RESTRICTED WORLD TRADE
ORGANIZATIONWT/DSB/M/63
6 July 1999
(99-2799)
Dispute Settlement Body
3 June 1999
MINUTES OF MEETING
Held in the Centre William Rappard
on 3 June 1999
Chairman:  Mr. Nobutoshi Akao (Japan)
Subjects discussed: Page :
1. European Communities – Measures concerning meat and meat products
(hormones)..................................................................................................................... ............2
(a) Recourse to Article 22.2 of th e DSU by the United States .........................................................2
(b) Recourse to Article 22.2 of the DSU by Canada ........................................................................2
2. European Communities – Regime for the importation, sale and distribution of
bananas  - Recourse to Article 21.5 of the DSU by Ecuador.................................................5
(a) Implementation of the reco mmendations of the DSB.................................................................5
3. Adoption of panel reports .................................................................................................... ....7
(a) Statement by  the Chairman................................................................................................... ......7
Prior to adoption of the agenda
 The item concerning "Argentina – Measures affecting imports of footwear:  Request for the
establishment of a panel by the United States" (WT/DS164/3) was removed from the proposed agendaat the request of the United States.
The representative of the United States drew attention to the US request for authorization to
suspend concessions, and said that if, under item 1, the EC intended to request arbitration pursuant to
Article 22.6, it should do so prior to the adoption of the agenda in order for item 1 to be removed fromthe proposed agenda.  She asked whether the EC intended to request arbitration on this matter and if
so the item should be withdrawn from the agenda.
The representative of Canada supported the statement made by the United States.  If the EC
was to request arbitration, then item 1 should be withdrawn from the agenda.  His delegation did not
believe that a DSB decision was required to refer this matter to arbitration.
The Chairman said that this procedural issue had already been discussed in the context of the
DSU review.  He asked whether the EC wished to take the floor at this stage.
The representative of the European Communitie s said that he wished to speak after the
adoption of the agenda.
The representative of the United States said that at the present meeting the DSB should follow
the established practice that when a panel report had been proposed for adoption and the panel reportWT/DSB/M/63
Page 2
was appealed, the agenda item was automatically withdrawn.  The DSU did not require any decision
by the DSB to refer the matter to arbitration.  The text of Article 22.6 provided that "if the Member
concerned objects to the level of suspension proposed, … the matter shall be referred to arbitration."
It did not provide that the DSB should decide to refer the matter to arbitration.  There was no
requirement for the DSB to meet for this purpose and no requirement could be read into the DSUwhere none was provided.  The DSB should follow the practice that had been established for
arbitration under Article 21.3 of the DSU that whenever a party to a dispute requested arbitration, the
arbitrator was appointed by the Director-General and the arbitration process started without delay.
The Chairman said that the Secretariat could provide some clarification on the practice under
Article 21.3  and whether the same practice had been followed in the Banana case.
The representative of the United States said that since the EC had not provided any indication
that it would request arbitration, the DSB should adopt the agenda and proceed to consideration of
item 1.
The Chairman proposed that the DSB adopt the agenda as amended.
The DSB so agreed.
1. European Communities – Measures concerning meat and meat products (hormones)
(a) Recourse to Article 22.2 of the DSU by the United States (WT/DS26/19)
(b) Recourse to Article 22.2 of the DSU by Canada (WT/DS48/17)
The Chairman proposed that the two sub-items be taken up together since they pertained to
the same matter.
The representative of the European Communities requested to take the floor in order to make
an announcement.
On a point of order, the representative of the United States said that under normal procedure
since the item had been placed on the agenda by the US delegation, the United States should speak
first.
The representative of the European Communitie s recognized that it was the right of the
United States to take the floor first, but his announcement might have a direct impact on the
statements to be made by the United States and Canada.  However, it was up to the United States to
decide whether the EC could speak first.
