RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/49
19 November 1998
(98-4637)
Dispute Settlement Body
21 October 1998
MINUTES OF MEETING
Held in the Centre William Rappard
on 21 October 1998
Chairman:  Mr. Kamel Morjane (Tunisia)
Subjects discussed: Page
1. Surveillance of implementation of recommendations adopted by the DSB.........................2
(a) Canada - Certain measures concerning pe riodicals: Status re port by Canada ............................2
(b) European Communities - Regime for the importation, sale and distribution of
bananas: Status report by the European Communities................................................................2
2. United States – Measure affect ing government procurement...............................................9
(a) Request for the establishment of a panel by the European Communities...................................9
(b) Request for the establishm ent of a panel by Japan .....................................................................9
3. Mexico – Anti-dumping investigation of high-fructose corn syrup (HFCS) from
the United States .............................................................................................................. .......11
(a) Request for the establishment of  a panel by the United States .................................................11
4. European Communities – Measures affe cting asbestos and products containing
asbestos ....................................................................................................................... .............12
(a) Request for the establishm ent of a panel by Canada ................................................................12
5. Slovak Republic – Measure affecting import duty on wheat from Hungary ....................13
(a) Request for the establishmen t of a panel by Hungary...............................................................13
6. India – Patent protection for pharmaceutical and agricultural chemical
products:  complaint by the European Communities and their member States...............14
(a) Implementation of the reco mmendations of the DSB...............................................................14
7. European Communities – Measures affecting the importation of certain poultry
products ....................................................................................................................... ............15
(a) Reasonable pe riod of time ................................................................................................... .....15
8. Czech Republic – Measure affecting import duty on wheat from Hungary .....................15
(a) Statement by Hungary........................................................................................................ .......15
9. Next meeting of the DSB...................................................................................................... ...16WT/DSB/M/49
Page 2
Prior to the adoption of the agenda the item concerning the adoption of the Panel Report on
"Korea – Taxes on Alcoholic Beverages" (W T/DS75/R - WT/DS84/R) was removed from the
proposed agenda since Korea had appealed this report on 20 October 1998.
1. Surveillance of implementation of recommendations adopted by the DSB
(a) Canada - Certain measures concerning periodicals: Status report by Canada
(WT/DS31/9/Add.5)
(b) European Communities - Regime for the importation, sale and distribution of bananas: Status
report by the European Communities (WT/DS27/17/Add.2)
The Chairman recalled that Article 21.6 of the DSU required that: "Unless the DSB decides
otherwise, the issue of implementation of the recommendations or rulings shall be placed on the
agenda of the DSB meeting after six months following the date of establishment of the reasonable
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is
resolved".  He proposed that the two sub-items be considered separately.  First, he drew attention to
document WT/DS31/9/Add.5 which contained Canada's sixth status report regarding its progress in
the implementation of the DSB's recommendations.
The representative of Canada said that his Government was pleased to present its sixth status
report on this matter.  As noted in its report, Canada would comply with the DSB's recommendations
by 30 October 1998.  The required parliamentary proceedings to enact the changes respecting the
Customs Tariff and Part V.1 of the Excise Tax Act  had been initiated and were scheduled to be
completed before 30 October 1998.  With respect to the postal implementation, Canada Post had sent
a letter to all its publications' mail clients, domestic  and foreign, informing them that, with effect from
30 October 1998, all publications' mail customers would pay the domestic price, which represented
significant savings for foreign magazines.  In addition, publishers that received the postal subsidy had
been informed by the Department of Canadian Heritage of the administrative changes that would takeplace on 30 October.  Canada, as one of the original architects of the dispute settlement mechanism
took  the DSB's recommendations very seriously and would fully implement them on 30 October.
 He also wished to address one issue raised by the United States at the DSB meeting on
22 September 1998.  At that meeting, the United States had referred to a new legislation being
introduced in the Canadian Parliament which it had characterized as replacing the measures
recommended for removal by the Panel and the Appellate Body in the Periodicals  case.  Canada
could not agree with statements linking this bill to the implementation of the DSB's recommendations
in the Periodicals  case.  His country wished to state clearly that the proposed legislation which would
give Canadian magazine publishers access to advertising revenues in Canada was a new, separate
legislative measure taken to achieve its cultural policy objectives.  The new measure related to
advertising services, an area in which Canada had not taken commitments under the GATS.  Thismeasure was therefore fully consistent with its WTO obligations.  He noted that in Canada's first
report on this matter at the DSB meeting on 25 March 1998, his delegation had recalled that the
panelists in their concluding remarks had stressed that the ability of any Member to take measures to
promote its cultural identity was not at issue in this case.  For its part, Canada was committed to
policies and measures aimed at maintaining the viability of its cultural industries, which it believedwould be consistent with its WTO rights and obligations.
The representative of the United States said that on 8 October 1998, Canada had introduced a
bill in Parliament that would ban foreign-owned publishers from carrying advertisements in their
magazines if such advertisements were aimed at Canadian consumers.  The bill was Canada’s answerto the Panel and the Appellate Body reports condemning a discriminatory tax - and import ban - on
magazines carrying the same advertisements.  It perpetuated Canada’s long-standing policy ofWT/DSB/M/49
Page 3
sheltering its magazine industry from competition by funnelling its advertising revenues exclusively
to Canadian publishing companies.  It was openly protectionist and discriminatory.  Foreign produced
split-run periodicals would continue to be shut out of the Canadian market as they had been for the
past 30 years.
