RESTRICTED
WORLD TRADE WT/DSB/M/28
21February 1997
ORGANIZATION(97-0737)
DISPUTE SETTLEMENT BODY
22January 1997
MINUTES OFMEETING
Held intheCentre William Rappard
on22January 1997
Chairman: Mr.Celso Lafer (Brazil)
Subjects discussed: Page
1. Surveillance ofimplementation ofrecommendations adopted bytheDSB 2
- United States -Standards forreformulated andconventional gasoline:
status report bytheUnited States 2
2. Hungary -Export subsidies inrespect ofagricultural products 3
- Request byAustralia fortheestablishment ofapanel 3
- Request byNewZealand fortheestablishment ofapanel 3
- Request bytheUnited States fortheestablishment ofapanel 3
- Request byArgentina fortheestablishment ofapanel 3
3. Turkey -Taxation offoreign filmrevenues 5
- Request bytheUnited States fortheestablishment ofapanel 5
4. Argentina -Measures affecting imports offootwear, textiles, apparel andother
items 6
- Request bytheUnited States fortheestablishment ofapanel 6
5. United States -Import prohibition ofcertain shrimp andshrimp products 7
- Request byMalaysia andThailand fortheestablishment ofapanel 7
6. Brazil -Export financing programme foraircraft 9
- Statement byCanada 9
7. Proposed nominations fortheindicative listofgovernmental andnon-governmental
panelists 10
8. European Communities -Duties onimports ofgrains 11
9. Election ofChairperson 12
10. Statement bytheoutgoing Chairman oftheDSB 12WT/DSB/M/28
Page2
1. Surveillance ofimplementation ofrecommendations adopted bytheDSB
- United States -Standards forreformulated andconventional gasoline:
status report bytheUnited States (WT/DS2/10)
TheChairman saidthatthisitemwasontheAgenda pursuant toArticle 21.6oftheDSUwhich
stated that: "Unless theDSBdecides otherwise, theissueofimplementation oftherecommendations
orrulings shallbeplaced ontheagenda oftheDSBmeeting aftersixmonths following thedateof
establishment ofthereasonable time-period pursuant toparagraph 3andshallremain ontheDSB's
agenda untiltheissue isresolved". Herecalled thatattheDSBmeeting on3December 1996, the
United States hadstated thatitwould provide theDSB, atitsmeeting inJanuary 1997, withastatus
report ofitsprogress intheimplementation ofitsrecommendations. Atthepresent meeting, thisstatus
report wasbefore theDSBindocument WT/DS2/10.
Therepresentative oftheUnited States saidthatpursuant toArticle 21.6oftheDSU, hiscountry
hadsubmitted, indocument WT/DS2/10, itsfirststatus report ontheimplementation ofthe
recommendations oftheDSB. Asoutlined inthisreport, theimplementation process initiated bythe
USEnvironmental Protection Agency (EPA) wasveryopen, which provided anopportunity forinput
from allinterested parties during thetime-period specified therein.
Therepresentative ofBrazil expressed hiscountry 'sconcern attheapparent delay intheeffective
implementation bytheUnited States oftheAppellate Body report which hadupheld theconclusions
ofthepanel onthismatter. Herecalled thatthepanel report hadbeencirculated on29January 1996,
andtheAppellate Body report on29April 1996. Brazil hadwelcomed theUnited States 'intention
toimplement therecommendations. InDecember 1996, theUnited States hadaffirmed thatitneeded
15months tofullyimplement therecommendations. Although Brazil believed thatthistime-period
wasexcessive, ithadnotformally made anyobjection because itunderstood thatsuchimplementation
could taketime. Heexpressed concern thattheUnited States might befalling behind the15-month
implementation period.
Asstated inWT/DS2/10, inJune1996, theEPAhadinvited comments from allinterested
parties tobesubmitted bySeptember 1996, onhow theUnited States should implement the
recommendations. Four months afterthereceipt ofthese comments, theUnited States hadstillnot
putforward anyspecific proposal fortheimplementation oftherecommendations. ItwasBrazil 's
understanding thatunder theUSdomestic lawanumber ofsteps hadtobetaken before thegasoline
rulecould bechanged andthatminimum time-frames wererequired forthesesteps. These procedures
delayed theimplementation process which imposed costs onBrazilian exporters ofgasoline. Asit
wasovertwoyears sincethegasoline rulehadbecome effective, Brazilian exporters queried howmuch
more timewasrequired forthisdiscriminatory ruletobemade consistent withArticle IIIofGATT
1994. Therefore, Brazil requested theUnited States toinform theDSBof:(i)where thematter presently
stood; (ii)when would theproposed changes tothegasoline rulebeissued; (iii)whatsteps would
betaken following publication oftheproposed rule; (iv)what would bethetime-limits inlawor
regulation forthose steps, andcould those time-limits beexceeded; (v)whattimewould berequired
foranyother steps; and(vi)theintended datewhen aruleimplementing theDSBrecommendations
would become effective.
