RESTRICTED
WORLD TRADE WT/DSB/M/29
26March 1997
ORGANIZATION(97-1248)
DISPUTE SETTLEMENT BODY
25February 1997
MINUTES OFMEETING
Held intheCentre William Rappard
on25February 1997
Chairman: Mr.Wade Armstrong (New Zealand)
Subjects discussed: Page
1. Election ofChairperson 2
2. Surveillance ofimplementation ofrecommendations adopted bytheDSB 2
- United States -Standards forreformulated andconventional gasoline:
status report bytheUnited States 2
3. 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
4. Taxation offoreign filmrevenues 5
- Request bytheUnited States fortheestablishment ofapanel 5
5. Argentina -Measures affecting imports offootwear, textiles, apparel andother
items 6
- Request bytheUnited States fortheestablishment ofapanel 6
6. United States -Import prohibition ofcertain shrimp andshrimp products 7
- Request byMalaysia andThailand fortheestablishment ofapanel 7
- Request byPakistan fortheestablishment ofapanel 7
7. Guatemala -Anti-dumping investigation regarding portland cement from Mexico 8
- Request byMexico fortheestablishment ofapanel 8
8. European Communities -Customs classification ofsome computer equipment 9
- Request bytheUnited States fortheestablishment ofapanel 9
9. European Communities -Duties onimports ofgrains 10
- Request bytheUnited States fortheestablishment ofapanel 10WT/DSB/M/29
Page2
10. United States -Restrictions onimports ofcotton andman-made fibreunderwear 11
- Report oftheAppellate Body andreport ofthepanel 11
11. United States -Measure affecting imports ofwoven wool shirts andblouses from
India 16
- Panel report 16
12. Practice thathasdeveloped under Article 6.1oftheDSU 16
13. Pakistan -Patent protection forpharmaceutical andagricultural chemical products 17
14. Chairmanship oftheAppellate Body 17
1. Election ofChairperson
TheChairman saidthatatitsmeeting on7February 19971,theGeneral Council hadtaken
noteoftheconsensus onaslateofnames forchairpersons toanumber ofWTO bodies including the
DSB. Onthebasis oftheunderstanding reached bytheGeneral Council, heproposed thattheDSB
electMr.W.Armstrong (New Zealand) asChairman ofthethisbody byacclamation.
TheDSBsoagreed.
TheoutgoingChairmaninvitedMr.W.Armstrongtopresideovertheproceedingsofthepresent
meeting.
Mr.W.Armstrong thanked Members forelecting himtothisposition andconveyed sincerest
thanks ofMembers totheoutgoing Chairman forhispivotal roleinchairing theDSBoverthepast
year. Inanotable combination ofdiplomatic andlegalskills, Mr.C.Lafer hadmade animportant
contribution tothefunctioning andconsolidation oftheDSBandtotheimplementation oftheDSU.
TheWTO hadbenefited greatly fromMr.C.Lafer'srole. Hehoped thatthefoundations laidbyhis
twopredecessors overthepasttwoyears would make histaskasChairman oftheDSBin1997somewhat
easier. Hewished Mr.C.Lafer wellinhisnewroleasChairman oftheGeneral Council.
2. Surveillance ofimplementation ofrecommendations adopted bytheDSB
- United States -Standards forreformulated andconventional gasoline:
status report bytheUnited States (WT/DS2/10/Add.1)
TheChairman recalled thatthisitemwasontheAgenda pursuant toArticle 21.6oftheDSU
which stated that: "Unless theDSB decides otherwise, theissue ofimplementation ofthe
recommendations orrulings shallbeplaced ontheagenda oftheDSBmeeting aftersixmonths following
thedateofestablishment ofthereasonable period oftimepursuant toparagraph 3andshallremain
ontheDSB'sagenda untiltheissueisresolved". AttheDSBmeeting on22January 1997, theUnited
States hadsubmitted itsfirststatus report onthismatter. Document WT/DS2/10/Add.1 contained
afurther report bytheUnited States pursuant toArticle 21.6oftheDSU.
Therepresentative oftheUnited States saidthatasprovided forinArticle 21.6oftheDSU,
hiscountry hadsubmitted itssecond report ontheimplementation oftheDSB'srecommendations,
1WT/GC/M/18.WT/DSB/M/29
Page3
which wascontained inWT/DS2/10/Add.1. Given theshort timesince thefirstreport, there were
onlylimited developments toreport atthepresent meeting. Nevertheless, heemphasized thatwork
wasproceedingapaceandtheUnitedStatesremainedcommittedtoa15-monthperiodforimplementation
oftheDSB'srecommendations asstated attheDSBmeeting inDecember 1996.
Therepresentative ofBrazil saidthathiscountry looked forward tothepublication ofthe
proposed amendments tothegasoline rulewhich would enable theUnited States tocomply withits
WTO obligations. Hehoped thatthiswould takeplace atanearly date. Brazil wished tounderline
itsunderstandingthatthe15-monthperiodforimplementationoftheDSB'srecommendationshadstarted
on20May1996, thedateofadoption ofthepanel report andtheAppellate Body report, andnoted
thatninemonths hadalready elapsed.
Therepresentative ofVenezuela saidthathisdelegation noted thestatement made bytheUnited
States, inparticular, thereiteration ofitscommitment toimplement theDSB'srecommendations within
the15-month period scheduled toelapse inAugust 1997.
TheDSBtooknoteofthestatements andagreed torevert tothismatter atitsnextregular
meeting.
3. 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)
TheChairmanrecalledthattheDSBhadconsideredthismatteratitsmeetingon22January1997,
andhadagreed torevert toitatthepresent meeting. Heproposed thattheabove-mentioned requests
beconsidered together since theypertained tothesame matter. Hefirstdrew attention tothe
communication from Australia contained indocument WT/DS35/4.
Therepresentative ofAustralia saidthat,ashisdelegation hadstated attheDSBmeeting in
January 1997, hiscountry attached highpriority tocompliance withtheUruguay Round commitments
inagriculture, inparticular intheareaofexport subsidies. Australia andother concerned Members
hadbeenactively working withHungary inorder tofindamutually satisfactory solution thatwould
bring Hungary 'spractices intoconformity withitsWTO commitments. Todate,these consultations
hadunfortunately failed tofindsuchasolution. Australia therefore requested theestablishment of
apanel. However, inthehopethatamutually satisfactory outcome, fullyconsistent withtheWTO,
might befound, hiscountry wasready tocontinue towork withHungary toward thisobjective.
TheChairman drewattention tothecommunication fromNewZealand contained indocument
WT/DS35/5.
Therepresentative ofNewZealand saidthathiscountry 'srequest fortheestablishment ofa
panel onthismatter wasfirstmade attheDSBmeeting on22January 1997. NewZealand continued
tobeconcerned atHungary 'sexport subsidies inexcess ofitsbudgetary outlay andquantity commitment
levels. Ithadbeen hoped thatHungary would bring itspractices intoconformity withitsWTO
obligations. Since thiswasnotthecase, New Zealand hadtoputforward itsrequest forthe
establishment ofapanel forthesecond time. However, ithad welcomed Hungary 'swillingness to
consultwithNewZealandandotherconcernedMemberseventhoughsofartherehadbeennoresolution
ofthematter. Hiscountry hoped thatHungary would continue toworkingoodfaithtowards amutuallyWT/DSB/M/29
Page4
acceptable solution through formal dispute settlement proceedings orthrough anyconsultations that
might progress intandem withthepanel process.