One of Canada’s leading newspapers, the Financial Post  stated that, "the measures [are] crafted
to get around a 1997 WTO ruling that Canada discriminated against US magazines".  A bill of this
nature apparently represented Canada’s idea of compliance with the Panel and the Appellate Body
reports.  Canadian officials had suggested that the bill, despite its discriminatory nature, would bring
Canada into conformity with its WTO obligations.  This was because it would forbid foreign-owned
magazine publishers from accepting advertisements aimed at Canadian consumers rather than taxing
the magazines that contained such advertisements.  If the bill was enacted, Canada would havereproduced the precise exclusionary effect of the measures condemned by the Panel and Appellate
Body.  In particular, imported magazines, unlike most of their Canadian-produced counterparts,
would be prevented from carrying advertisements aimed at Canadian consumers.  This new form of
protectionism had been justified on the ground that it was inconsistent with the anti-discrimination
provisions of the GATS rather than the GATT;  conveniently, Canada had not made commitmentsregarding advertising under the GATS, as pointed out by Canadian representatives.  It was perplexing
that Canada believed that its GATT/GATS argume nt, which the panel and the Appellate Body had
soundly rejected in 1997, had taken on credibility with the passage of time.
The introduction of bill C-55 should not obscure a second aspect of Canada’s purported
compliance with the Panel and Appellate Body reports.  Canada had made clear that it intended to
continue its practice of providing postal subsidies exclusively to Canadian-owned publishers.  It had
announced that it would begin using the subsidy to credit the accounts maintained by Canadian
publishers with Canada Post, Canada’s government postal service.  This practice would replace the
present system under which Canada Post reduced the rates for magazines produced byCanadian-owned firms.
Canada had opted to make a purely cosmetic change that would leave the discrimination
condemned by the Appellate Body in place.  U nder the new system, as under the old, the cost of
mailing imported magazines would be higher than the cost of mailing Canadian magazines.  It was
difficult to discern how this new discriminatory postal subsidy differed from the one which the
Appellate Body considered that it viol ated GATT’s national treatment principle.
Both the bill introduced on October 8 and the new postal subsidy scheme had sent a troubling
signal regarding Canada’s seriousness in abiding by its international obligations, and in particular, in
observing both the letter and spirit of the dispute settlement system.  Canada’s willingness to comply
with a WTO panel decision had been put to the test for the first time.  Canada had requested, andinsisted on 15 months to consider how to respond to the Panel and Appellate Body reports.  That
period should have been used to provide a GATT-consistent response and to prepare Canada’s
domestic industry for the introduction of the type of competition envisaged under the GATT.  Instead,
for over a year, Canada had refused to disclose any of the alternatives it was considering or to consult
with interested governments regarding its complia nce.  After virtually the entire 15-month period,
Canada had suddenly announced replacement measures that were both discriminatory and
protectionist.
If Canada could not or would not live up to its international commitments, it should state this
openly.  The DSU and the GATT contained procedures for accommodating such a decision.However, the replacement bill that Canada had introduced, and the continuation of its postal subsidy,
threatened to make a mockery of the dispute settlement process.  This was because both suggested
that the answer to an unfavourable panel and Appellate Body report was to stall for time and then
trade one form of protection for another.  Canada could not expect other Members to follow
internationally agreed dispute settlement rules if it did not abide by those rules.  The United StatesWT/DSB/M/49
Page 4
strongly urged Canada to reconsider its course and to withdraw the C-55 bill as well as the proposed
subsidy.  If not, her country was prepared to take action in this regard.
The representative of Canada wished to reiterate that his Government was in the process of
finalizing all the necessary legislative and administrative measures to bring its measures into
conformity with the DSB's recommendations.  He noted that the United States was concerned about
the fact that Canada would continue to subsidize its magazine industry.  It was his understanding that
in most cases of domestic subsidies, Members favoured their domestic industries over foreign ones
with regard to the provision of subsidies.  With respect to Canada's new measures, which had recently
been introduced, he emphasized that these measures related to advertising, an area in which Canada
had not accepted any obligations under the GATS.  His country believed that in response to the
Periodicals  case it had fully dealt with all the findings raised therein.
The DSB took note of the statements.
The Chairman drew attention to document WT/DS27/17/Add.2 which contained the third
status report by the European Communities on its progress in the implementation of the DSB's
recommendations concerning its banana import regime.
The representative of the European Communitie s said that as noted in the report, the
Community had entered into negotiations with all pa rties having a substantial interest in supplying
bananas to the EC market, in order to seek agreement with respect to the allocation of shares pursuantto Article XIII:2(d) of GATT 1994.  These negotiations, however, had not resulted in any agreement.
At the present meeting, he wished to draw attention to a development which should be of serious
concern to the DSB members.  Some member s of the US Congress had proposed a WTO-
incompatible legislation providing for retaliatory action based on a US unilateral evaluation of the
EC's non-compliance with the DSB's recommendations on bananas and other products.  TheCommunity welcomed an intervention by the US administration which had been instrumental in the
withdrawal of this draft legislation.  However, the Community was surprised and disappointed by a
White House letter to Congress on the same issue.  This letter appeared to represent a threat of
retaliation based on a US unilateral determination of non-compliance.  This retaliation was not to be
conditional upon the result of the dispute settlement procedures under Article 21.5 of the DSU, which
was the only way under the WTO rules to determine if the EC's modified regime was WTO-
consistent.  He underlined that any action based on a unilateral determination would be illegal and theEC would be obliged to challenge it.