Therepresentative ofVenezuela thanked theUnited States forthestatus report inWT/DS2/10.
Hisdelegation noted theUnited States 'assurance thatitsimplementation process waswellunder way,
andthattheUnited States didnotanticipate anyproblems infullyimplementing therecommendations
within the15-month period, asagreed bybothgovernments. Hisdelegation would beinterested in
theanswers tothequestions raised byBrazil withregard toalleged delays intheimplementation process.WT/DSB/M/28
Page3
Therepresentative oftheUnited States saidthattheEPAwascurrently reviewing regulatory
options open toit.Hewastherefore notinaposition atthepresent meeting toindicate thetiming
ofthenextstepsinthereview process. Allinformation currently available tohisdelegation hadbeen
provided indocument WT/DS2/10. Nevertheless, hisdelegation would maintain thedialogue with
Brazil andVenezuela concerning thepoints which hadbeenraised. Herequested Brazil toprovide
itsquestions inwriting. Hewould recommend tohisauthorities tomake every effort torespond to
these questions bythetimeofthenextregular DSBmeeting. Notwithstanding theconcerns raised
byBrazil, hewished toassure Members thattheUnited States wascurrently onschedule inthe15-month
period asithadanticipated when ithadannounced theimplementation oftherecommendations.
TheDSBtooknoteofthestatements andagreed torevert tothismatter atitsnextregular
meeting.
2. Hungary -Export subsidies inrespect ofagricultural products
- Request byAustralia fortheestablishment ofapanel (WT/DS35/4)
- Request byNewZealand fortheestablishment ofapanel (WT/DS35/5)
- Request bytheUnited States fortheestablishment ofapanel (WT/DS35/6)
- Request byArgentina fortheestablishment ofapanel (WT/DS35/7)
TheChairman proposed thattheabove-mentioned requests beconsidered together since they
pertained tothesamematter. Hethendrewattention tothecommunication fromAustralia indocument
WT/DS35/4.
Therepresentative ofAustralia saidthathiscountry andsome other Members hadheldseveral
consultations withHungary withregard toitsexport subsidies onagricultural products. Parties to
thedispute hadactively sought towork withHungary inorder tofindamutually satisfactory solution
tothematter. Itwasdisappointing thatafteralengthy process ofconsultations, bothformal and
informal, including intheCommittee onAgriculture andunder theDSUprocedures, aswellasinformal
discussions between thecomplainants andHungary, ithadnotbeenpossible tofindamutually acceptable
solution totheproblem ofHungary 'sbreach ofitsexport subsidy commitments. Efforts hadincluded
aproposal bythecomplainants foratemporary waiver which would require Hungary tobring itsexport
subsidy commitments intoconformity withitsWTO obligations.
Australia therefore requested theestablishment ofapanel. Thebasisofitscomplaint wasthat
Hungary wasproviding export subsidies onagricultural products inexcess ofthebudgetary outlay
andquantity commitment levels specified initsSchedule annexed totheMarrakesh Protocol tothe
GATT 1994, andnotspecified therein. Accordingly, these subsidies appeared tobeinconsistent with
theAgreement onAgriculture, including butnotlimited toArticles 3.3,8and9.2thereof. Itwas
important thatallMembers fullyhonoured theirUruguay Round commitments onagriculture andin
particular onexport subsidies. Hiscountry hoped thatamutually satisfactory solution tothisdispute
might stillbefound which would beconsistent withtheAgreement onAgriculture andother WTO
Agreements.
TheChairman thendrew attention tothecommunication from New Zealand contained in
document WT/DS35/5.
TherepresentativeofNewZealandendorsedthestatementmadebyAustralia.Thislong-standing
dispute hadbeenraised forthefirsttimeinSeptember 1995 intheCommittee onAgriculture. Ithad
related toHungary 'sprovision ofexport subsidies withrespect toagricultural products, which since
thebeginning oftheimplementation period hadexceeded boththebudgetary outlay andquantity
commitment levels specified initsSchedule. Since then, New Zealand together withsome otherWT/DSB/M/28
Page4
Members, hadbeenactively engaged bothformally andinformally intheprocess aimed atassisting
Hungary tobring itsexport subsidy regime intoconformity withtheWTO. InMarch 1996, New
Zealand hadrequested consultations pursuant toArticle XXII ofGATT 1994. Over thepastyear,
regular consultations hadbeenheldresulting inaproposal made bythecomplainants foratemporary
waiver. Atthattimeithadbeenmade clear thatifHungary declined thisproposal there would be
notother option thantorequest theestablishment ofapanel. Regrettably, thedispute hadnotbeen
resolved.