TheChairmandrewattentiontothecommunicationfromtheUnitedStatescontainedindocument
WT/DS35/6.
Therepresentative oftheUnited States saidthatasnoted bytheprevious speakers theUnited
States andother interested Members hadworked long andextensively toresolve thisdispute.
Unfortunately, these efforts hadnotbeensuccessful thusfar.Therefore, herequested theDSB to
establish apanel asthismatter wasunder consideration forthesecond time. ItwastheUnited States '
understanding thatthefourrequests would beconsolidated sothatasingle panel would examine these
complaints inaccordance withArticle 9.1oftheDSU. Notwithstanding theestablishment ofapanel,
theUnitedStates,likethepreviousspeakers,remainedinterestedinpursuingconsultationswithHungary
aimed atresolving thisdispute inamutually satisfactory manner.
TheChairman drew attention tothecommunication from Argentina contained indocument
WT/DS35/7.
Therepresentative ofArgentina saidthathisdelegation supported theinclusion ofthisitem
ontheDSB'sagenda forthesecond timeforreasons already stated attheprevious meeting. His
government attached highpriority tocompliance withtheUruguay Round disciplines andcommitments
onagriculture where themajor progress hadbeenintheareaofexport subsidy commitments. He
recalled thatconsultations hadbeen initiated 18months agointheCommittee onAgriculture.
Subsequently on27March 1996, arequest forconsultations withHungary hadbeenmade pursuant
toArticle 4oftheDSU andArticle 19oftheAgreement onAgriculture. Thelengthy consultation
process undertaken withHungary byArgentina andother Members hadfailed toresolve thisdispute.
Forthese reasons, Argentina reiterated itsrequest fortheestablishment ofapanel withstandard terms
ofreference asprovided forinArticle 7.1oftheDSU. Hisdelegation would havepreferred toavoid
theestablishment ofapanel andstillhoped thataftertheestablishment ofapanel hiscountry could
continue towork withHungary towards amutually satisfactory solution which would safeguard the
systemic andtrade interests involved inthisdispute.
Therepresentative ofHungary regretted thatdespite hiscountry 'scontinuing efforts tofind
amutually satisfactory solution, fourcomplaining parties haddecided toproceed withtheirrequest
fortheestablishment ofapanel. Hereiterated theviewthatgiven theunique nature ofthismatter,
Hungary believed thattheestablishment ofapanel wasnotasuitable waytoprovide apositive solution
toaproblem caused byerrors initsSchedule. Since theprotection ofitsnational interests related
tothepreservation ofagricultural activity wasatstake, Hungary thought thatapanel wasnotan
appropriate waytodealwiththismatter andcould poseriskstothedispute settlement system.
However, since thisrequest appeared ontheDSB'sagenda forthesecond timehiscountry
nolonger objected totheestablishment ofapanel. Duetotheunique conditions which layatthe
rootoftheproblem, herequested thecomplaining parties toholdconsultations ontheterms ofreference
ofthepanel pursuant toArticle 7.3oftheDSUinorder totakeaccount oftheexceptional circumstances
outlined inWT/L/144. Thiswasindispensable fortheachievement ofapositive solution which was
theultimate objective ofthedispute settlement mechanism within themeaning ofArticle 3.7ofthe
DSU. Heassured thatHungary wasready tomake further efforts tofindamutually acceptable solution
tothisdispute outside thepanel procedure, which would enable Hungary toproduce andexport
agricultural products, andtomake thenecessary adjustments inthissector under socially acceptable
conditions.WT/DSB/M/29
Page5
Therepresentative oftheUnited States saidthathisdelegation noted Hungary 'srequest for
special terms ofreference. TheUnited States would beready togiveserious consideration toany
proposal thatwould bemade byHungary buthadsome doubts withregard totheapplicability of
Article 7.3oftheDSU. There wasnoneedfortheChairman oftheDSB todraw-up theterms of
reference inthisparticular case. Therefore, hisdelegation would notbeinaposition tojoinina
consensus, pursuant toArticle 7.3oftheDSU, toauthorize theChairman todoso.Thishowever,
didnotexclude consultations among theparties pursuant toArticle 7.1oftheDSU within thenext
20days.
Therepresentative ofNewZealand supported theviewexpressed bytheUnited States.
TheChairman saidthatwithrespect totheterms ofreference andinlightoftherequest made
byHungary, hisintention would betoinvite theparties tothedispute toconsult andtodraw-up the
terms ofreference ofthepanel inaccordance withArticle 7oftheDSU.
Therepresentative ofAustralia saidthathiscountry would bewilling toconsult bilaterally
withHungary ontheterms ofreference.
Therepresentative ofHungary supported theChairman 'sproposal withregard totheterms
ofreference.
Therepresentative ofArgentina saidthathisdelegation wasready toenter intoconsultations
pursuant toArticle 7oftheDSU, assuggested bytheUnited States.
TheDSBtooknoteofthestatementsandagreedtoestablishasinglepanelpursuanttoArticle9.1
oftheDSUandtotheChairman 'sproposal thattheparties tothedispute consult anddraw-up theterms
ofreference ofthepanel inaccordance withArticle 7oftheDSU.
Therepresentatives ofCanada, Japan, Thailand andUruguay reserved theirthird-party rights
toparticipate inthepanel proceedings.
4. Taxation offoreign filmrevenues
- Request bytheUnited States fortheestablishment ofapanel (WT/DS43/2)
TheChairman saidthattheDSBhadconsidered thismatter atitsmeeting on22January 1997,
andhadagreed torevert toitatthepresent meeting. Hedrew attention tothecommunication from
theUnited States contained indocument WT/DS43/2.
TherepresentativeoftheUnitedStatessaidthatatthepreviousmeetingoftheDSBhisdelegation
hadexplained whytheUnited States considered Turkey 'smunicipality taxtobeinconsistent withits
obligations under Article IIIofGATT 1994. TheUnited States hadengaged inconsultations with
Turkey withtheaimtoresolve thisdispute. Hisdelegation hadhoped thatatthepresent meeting it
would havebeeninaposition toannounce thatthisdispute hadbeenresolved. While theUnited States
remained hopeful thatamutually agreed solution might bereached, unfortunately, thusfarthe
consultations hadnotyetresulted insuchasolution. Accordingly, inorder topreserve itsrights, the
United States requested theDSBtoestablish apanel asthismatter wasunder consideration forthe
second time.
Therepresentative ofTurkey saidthathisgovernment continued tohope thatamutual
understanding withtheUnited States onthismatter could bereached.WT/DSB/M/29
Page6
TheDSBtooknoteofthestatements andagreed toestablish apanel inaccordance withthe
provisions ofArticle 6oftheDSU withstandard terms ofreference.
