.7 of the DSU.

to complete the analysis on compliance, final reso lution of the question could have been achieved
through this proceeding. Again, there is an inherent contradiction in the Appellate Body's reasoning.
17
15. These are some of the legal flaws in the Appella te Body's reasoning. Beyond that, however,
there are numerous problems with the actual pro cedure recommended by the Appellate Body. For
example, the Appellate Body's approach would preclude a Member from initiating an "ordinary"
panel proceeding pursuant to DSU Article 6 to ad dress matters of concern with another Member.
There has been much litigation over the scope of the jurisdictional limitation of an Article 21.5
compliance panel proceeding. A complaining party has, up until now, always retained the option of
avoiding those jurisdictional complexities (for example, in a situation where it is not clear whether a
measure is a "measure taken to comply") and in itiating an ordinary panel proceeding instead (in
exchange, of course, for foregoing the accelerated time frames mentioned in Article 21.5). Under the
Appellate Body's approach, a Member would be forced to choose whether to:
(1) argue that a measure is a "measure taken to comply" (and therefore a challenge against
that measure could only be pursued throug h an Article 21.5 proceeding), and risk a
finding at the end of the process that in fact the measure is not a "measure taken to
comply" and then need to begin an entire new "ordinary" panel proceeding, or

(2) conversely challenge the measure in an ordinary panel proceeding only to risk
discovering in the end that it was a "measure taken to comply" and therefore the Member
would need to start all over and bring an Article 21.5 compliance panel proceeding with
respect to that measure.

Either outcome would entail all the expense a nd delay associated with having to bring two
proceedings. Furthermore, even where it might ma ke sense to challenge a measure together with
other, related measures that are clearly not "mea sures taken to comply," the Appellate Body's
approach would prevent a panel from considering the various related measures together.
16. In its report, the Appellate Body correctly identified some of the potential problems with
respect to the terms of reference of an Article 21.5 proceeding.
18 However, the Appellate Body's
suggestion that two separate Article 21.5 proceedin gs could be brought to avoid the problems, one
brought by the Member concerned and one by the complaining party, would not necessarily solve
these problems but only create additional ones. For ex ample, there is nothing in Article 21.5 that
provides for consolidating or harm onizing compliance panel proceedings
19 and the DSB could end up
adopting mutually exclusive or inconsistent co mpliance panel reports. Members have already
experienced some of the difficulties involved in mo re than one panel seeking to address the same or
similar issues.
17. There are other practical difficulties and issues that Members have been identifying and
discussing in negotiations on the procedures in a pos t-suspension situation. The Appellate Body's
proposed approach does not take these into account and would appear to be too simplistic.

17 The contradiction could be resolved by interpreting the Appellate Body's opining as intended to
pronounce a new rule, i.e., while other avenues had been viable until now – including in this dispute –
henceforward
, the only avenue available to pa rties in a post-suspension situati on is an Article 21.5 proceeding
brought by one or both parties that follows the detaile d procedure on claims and co unterclaims and the specific
burden of proof scheme envisioned by the Appellate Body in this report. Such an interpretation, however,
would only highlight the extent to which the Appellate Body would be operating outside its authority and
"making law" rather than clarifying the application of the existing rules.
18 See paragraphs 353 and 354 of the Appellate Body report.
19 This is particularly true when the timing of diffe rent panels, or the Members who are third parties to
the panels differed, could result in different panelists serving on each panel.