The representative of the United States said that her country requested the authorization of the
DSB to suspend the application to the EC and its member States of tariff concessions and related
obligations with respect to imports of EC products to the amount of US$202 million.  This level of
suspension was equivalent, on an annual basis, to  the level of nullification or impairment of US
benefits as a result of the EC's failure to bring its measures into compliance with the DSB'srecommendations.  The EC had failed to comply with  its WTO obligations to lift its ban on hormone-
treated beef by 13 May.  The United States was disappointed that after 15 months, the EC had failed
to come into compliance with its WTO obligations.  The United States had not been able to reach
agreement on acceptable compensation.  The United States intended to suspend tariff concessions and
related obligations by directing the US Customs Service to impose duties in excess of bound rates ona list of products to be drawn from an initial list contained in document WT/DS26/19.  The US
objective was not to withdraw concessions, which did not help US exports, and was not to the benefitWT/DSB/M/63
Page 3
of its importers.  The United States would prefer to settle the dispute, and would therefore continue to
strive to reach a mutually acceptable solution with the EC.  Unless the EC contested the level of
suspension at the present meeting, the US request should be authorized, unless there was a consensus
decision to reject the request.  As the United States would not object to its request, authorization
should be granted that same day.  This was why Article 22 provided for the suspension of concessionsand why the United States insisted as a fundamental part of the Uruguay Round package of
agreements that this decision be automatic.
The representative of Canada said that his delegation was seeking authorization to suspend
the application to the EC and its member States of tariff concessions under the GATT 1994.  Canada
was seeking authorization to suspend tariff concessions by imposing 100 per cent tariffs on products
from the EC covering trade in the amount of Can$75 million.  In accordance with Article 22.4 of theDSU, the level of suspension of concessions requested by Canada was equivalent to the level of
nullification or impairment suffered by Canada as a result of the EC's measure.  Canada was prepared
to explain to an arbitrator – if arbitration was requested – why Can$75 million was an accurate
representation of the impairment it had suffered.  Canada was taking this exceptional action of
requesting authorization to retaliate in response to the EC's failure to meet its obligation and tocomply with the DSB recommendations by the deadline of 13 May 1999.  However, this was not
Canada's preferred option.  His delegation urged the EC to comply with its obligations or to offer
meaningful compensation as an interim solution until full compliance.
The representative of the European Communities said that the requests by the US and Canada
to suspend concessions to the amount of US$202 million and Can$75 million respectively were
significantly higher than the levels of benefits nullified or impaired as a result of the EC's import ban.
His delegation therefore requested that the amounts proposed by the US and Canada be determined by
arbitration in conformity with Articles 22.6 and 22.7 of the DSU.  To this effect, a written request
would be circulated shortly.  The EC requested that  in order to guarantee a minimum of security for
EC operators, the products covered by any authorization to suspend tariff concessions should be
identified in a precise, complete and exhaustive manner once the total value of the trade subject to
suspension had been determined by the arbitrators.
The Chairman proposed that the DSB take note of the statements and agree that each matter
be referred to arbitration by the original Panel in accordance with Article 22.6 of the DSU.
The representative of the United States said that it was her delegation's understanding that the
DSB did not need to authorize the arbitration, and that no DSB agreement was necessary.  Her
delegation believed that the DSB did not need to take any action other than to take note of the EC's
request.
The representative of the Philippines said that in light of the EC's request for arbitration, the
DSB was not in a position to authorize the suspension of concessions at the present meeting.
Therefore, the DSB could take a decision to suspend the requests by the United States and Canada
pending arbitration.
The representative of India said that, without prejudice to any position or particular
interpretation, the Legal Affairs Division could provide some clarification on this issue.  In
accordance with the text of Article 22.6,  the US request for authorization should be brought to the
DSB.  Then if the Member concerned objected to the level of suspension, the matter should be
referred to arbitration.  It was his view that when the request for authorization was submitted to theDSB and objection was made in the DSB, the DSB would have to refer the matter to arbitration.  He
hoped that the outcome would not be prejudiced in any manner towards either party.
The Chairman said that several requests had been made for arbitration under Article 21.3 of
the DSU, but Article 22.6 was only invoked for the second time.  Therefore there could be someWT/DSB/M/63
Page 4
differences of interpretation.  The only precedent was the Banana case which might not constitute the
right legal interpretation.  In the Banana case, the former DSB Chairman had proposed that "the DSB
take note of the statements and agree that the matter be referred to arbitration by the original panel in
accordance with Article 22.6 of the DSU".1  He proposed that the DSB follow the approach taken in
the Banana case and that the matter be discussed in the context of the DSU review.
The representative of the United States said that the Banana case was a bad precedent.  She
reiterated that the DSU did not require any decision by the DSB to refer the matter to arbitration.  The
text of Article 22.6 provided that if a Member concerned objected to the level of the suspension
proposed, the matter would have to be referred to ar bitration.  It did not provide that the DSB would
decide to refer the matter to arbitration.  There was no requirement for the DSB to meet for this
purpose, and no requirement could be read into the DSU where none was provided.  The United Statesbelieved that the DSB was not required to decide on the amount and that the request for arbitration did
not need to be made in the DSB meeting.  If the EC had to submit its request for arbitration on
18 May, would it have had to wait until now to start arbitration?
The representative of India said that the WTO was a Member-driven organization and since
the United States had made its request in the DSB and the EC's objection to the level of suspension
proposed had also been made in the DSB, it would not  be appropriate to refer the matter to arbitration
without  the DSB's decision thereon.