In this letter, dated 10 October 1998, signed by the White House Chief of Staff 
1, reference
had been made to retaliation, if the EC's regime was found to be WTO-inconsistent and not acceptable
to the United States.  It was clear that the EC's regime needed only to be WTO-consistent.  It was notfor the United States or any other delegation to attach further conditions.  If the United States were to
take retaliatory action based on a unilateral assessment of unacceptability, this would be against its
WTO obligations.  Article 23 of the DSU clearly prohibited the making of unilateral determinations of
violations or nullification and impairment of be nefits.  Since there was disagreement between the
parties on the consistency of measures taken, the procedures under Article 21.5 of the DSU had tofollow its course and be completed before any compensation or withdrawal of concessions could be
requested pursuant to Article 22 of the DSU.  Compliance with the WTO recommendations was a
matter not for unilateral consideration and decision by the United States but for the WTO to
determine.  The Community was in the proces s of implementing the DSB's recommendations in
conformity with its WTO obligations.  When such implementation was completed, the United Stateswould have the right to continue to pursue the appropriate and internationally agreed dispute
settlement procedures.  However, as a major trading party, with a shared interest in a strong and
respected DSU, the Community invited the United States to refrain from taking any unilateral action,
                                                     
1 "Inside US Trade", Vol. 16, No. 41, 16 October 1998.WT/DSB/M/49
Page 5
in clear contravention of its international obligati ons, which would require the EC to bring the matter
to the WTO.
The representative of Ecuador, speaking also on behalf of Guatemala, Honduras, Mexico
Panama and the United States, said that the complaining parties had reviewed the status report by the
Community.  The report had provided an assurance that the reasonable period of time "will be duly
respected".  However, as stated previously, the measures on market sharing and licence allocation
proposed by the EC to be implemented on 1 January 1999, would be inconsistent with the GATT
and/or the GATS.  The complaining parties had waited over five years for this dispute to be settled.
The EC still had about two months before the expiry of the reasonable period of time.  The
complaining parties therefore wished to request that the EC modify its proposal and hold urgent
consultations with them before 1 January 1999 regarding the implementation of a regime that wouldbe WTO-compatible.  The complaining parties were c onfident that it was possible to discuss this issue
in good faith, and that in such favourable circumstances this dispute could be promptly settled.  He
reiterated that the EC should comply with its under takings  in order to uphold the credibility of the
DSU.
The representative of Ecuador, speaking on behalf of his delegation only, further said that it
was only two months before the expiry of the reasonable period of time.  Although the EC had stated
that it would implement the DSB's recommendations within that period of time, Ecuador continued to
have doubts about this matter.  The measures taken thus far by the EC had demonstrated that the
discrimination would continue since this new EC regulation, scheduled to be effective on1 January 1998, would not comply with the DSB's recommendations.  As a result, the EC would
imperil the foundations of the dispute settlement system and bring Members into uncharted territory.
The manner of resolving this dispute could become a guideline for ensuring the future credibility and
efficiency of the system.  It was therefore necessary that this matter be discussed and resolved before
1 January 1999.  For Ecuador, a country with an economy based on the production, marketing anddistribution of bananas, this expensive and excessively protracted matter could lead to injustice.  It
could also demonstrate that developing countries might be deprived of benefits under a system of
rules as a result of disguised illegal actions and discriminatory treatment by one Member.
Ecuador awaited the EC's final amendment to its banana import regime since it would affect the
main market for its most important agricultural export product.  It wished to be informed of the new
conditions of competition in the EC market which should, at least in principle, be free ofdiscrimination.  Ecuador had a right to demand that this should not entail delaying tactics to postpone
compliance.  Together with other complainants, Ecuador had repeatedly stated in the DSB that the EC
Commission had ignored their views on the modification of its banana import regime and had adopted
new measures which had been challenged both in the DSB and in bilateral consultations.  This had led
to disagreement with regard to the WTO consistency of the EC measures shortly before1 January 1999.  This dispute could be further prolonged as a result of the initiation of procedures to
challenge, once again, the EC import banana regime.  The time involved in any such procedures
favoured the EC's trade interests and harmed Ecuador.  The EC had also disregarded the letter and
spirit of the DSU, and in particular Article 21.8 thereof.  In this dispute, no account had been taken of
the trade impact on Ecuador's economy pursuant to Article 21.8 of the DSU.  He therefore appealed tothe DSB and the EC member States to urge the Commission to deal with this matter shortly.  At the
meeting of the General Council in October 1998, the Director-General had raised the question of
transparency.  He had stated that there was a mistaken perception of the WTO's work because civil
society or the general public did not have access to information.  He had also stated that it was
therefore necessary to improve the WTO's communication policy, on the basis of the principle oftransparency.  However, he had added that while this negative image of the WTO might be remedied
by a better policy of communication, a feeling of concern and uneasiness was being spread among
developing countries at the absence of equity and special and differential treatment.  The only strength
of developing countries was to support  multilateral rules which upheld their rights.  The settlement of
this dispute could not be imposed unilaterally.  For example, the imposition of a new regime that,WT/DSB/M/49
Page 6
apart from making a mockery of the dispute settleme nt system, would lead to its erosion and prolong
the dispute without a speedy action such as  immediate recourse to the original panel.  In the context
of this search for a balance, he could not fail to me ntion that the sole strength of developing countries
with relatively small economies, was the law enshrine d in panels and the multilateral order.  Ecuador
would therefore continue its search towards ensuring that the market for its primary export productwas governed by fair and non-discriminatory rules.  His country wished to reserve its right under
Article 21.5 of the DSU to counter any inconsistencies of the EC's new measures with the GATT and
GATS.
