WORLD TRADE
ORGANIZATIONTN/DS/W/35
22 January 2003
(03-0353)
Dispute Settlement Body
Special SessionOriginal:  English
CONTRIBUTION OF THE REPUBLIC OF KOREA TO THE IMPROVEMENT
OF THE DISPUTE SETTLEMENT UNDERSTANDING OF THE WTO
Communication from the Republic of Korea
The following communication, dated 20 January 2003, has been received from the Permanent
Mission of the Republic of Korea.
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I. INTRODUCTION
1. Korea suggested in its submission (TN/DSW/11) dated 11 July 2002 to (1) provide a fast-
track option for the prevailing party to request the Director-General to appoint an arbitrator fordetermination of a reasonable period of time (RPT) at the DSB meeting held within 30 days of the
adoption of the Panel/AB report;  and (2) front-load the determination of the level of the nullification
or impairment by having the Article 21.5 compliance panel determine the level.
2. As the negotiations switch from discussions based on issues to those based on draft legal
texts, as agreed at the meeting of the Special Session of the DSB held on 16 December 2002, Korea
hereby submits further elaboration on its proposal together with draft legal texts.
II. FAST-TRACK OPTION FOR THE DETERMINATION OF THE RPT
A. H
OW KOREA 'S PROPOSAL FITS INTO ARTICLE 21.3( C) TIME -FRAME
3. Should the complaining party be allowed to re quest the Director-General to appoint the
arbitrator for the RPT at the DSB meeting held within  30 days of the adoption of the final reports, the
arbitrator would be given around 50 days because, out of the 90 day time-frame, 30 days would have
been spent for bilateral discussions and another 10 days would have been reserved for the Director-General to select and appoint the arbitrator.
4. According to the normal working schedule of the Article 21.3(c) arbitration, parties to the
dispute are given 10 days after the nomination of the arbitrator for preparing written submissions.
The oral hearing takes place around 10 days after the deadline for the submissions.  After the oral
hearing, the arbitrator is left with around 30 days during which he/she can complete his/her task,including the time needed for translation of the report into official languages.
B. P
RACTICAL ADVANTAGE OF KOREA 'S PROPOSAL IN THE INTEREST OF PROMPT COMPLIANCE .
5. The RPT is determined through either bilateral agreement under Article 21.3(b) or binding
arbitration under Article 21.3(c).  In the case of  RPT determined through binding arbitration, theTN/DS/W/35
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shortest RPT so far was 6 months in Canada – Pharmaceutical Patents.  This essentially means that
the minimum RPT through binding arbitration is 6 months.  In contrast, where the RPT is determined
through mutual agreement, the RPT can be less than 6 months, depending on the particular
circumstances or the lack thereof.  The shortest RPT determined through bilateral agreement was
4 months 8 days in Korea – Dairy.  Korea’s proposal will be beneficial in cases involving traderemedy measures, like SGs, where implementation can be done through withdrawal of the measure,
which can be effected in substantially less than 6 months.
Table 1:  Three Shortest RPTs Determined through Binding Arbitration
Dispute WT/DS Number Type of measures in
disputeRPT
Canada – Pharm.
Patents114 Patent Protection 6 months
Australia – Salmon 18 Quarantine 8 months
Canada – Auto 139/142 Value-added content
requirement8 months
Table 2:  Three Shortest RPTs Bilaterally Agreed
Dispute WT/DS Number Type of measures in
disputeRPT
Korea – Dairy 98 Safeguard 4 months, 8 days
US – Wheat Gluten 166 Safeguard 4 months, 14 days
EC – Bed Linen 141 Anti-dumping 5 months, 2 days
C. PROPOSED LEGAL TEXT
6. The following to be added at the end of Article 21.3(b):
Notwithstanding this provision, in the event that the prevailing party considers that there has
not been adequate progress made in seeking a mutually agreeable reasonable period of time
prior to the DSB meeting to be held within 30 days after the adoption of the Panel orAppellate Body report, the prevailing party may request at that DSB meeting a binding
arbitration under subparagraph (c).  In this case, the arbitrator shall be appointed by the
Director-General within 10 days of the request, after consulting the parties.TN/DS/W/35
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III. FRONT-LOADING OF DETERMINATION OF THE LEVEL OF THE
NULLIFICATION OR IMPAIRMENT
A. OPTIMAL TIMING FOR DETERMINATION OF THE LEVEL OF THE NULLIFICATION OR
IMPAIRMENT
7. Article 22.4 of the DSU stipulates that the level of the suspension of concessions or other
obligations authorized by the DSB should be equivalent to the level of the nullification or impairment.