Therepresentative ofCanada reserved hisgovernment 'sthird-party rights toparticipate inthe
panel proceedings.
5. Argentina -Measures affecting imports offootwear, textiles, apparel andother items
- Request bytheUnited States fortheestablishment ofapanel (WT/DS56/5)
TheChairmanrecalledthattheDSBhadconsideredthismatteratitsmeetingon22January1997,
andhadagreed torevert toitatthenextmeeting. Thisitemwasontheagenda ofthepresent meeting
attherequest oftheUnited States. Hedrew attention tothecommunication from theUnited States
contained indocument WT/DS56/5.
Therepresentative oftheUnited States saidthatattheDSB meeting inJanuary 1997, his
delegation hadexplained thatwithrespect toimports offootwear, textiles, andapparel, Argentina had
imposed specific duties inexcess ofitstariff commitments. Inaddition, ithadimposed astatistical
taxof3percentadvalorem onimports oftextiles, apparel, footwear, andother items. TheUnited
States believed thatthese measures violated Articles II,VII,VIIIandXofGATT 1994, Articles 1
to8oftheAgreement onImplementation ofArticle VII,andArticle 7oftheAgreement onTextiles
andClothing.
Hiscountry hadheld several rounds ofconsultations with Argentina, including on
10-12 February 1997. During these consultations, asindicated indocument WT/DS56/5, Argentina
hadrepresented thatithadmodified itslabelling regime, which hadsatisfied theUSconcerns. However,
theUnited States hadentered intoconsultations withArgentina withtheaimtoresolve thisdispute
initsentirety. Despite theresolution oftheissue concerning labelling, theconsultations hadnotyet
produced amutually acceptable solution withrespect tospecific duties andthestatistical tax.Therefore,
inorder topreserve itsrights inthismatter, theUnited States requested forthesecond timethe
establishment ofapanel. Notwithstanding theestablishment ofapanel atthepresent meeting, his
country remained open topursue consultations withArgentina aimed atresolving thisdispute ina
mutually satisfactory manner.
Therepresentative ofArgentina saidthatinaccordance withArticle 6.1oftheDSUhiscountry
accepted theestablishment ofapanel withtheterms ofreference ascontained inWT/DS56/5. He
underlined thatmost ofthemeasures mentioned therein were nolonger inforce inArgentina. He
notedthattheUnitedStateshadrecognizedthatArgentina'smodifiedlabellingrequirementshadsatisfied
theconcerns raised bytheUnited States inthisarea. Despite theestablishment ofapanel, hisdelegation
hoped thatwithin theframework ofongoing consultations itwould stillbepossible toarrive atamutually
satisfactory solution onmatters which intheviewoftheUnited States were stilloutstanding.
Therepresentative ofHungary saidthathisdelegation hadserious concerns withregard to
Argentina 'sspecific duties imposed onvarious textile items inexcess ofthebound rateof35percent
advalorem provided initsSchedule. Duetothese tariff increases Hungary 'stextile exports which
represented aconsiderable partofitstotalexports toArgentina hadpractically ceased during thepast
year. InOctober 1996, Hungary hadjoined theconsultations requested bytheUnited States with
Argentina.2Although these consultations hadnotresulted inasatisfactory solution hisdelegation
continued tohopethattheparties tothedispute would findamutually acceptable arrangement outside
thepanel procedures.
2WT/DS56/2 .WT/DSB/M/29
Page7
TheDSBtooknoteofthestatements andagreed toestablish apanel inaccordance withthe
provisions ofArticle 6oftheDSU withstandard terms ofreference.
Therepresentatives oftheEuropean Communities andIndia reserved theirthird-party rights
toparticipate inthepanel proceedings.3
6. United States -Import prohibition ofcertain shrimp andshrimp products
- Request byMalaysia andThailand fortheestablishment ofapanel (WT/DS58/6)
- Request byPakistan fortheestablishment ofapanel (WT/DS58/7)
TheChairman proposed thattheabove-mentioned requests beconsidered together since they
pertained tothesamematter. Hefirstdrewattention tothecommunication fromMalaysia andThailand
contained indocument WT/DS58/6. Herecalled thattheDSBhadconsidered thismatter atitsmeeting
on22January 1997, andhadagreed torevert toitatthepresent meeting.
Therepresentative ofThailand, speaking alsoonbehalf ofMalaysia, saidthatMalaysia and
Thailand hadrequested theestablishment ofapanel because theirrights under theWTO Agreement
hadbeenimpaired andnullified asaresult ofcertain measures taken bytheUnited States. Efforts
toresolve thismatter through consultations hadfailed toachieve adesired result. AttheDSBmeeting
on22January 1997, Malaysia andThailand hadrequested theestablishment ofapanel. However,
duetoalackofconsensus apanel could notbeestablished atthatmeeting. Atthepresent meeting
therefore, herequested thatapanel beestablished inaccordance withArticle 6.1oftheDSU.
In1989, theUnited States hadenacted Section 609ofPublic Law101-162 which prohibited
imports ofshrimp orshrimp products harvested withcommercial fishing technology which could affect
seaturtles unless: (i)aharvesting nation wascertified bytheUnited States ashaving aregulatory
programme toprotect seaturtles governing theincidental taking ofseaturtles comparable tothatof
theUnited States; and(ii)arateoftheincidental taking ofseaturtles wascomparable totheUSrate.
Asaresult ofthislaw,subsequent rulings bytheUSCourt ofInternational Trade, andthe
government 'simplementing guidelines, wildharvested shrimp andshrimp products from Malaysia
andThailand aswellasother countries could notenter intotheUnited States without acertification
thattheexporting country hadaregulatory programme which required allcommercial shrimp trawl
vessels touseturtle excluder devices (TEDs). Shrimp andshrimp products harvested inamanner
thatdidnotaffect seaturtles, suchasaquaculture, could continue tobeexported totheUnited States.
Malaysia andThailand didnotobject tothegoalofprotecting seaturtles andassuchhadenacted
andseriously andvigorously implemented theirownseaturtle protection laws. TheUSlawwasextra-
territorial inscope anditsimplementation wasarbitrary equivalent tounilateral trade sanctions taken
bytheUnited States inorder toachieve itsownpolicy objectives. Such unilateral measures were
inconsistent withthespirit andtheletter oftheWTO Agreement, including Articles I,XIandXIII
ofGATT 1994. Thelawwhich required theuseofTEDs anditsimplementation bytheUnited States
constituted prima facienullification andimpairment ofthebenefits accruing directly orindirectly to
Malaysia andThailand.
Since itsimplementation, theUSlawhadcaused asubstantial trade losstoThailand and
Malaysia. Thisdropmight continue inthefuture unless themeasures taken bytheUnited States be
3After themeeting Hungary reserved itsthird-party rights.WT/DSB/M/29
Page8
brought intolinewiththeWTO Agreement. Malaysia andThailand hadengaged inconsultations with
theUnited States inaneffort toresolve thisdispute. Unfortunately, these consultations hadfailed
toproduce amutually agreed solution tothisdispute. Therefore, theabove-mentioned countries had
nochoice buttorequest theestablishment ofapanel.