The representative of Honduras said that her Government attached great importance to the
dispute settlement system, because it considered it a legitimate option for ensuring that its rights were
fully respected.  After participating in lengthy proceedings before the Panel and the Appellate Bodyand after the adoption of the DSB's recommendations, Honduras had serious doubts and was
concerned about the effectiveness of the system.  Although the reasonable period of 15 months set by
the arbitrator was extremely burdensome due to the negative impact on its economy, her country had
been confident that on 1 January 1999 the EC would bring its regime into conformity with its WTO
obligations.  She regretted that several months had elapsed and it appeared that the 15-month periodmight be prolonged arbitrarily.  In order to preserve the discriminatory and illegal measures which
had already been condemned, the EC had made its own interpretations of the reports, and had used
every means to prevent the original panel from ru ling promptly on the incompatibilities of the new
system it wished to introduce.  Honduras believed that it had received an unfair treatment.  It
considered that if this case - which many had viewed as the trade dispute of the century - could bereduced to a mere academic exercise, which in practice would replace one illegal system by another
equally incompatible one, any future trade dispute mi ght have similar results.  She therefore wished to
invite the developing-country Members to consider the difficult situation of her country, which after
two years had realized that all its efforts had been wasted and that the proceedings had prolonged
indefinitely the implementation phase of the DS B's recommendations.  This experience did not
contribute to the strengthening of the credibility of the system, and, like Honduras, other developing
countries would harbour serious doubts about the effectiveness of resorting to the WTO.  Efforts were
underway in the DSB to review and revise the pr ocedures.  However, the solutions that could be
proposed in this context would not remedy the denial  of justice to Honduras.  Although one might try
to design the perfect system any change could be circumvented.  The only effective solution was a
change of attitude.  Honduras still hoped that the EC would change its attitude and would take the
necessary decisions to bring its banana import regime into conformity with the WTO without furthercomplicated manoeuvring and within the time-limit set by the arbitrator.
The representative of Guatemala said that this dispute aimed at putting an end to the EC's
banana import regime was not new.  This matter had twice been examined in the GATT but the panel
reports had not been adopted.  The matter had once again been brought to the WTO with the hope thatits dispute settlement system was reliable, foreseeable and effective.  In the past several years,
Guatemala had invested both time and effort in this case because it was confident that the dispute
settlement system was a suitable means for ensuring that its rights would be restored.  However, its
expectations had been frustrated.  The new regime which the EC wished to impose would not comply
with the Panel and Appellate Body findings.  It woul d no longer be possible for the original panel to
conduct the review provided for in Article 21.5 of the DSU within the reasonable period set by the
arbitrator.  This situation raised serious systemic implications which affected the credibility of the
dispute settlement system.  Prompt and full co mpliance with DSB's recommendations as a means of
ensuring the efficient settlement of all trade disputes was of interest to all Members.  The history of
the WTO was being written with each case brought by Members.  The EC could still make a positivecontribution, that would display its willingness to ta ke the necessary decisions in order to bring its
banana import regime into conformity with the WTO within the reasonable period of time.
The representative of Mexico said that his delegation supported Ecuador's statement on behalf
of Guatemala, Honduras, Mexico, Panama and the United States.  Like other complaining parties,WT/DSB/M/49
Page 7
Mexico had repeatedly explained its view that the EC measures to modify its banana import regime
were not sufficient to comply with the DSB's recommendations and were WTO inconsistent.  Since
the EC did not share this view, the complaining parties had proposed recourse to the original panel to
decide on this matter.  Unfortunately, it had not yet been possible to establish this panel to clarify the
situation with the promptness that this case required.  If both the respondent and the complainantswere certain of their assertions, this matter could be referred immediately to the panel.  Therefore,
Mexico wished to take this opportunity once again to  urge the EC to examine, with the complainants,
the best way of ensuring that its new banana import regime was compatible with the WTO, and that it
effectively complied with the DSB's recommendations.
The representative of the United States said that her delegation noted the EC's statement.  The
United States was not surprised that the EC had pr eferred to draw the DSB's attention to another
matter rather than its long-standing pattern of total disregard of its GATT and WTO obligations
regarding  this dispute.  The real issue before the DSB was the EC's intention towards its response to
the panel and the Appellate Body reports.  The issue was  not what the US intended to do if the EC
continued its current path toward non-compliance.  The United States had been very transparent in
announcing its domestic procedures to be followed in order to respond to the EC’s anticipated failureto implement the DSB's recommendations.  Under its domestic process, the United States could
exercise its rights pursuant to Article 22 of the DSU.  Under its law her country was required to seek
public comment prior to taking such action, and therefore it was only complying with its domestic
law.  Her country was acting fully within its WTO rights and had scheduled future action accordingly.