The representative of Bulgaria said that if the matter was not referred to arbitration by the
DSB, one would not know who would initiate the arbi tration and when the arbitrators could start their
work.
The representative of Hong Kong, China said that his delegation believed that it was
appropriate for the DSB to consider a request under Article 22.6.  The problem was that the
respondent did not officially know the amount until the request was formally made in the DSB under
Article 22.2.  Only when the DSB was convened coul d the respondent decide whether or not it wished
to request arbitration.  Furthermore, there would be a lack of transparency for other Members, if the
matter was referred to arbitration without any DSB involvement.  He also underlined that many
Members attached importance to transparency and to the multilateral character of the dispute
settlement mechanism.
The representative of the European Communities said that it was not necessary to prolong the
procedural discussion on this matter.  The outcome of this issue had already been decided, namely
that the matter would be referred to arbitration.  It was his understanding that this matter could be
discussed in the DSU review.  As the request for arbitration had been made in the DSB, it would be
appropriate that the DSB take note of the request and apply the provisions of Article 22.6 inaccordance with the precedent set in the Banana case at the DSB meeting in January 1999.  He added
that the minutes of that meeting had not been challenged by the United States.  This should not
prejudice any views concerning procedural issues.  This important matter which involved the
suspension of concessions was of concern to all Members and it was only legitimate that this issue
should be discussed in the multilateral context.
The representative of Uruguay proposed the following language: "since the Member
concerned, i.e. the EC objects to the level of suspension proposed, in accordance with Article 22.6 the
matter is referred to arbitration".  He believed that this neutral language would not prejudge Members'
positions.
The representative of the United States said that her delegation could agree with the
suggestion made by Uruguay.  The United States was one of the delegations who supported
                                                     
1 WT/DSB/M/54, p. 34.WT/DSB/M/63
Page 5
transparency, and it was not her intention to imply that the DSB should not be involved when a
request had been made under Article 22.  Her intention was to emphasize that the DSU did not require
the Chairman to seek agreement of the DSB when a request for arbitration was made.  She proposed
that in light of the EC's request, the matter shall be referred to arbitration.
The Chairman proposed that the DSB take note of the statements and that, in light of the EC's
request, each matter shall be referred to arbitration by the original Panel in accordance with Article
22.6 of the DSU.
The DSB so agreed.
2. European Communities – Regime for the importation, sale and distribution of bananas
- Recourse to Article 21.5 of the DSU by Ecuador
(a) Implementation of the recommendations of the DSB
The Chairman said that this item was on the agenda at the request of Ecuador.
The representative of Ecuador said that, without prejudice to its rights under Article 22 of the
DSU, Ecuador had requested that this item be include d on the agenda of the present meeting in order for
the EC to report on its progress in the implemen tation of the DSB recommendations following the
adoption of the Panel report on "European Communities - Regime for the Importation, Sale and
Distribution of Bananas: R ecourse to Article 21.5 by Ecuador".  Du e to its failure to  comply with its
obligation to bring its banana import regime into  conformity with the WTO rules, the EC had an
obligation to report on its progress in implementation.  The EC was not entitled to another reasonable
period of time and had an obligation to immediately modify its regime.  The obligation to provide status
reports in writing under Article 21.6 of the DSU con tinued until the EC had complied with the DSB's
recommendations.  Ecuador wished the DSB to be info rmed of any changes and steps to be taken on this
matter.  Ecuador was aware of the EC's difficulties to modify its regime.  However, some inconsistent
elements of its banana import regime could be rec tified through adoption of administrative measures,
which could be done immediately by  the Commission.  These included  elimination of country quotas.
He then requested that the EC provide its status report on this matter.
The Chairman said that delegations had discussed this matter in the DSU review, and had in
general supported the view that surveillance under Articles 21.6 and 22.8 should continue beyond the
expiration of the reasonable period of time.