TheChairman drew attention tothecommunication from Pakistan contained indocument
WT/DS58/7.
Therepresentative ofPakistan saidthathiscountry 'sshrimp exports totheUnited States had
beenadversely affected bytheUSembargo. Therefore, together withIndia, Malaysia andThailand,
Pakistan hadrequested consultations withtheUnited States on8October 1996. Theconsultations
hadbeenheldon19November 1996. Although shrimp washarvested inPakistan under preventive
procedures withnomechanical retrieval system, parties tothedispute hadfailed toresolve thematter.
Therefore,PakistanjoinedMalaysiaandThailandinrequestingtheestablishmentofapanelinaccordance
withArticle 6oftheDSU.
Therepresentative oftheUnited States saidthathisdelegation hadquestioned attheprevious
meeting thedecision byMalaysia andThailand torequest theestablishment ofapanel. Itwashis
delegation 'sunderstanding thatapanel would beestablished atthepresent meeting. Inthelightof
themostrecent decision oftheUSCourt ofInternational Trade, Section 609ofPublic Law101-162
--which authorized theprohibition --hadonlyasmall effect ontrade fromPakistan. However, his
country recognized Pakistan 'srighttoraisethismatter. Hisdelegation didnotoppose theestablishment
ofapanel inresponse toPakistan 'srequest. Thisposition, however, wasbased ontheunderstanding
thatthispanel would beconsolidated withthepanel requested byMalaysia andThailand pursuant to
Article 9.1oftheDSU, since theissues raised byPakistan werecovered intherequest byMalaysia
andThailand.
TheDSBtooknoteofthestatementsandagreedtoestablishasinglepanelpursuanttoArticle9.1
oftheDSU withstandard terms ofreference.
Therepresentatives ofAustralia, Colombia, theEuropean Communities, Guatemala, Hong
Kong, India, Japan, Mexico, Nigeria, thePhilippines, Singapore, andSriLanka reserved theirthird-
party rights toparticipate inthepanel proceedings.4
7. Guatemala -Anti-dumping investigation regarding portland cement from Mexico
- Request byMexico fortheestablishment ofapanel (WT/DS60/2)
TheChairman drew attention tothecommunication fromMexico indocument WT/DS60/2.
Therepresentative ofMexico saidthathiscountry hadincluded thisitemontheagenda of
thepresent meeting inorder torequest theestablishment ofapanel toexamine theconsistency ofthe
anti-dumping investigation carried outbyGuatemala withregard toimports ofportland cement from
Mexico. Themain arguments ofthiscasewere contained indocument WT/DS60/2. InMexico 's
view theanti-dumping investigation wasinconsistent with, atleast, Article VIofGATT 1994 and
Articles 2,3,5,6and7oftheAnti-Dumping Agreement andAnnex Ithereto. Thisanti-dumping
investigation should never havebeeninitiated duetotheinconsistencies which hadoccurred. Both
itsinitiation anditssubsequent conduct hadnullified orimpaired thebenefits accruing toMexico under
theWTO Agreement.
4After themeeting Costa Rica, Ecuador andSenegal reserved their third-party rights.WT/DSB/M/29
Page9
Theaspects ofinvestigation presenting themain inconsistencies withtheAnti-Dumping
Agreement wererelated toitsinitiation, preliminary resolution andthefinalstage ofproceedings and
indicated indocument WT/DS60/2. Theapplication fortheinitiation oftheinvestigation which had
beensubmitted bythesolecement-producing firminGuatemala contained many shortcomings. One
ofthemwasthatthealleged dumping hadbeenbased ononlytwoinvoices, eachforonesackofcement,
asproof ofprices ontheMexican market. Thiscould hardly beconsidered asrepresentative ofnormal
value. Asproof oftheexport price, theonlyevidence submitted hadbeenphotocopies oftwoimport
certificates foratotalvalue ofabout US$30,000. Thepetitioner hadnotsubmitted anyevidence of
existence ofthethreat ofinjury totheGuatemalan industry. Information tosubstantiate thethreat of
injury hadnotbeenavailable untiltheinvestigation hadbeeninitiated. With regard tothecausal
relationship between thedumped imports andthealleged threat ofinjury totheGuatemalan industry
noevidence hadbeensubmitted.
MexicobelievedthattheGuatemalanauthoritieshadinitiatedthisinvestigationwithoutexamining
theaccuracy andrelevance oftheevidence submitted intheapplication. They haddecided toinitiate
thisinvestigation despite interaliatheabsence ofrelevant datatocalculate normal value, shortcomings
inthemethodology forcomparing thenormal value withtheexport price, absence ofevidence ofthreat
ofinjury totheGuatemalan industry andabsence ofrelevant proof orevenarguments todemonstrate
theexistence ofacausal linkbetween alleged dumping andthealleged threat ofinjury. Furthermore,
Mexico hadnotbeennotified prior totheinitiation oftheinvestigation, andtheobligation tomake
available thefulltextoftheapplication totheexporter andtoMexico assoonastheinvestigation had
been initiated hadnotbeen fulfilled. Theabove were onlyexamples ofsome inconsistencies in
connection withtheinitiation oftheinvestigation butsincetherewereotherinconsistencies inconnection
withtheinvestigation asawhole, hedrew attention toMexico 'sarguments indocument WT/DS60/2
which contained further details onthismatter andrequested theestablishment ofapanel.
Therepresentative ofGuatemala saidthatconsultations hadbeen heldwith Mexico on
9January 1997, inthecourse ofwhich Mexico hadbeeninformed thatGuatemalan industry hadbeen
adversely affected bydumped imports ofportland cement fromtheCruz AzulCompany. Further to
these consultations theCruz Azul Company hadundergone domestic administrative procedures in
accordance withGuatemalan law. On13February 1997, there hadbeentwoappeals forreview by
theCooperativa LaCruz Azul SCLandDistribuidora Comercial Molina. Atthepresent meeting
Guatemala wasnotinaposition tojoinintheconsensus toestablish apanel untilitsdomestic procedures,
which were under way, would befinalized.
TheDSBtooknoteofthestatements andagreed torevert tothismatter.
8. European Communities -Customs classification ofsome computer equipment
- Request bytheUnited States fortheestablishment ofapanel (WT/DS62/4)
TheChairmandrewattentiontothecommunicationfromtheUnitedStatescontainedindocument
WT/DS62/4.