For the past five years, the EC had reserved for itself the determination of whether its measures
were consistent with its multilateral obligations by acting unilaterally and by ignoring the GATT and
WTO decisions in this regard.  It appeared that respecting its international commitments did not mean
acting consistently with them.  The United States was exercising its WTO rights to withdraw
concessions if the EC would not comply with its obligations, which at the present it was not.  In thefirst half of 1998, following the Commission’s propos al, the United Stated had provided the EC with
numerous opportunities to address its concerns.  It had provided an opportunity for the EC to test its
claim that its new measures were WTO-consistent.  On 7 July,  US officials had suggested to the EC
that their staff work together to ensure a prompt  reconvening of the original panel to examine the
WTO-consistency of the EC measures and render a decision before the end of the reasonable period
of time.  The United States had stated that the risk was that if the EC did not see fit to change its
course shortly the United States would have to suspend concessions under WTO procedures.  Thus,the EC had no grounds to complain about US demands for compliance because it was taking a
unilateral approach to compliance, developing a WTO-inconsistent solution without discussing the
case with the United States.  The EC's practices had been found to violate its international obligations
three times in the last five years.  The United States continued to hope that a WTO-consistent solution
would be found through negotiation before it had to request authorization from the DSB to suspendconcessions.  The United States considered the suspension of concessions as a last resort, given the
history of EC’s unwillingness to negotiate on the basis of a WTO-consistent solution.
The representative of Panama said that his delegation supported the statements made by the
complaining parties.  Panama had repeatedly expressed, both individually and together with the
complaining parties, its concerns and doubts about the lack of compatibility of Regulation 1637/98 to
be implemented by the EC on 1 January 1999.  From the outset all the six countries had indicated to
the EC that this regime had failed to comply w ith the Panel and the Appellate Body recommendations.
The EC had disregarded these views and had continued to do so with the recent regulation on the
granting of import licences that would increase the WTO-inconsistency of its banana regime.  Hedrew attention to the fact that almost two and a half months were left before the expiry of the
reasonable period of time, yet the proposed regime did not represent any significant change from the
previous one.  He therefore reiterated his country's position that the proposed Regulation would not
enable the EC to bring its banana regime into line with the WTO rules and principles.  Panama was
concerned about the EC's failure to comply with these obligations because its economy suffered greatWT/DSB/M/49
Page 8
losses under the current regime.  He was concerned about further economic losses as a result of the
implementation of a similar regime.  Panama had been a Member of the WTO for more than a year
and was concerned that one of the greatest achievements of the multilateral trading system, namely
the prompt and effective dispute settlement system, was called into question by the intransigent stance
of one important Member.  He called on the EC to heed the concerns voiced by Panama together withthe complaining countries and to recognize the need  to engage without further delay in a dialogue
aimed at implementation of a banana regime genuinely compatible with the WTO which would help
to strengthen rather than weaken the WTO and hence free trade among nations.
The representative of Japan said that if a complaining party considered that a respondent had
failed to implement the DSB's recommendations, the dispute settlement mechanism did not permit the
former to take a unilateral action with regard to re taliation.  At the present meeting, the United States
had indicated that it would consider a WTO-consistent solution to this problem.  Japan wished to
encourage the United States to do so.  In his country's view, Article 21.5 of the DSU provided
Members with the necessary guidelines in this case.
The representative of Australia said that this case raised some important systemic and
procedural issues.  He recalled that that all Members were committed to multilateral dispute
settlement.  The DSU had thus far been one of the success stories of the Uruguay Round but there was
a need to ensure that it would not stumble in  the process of implementation.  Australia urged
Members to continue their commitment to Articl e 23 of the DSU, including adherence to the
provisions of Article 23(a), (b) and (c) which in its heading referred to "Strengthening of theMultilateral System".  The DSU provided the framework for resolving differences between Members
on implementation although it was evident that there were differences in interpretation on the precise
procedures.  Due to the fact that there were significant points of procedure that had an impact on the
functioning of the DSU, he proposed that it would be useful to have a structural debate in the DSB to
clarify reasoning on these matters, which should be considered in the context of the DSU review.
The representative of Jamaica said that the DSB had before it the third report by the EC and
prior to 1 January 1999, Members had to ensure that the Community had complied with the DSB's
recommendations.  As indicated in the status report, the second regulation concerning the rules for the
management of the import regime would be a dopted by the EC Commission.  The negotiations
undertaken by the Community on the allocation of shares had unfortunately not resulted in any
agreement.  As part of its international commitmen ts, the Community was also obliged to consult with
the banana-exporting countries which were members of the Lomé Convention.  Therefore, the EC's
compliance with its international commitments should not only be considered within the context of its
WTO commitments.  In modifying the trade provisions of the Regulation 404/93, the Community and
the ACP countries were required to ensure that these measures were WTO-consistent.  Jamaica
wished that the EC be given the opportunity to consult and complete these modifications inaccordance with the DSU provisions.  Like the EC, his country was surprised by the draft legislation
prepared by the members of Congress, which contained an error of fact.  Jamaica was also concerned
about the content of the letter from the US Administration which had referred to retaliation as
determined by one party.  Jamaica was therefore satisfied that this draft legislation had been
withdrawn.  In accordance with this statement, the United States was pursuing its domesticprocedures, but any withdrawal of concessions by  a Member had to be authorized by the DSB.
