  
 WORLD TRADE  
ORGANIZATION  WT/DS321/1 
G/L/714 10 November 2004 
 
(04-4776) 
 Original:   English 
  
 
 
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. 
 
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  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 recommende d 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 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 artic les 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 entere d 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 WT/DS321/1 
G/L/714 Page 2 
 
 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 findi ngs 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 Eu ropean 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 ru lings 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 se ttlement 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.  WT/DS321/1 
G/L/714 
 Page 3 
 
 
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 a nnexed 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 repor t 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 im plement 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. 
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