The representative of the European Communities said that the EC did not have any problems
in keeping the DSB informed about its progress in implementation.  The EC intended to bring its
banana regime into conformity with the Panel's findings as soon as possible, and to this end, it
continued its examination of various options for a WTO-consistent regime.  The EC had already
started, and intended to pursue, intensive discussions with all the main parties before drawing any
conclusions.  Consultations had been held with Ecuador, the United States, the main supplying
countries, the ACP countries and many other interested parties.
The representative of the United States said that her country had consulted with the EC on its
implementing options and appreciated the EC's readin ess to consult with the United States while it
was preparing ways to comply with the WTO rulings.  The United States had provided the EC with its
views and concerns regarding some options, and hoped the EC would take into account these points
and the concern of all parties as it moved forward in  its process.  Her delegation would appreciate the
opportunity to continue discussions with the EC on this issue, and hoped that the EC would be in a
position to adopt a WTO-consistent regime to enable the United States to terminate the suspension of
concessions in accordance with Article 22.8 of the DSU.WT/DSB/M/63
Page 6
The representative of Guatemala said that his delegation had indicated its support for
Members to invoke Article 21.5 procedures.  Guatem ala wished to reiterate that it never questioned
the efficiency of the DSU rules.  His delegation believed that transparency was a basic principle and
thus supported Ecuador's request.  Guatemala co nsidered that status reports under Article 21.5
procedures should continue to be provided to indicate progress in implementation.  Guatemala hoped
that there would be no obstacles in the implementation of the DSB recommendations in this case, and
that the EC would shortly comply with its WTO obligations.
The representative of Panama said that, like previous speakers, his delegation supported the
request by Ecuador.  He had previously made a statement in the DSB that status reports should be
automatically placed on the agenda until the issue had been resolved.  At that time, the Secretariat hadstated that the current practice was that Members had to request the inclusion of a status report on the
agenda.  He continued to believe that Panama's interpretation was correct and that under Article 21.6
of the DSU status reports should be automatically placed on the agenda, and should remain on the
agenda until the issue had been resolved.  His delegation maintained that the language of the Article
placed an obligation on Members to provide status reports and there was no need for a Member torequest that the item be included on the agenda.  He thanked the EC for its report and hoped that it
would continue to provide status reports since this was of interest not only to the parties to the dispute,
but, due to its systemic implications, it was of interest to all Members.  Panama hoped that the EC
would be able to intensify its efforts in consultations with the interested parties.
The representative of Ecuador said that his delegation had noted the statement made by the
EC.  However, he was not sure whether the inform ation provided by the EC met Members' expectations
concerning status reports, in particular because this case was under public scrutiny.  The information
provided at the present meeting had not contained any references to the EC's paper currently under
consideration in Brussels.  His delegation believed that the paper submitted to the EC authorities, whichlisted three options, contained elements which were  not aimed at meeting the expectations of the
countries whose views on the legality of the EC's ba nana regime had been supported by the Panel.  The
EC should not miss the opportunity to radically reform its banana regime and should eliminate
protectionist elements which had negative trade effects.   He said that not all options contained in the
EC's paper were aimed at free trade and, at least,  two options would preser ve protectionism in the
banana trade.
The representative of Mexico said that the consultations which would continue to be carried
out by the EC should cover all co-complainants, including Mexico.  His country requested that the EC
comply immediately with the DSB recommendations.
The representative of Colombia said that her delegation wished to comment on some elements
referred to by Ecuador.  Colombia had two concerns.  First, the country quotas did not have to be
eliminated, but rather reallocated with a more appropriate reference period.  As long as the EC
maintained its tariff-quota regime, it had an obligation to preserve country-quota allocations.  This
obligation would be terminated with the introduction of a single tariff regime.  Second, in the process
of modification of its banana import regime, the EC should cooperate with all the parties concerned toensure a prompt and broad solution which would cover all elements including import licences, tariff
preferences and the MFN tariff-quotas.
The representative of Honduras supported the statements by Ecuador and Mexico.  Honduras,
as a party to the dispute, would welcome consultations with the EC at its convenience.  His delegation
encouraged the EC to try to br ing its regime into conformity.
The representative of the European Communities said that his delegation had noted the
statements made.  The EC was currently examining its implementing options and was of the view thatWT/DSB/M/63
Page 7
at this stage, one should  try to arrive at an overall solution as soon as possible.  However, at this stage
no final position had been taken.
The Chairman said that in light of the discussion, the matter would be placed on the agenda of
subsequent DSB meetings in accordance with Article 21.6 of the DSU.
The DSB took note of the statements and agreed  to revert to this matter.