Therefore, if after 1 January 1999 some dissatisfaction still remained, the nature and scope of any
concessions could then be examined, taking into account that the party in question had no position
with respect to banana exports but had only a systemic interest in this matter.  The issue of the
reconvening of the original panel was not simple and could not be determined exclusively either bythe EC or the complaining parties.   Any interpretation of the meaning and intent of Article 21.5 of the
DSU had to be undertaken by the DSB.  Jamaica therefore expressed satisfaction that the avenue
previously sought had not been pursued.  In Novemb er,  the EC would submit its fourth report to the
DSB and he hoped that, in the meantime, the consultations carried out in Brussels, Geneva and
Washington would enable the parties to make progress towards meeting the legitimate interest ofWT/DSB/M/49
Page 9
these developing countries that exported bananas to the EC market as well as the interest of the
banana exporting countries under the Lomé Convention with respect to which the Community had
international commitments and obligations.
The representative of Cuba said that his delegation was concerned about the scope of any
decision to be taken with regard to this case.  Cuba was concerned about the economic conditions of
the small and fragile Caribbean countries which were dependent on exports of bananas to the EC
market.  In order to preserve their subsistence and minimum standards of living, the ACP preferences
and export quotas should be maintained.  His country hoped that any subsequent negotiations or
decisions on this matter would permit to maintain special and differential treatment in favour of the
Caribbean countries and that this issue would be resolved on the basis of equity.
The representative of the European Communities said that his delegation had noted the
statement made by Jamaica in relation to the Lomé  Convention.  However, he believed that at the
present meeting it was not appropriate to further pursue this discussion.  A considerable amount of
time had already been devoted to this issue in an attempt to find a solution.  The Community had
worked and continued to work with its trading partners.  He expressed doubt whether in any disputeso much time had been involved to discuss a proposal by a Member to comply with its WTO
obligations.  This was the case from the very early stages of this dispute after the adoption of the
Panel and the Appellate Body Reports.  The Community would continue this process and hoped that it
would still be possible to reach a mutually satisfactory understanding and agreement on the way in
which it had proposed to meet its WTO obligations.  He also wished to place on record that hisdelegation could not accept that another delegation should refer to "the EC's total disregard of its
WTO obligations".  He considered that this statement should be withdrawn.
The DSB took note of the statements and agreed
 to revert to this matter at its next regular
meeting.
2. United States – Measure affecting government procurement
(a) Request for the establishment of a panel by the European Communities (WT/DS88/3)
(b) Request for the establishment of a panel by Japan (WT/DS95/3)
The Chairman proposed that the two sub-items be taken up together.  He recalled that the
DSB had considered this matter at its meeting on 22 September and had agreed to revert to it.  First,
he wished to draw attention to the communication from the European Communities contained in
document WT/DS88/3.
The representative of the European Communities said that no new development had taken
place since the previous meeting of the DSB.  Therefore, his delegation requested, for the second
time, the establishment of a panel in accordance with the provisions of the DSU and the Agreement
on Government Procurement (GPA) to examine the compatibility of the Massachusetts law of June
1996 with the GPA.
The Chairman drew attention to the communication from Japan contained in document
WT/DS95/3.
The representative of Japan said that he did not wish to reiterate the points made by his
delegation at the previous meeting of the DSB.  He only wished to point out that Japan considered that
the measure at issue was inconsistent with the US obligations under the GPA.  On 22 July, 2 Octoberand 17 December 1997, Japan and the United States had held consultations on this matter.  TheseWT/DSB/M/49
Page 10
consultations, however, had failed to settle the dispute.  Therefore, his country requested, for the
second time, the establishment of a panel.
The representative of the United States expressed her country's regret and disappointment that
the EC and Japan had reiterated their request for a panel, given the strong interest of all three parties
towards improving the human rights situation in My anmar.  The United States remained concerned
about the extensive abuses of human rights by the SLORC regime in Myanmar, which has been
internationally condemned.  Her delegation disagreed with the EC statement that no new development
had taken place.  She noted that on 17 September 1998, the European Parliament had approved a
resolution which called on the EC to impose economic sanctions that would end all trade, tourism and
investment in Myanmar, and to exert additional pressures on the regime.  The resolution had also
criticised “the Commission decision to insist on a conflict resolution panel within WTO over the lawof the US State of Massachusetts".
Furthermore, recently, the International Federation of Chemical, Energy, Mines and General
Workers’ Unions representing more than 20 million EC workers had called on Sir Leon Brittan to
“sever all trading links with Burma until democracy is restored.”  The Union had also noted that,“global public opinion will see the EC’s pursuance of the Commission’s case in the WTO as implying
EU support for one of the world’s most brutal and corrupt military dictatorships.”  It was unfortunate
that the EC had chosen to ignore the requests of the European Parliament, and one of the largest EC
worker’s unions, and  had continued to pursue this dispute.  Her Government, with the assistance of,
and in consultation with the Massachusetts officials would continue its efforts to reach a mutuallysatisfactory resolution with the EC and Japan without prejudice of the US rights under the WTO
Agreement.  The  United States was prepared to defend this measure before a panel, if established.
The DSB took note of the statements and agreed
 to establish a single panel in accordance with
Article 9 of the DSU with terms of reference pursuant to Article XXII:4 of GPA.
The representative of Japan said that it was his delegation's understanding that although a
single panel had been established Japan wished to reserve its third-party rights with regard to the
complaint raised by the Community.
The representative of the Philippines said that he sought clarification whether Members which
were not parties to the GPA could, if they so wished, participate as third parties in the Panel
proceedings.