18. Members have spent several years trying to reach agreement on what process Members
should follow in a post-suspension situation, but ha ve not yet achieved consensus on the procedures
that would apply. 20 The Appellate Body presumably is aware that Members are engaged in these
negotiations, yet proceeded to opine on the matter. The Appellate Body does not explain in its report
why it chose to do so. It is possible the Appellate Body considered that its suggestions for how to
proceed might be helpful to Members. Unfort unately, however well-intentioned the advice might
have been, the Appellate Body's opinion on the appr opriate procedural avenue for resolving disputes
in a post-suspension situation is an advisory opini on made outside of the Appellate Body's proper
mandate in this dispute and outside its authority under the WTO dispute settlement system.
19. It is no secret that the DSU lacks specificity on the procedures applicable in a post-suspension
situation. Indeed, this lack of specificity has been long observed by Members and is a key reason for
the negotiations referred to above. Members' negotiations on this matter have demonstrated the
complexity of the questions presented and the need for Members to decide on a complex series of
issues on how the system would best function. Desp ite the solidity of the Appellate Body's analysis
on Article 23 and whatever good intentions the Appe llate Body may have had with respect to its
additional DSU analysis, the Appellate Body went too far; the rules it has articulated as being
applicable in a post-suspension situation are not what any Member has suggested or to which any
Member has agreed. This incurs negative consequences for the dispute settlement system and for
Members.
20. Furthermore, despite the fact that the specific ity supplied by the Appellate Body on the rules
and procedures applicable in a post-suspension situ ation is nowhere provided for in the DSU, the
Appellate Body somehow "found" that both parti es must engage exclusively in Article 21.5
compliance panel proceedings that either or both pa rties initiate, and even went so far as to provide
for how harmonization of separate proceedings c ould occur should both parties initiate them 21 and a
detailed scheme for applying and shifting the burden of proof, which would apply to post-suspension
disputes generally.
21. This type of engagement by the Appellate Body amounts to nothing less than rule-making,
which is outside of the Appellate B ody's mandate. This is of serious concern in and of itself, even if
all Members considered that the Appellate Body's suggestions for how to a pproach a post-suspension
situation were a well-considered approach both from a legal and practical perspective. Unfortunately,
that is not the case.
22. In conclusion, the Appellate Body's proposed approach is outside the authority of the
Appellate Body, lacks legal foundation in the text of the DSU, raises a number of practical problems,
and ignores the extensive work already undertaken by Members in their negotiations to clarify and
improve the DSU.
Untenable Standard for "Independence and Impartiality"

23. The Appellate Body also concluded that the pa nel's appointment of and consultation with two
scientific expert advisers infringed "the EC's" due process rights. 22 Those two experts were directly
involved in the risk assessments performed by the Joint FAO/WHO Expert Committee on Food
Additives ("JECFA"), the international organizatio n that conducts risk assessments, advises, and

20 See for example TN/DS/W/32, dated 22 January 2003.
21 See footnote 772 of the Appellate Body Report. Although in that footnote the Appellate Body relies
in part on Article 9 of the DSU, that Article would not appear to apply by its terms to the situation envisioned.
22 The Appellate Body did not explain why the " due process " rights at issue accrued only to the EC.
Presumably all the parties to a dispute have a "due process" interest or "right" in ensuring that the process for a
panel to receive expert advice affords due process.

makes recommendations to the Codex Alimentari us Commission ("Codex"), the international
standard-setting body that Members have explicitly endorsed in the Agreement on the Application of
Sanitary and Phytosanitary Measures for the hormones at issue. According to the Appellate Body,
this fact compounded with the particular role that JECFA's assessments had in this case, formed an
objective basis to conclude that the independence or impartiality of those two experts would likely be
affected. According to the Appe llate Body, the panel's appointment of those two experts therefore
compromised the independence and impartiality of the panel and constituted an infringement of the
EC's due process rights.
24. The Appellate Body's standard for independence and impartiality of expert advisers is of great
concern. It could result in disqualifying those who have the greatest expertise and familiarity with an
issue, subject matter, or controversy. The two experts in question had an intimate understanding and
well-developed ability to communicate matters of extreme technical, scientific, and conceptual
complexity, by virtue of their familiarity with the risk assessments at issue.
25. Furthermore, the panel was well aware of the e xperts' prior involvement in the Codex process
and was able to take that into account in evaluating the advice of the experts. Again, this is all the
more surprising given that the panel was fully in a position to take into account the involvement of the
experts in the earlier JECFA processes. Indeed, it is important to recall that it is panels, not experts,
that make findings of fact. Panels are expect ed to weigh the probative value of any source of
information in making findings of fact, including of course, any information from an expert, taking
into account their involvement in earlier processes rele vant to and impacting the matters in question.
Panels are entirely capable and are expected to ma ke these determinations, and they do so in every
single dispute for which they are established.
26. In other contexts in WTO dispute settlement, fa miliarity and expertise with the matters in
dispute are assets viewed with great favor in selecting adjudicators. In Article 21.5 compliance panel
proceedings, for example, original panelists ar e preferred for the composition of the compliance
panel. As the Appellate Body explained in its report, original panelists are "familiar with the
background of the dispute and the inconsistencies with the covered agreements they had found" and
would be able "to examine whether the inconsistenci es . . . have been rectified . . . . [Article 21.5
compliance panel] proceedings would benefit from their knowledge and expertise gained from serving
as panelists in [the original panel proceeding], a nd would be adjudicated within a shorter time frame
than regular proceedings."
23 The fact that those panelists may have been reversed on appeal and may
be reviewing the same or similar issues in the compliance phase is apparently of no concern to the
Appellate Body and raises no problems in terms of their impartiality or independence.
27. Based on the Appellate Body's reasoning, howeve r, the same kind of familiarity with the
facts, background, and conclusions from a prior deliberative exercise should be considered
disqualifying with respect to the scientific expert s because this prior exposure would likely prejudice
the individuals' ability to view a modified situation with independence and impartiality.
28. Similarly, the Appellate Body's view concer ning impartiality and independence would mean
that no Appellate Body member or member of the S ecretariat could be involved in an appeal from a
panel report involving issues similar to those explor ed in an earlier Appellate Body report in which
that Appellate Body member or member of the Secretariat had been involved. Otherwise the
Appellate Body would lack the necessary impartia lity and independence and would infringe the due