Thisdispute wasthefirstrealtestoftheAgreement onAgriculture. There wasnoneedto
elaborateontheimportancethatNewZealandattachedtothisAgreement,inparticulartheexportsubsidy
disciplines inagriculture which were akeyresult oftheUruguay Round. Therefore, NewZealand
requested theestablishment ofapanel toexamine thismatter andtofindthatHungary wasinbreach
ofitsexport subsidy commitments. With suchanoutcome, Hungary would havetoaccept thatits
export subsidy Schedule wasabinding commitment thatmust beobserved.
TheChairman thendrew attention tothecommunication fromtheUnited States contained in
document WT/DS35/6.
Therepresentative oftheUnited States saidthat,asnoted byprevious speakers, theUnited
States andother interested Members hadworked longandextensively withHungary toresolve this
dispute. Hisdelegation regretted thatthose efforts hadbeenunsuccessful. TheUnited States supported
therequests forapanel byAustralia, NewZealand andArgentina. Itbelieved thatthemarket distortions
resulting fromHungary 'sagricultural export subsidies wereofconcern toallMembers. Hisdelegation
requested thatapanel beestablished atthepresent meeting since theconsultations withHungary had
extended overalongperiod oftimeandtherefore there wasnoreason foranyfurther delay.
TheChairmanfinallydrewattentiontothecommunicationfromArgentinacontainedindocument
WT/DS35/7.
Therepresentative ofArgentina saidthathisdelegation hadrequested theinclusion ofthisitem
ontheagenda forthereasons outlined byprevious speakers, following anevaluation oftrade and
systemic implications forArgentina, andafterhaving exhausted alengthy consultation process. On
several occasions, hiscountry hadstated thatitattached importance tothefullimplementation ofthe
Uruguay Round commitments, andinparticular intheareaofagriculture which hadbeenbrought for
thefirsttimeunder theGATT/WTO disciplines. Export subsidy disciplines under theAgreement on
Agriculture constituted amajor advance inthissector. Anyalteration tocommitments inthisarea,
which werenotrenegotiable, would affect theoverall balance ofalltheUruguay Round Agreements.
Between 1993 and1995, 33.66 percentofArgentine exports hadbeen inagricultural
commodities. Despite theincreased diversification ofitsexports, theshare oftheagricultural sector
hadreached 39percentbetween January andAugust 1996. Therefore, thefailure byHungary tofulfil
itssubsidy reduction commitments contained initsSchedule, andbygranting subsidies toproducts
notspecified therein affected Argentina 'sspecific trade interests. Hiscountry would havepreferred
toavoid theestablishment ofapanel, butitconsidered thatithadexhausted aconsultation process
thathadlasted overoneandahalfyears.
Herecalled thatthisissue hadbeendiscussed intheCommittee onAgriculture forthefirst
timeinSeptember 1995. Therequest forconsultations under Article 4oftheDSU andArticle 19
oftheAgreement onAgriculture hadbeenmade on27March 1996. Consultations hadbeenheldwith
Hungary aslateastheprevious week inorder tofindasolution tothismatter. Regrettably, themost
recent arguments submitted bythelatter didnotindicate thatHungary waswilling tobring itsexport
subsidy commitment intoconformity withitsWTO obligations. Hisgovernment hadtherefore reachedWT/DSB/M/28
Page5
theconclusion thattheonlyalternative toresolve thisdispute wastorequest theestablishment ofa
panel withstandard terms ofreference inaccordance withArticle 7oftheDSU.
Therepresentative ofHungary saidthathiscountry fullyrespected therights ofMembers to
requesttheestablishmentofapanelafterconsultationshadfailedtosettlethedispute.However,Hungary
wasconcerned thatsome ofthecomplaining parties haddecided toproceed toapanel stage. Hungary
didnotbelieve thatthiswasthebestwaytoreach apositive solution tothisunique situation which
hadarisen from anerroneous establishment ofitsSchedule intheareaofexport subsidies. The
underlying background ofthissituation waswellknown totheDSBmembers asHungary hadprovided
adetailed account thereof totheCommittee onAgriculture andtotheGeneral Council.1
Hungary believed thatallpossibilities forasolution hadnotyetbeenexhausted. Therequests
fortheestablishment ofapanel hadbeenmade afewdaysafterHungary hadsubmitted itslatest proposal
foramutually satisfactory solution. Hiscountry hadnointention ofdelaying theDSU procedures.
However,somereflectionwouldberequiredtodeterminewhetherthepanelprocedureswereappropriate
toprovide apositive solution tothisdispute. Therefore, Hungary wasnotinaposition atthepresent
meeting tojoininaconsensus fortheestablishment ofapanel.