The representative of the European Communities said that since this dispute concerned a
Plurilateral Agreement, additional dispute settleme nt rules and procedures of that Agreement would
also be applied in this case.  This meant that only the GPA members could intervene and participate indecision-making on this matter.  He then enum erated the GPA members: EC, US, Japan, Canada,
Switzerland, Norway, Israel, South Korea, Singapor e, the Netherlands on behalf of Aruba and Hong
Kong, China.
The representative of Cuba requested that the Legal Affairs Division  provide an opinion with
regard to the participation of third parties in this dispute.  This was a systemic issue which had an
impact for the Organization.  His delegation believed that this dispute should not only be limited to
the GPA members.
The representative of Colombia said that her delegation did not wish to reserve its third-party
rights with regard to this matter.  However, the question raised by the Philippines was important.  She
was not certain whether all claims contained in the EC's request for the establishment of a panel
related only to the GPA but concerned the GATT as well.  This should be taken into account in
providing the response to the Philippines.WT/DSB/M/49
Page 11
The Chairman drew attention to Article 2.1 of the DSU which read as follows:  "With respect
to disputes arising under a covered agreement which is a Plurilateral Trade Agreement, the term
'Member' as used therein shall refer only to those Members that are parties to the relevant Plurilateral
Trade Agreement.  Where the DSB administers the dispute settlement provisions of a Plurilateral
Trade Agreement, only those Members that are parties to the Agreement may participate in decisionsor actions taken by the DSB with respect to that dispute".
The representative of the Philippines said that her delegation had some reservations with
regard to this interpretation since any decision co ncerning this matter would have an effect on the
DSB members which were not parties to the GPA.
The representative of Cuba said that he also  had reservations concerning the interpretation
provided by the Chairman.  His country had a systemic interest in this matter and wished that this
issue be examined in detail.
The Chairman pointed out that his statement did not contain any interpretation of the DSU but
only recalled the relevant provisions of Article 2.1 of the DSU.
The representative of Mexico said that his delegation had initially intended to reserve its
position on this matter but after the clarification provided by the Chairman this was no longer
necessary.
The representative of Hong Kong, China said that the provisions of Article 2.1 of the DSU
had been clear and therefore no disagreement should arise with regard to their correct interpretation.
He added that Article II:3 of the WTO Agreement was also clear with regard to the rights and
obligations under the GPA.
The representative of Argentina said that this matter had been sufficiently clarified and
therefore it was not necessary to further discuss this.
The DSB took note of the statements.
3. Mexico – Anti-dumping investigation of high-fructose corn syrup (HFCS) from the
United States
(a) Request for the establishment of a panel by the United States (WT/DS132/2)
The Chairman drew attention to the communication from the United States contained in
document WT/DS132/2.
The representative of the United States said that for several months her country had been
engaged with Mexico in an effort to resolve its outstanding concerns about Mexico's anti-dumping
measures pertaining to high-fructose corn syrup (H FCS).  However, no satisfactory solution had been
reached.  As a result, US exporters of this product continued to face unjustified barriers in Mexico.
The United States believed that Mexico's antidumping measures with respect to HFCS wereinconsistent in important respects with its obligations under the Anti-Dumping Agreement and
Article VI of  GATT 1994.  The notice of initiation of an anti-dumping investigation had not provided
adequate information, and the evidence in the application for an anti-dumping investigation had been
insufficient to justify initiation of the investigation.  Mexico’s provisional anti-dumping measures and
its final determination had not met the standards of the Agreement.  US exporters had also beendenied a full opportunity to defend their interests.  Since Mexico had not taken any action to address
US concerns in this area, her delegation requested the establishment of a panel.  The United StatesWT/DSB/M/49
Page 12
remained interested in resolving this issue throug h bilateral negotiations with Mexico and its panel
request would not preclude that result.
The representative of Mexico said that his delegation had noted the US statement.  This
matter, raised in the DSB for the first time, concerned the question of whether Mexico's measures
were compatible with the relevant WTO provisions.  Mexico had previously discussed this matter
with the United States, and did not share the view s contained in the US request for a panel or its
statement made at the present meeting.  He did not wish to enter into a debate on the matter but
wished to limit his statement to the following points:   (i) Mexico was convinced that the anti-dumping
investigation was carried out in accordance with its WTO rights and obligations, and in particular the
Anti-Dumping Agreement;  (ii) Mexico was consider ing the US request for the establishment of a
panel contained in document WT/DS132/2;  and (iii) since the consideration of the matter had not yet
been completed his delegation could not agree to th e establishment of a panel at the present meeting.
The DSB took note of the statements and agreed  to revert to this matter.
4. European Communities – Measures affecting asbestos and products containing asbestos
(a) Request for the establishment of a panel by Canada (WT/DS135/3)
The Chairman drew attention to the communi cation from Canada contained in document
WT/DS135/3.
The representative of Canada said that on 28 May 1998, his country had requested
consultations with the EC regarding the measures taken by France prohibiting asbestos and products
containing asbestos.  This request had been circulated to Members on 3 June 1998.  In the
consultations held on 8 July, Canada had inquired about the reasons to ban asbestos and products
containing asbestos and had attempted to convince the EC that the French ban was unjustifiable.Canada and the EC had agreed to hold a second round of consultations.  However, it had not been
possible to reach an agreement regarding a possible date.  Canada noted with regret that it had not
been possible to arrive at a solution which would ta ke into account its interests.  Furthermore, there
was no indication that further consultations would enable the parties to arrive at a satisfactory
solution.  Therefore, in accordance with the DSU provisions, Canada requested the establishment of a
panel with standard terms of reference in order to examine the French measures.