3. Adoption of panel reports
(a) Statement by the Chairman
The Chairman said that he wished to report on the outcome of his consultations on the
question of the adoption of the report of the Panel established at the request of the EC, namely,
"European Communities – Regime for the Importation, Sale and Distribution of bananas – Recourse
to Article 21.5 of the DSU by the European Communities" (WT/DS27/RW/EEC and Corr. 1), which
had been circulated on 12 April 1999.  On the basis of his consultations, he had detected that a
number of delegations were of the view that if the party who requested the establishment of a paneldid not inscribe the item on the agenda of the DSB, then there was no need to take action in this
regard within 60 days.  It was his understanding that the EC had contacted some delegations who had
indicated their flexibility in this matter.  He asked whether the DSB could agree that no action be
taken on this report within the 60 day time-limit as provided for in the DSU.
The representative of Hong Kong, China drew attention to footnote 7 to Article 16.4 which he
believed was relevant in this case.  His delegation considered that in the interests of the overall
systemic operation of the DSB, it was not appropriate to allow any flexibility.  Once a panel had been
established and its report had been circulated, the DSB had to meet within 60 days from the date of
circulation to consider the adoption of  a panel report.  No flexibility was envisaged under the existingDSU provisions.  His delegation urged the Chairman to continue to consult on this important systemic
matter.
The representative of Panama supported the statement made by Hong Kong, China.  Due to
its limited resources, Panama had not participated in the consultations carried out by the Chairman on
this matter.  This was the first time that Panama had been made aware of the fact that such
consultations had been held.  He therefore requested that the Chairman include Panama in informalconsultations to be held on this matter.  His delegation wished to be informed of any possible
consequences in case no action was taken within 60 days.  It was his delegation's view that, for
transparency purposes, the panel report should be considered by the DSB in order to provide an
opportunity for Members to express their views.
The representative of the Philippines wished to associate his delegation with the statement
made by Hong Kong, China.
The representative of the United States said that his delegation believed that this question had
to be considered in the context of Article 3.4 of the DSU which stated that the aim of
recommendations was to achieve a mutually satisfactory solution.  If neither party to the dispute
wished to request  the adoption of a panel report within the 60-day period, then it had to be due to the
fact that a satisfactory solution had been reached.  His delegation believed that only the parties to a
dispute could request the adoption of a panel report.  This was the established practice under the
GATT 1947 and it should continue to be the practice under the WTO.  The United States readArticle 16.4 of the DSU not as requiring action by the DSB within 60 days if no party had requested
it, but rather as a deadline for having a right to adoption by negative consensus.  After 60 days a party
could seek adoption of the panel report, but would need positive consensus for adoption.WT/DSB/M/63
Page 8
The representative of Turkey said that this matter had been discussed at length in the DSU
review, and his delegation had supported the view expressed by the majority of delegations present at
the meeting, namely that only one of the parties to the dispute could request the adoption of a panel
report.
The representative of Uruguay said that his delegation believed that the objective  of the DSU
was to find a satisfactory settlement.  If the parties agreed to a settlement at any time in the process,
then the problem was solved.  Uruguay did not believe that the right to request the adoption of the
report could be lost through the negative consensus rule.  It was not correct to state that if 60 days had
elapsed, then the Member would lose its right.  Uruguay did not support such an interpretation.
The representative of Hong Kong, China recalled that the United States had stated that once a
mutually satisfactory solution had been found, then according to Article 3.4 of the DSU,  if no party to
the dispute requested the adoption of the panel report,  the DSB should take no further action.  His
delegation wished to point out that under Article 3.6 of the DSU, any mutually agreed solution would
have to be notified to the DSB.  Second, the DSU allowed other Members to raise any point relatingthereto.  His delegation wished to know whether a mutually agreed solution had been reached in this
case and, if so, whether this solution had been notified to the DSB, and whether the DSB could meet
so as to allow other Members to raise any relevant point.
The Chairman said that there was only one party to the dispute under consideration.
The representative of Brazil supported the view that only the parties to the dispute had the
right to place a panel report on the agenda for adoption.
The representative of India reiterated his statement made at the previous meeting.  India
continued to believe that panel reports should be adopted within a 60-day period.  Once a panel report
had been circulated, it was the property of the DSB, and it was obligatory for the DSB to place it on
the agenda of its meeting within 60 days.
The Chairman said that in light of the discussion he would continue to consult on this matter.
He believed that the systemic issue under consideration would be better dealt with in the DSU review.
The DSB took note of the statements.
__________