Therepresentative oftheUnited States saidthatinaccordance withtheDSU, Hungary had
therightnottoparticipate intheconsensus toestablish thispanel. However, henoted thatpursuant
toArticle 6oftheDSUapanel toexamine thisdispute would beestablished when thisrequest appeared
ontheagenda oftheDSBmeeting forasecond time.
TheDSB tooknoteofthestatements andagreed torevert tothismatter atitsnextregular
meeting.
3. Turkey -Taxation offoreign filmrevenues
- Request bytheUnited States fortheestablishment ofapanel (WT/DS43/2)
TheChairmandrewattentiontothecommunicationfromtheUnitedStatescontainedindocument
WT/DS43/2.
Therepresentative oftheUnited States saidthat,asindicated indocument WT/DS43/2, Turkey
hadmaintained a25percentmunicipality taxonbox-office receipts generated from theshowing of
foreign-origin films, buthadnotimposed suchataxonbox-office receipts generated fromtheshowing
ofdomestic-origin films. TheUnited States considered thistobeinconsistent withTurkey 'sobligations
under Article IIIofGATT 1994.
On12June1996, theUnited States hadrequested consultations withTurkey onthismatter
which hadbeenheldon25July1996. Hiscountry hadentered intoconsultations withTurkey with
theaimofresolving thisdispute, butnomutually acceptable solution hadbeenfound inthesixmonths
since these consultations hadtaken place. Accordingly, theUnited States requested theestablishment
ofapanel toexamine thismatter.
Therepresentative ofTurkey saidthat,on25July1996, theUnited States andhiscountry
hadheldconsultationsregardingthemunicipalitytaximposedbyTurkeyonbox-officerevenuesgenerated
from theshowing offoreign-origin films. TheTurkish authorities were considering thesteps tobe
taken inlightoftheviews expressed bytheUnited States. Hisdelegation hoped thatitwould bein
1WT/L/144WT/DSB/M/28
Page6
aposition toreport ontheresults inthenearfuture. Therefore, Turkey believed thatitwasnotnecessary
atthisstage toestablish apanel andwould notjoininaconsensus tothisend.
Therepresentative oftheUnited States saidthathiscountry wasalways prepared tofinda
mutually acceptable solution toanydispute liketheoneunder consideration andhoped tobeableto
resolve thismatter withTurkey. Pursuant toArticle 6oftheDSU, hisdelegation noted thatapanel
toexamine thisdispute would beestablished when theUSrequest would appear nextontheagenda
ofameeting oftheDSB.
TheDSBtooknoteofthestatements andagreed torevert tothismatter atitsnextregular
meeting.
4. Argentina -Measures affecting imports offootwear, textiles, apparel andother items
- Request bytheUnited States fortheestablishment ofapanel (WT/DS56/5)
TheChairmandrewattentiontothecommunicationfromtheUnitedStatescontainedindocument
WT/DS56/5.
Therepresentative oftheUnited States saidthat,asindicated inWT/DS56/5, Argentina had
imposed specific duties onimports offootwear, textiles andapparel inexcess ofitstariffcommitments.
Inaddition, ithadimposed astatistical taxof3percentadvalorem onimports oftextiles, apparel,
footwear andother items. TheUnited States believed thatthese measures violated: (i)Articles II,
VII,VIIIandXofGATT 1994; (ii)Articles 1to8oftheAgreement onImplementation ofArticle
VIIofGATT 1994; and(iii)Article 7oftheAgreement onTextiles andClothing.
On4October 1996, theUnited States hadrequested consultations withArgentina which had
beenheldon12November 1996. Asstated indocument WT/DS56/5, theUnited States hadbeen
satisfied withtheinformation provided byArgentina thatithadmodified itslabelling regime. However,
hiscountry hadentered intoconsultations withArgentina withtheaimtoresolve thisdispute inits
entirety. Despite theresolution oftheissue concerning labelling, theconsultations hadnotproduced
amutually acceptable solution withrespect toArgentina 'sspecific duties andstatistical tax.Therefore,
while theUnited States continued tohopethatamutually acceptable solution might befound ithad
noother option buttorequest theestablishment ofapanel toexamine thismatter.
Therepresentative ofArgentina saidthathisdelegation noted therequest forapanel made
bytheUnited States. Itwas,however, notinaposition atthepresent meeting toaccept thisrequest.
Asindicated bytheUnited States, Argentina alsobelieved thatcontinuing informal consultations would
enable amutually satisfactory solution tobefound.
Therepresentative oftheUnited States saidthathiscountry wasprepared tocontinue towork
withArgentina withtheintention toresolve thisdispute before thenextmeeting oftheDSB. His
delegation noted thatapanel toexamine thismatter would beestablished when theUSrequest appeared
nextontheagenda ofameeting oftheDSB.