Therepresentative oftheUnited States saidthathiscountry hadrequested theestablishment
ofapanel tohelpresolve adispute thathaditsorigins inmid-1995. Asaresult oftheRegulation5
adopted bytheCommission oftheEuropean Communities which reclassified certain localareanetwork
(LAN) adapter cards together withactions taken bycustoms authorities ofmember States through
5Commission Regulation (EC) No1165/95 of23May 1995 concerning theclassification ofcertain goods
inthecombined nomenclature.WT/DSB/M/29
Page10
reclassification ofother LAN equipment andcertain types ofpersonal computers (PCs), imports of
these products from theUnited States hadbecome subject toduties inexcess ofthebound ratesin
theCommunities 'Schedules. These actions hadaffected anincreasing volume oftrade which had
already reached hundreds ofmillions ofUSdollars. TheUnited States hadhoped thattheCommunities
would adhere totheirSchedules andcontinue toapply duties attheratesprovided forthese products:
i.e,duties under thecomputer equipment (automatic dataprocessing) tariff category. Todate,efforts
toresolve thisdispute bilaterally hadnotsucceeded. Since theCommunities hadnotmetits
commitments, theUnited States hadnoother recourse thantorequest theestablishment ofapanel.
Therepresentative oftheEuropean Communities saidthattheUSrequest forapanel alleged
aviolation bytheCommunities andtheirmember States ofArticle IIofGATT 1994, whereas the
consultations thathadbeenconducted withtheCommunities hadonlyaddressed analleged violation
bytheCommunities.TherequestforapanelhadalsomentionedtheimplementationoftheCommunities'
customs rules bycustoms authorities inmember States other thantheUnited Kingdom andIreland
while during theconsultations theimplementation oftheECcustoms ruleshadbeenlimited totheUnited
Kingdom andIreland.
Therequest forapanel hadextended thescope toproducts notmentioned during the
consultations. While therequest forconsultations hadonlycovered certain LAN equipment namely,
"automatic dataprocessing machines andunits thereof" aswellas"telecommunication apparatus",
therequest forapanel referred to"alltypes ofLAN equipment -including hubs, in-line repeaters,
converters, concentrators, bridges androuters -inexcess ofthose provided forintheCommunities '
Schedules".
TheCommunities hadalways taken theposition thatastrictrelationship between consultations
andtheestablishment ofapanel bemaintained inorder topreserve clarity andprotection oftheright
ofdefence inthepanel procedure. Thishadnotbeenrespected bytheUnited States. Withthisproviso,
theCommunities accepted theestablishment ofapanel.
TheDSBtooknoteofthestatements andagreed toestablish apanel inaccordance withthe
provisions ofArticle 6oftheDSU withstandard terms ofreference.
Therepresentatives ofIndia, Japan, Korea andSingapore reserved theirthird-party rights.
9. European Communities -Duties onimports ofgrains
- Request bytheUnited States fortheestablishment ofapanel (WT/DS13/5)
TheChairmandrewattentiontothecommunicationfromtheUnitedStatescontainedindocument
WT/DS13/5.
Therepresentative oftheUnited States saidthathiscountry remained veryconcerned about
thereference price system adopted bytheEuropean Communities withregard toitstariff concessions
ongrains scheduled tobeimplemented on1July1995. TheUnited States continued tobeataloss
astohowthissystem wasconsistent withtheCommunities 'tariffbindings. While itremained hopeful
thatthismatter might yetberesolved inamutually satisfactory manner, theUnited States inorder
topreserve itsrights, hadsubmitted anewrequest forapanel toexamine thismatter. Hisdelegation
expected thatapanel would beestablished atthenextmeeting oftheDSBunless theCommunities
hadbythattimesatisfactorily resolved thismatter.
Therepresentative oftheEuropean Communities saidthattheCommunities werenotwilling
toaccept therequest forapanel atthepresent meeting. Thisrequest waspremature sinceconsultationsWT/DSB/M/29
Page11
werecurrently under waytofindasolution tothismatter. Hisdelegation believed thatadequate time
should beallowed forthese consultations, atleastuntilameeting oftheDSBinApril. Hebelieved
thatitwould beappropriate topursue thispanel request onlyif,andwhen, suchconsultations had
definitely failed.
Herecalled thatthismatter hadbeendiscussed inDecember 1996, andsome information had
beencirculated6.TheUnited States hadstated thatitcontinued tobeatalossastohowareference
price system wasconsistent withtheCommunities 'tariff bindings. Heexplained thatin1996, ithad
become apparent thatduetotheparticular structure oftheUSandother riceexporting industries, the
provisions oftheWTO agricultural agreement could notbeapplied therein without averyserious risk
offraud between importers andexporters. Thishadledtoajointagreement between theUnited States
andtheCommunities on22July1996, ontheprinciple thattheCommunities would apply areference
price system, themodalities ofthistobesatisfactory toallconcerned. Unfortunately thiswasnot
asimple casebecause toreach anagreement bothparties hadtobeabletoaccept it.
Since autumn 1996, theCommunities hadbeendiscussing thismatter withtheUnited States.
Some proposals hadbeenputforward inNovember andDecember 1996. Ithadtaken some timeto
havearesponse from theUnited States which involved anumber ofcomments. Subsequently, the
Communities haddrafted aregulation andwerepresently awaiting aresponse fromtheUnited States.
Thiswasnotacaseofunwillingness onthepartofoneparty butacasewerebothparties werehaving
difficulties inmaking progress. TheCommunities understood theproblems ofUnited States thathaving
adivided industry hadtotakeintoaccount alldifferent views. TheUnited States 'reference thatthis
request should beconsidered atthenextDSB meeting unless theCommunities bythattimehad
satisfactorily resolved thematter wasonlypartofthepicture. Bothparties hadtofindasatisfactory
solution tothismatter.
Therepresentative oftheUnited States saidthatifthismatter wasnotresolved bythenext
meeting oftheDSB, hisdelegation would maintain itsrequest forapanel.
TheDSBtooknoteofthestatements andagreed torevert tothismatter.
10. United States -Restrictions onimports ofcotton andman-made fibreunderwear
- Report oftheAppellate Body (WT/DS24/AB/R)
andreport ofthepanel (WT/DS24/R)
TheChairman drew attention tothecommunication from theAppellate Body indocument
WT/DS24/7 transmitting theAppellate Body report in"United States -Restrictions onImports ofCotton
andMan-made Fibre Underwear" circulated inWT/DS24/AB/R inaccordance withArticle 17.5of
theDSU. Herecalled thatinaccordance withtheDecision onProcedures fortheCirculation and
Derestriction ofWTO Documents (WT/L/160/Rev.1), bothreports hadbeenissued asunrestricted
documents. Hethendrewattention toArticle 17.14 oftheDSUregarding theadoption oftheAppellate
Body reports.
Therepresentative ofCosta Ricaexpressed gratitude tomembers oftheAppellate Body and
thepanel aswellastheSecretariat fortheirwork. Costa Ricawelcomed thepanel report asmodified
bytheAppellate Body andsupported theadoption ofthereports. Thelegalrigour ofthereports had
further clarified theAgreement onTextiles andClothing (ATC) which would affect itsimplementation
inthefuture. Hiscountry hoped thattheUnited States would bring themeasure challenged byCosta
6WT/DS13/3.WT/DSB/M/29
Page12
Ricaintocompliance withUSobligations under theATC byimmediately withdrawing therestriction
imposed.