The plain reading of Article 22.4 suggests that the drafters were of the view that the determination of
the level of the nullification or impairment should take place only after unsuccessful negotiations on a
mutually acceptable compensation within the meaning of Article 22.2.
8. A pre-determined level of the nullification or impairment is an essential parameter not only
for the suspension of concessions or other obligatio ns but also for the conduct of the compensation
negotiations.  The lack of a mechanism for establishing the level of the nullification or impairmentbefore the initiation of the compensation negotiations effectively reduces the Article 22.2
compensation negotiations into inutility, since there is no common ground on the basis of which the
parties to the dispute could develop a mutually acceptable compensation.  Accordingly, Korea is of
the view that the optimal timing for the determination of the level of the nullification or impairment
should be a point in time between the expiry of the RPT – in consideration of the current remedystructure – and the commencement of the compensation negotiations under Article 22.2 of the DSU.
B. S
EQUENCING OF TASKS IN COMPLIANCE PANEL
9. Korea suggested that the compliance panel be entr usted with the task of determining the level
of the nullification or impairment in addition to fulfilling its mandate of making a ruling on the
existence of or consistency with a covered agreement of measures taken to comply with therecommendations and rulings under Article 21.5 of the DSU.
10. It would be only logical that the compliance panel perform these two tasks in an orderly
fashion.  The compliance panel would proceed to the task of determining the level of the nullification
or impairment only after it is convinced that compliance has not occurred.
C. A
DVANTAGES OF KOREA 'S PROPOSAL AND RELATED ISSUES
11. The main advantages of Korea's proposal from the institutional point of view are first, it
would give a fair chance of success to the Article 22.2 compensation negotiations, and second, even if
the compensation negotiations fail, the possibility of dispute as to the level of suspension of
concessions or other obligations within the meaning of Article 22.6 of the DSU would be substantially
reduced because, in most cases, the main element of contention under the Article 22.6 dispute is
whether the proposed level of suspension of concessions or other obligations is equivalent to the level
of the nullification or impairment.
D. IMPLICATION ON THE TIME -FRAME PROVIDED FOR IN ARTICLE 21.5
12. Under Korea's proposal, the compliance panel would not be able to meet the 90-day time-
frame provided for in Article 21.5 should it proceed to determine the level of the nullification or
impairment.  Korea believes that an extra 30 days would be appropriate for the compliance panel to
determine the level of the nullification or impairment, as implied in Article 22.6 of the DSU.TN/DS/W/35
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E. PROPOSED LEGAL TEXT
13. The second sentence of Article 21.5 to be replaced by the following:
The Panel shall circulate its report within 90 days after the date of referral of the matter to it
in case of compliance.  In the case of non- compliance, the Panel shall proceed to determine
the level of the nullification or impairment and circulate its report within 120 days after thedate of referral of the matter to it, including the level of the nullification or impairment.
14. The following footnote to be added to the above additional language:
To the extent that the legal findings and conclusions of the Article 21.5 Panel are modified or
reversed by the Appellate Body, thereby affecting the level of the nullification or impairment
determined by the Article 21.5 Panel, the Appellate Body shall determine the final level of the
nullification or impairment.
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