TheDSB tooknoteofthestatements andagreed torevert tothismatter atitsnextregular
meeting.WT/DSB/M/28
Page7
5. United States -Import prohibition ofcertain shrimp andshrimp products
- Request byMalaysia andThailand fortheestablishment ofapanel (WT/DS58/6)
TheChairman drew attention tothecommunication from Malaysia andThailand contained
inWT/DS58/6.
Therepresentative ofThailand, speaking alsoonbehalf ofMalaysia, saidthattheembargo
ontheimportation ofcertain shrimp andshrimp products imposed bytheUnited States pursuant to
Section 609ofPublic Law101-162 amending theEndangered Species Actof1973 (16U.S.C. 1531
etseq.)wasinconsistent withtheUSobligations under theGATT 1994, including, butnotlimited
to,Articles I:1,X:1andXIII:1. Aiming toprotect seaturtles outside itsterritory, theUnited States
hadimposed acomplete embargo onwild-caught shrimp andshrimp products onimports fromcountries
notcertified asmeeting theUSseaturtle protection programme. Inorder tobecertified, acountry
hadtomeetcertainstandardsdeterminedunilaterallybytheUnitedStatesassetforthintheimplementing
regulations totheAct.
Under Article XI:1ofGATT 1994 "noprohibitions orrestrictions other thanduties, taxes
orother charges, whether made effective through quotas, import orexport licenses orother measures
shall, beinstituted ormaintained byanycontracting party ontheimportation ofanyproduct ofthe
territory ofanyother contracting party..." Thescope ofArticle XI:1wascomprehensive, applicable
toallmeasures which prohibited orrestricted imports, other thanduties, taxes orother charges. The
embargo onshrimp imports maintained bytheUnited States clearly violated thisfundamental GATT
provision. Article I:1ofGATT 1994required m.f.n treatment. Bypermitting imports ofwild-caught
shrimp fromcertain Members anddenying thatprivilege toothers, theUnited States hadalsoviolated
them.f.n. treatment.
Under Article XIII:1 ofGATT 1994 "noprohibition orrestriction shallbeapplied byany
contracting party ontheimportation ofanyproduct oftheterritory ofanyother contracting party....,
unless theimportation ofthelikeproduct ofallthirdcountries....is similarly prohibited". TheUS
embargo violated thisprovision asitdiscriminated between theimports oflikeproducts, allowing entry
ofshrimp andshrimp products from countries which theUnited States hadcertified while denying
suchentry tophysically identical products from countries thathadnotbeencertified. Malaysia and
Thailand believed thatthemeasures maintained bytheUnited States could notbejustified byanyother
GATT provisions, including theexceptions contained inArticle XX.Moreover, theseactions nullified
orimpaired benefits accruing toMalaysia andThailand under GATT 1994andtheWTO Agreement.
On8October 1996, inaneffort toresolve thismatter, India, Malaysia, Pakistan andThailand
hadrequested consultations withtheUnited States2.These consultations hadbeenheldon19November
1996, andsubsequently letters hadbeenexchanged. However, ithadnotbeenpossible toreach a
mutually agreed solution. Therefore, Malaysia andThailand requested thatapanel beestablished with
standard terms ofreference.
Therepresentative oftheUnited States saidthatthescope oftheimport prohibition atissue
inthisdispute wascurrently thesubject ofpending litigation intheUScourts. TheUnited States '
understanding wasthatunder themostrecent decision oftheUSCourt ofInternational Trade, Section
609ofPublic Law101-162, which authorized theprohibition, hadonlyasmall effect ontradebetween
theUnited States andthecountries requesting apanel. Furthermore, because Thailand hadbeencertified
under Section 609,presently thisSection hadabsolutely noeffect ontradefromThailand. Hisdelegation
2WT/DS58/1WT/DSB/M/28
Page8
wasdisappointed thatMalaysia andThailand hadrequested apanel inthisparticular case. Atthis
stage, theUnited States wasnotinaposition toagree totheestablishment ofapanel.
Therepresentative ofthePhilippines saidthat,hercountry hadrequested separate consultations
withtheUnited States onthismatter3,buthadparticipated together withother complainants inthe
consultations heldon19November 1996. These consultations hadfailed tosettle thematter dueto
divergentviewsontheconsistencyoftheapplicationofthemeasurewiththeWTOAgreement.Malaysia
andThailand hadtherighttorequest theestablishment ofapanel. ThePhilippines wascurrently making
anassessment ofsubsequent developments, inparticular theOrder oftheUSCourt ofInternational
Trade issued on25November 1996, which clarified andrevised anearlier decision of8October 1996.
ThisCourt Order hadmade certain changes inthemanner inwhich themeasure wasenforced. The
Philippines wasintheprocess ofevaluating theimplications ofthesechanges inlightofprevious panel
reports onrelated issues.