Therepresentative oftheUnited States saidthathiscountry supported adoption oftheAppellate
Body report andthepanel report asmodified bytheAppellate Body report. However, hisdelegation
wished toexpress theUSviews onthese reports andrequested thatthese views befullyrecorded in
accordance withArticle 16.3oftheDSU.
Some Members might finditsurprising thattheUnited States supported adoption ofthepanel
report which hadfound asafeguard action taken bytheUnited States tobeinconsistent withtheATC
provisions. Hiscountry would havepreferred thatthepanel found thatthesafeguard action inquestion
wasnotinconsistent withtheATC.
IntheviewoftheUnited States thepanel report should beadopted. While hiscountry was
notpleased withthefinalconclusions andhadproblems withcertain parts ofthereport, thisreport
aswellasthepanel report on"United States -Measure Affecting Imports ofWoven Wool Shirts and
Blouses from India"7,hadacknowledged thefundamental principle thatinreviewing factual
determinations made bydomestic authorities, thefunction ofdispute settlement panels wasnottoengage
inadenovoreview ofthefactsorto"second-guess" thefactual judgments ofdomestic authorities
which hadconsidered allthefactors required byaparticular agreement. Instead, panels weretomake
anobjective assessment ofwhether, inmaking adetermination, thedomestic authorities hadrespected
therequirements oftheparticular agreement.
Twoother positive aspects ofthepanel report related tothecausation standard inArticle 6.4
oftheATC andthetreatment ofre-imports. Withrespect tocausation, thepanel report hadcorrectly
recognized thattheproper question facing domestic authorities, suchastheUSCommittee forthe
Implementation ofTextiles Agreements (CITA), hadbeenwhether exports fromaparticular country
contributed toserious damage tothedomestic industry, notwhether exports from asingle country
were theprincipal orthesolecause ofserious damage.8Ontheissue ofre-imports, thepanel had
agreed totheUSarguments thatatransitional safeguard action pursuant totheATC could betaken
onre-imports andthatbygiving favourable treatment tore-imports there hadbeenmany options
available.
TheUnited States wasnevertheless concerned withcertain aspects ofthepanel report. One
suchconcern involved thepanel'scharacterization ofArticle 6oftheATC asan"exception" thereto.9
Thepanel hadrelied inpartonthephrase inArticle 6.1thatsafeguard actions should betaken "as
sparingly aspossible". Thischaracterization wasimproper forseveral reasons. First, thephrase
"assparingly aspossible" camefromtheATCpredecessor, theMultifibre Arrangement (MFA). Under
theMFA, thisphrase hadnotbeenconstrued inthemanner suggested bythepanel report. Thepanel's
interpretation, iffollowed andapplied, would violate Article 3.2oftheDSU byadding anobligation
totheATCnotincluded byitsnegotiators. Second, andmore fundamentally, therighttotakesafeguard
actions under Article 6wasanintegral provision oftheATC, notanexception. Theinclusion ofthe
transitional safeguard mechanism hadbeenacritical quidproquotothephase-out ofquotas, forming
partofthebalance ofrights andobligations under theAgreement. A"transitional" safeguard under
Article 6oftheATC wasonanequal footing withthe"transitional phaseouts" oftextile restrictions
intheATC.
7WT/DS33/R.
8Panel report, para. 7.47.
9Idem para. 7.17-7.21.WT/DSB/M/29
Page13
Although these aspects ofthepanel report weremerely dicta thathadnotbeendeterminative
oftheoutcome inthiscase, theUnited States would haveremained concerned ifthepanel report had
beenthelastword onthesubject. Fortunately, ithadnotbeen, because theAppellate Body hadrefused
toadopt thisaspect ofthepanel'sreasoning. TheAppellate Body hadnotaccepted Costa Rica's
arguments thatthepanel'sinterpretation ofthe"assparingly aspossible" phrase meant thatthelanguage
ofArticle 6oftheATChadtobeinterpreted "narrowly". Instead, theAppellate Body hadrecognized
thatthisphrase hadtobereadinconjunction withother language inArticle 6.1oftheATC which
provided thatsafeguard actions weretobeapplied "consistently withtheprovisions of[Article 6]and
theeffective implementation oftheintegration process ofthe[ATC]". Byadopting theUSarguments,
theAppellate Body hadacknowledged thatArticle 6oftheATC reflected a"carefully drawn balance
ofrights andobligations ofMembers".
Thepanel report onWoven Wool Shirts andBlouses, certain narrow portions ofwhich India
hadappealed totheAppellate Body, hadalsorecognized therightofaMember totakesafeguard actions,
andhadrejected thenotion thatArticle 6oftheATC wasan"exceptional" provision thathadtobe
construed narrowly, which would haveimposed anextraordinary burden ofproof ontheMember taking
asafeguard action. TheUnited States expected thatfuture panels would ignore thedictainthepanel
report (WT/DS24/R), andinstead would follow thesound reasoning oftheAppellate Body andthe
panel report onWoven Wool Shirts andBlouses.
Anadditional problem related tothepanel'simproper consideration ofsettlements inanalysing
theconsistency oftheUSsafeguard measure withArticle 6.4oftheATC. IntheviewoftheUnited
States thepanel hadmade afundamental error when, inrejecting CITA 'sfindings ofattribution by
reason ofCosta Rican underwear imports, thepanel hadrelied largely onthefactthattheUnited States
hadsettled withfiveofthesixcountries aftertheCITA hadissued itsdetermination ofserious damage
inMarch 1995.10Thepanel'sinclination topenalize theUnited States forentering intosettlements
hadcontravened theobjectives ofArticles 3.7,12.7and22.2oftheDSUwhich expressly encouraged
theresolution ofdisputes bymeans ofmutually satisfactory solutions. Should future panels orthe
Appellate Body takeasimilar approach, thiscould haveanadverse effect onthewillingness ofparties
toenterintosettlements. Itcould frustrate, among other things, thenegotiating flexibility ofMembers
duetoconcerns thattheresults ofmutually satisfactory solutions could beusedagainst themindispute
settlement proceedings, inparticular withnon-settling Members.
While theUnited States accepted theprinciple inArticle 13oftheDSU thatapanel hadthe
righttoseekrelevant information, itdidnotfollow thatanyinformation became legally relevant merely
because thepanel hadsought it.Hadthiserror bythepanel beendeterminative oftheoutcome, the
United States would haveappealed thefinding. However, because thiserror hadbeendicta --not
determinative oftheoutcome --andbecause theerror wassoobviously atodds withoneofthe
fundamental principles oftheDSU, hiscountry wasconfident thatfuture panels andtheAppellate Body
would refrain from following thisparticular lineofreasoning.
TheUnited States wasdisappointed thattheAppellate Body haddisagreed withthepanel with
regard totheeffective dateoftemporary safeguard measures. However, itwaspleased thattheAppellate
Body hadrecognized thattheproblem ofimport surges wasalegitimate oneandthataremedy against
suchsurges wasavailable under Article 6.11oftheATC. Moreover, asnoted previously, theUnited
States wassatisfied thattheAppellate Body hadrejected thepanel'sconclusions thatthelanguage
ofArticle 6oftheATC should beinterpreted narrowly.