23 Appellate Body Report, para. 344.

process rights of at least one of the parties to the dispute. 24 Yet this is at odds with the Appellate
Body's apparent views in that type of situation.
29. In conclusion, the Appellate Body's reasoning and standard for impartiality and independence
of expert advisers to panels appears to be fundame ntally confused and at odds with the principles
underlying the selection of adjudicators in the WTO dispute settlement system.
Legally Defective "Recommendation"

30. Members have explicitly agreed that: "Where a panel or the Appellate Body concludes that a
measure is inconsistent with a covered agreement, it shall recommend that the Member concerned
bring the measure into conformity with that agreement."
25 In other words, the only situation in which
a panel or the Appellate Body is authorized to issue a recommendation is where a panel or the
Appellate Body has concluded that a measure with in the terms of reference of the proceeding is
inconsistent with a covered agreement.
31. In this appeal, the Appellate Body concluded th at there was no measure that was inconsistent
with a covered agreement. Th e Appellate Body has no authority, therefore, to make any
"recommendation" in this appeal. As a result, it is apparently an ill-considered word choice 26 on the
part of the Appellate Body to use the term "recommend" in its report. 27 Any other reading would be
contrary to the DSU.
32. A further difficulty with reading the Appellate Body's "recommendation" as intending to have
the legal status of a recommendation under Article 19. 1 of the DSU is that it is not addressed only to
the United States as the responding party in the dis pute, but it is also addressed to the European
Communities, which was the complaining party in this proceeding. There is no basis in the DSU for
addressing a "recommendation" to a complaining party.
33. Yet another difficulty with such a reading is that the Appellate Body refers to "without delay,"
although nothing in Article 19 of the DSU provides au thority for the Appellate Body to specify a time
period for implementing a "recommendation" and ind eed, such authority would conflict with other
elements of the DSU, such as Article 21.3.
34. In addition to these fundame ntal legal failings with r eading the Appellate Body's
"recommendation" as intending to have the legal status of a recommendation under Article 19.1 of the
DSU, there would also be a number of practical difficulties as well. For example, would the United
States and the EC each have a "reasonable period of time" to comply with such a "recommendation"?
Would those times periods be the same? How woul d Article 22 apply in the absence of a "measure"
that was found to be inconsistent with a covered agreement?

24 Presumably of even greater concern under the Appellate Body's approach would be a situation in
which the panel was disagreeing with an earlier Appellate Body report with which that Appellate Body member
had been involved.
25 Article 19.1 of the DSU.
26 The question of ill-considered word choices is one of the types of questions that could be addressed
were the Appellate Body to afford parties an opportunity to comment on an interim report of the Appellate
Body.
27 Paragraph 737 of the Appellate Body report (" In the light of the obligations arising under
Article 22.8 of the DSU, we recommend that the Disp ute Settlement Body request the United States and the
European Communities to initiate Article 21.5 proceedings without delay in order to resolve their disagreement
as to whether the European Communities has removed the measure found to be inconsistent in EC – Hormones
and whether the application of the suspension of concessions by the United States remains legally valid.").

35. In conclusion, while framed as a "recommenda tion" along the lines of recommendations by
the Appellate Body pursuant to Article 19.1 of the DSU in past disputes, the use of the term
"recommend" is best read as an ill-considered word choice by the Appellate Body.