Subsequent totheconsultations, theUnited States hadrequested thePhilippines, andother
countries intheregion, toconsider thepossibility ofconcluding atreaty ontheprotection ofseaturtles.
Inaspirit ofcomity andinpursuit ofitsownenvironmental objective ofprotecting seaturtles, the
Philippines would keepanopenmind tosuchinitiatives. However, hercountry considered atreaty
ontheprotection ofseaturtles asaseparate issuefromtheconsistency ofdisputed measures withthe
WTO Agreement. ThePhilippines would continue itsevaluation andwould monitor further
developments onthismatter. Herdelegation reserved itsrights torevert tothismatter atafuture date.
Therepresentative ofPakistan saidthathiscountry supported thestatement made byThailand.
Pakistan believed thatthemeasure taken bytheUnited States violated, interalia,thefollowing Articles
ofGATT 1994: (i)Article Iconcerning them.f.n. treatment; (ii)Article XIpertaining tothegeneral
elimination ofthequantitative restrictions; and (iii)Article XIIIconcerning non-discriminatory
administration ofquantitative restrictions. Pakistan 'sshrimp exports totheUnited States hadbeen
adversely affected bytheabove-mentioned embargo. Therefore, along withIndia, Malaysia and
Thailand, hiscountry hadrequested consultations withtheUnited States inOctober 1996, withthe
aimtoresolve thismatter. These consultations hadbeenheldon19November 1996. Despite thefact
thatinPakistan preventive procedures wereutilized forshrimp fishing without anymechanical retrieval
system, theconsultations hadfailed toresolve thismatter. Therefore, Pakistan wished tojointherequest
byMalaysia andThailand fortheestablishment ofapanel. Hisdelegation would shortly submit this
request inwriting.4
Therepresentative ofAustralia saidthatifapanel were established Australia would reserve
itsthird-party rights. Although hiscountry 'sdirect interest intheUSprawn market wassmall, Australia
hadsignificant interest inthisissueduetopossible secondary market effects, andtothesystemic issues
raised bytheUSmeasures.
Therepresentative ofIndiarecalled thathiscountry along withMalaysia, Thailand andPakistan
hadrequestedconsultationswiththeUnitedStatesonthismatter.Heregrettedthatthejointconsultations
hadfailed tofindanunderstanding onthismatter andindicated thatthisissue wasunder review by
hisauthorities. Hisdelegation shared thepoints made bythePhilippines. Since thedecision toestablish
apanel would bemade atalaterdate, India wished toreserve itsrights topursue thismatter as
appropriate.
3WT/DS61/1
4Subsequently circulated asWT/DS58/7.WT/DSB/M/28
Page9
Therepresentative ofThailand, speaking alsoonbehalf ofMalaysia, requested thattheDSB
revert tothismatter atitsnextregular meeting.
Therepresentative ofHong Kong saidthathisauthorities hadtrade andsystemic interests in
thismatter. Hong Kong hadparticipated intheconsultations, astheUSattitude wasopenandreasonable
respecting therights ofMembers toparticipate therein. Efforts toprovide oralanswers toquestions
raised hadbeenmade though theymight notbeentirely satisfactory. Hong Kong believed thattheUS
Administration hadmade efforts ingood faithtoseekmodifications tothemeasures withtheview
toresolve thismatter. Since important principles wereinvolved ifapanel wereestablished toexamine
thismatter, Hong Kong would reserve itsthird-party rights.
Therepresentative ofMexico saidthathiscountry, though notaffected bytheembargo, had
bothtrade andsystemic interests inthismatter asanexporter ofthisproduct. Therefore, ifapanel
were established hiscountry would reserve itsthird-party rights.
Therepresentative ofSingapore saidthatthough hiscountry hadnotparticipated inthe
consultations ithadtradeandsystemic interests inthismatter, andifapanel wereestablished itwould
reserve itsthird-party rights.
Therepresentative ofColombia saidthathiscountry hadfollowed withgreat interest the
developments inthismatter andifapanel were established itwould reserve itsthird-party rights.
TherepresentativeoftheEuropeanCommunitiessaidthat,likeotherMembers,theCommunities
alsohadaneconomic interest inthismatter andmight therefore wishtoparticipate asathirdparty
inapanel tobeestablished.
Therepresentative ofEcuador saidthathisdelegation alsowished toindicate hiscountry 's
interest inreserving itsthird-party rights.
TheDSB tooknoteofthestatements andagreed torevert tothismatter atitsnextregular
meeting.
6. Brazil -Export financing programme foraircraft
- Statement byCanada
TheChairman recalled thattheDSBhadconsidered thismatter atitsmeeting on27September
1996. Atthatmeeting, Canada hadagreed tonarrow thescope ofitscomplaint andcirculate anew
request forapanel under Article 4oftheAgreement onSubsidies andCountervailing Measures (SCM).