10Panel report, para. 7.49-7.51.WT/DSB/M/29
Page14
Inconcluding, while there were certain aspects ofthepanel report thatcaused concerns, as
awhole andwhen readinconjunction withtheAppellate Body report andthepanel report onWoven
Wool Shirts andBlouses, thispanel report contained several positive elements. Accordingly, theUnited
States would joininaconsensus toadopt theAppellate Body report andthepanel report, asmodified
bytheAppellate Body report.
Therepresentative ofIndiasaidthathisdelegation wassatisfied withthereports oftheAppellate
Body andthepanel. Herecalled thatIndia hadparticipated inthepanel proceedings asathirdparty
aswellasintheAppellate Body proceedings. InIndia'sviewboththepanel andtheAppellate Body
haddoneexcellent work through anincisive analysis oftheissues raised.
Hehighlighted certain important elements inthese reports. With regard tothestandard of
review, thepanel report inparagraph 7.10hadclearly stated that"apolicy oftotaldeference tothe
findings ofthenational authorities could notensure an'objective assessment 'asforeseen inArticle 11
oftheDSU". Hewelcomed thatthepanel hadclearly ruled thatitstaskwastoexamine theconsistency
oftheUSaction withtheinternational obligations oftheUnited States andnotwiththeUSdomestic
lawimplementing itsinternational obligations. Thepanel hadalsoupheld thesupremacy oftheATC
asarelevant legalframework, which theUnited States hadnotchallenged atthepresent meeting.
Withregard totheburden ofproof, Indiawaspleased thatthepanel hadvindicated itsposition,
namely, thatArticle 6oftheATC wasanexception totheruleofArticle 2.4oftheATC andthat
theparty which invoked anexception hadtojustify itsaction anditcarried theburden ofproof that
ithadfulfilled theconditions forinvoking suchanexception. TheAppellate Body hadnotoverruled
thepanel'sfindings onthequestion ofArticle 6oftheATC being anexception.
India thought thatthepanel hadveryclearly andsuccinctly interpreted theATC aswellas
thestructure ofArticle 6thereof. Ithadstated inparagraph 7.20that"finally, werecall thattherelevant
provisions havetobeinterpreted ingood faith. Based upon thewording, thecontext andtheoverall
purpose oftheAgreement, exporting Members canlegitimately expect thattransitional safeguards,
adopted under Article 6oftheATC, would onlybeapplied sparingly inorder toserve thenarrow
purpose ofprotecting domestic producers oflikeand/or directly competitive products. Exporting
Members can,inother words, legitimately expect thatmarket access andinvestments made would not
befrustrated byimporting Members taking improper recourse tosuchaction".
Thepanel hadalsonoted thattheoverall purpose ofArticle 6oftheATCwastogiveMembers
thepossibility toadopt newrestrictions onproducts notintegrated intotheGATT 1994andnotunder
existing restrictions. Thepanel hadalsoclearly stated thatArticle 6oftheATC established athree
stepapproach required forimposing newrestrictions. Thisviewhadbeenconsistently putforward
byIndia inother fora.
When dealing withsubsequent information made available aftertheMarch statement11,which
hadbeenthebasisforthedetermination bytheimporting Member, thepanel hadnoted that"webelieve
thatstatements subsequent totheMarch statement should notbeviewed aslegally independent basis
forestablishing serious damage oractual threat thereof inthepresent case". Inparticular, India was
satisfied thattheAppellate Body report, onpage15,noted that"oneclear objective ofrequiring a
60-day period forconsultations wastogivesuchMember orMembers arealandfair,notmerely pro
forma ,opportunity torebut ormoderate those factors". Thisconfirmed India'sviewthatanyreview
ofthedetermination made byanimporting Member regarding theexistence ofserious damage oractual
11Technical datasupplied bytheUnited States toCosta Rica justifying itsrequest forconsultations.WT/DSB/M/29
Page15
threat thereof should bebased ontheinformation taken intoaccount bythatMember atthetimeof
determination.
Indiawelcomed thatthepanel report, inparagraph 7.55, hadmade acleardistinction between
"serious damage" and"actual threat ofserious damage" andhadinawayconfirmed hiscountry 'soften
reiterated viewthat"serious damage" referred toasituation thathadalready taken place, while "actual
threat ofserious damage" referred toanexisting situation which might leadto"serious damage" in
thefuture.
IndiawasparticularlyappreciativetotheAppellateBodyforitsrulingonretroactivity,aposition,
hesaid, taken bymost Members. Further, aspointed outbytheAppellate Body, theretroactive
application ofasafeguard measure wasnolonger permissible under Article 6oftheATC andwas
infactprohibited under Article 6.10oftheAgreement.
Hecomplimented Costa Ricaforitsdetermination topursue thismatter. BothCosta Ricaand
theUnited States hadcontributed tothestrengthening oftherule-based multilateral trading system.
Hiscountry hoped thattheTMB would benefit fromthefindings ofthese reports andwould dealwith
similar issues onthebasisoftheseincisive analysis andconvinced findings. Inparticular, alldelegations
andtheTMB should carefully reflect onthepanel'sanalysis withregard totheUSattribution ofserious
damage toCosta Rican imports inparagraph 7.50.
Hisdelegation believed thattheadoption ofthepanel andtheAppellate Body reports bythe
DSBmarked ahistoric steptowards integration ofthetextiles andclothing sector intoarule-based
multilateral trading system. Forthose Members whohadbeenrather pessimistic during thelasttwo
years about "fullandfaithful implementation" oftheATC, these tworeports provided hope.
Therepresentative ofHong Kong saidthathisauthorities endorsed thepanel'sfindings as
modifiedbytheAppellateBody.Henotedthepanel'semphasisontransitionalsafeguardsunderArticle6
oftheATC being applied assparingly aspossible. Thisreflected theexceptional nature ofthis
mechanism. Exceptional notjustbecause ofitsrestrictive effect, butduetothefactthatitdiscriminated
againstcertainMembersbysubjectingonlytheseMemberstorestraint.StrictdisciplinesunderArticle6
oftheATC should beseeninthislight.
Inthecontext ofArticle 6.2to6.4oftheATC, some importing Members might experience
difficulties toprovide thedatarequired under Article 6.3oftheATC foradetermination ofserious
damage oractual threat thereof. Hong Kong wasnotrigidbutjustification wasabasic requirement.
Ifthedatawerenotavailable, onecould question whether aproper determination tojustify arestraint
waspossible. InHong Kong'sviewtherequirement forproper datacould beadefence fornational
authorities against protection-seeking domestic industries.
Henoted thatthepanel hadrecognized thattheTMB hadconducted afact-intensive review
ofthecase. Hong Kong considered thattheTMB, given itsoverall responsibility forthesupervision
oftheATC, hadamuch broader rolethanthedispute settlement panel. Hisauthorities believed that
theTMB andpanels hadcomplementary roles, notwithstanding thatpanels might come upwithdifferent
findings having different impacts forparties involved. How tomaximize theadvantage ofsuch
complementarity would beamatter forfurther consideration intheTMB or,ifdeemed appropriate
byMembers, inthecourse ofthemajor review oftheATC pursuant toitsArticle 8.11.
TheDSBtooknoteofthestatements andadopted theAppellate Body report inWT/DS24/AB/R
andthePanel report inWT/DS24/R asmodified bytheAppellate Body report.WT/DSB/M/29
Page16
11. United States -Measure affecting imports ofwoven wool shirts andblouses from India
- Panel report (WT/DS33/R)
TheChairman saidthatthisitemwasontheagenda ofthemeeting attherequest oftheUnited
States. Hedrewattention tothepanel report contained inWT/DS33/R andrecalled thatinaccordance
with theDecision onProcedures fortheCirculation andDerestriction ofWTO Documents
(WT/L/160/Rev.1) thispanel report hadbeenissued asanunrestricted document. Healsorecalled
thatunder Article 16.4oftheDSU "within 60daysafterthedateofcirculation ofapanel report to
theMembers, thereport shallbeadopted ataDSBmeeting unless apartytothedispute formally notifies
theDSBofitsdecision toappeal ortheDSBdecides byconsensus nottoadopt thereport. Ifaparty
hadnotified itsdecision toappeal, thereport bythepanel shallnotbeconsidered foradoption bythe
DSBuntilaftercompletion ofappeal. Thisadoption procedure iswithout prejudice totheright of
Members toexpress theirviews onapanel report." Heinformed Members thaton24February 1997,
India hadnotified theDSBofitsdecision toappeal thepanel report. Therefore thepanel report could
notbeadopted bytheDSBatthepresent meeting.
Therepresentative ofIndia confirmed thaton24February 1997, hisdelegation hadsubmitted
anotice ofappeal totheDSBandtheAppellate Body.12
TheDSB tooknoteofthestatements andreferred thematter totheAppellate Body for
consideration.
12. Practice thathasdeveloped under Article 6.1oftheDSU
TherepresentativeoftheUnitedStates,speakingunder"OtherBusiness",requestedtheChairman
--inlightofArticle 3oftheDSUwithregard tomutually acceptable solutions --toholdconsultations
withinterested delegations onthepractice thathaddeveloped under Article 6.1oftheDSU.
Therepresentative ofArgentina saidthathisdelegation shared theconcerns expressed bythe
United States. Henoted thattheautomaticity withwhich insome cases Article 6.1oftheDSU had
beenapplied seemed toleadtoamechanical exclusion ofother options envisaged under theDSU.
Thisrestricted theefforts ofparties tofindsolutions tosome disputes. Hetherefore supported the
request made bytheUnited States.
Therepresentative ofUruguay saidthathisdelegation shared theviews expressed bytheUnited
States andArgentina. Uruguay would beinterested inparticipating intheconsultations tobeheld
onthismatter.
Therepresentative ofIndia saidthatalthough thepurpose oftheconsultations wasunclear,
hisdelegation would liketoparticipate therein. Heexpressed some reservations regarding pragmatic
andflexible solutions topractical problems. Flexibility andpragmatism should notmean thatthe
Agreement could beamended without following theprescribed procedures.
Therepresentative ofMexico saidthatthepurpose oftheconsultations wasalsonotclearto
hisdelegation. Heshared India'sconcerns andrequested tobeincluded inthese consultations assuch
participation would enable abetter understanding ofthismatter, andwould allow Mexico toassess
howitsinterest would beaffected.
12Subsequently circulated asdocument WT/DS33/3.WT/DSB/M/29
Page17
Therepresentative oftheEuropean Communities saidthathewished tobeconsistent withhis
earlier statement thatoneshould notproceed toapanel stageifitwasstillpossible toreach asettlement.
Therepresentative ofJapan saidthathisdelegation would beinterested inparticipating inthe
consultations tobeheldonthismatter. Herequested theChairman toexplain thepurpose ofthese
consultations.
TheChairman saidthatthesubject oftheconsultations could betaken upattheirinitial stage.
Theconcerns thathadbeenraised related tothepractice thathaddeveloped under Article 6.1ofthe
DSU andsome delegations might havedifferent interpretations thereof.
Therepresentative ofHong Kong saidthatautomaticity wasanimportant aspect oftheDSU
andhisdelegation would beinterested inparticipating intheconsultations inorder tobeabletobetter
understand theUSconcerns.
Therepresentative ofPerusaidthathisdelegation wished toparticipate intheconsultations
duetoitssystemic interest.
TheChairman invited delegations interested inparticipating intheconsultations tocontact him
directly ortheSecretariat. Theissueraised bytheUnited States wasimportant andwarranted holding
consultations. Theinitial stage ofthose consultations would beusedtoclarify theconcerns ofsome
delegations withregard toArticle 6.1oftheDSU.
TheDSBtooknoteofthestatements.
13. Pakistan -Patent protection forpharmaceutical andagricultural chemical products
Therepresentative oftheUnited States, speaking under "Other Business", informed Members
thattheterms ofsettlement concerning theUSdispute withPakistan onthelatter'spatent protection
forpharmaceutical andagricultural chemical products, werebeing finalized. Theparties tothedispute
would notify theDSBinwriting oftheterms ofthesettlement inaverynearfuture.
Therepresentative ofPakistan welcomed thestatement made bytheUnited States. The
Ordonnance No.XXVI of1997bythePresident ofPakistan provided thatallpatent applications after
1January 1995shallbeconsidered validly filed. Pakistan waspreparing ajointletter withtheUnited
States outlining theterms ofsettlement which would besubmitted totheDSBinthenearfuture.13
TheDSBtooknoteofthestatements.
14. Chairmanship oftheAppellate Body
TheChairman, speaking under "Other Business", recalled thatataninformal meeting ofthe
DSBheldon4February 1997, theChairman oftheDSBhadinformed Members oftheintention of
theAppellate Body members toamend Rule5(2)oftheWorking Procedures forAppellate Review
toallow foraterm oftwoyears rather thanone,forthefirstChairman oftheAppellate Body.
Delegations wishing toexpress views onthismatter hadbeeninvited tocontact directly theChairman
oftheDSBinorder toconvey theirviews totheAppellate Body. AstheChairman oftheDSBhad
13Subsequently circulated asdocument WT/DS36/4.WT/DSB/M/29
Page18
notreceivedanyviewsinconnectionwiththismatter,theAppellateBodyhadbeeninformedaccordingly.
Arevised andconsolidated version oftheWorking Procedures forAppellate Review, toincorporate
thisamendment andtheRules ofConduct fortheUnderstanding onRules andProcedures Governing
theSettlement ofDisputes, asadopted bytheDSB on3December 1996, would becirculated as
WT/AB/WP/3. Thisconsolidated version would takeintoaccount thecomments made bytheEuropean
Communities concerning theFrench andSpanish versions oftheinitial textoftheWorking Procedures.
TheDSBtooknoteofthisinformation.