Subsequently, thisrequest hadbeencirculated indocument WT/DS46/4. Thematter hadbeenonthe
agenda oftheDSBmeeting on16October 1996. However, attherequest ofCanada ithadbeenremoved
fromtheagenda ontheunderstanding thatthewithdrawal would bewithout prejudice toCanada 'sright
torevert tothismatter atalaterstage. Theinclusion ofthisitemontheAgenda ofthepresent meeting
wasattherequest ofCanada.
Therepresentative ofCanada saidthathiscountry hadrequested theinclusion ofthisitemon
theAgenda inorder toreport onthestatus ofconsultations heldcurrently pursuant toArticle 4ofthe
SCMAgreement,withregardtoBrazil'sexportsubsidiesunderPROEX5.InresponsetoBrazil'srequest
thatfurther consultations beheldtofindanegotiated solution, Canada hadwithdrawn itsrequest for
5Programa deFinanciamento àsExporta çõesWT/DSB/M/28
Page10
theestablishment ofapanel from theagenda oftheDSBmeeting on16October 1996. Ithadtaken
thisaction because itbelieved, andcontinued tobelieve, thattheDSUhadbeendesigned toencourage
consultations tofindmutually agreed solutions. Despite twodraftproposals andseveral meetings, his
country wasdisappointed withtheresults ofthenegotiations withBrazil. Canada hadrecently received
acommunication fromBrazil towhich itwould shortly respond, butatthisstagetherewerenopositive
details toreport afterseven months ofconsultations.
Hiscountry wasparticularly concerned atapparent misperceptions inthemarketplace caused
bythewithdrawal ofitsrequest forapanel. Ithadbeensuggested thattheWTO hadrejected Canada 's
caseagainst PROEX based onitsmerits, acharacterization which wasnotaccurate andwhich might
reflect alackofunderstanding byindustry oftheWTO dispute settlement process. Canada registered
oncemore itsconcerns withregard topayments under theInterest RateEqualization System component
ofPROEX. Hiscountry believed inthemerits ofanegotiated solution andhoped thatsuchasolution
could befound, butmight needtoconsider other options available under theWTO.
Therepresentative ofBrazil saidthat,asstated previously intheDSB, Brazil believed that
PROEX wasfully consistent withArticle 3oftheSCM Agreement andevenifitwere not,any
inconsistencies could bejustified byArticle 27ofthatAgreement. Hiscountry hoped thatamutually
agreed solution tothisproblem could befound. However, regardless oftheconsistency ofPROEX
withArticle 3oftheSCM Agreement, theincreased subsidies thatCanada seemed toprovide toits
industry, which farexceeded anybenefits fromPROEX, might create difficulties tofindasolution.
Inaccordance withtheinformation provided byBrazil 'saircraft industry, Canada hadgranted
itsindustry: (i)US$87million inOctober 1996; (ii)US$57million inDecember 1996; and(iii)
US$147million inJanuary 1997. Heregretted suchsubsidization byadeveloped country. This
suggested thatCanada wasnotobserving thedisciplines oftheSCM Agreement withregard toincentives
toitsexports ofcivilaircraft. Brazil hoped toexplore withCanada thisinformation aswellasother
reports ofpossible subsidies totheCanadian aircraft industry inthecontext oftheconsultations on
PROEX. Heagreed withCanada 'sstatement that"theDSU wasdesigned toencourage consultations
andmutually agreed solutions". Brazil wasprepared tocontinue working inthisdirection.
Therepresentative ofCanada believed that,based onthecurrent information, PROEX was
anexport subsidy. Henoted Brazil 'sstatement concerning certain Canadian programmes which he
would report tohisauthorities. Hereiterated thatthisitemhadbeenincluded ontheAgenda toreport
totheDSBontheconsultations thatCanada carried outwithBrazil onPROEX. Canada didnotconsider
anyofitsprogrammes tobeinconsistent withitsWTO obligations, andshould anyofthembechallenged
itwould fullydefend them.
TheDSBtooknoteofthestatements.
7. Proposed nominations fortheindicative listofgovernmental andnon-governmental panelists
(WT/DSB/W/46)
TheChairman drewattention todocument WT/DSB/W/46 which contained additional names
proposed forinclusion ontheindicative listofgovernmental andnon-governmental panelists in
accordance withArticle 8.4oftheDSU. Heproposed thattheDSBapprove thenames contained therein.
TheDSBsoagreed.WT/DSB/M/28
Page11
TheChairman recalled thatinaccordance withtheproposal fortheadministration ofthe
indicative listofpanelists approved bytheDSBon31May19956,thelistshould becompletely updated
every twoyears. Within thefirstmonth ofeachtwo-year period, Members would berequired toforward
updated curricula vitaeofpersons contained ontheindicative list.Thecurrent indicative listhadbeen
constituted on27September 1995. Therefore, theSecretariat would circulate anupdated listin
September 1997.
TheDSBtooknoteofthisinformation.
8. European Communities -Duties onimports ofgrains
Therepresentative oftheUnited States, speaking under "Other Business", expressed his
country 'sincreasing concern withrespect tothecontinued delay bytheEuropean Communities tofully
implementitsmarketaccessconcessionsongrains.IntheUruguayRound,theCommunitieshadgranted
tariff concessions ongrain imports limiting thetotaldutytobepaidbased onthelanded, duty-paid
price ofthegrain. However, theCommunities hadadopted areference price system, andhadfailed
toimplement fullythese concessions.
On19July1995, theUnited States hadrequested consultations withtheCommunities onthis
matter. Asthese consultations hadnotresulted inamutually satisfactory solution, theUnited States
hadrequested theestablishment ofapanel on28September 1995. Thisrequest hadbeenconsidered
forthefirsttimebytheDSBatitsmeeting inOctober 1995. Subsequently, inNovember 1995, the
United States andtheCommunities hadreached asettlement ofthematter. Thesettlement tookthe
form ofanexchange ofletters which provided foranumber ofundertakings onthepartofthe
Communities tobeimplemented bytheECCommission. Theexchange hadalsostated thattheUnited
States would withdraw itsrequest forapanel, which itwould notreintroduce "provided thatthere is
effective implementation oftheprovisions ofthisAgreement". Unfortunately, todate,therehadbeen
noeffective implementation ofthesettlement agreement. This14-month period ofinaction onthe
partoftheCommunities deeply concerned theUnited States. Therefore, hiscountry intended torenew
itsrequest forapanel atthenextmeeting oftheDSB inFebruary 1997, unless theCommunities
immediately tooksteps toimplement thesettlement agreement.
Therepresentative oftheEuropean Communities noted theintentions oftheUnited States with
regard tothenextmeeting oftheDSB. TheCommunities believed thatasaprocedural matter itwould
normally benecessary fortheUnited States tore-introduce itsrequest toinvoke thedispute settlement
machinery abinitio.Thiswould reflect faithfully thefactthattheUnited States should havewithdrawn
itsrequest forapanel ontheunderstanding thatitwould retain itsrighttore-introduce itsrequest if
itjudged thattheCommunities hadnotmetitsobligations under theexchange ofletters. TheUnited
States hadnotwithdrawn itsrequest forapanel. Therefore, there wasaneedforfurther clarification
onthisprocedural point. Prior totheDSBmeeting on3December 1996, hisdelegation hadcirculated
acommunication indocument WT/DS13/3 concerning thismatter. TheCommunities stood byits
obligations under theexchange ofletters andhoped tofindamutually satisfactory solution toany
outstanding problems.
TheDSBtooknoteofthestatements.
6Annex toWT/DSB/5WT/DSB/M/28
Page12
9. Election ofChairperson
TheChairman,speakingunder"OtherBusiness",recalledthatinaccordancewiththeRulesofProcedure
formeetings oftheDSB7,theelection ofitsChairperson should takeplace atthefirstmeeting ofthe
year. TheChairman oftheGeneral Council wascurrently conducting informal consultations onaslate
ofnamesforappointmentaschairpersonstoWTObodies.Theproposednominationswouldbesubmitted
forapproval bytheGeneral Council atitsmeeting on7February 1997. Hetherefore proposed that
theDSBformally electitsChairperson atitsnextmeeting following themeeting oftheGeneral Council
tobeheldon7February.
TheDSBsoagreed.
10. Statement bytheoutgoing Chairman oftheDSB
Theoutgoing Chairman oftheDSB, Mr.C.Lafer (Brazil) made aconcluding statement
subsequently circulated indocument WT/DSB(97)ST/1.
Therepresentative ofCanada, saidthathebelieved hecould speak onbehalf ofDSBmembers
tothank theoutgoing Chairman forhisoutstanding service totheWTO andhiswork fortheDSBover
thepastyear. TheChairman 'sstatement wasaneloquent expression ofhowwell-suited hehadbeen
forthistask. Thishadbeenaveryimportant yearintheevolution ofthedispute settlement system
which wasacorner-stone oftheWTO Agreement. Through hiswork overthepastyear, themanner
inwhich hehadhandled theDSB, hisprofessionalism indealing withMembers, theChairman had
made aninvaluable contribution tothestrengthening ofthedispute settlement mechanism andin
reinforcing itsroleintheWTO.
TheDSBtooknoteofthestatements.
7WT/DSB/9