The representative of the European Communities said that at the end of 1996, France had
banned production, sale, use or import of asbestos and products containing asbestos, with certain
limited exceptions.  It had been scientifically proved that asbestos fibres caused cancer.  In France
some 2,000 people died each year as a result of asbestos-derived cancer.  Available scientific data
had demonstrated that there were safer products that could be substituted for asbestos.  In addition toFrance, seven other EC member States had banned or prohibited asbestos, with certain exceptions.
The French measures were not discriminatory.  In the EC's view the measures were fully justified for
public health reasons and were in full conformity with the WTO provisions.  In the consultations, the
Community had attempted to convince Canada that the measures were perfectly justified.
Unfortunately, Canada had prematurely broken off consultations at a time when the EC was in theprocess of making information available in particular  with regard to the latest scientific data which
could justify the measures.  This was the first time that the DSB considered this request and, at this
stage, the Community was not in a position to agree to the establishment of a panel.
The DSB took note of the statements and agreed
 to revert to this matter.  WT/DSB/M/49
Page 13
5. Slovak Republic – Measure affecting import duty on wheat from Hungary
(a) Request for the establishment of a panel by Hungary (WT/DS143/2)
The Chairman drew attention to the communi cation from Hungary contained in document
WT/DS143/2.
The representative of Hungary said that as of 10 September 1998, wheat originating in
Hungary - HS 1001.1000, 1001.90 - exported to the Slovak Republic was subject to an increased duty
of 2540 Sk/t which had amounted to approx. US$ 70 or 70 per cent ad valorem.  The bound rates for
the above tariff lines had been between 4,4 and 27 per cent.  The increased tariff rates, which had
exceeded the bound rates, had been applied only on Hungarian wheat and were inconsistent with the
Slovak Republic's obligations under Articles I and II of GATT 1994 and Article 4 of the Agreement
on Agriculture.  The measure had amounted to a de facto  import prohibition and had resulted in
severe losses in the most important agricultural sub-sectors of Hungary, which relied heavily on
exports.
On 18 September 1998, Hungary had requested urgent consultations with the Slovak Republic
pursuant to Article 4.8 of the DSU.  These consultations had been held on 28 September 1998 inBudapest.  In the consultations, the Slovak Republic had undertaken to adjust its measure within a
short period of time in order to bring it into compliance with its WTO obligations.  This had been
confirmed by the Slovak representative at the meeting of the Committee on Agriculture.
Subsequently, Hungary had been informed that, in  spite of the official assurances, the Slovak
Government had changed its position and had chosen to maintain its measure.
In its letter of 20 October, the Slovak Republic had informed Hungary that as of
2 November 1998, the measure would be withdraw n.  While Hungary welcomed this decision, it
wished to be certain of this understanding.  Theref ore, he asked the Slovak delegation to confirm that,
as of 2 November 1998, the import duties on Hungarian wheat exports would be only tariff rates at a
level not exceeding the relevant bound rates.  If so, Hungary was ready to withdraw its request for a
panel.
The representative of the Slovak Republic said that her delegation noted the statement made
by Hungary.  She said that in 1998, her authorities had registered a substantial increase of imports of
wheat to the Slovak Republic, in particular from Hung ary as a result of its very good harvest of wheat.
Imports had been in such large quantities and under such conditions that they had constituted a threatof serious injury for domestic producers.  Therefore her authorities had decided to resolve this issue
bilaterally pursuant to the provisions of the Central European Free Trade Agreement (CEFTA).  On
10 September, the Minister of Economy, in his decision No. 9049/1998, had decided to impose
safeguard measures on imports of wheat from Hungary in accordance with  Article 14 of the CEFTA.
On 14 September 1998, Hungary had challenged the consistency of these measures with theprovisions of Article 14 of the CEFTA and had requested that these measures be immediately
withdrawn.  In spite of the willingness of the Slovak authorities to discuss this issue, on
September 18, Hungary had decided to bring this matter to the WTO and had requested urgent
consultations in accordance with Article 4.8 of the DSU.  These consultations had been held on
28 September in Budapest.  The Slovak Republic had promised to modify the measure.  However, theresult of these consultations had been subject to approval by the Slovak Government and subsequently
the matter had been discussed at a meeting on 13 October.  The Minister of Economy had been
instructed to withdraw the measure as of 2 November 1998, in accordance with the domestic legal
procedures.
At the present meeting, she wished to confirm that the measure would be withdrawn on
2 November in accordance with the decision of the Minister of Economy, N o. 1/S/1998 of 15 October
1998.  Consequently as of 2 November, the reasons for Hungary's request to establish a panel wouldWT/DSB/M/49
Page 14
cease to exist.  For the sake of transparency, she drew attention to the fact that the problems which
had led to the adoption of the measure still existed and threatened to cause a serious injury to
domestic producers.  Therefore, the Slovak Republic was carefully considering possible remedies
concerning this situation in accordance with the WTO provisions.
The representative of Hungary said that his delegation noted that the statement made by the
Slovak Republic had not excluded the possibility of maintaining the measure by modifying its legal
basis.  He drew attention to the fact that after the meeting of the Slovak Government on 13 October,
references had been made to a decision to reintroduce the same measure as an erga omnes  safeguard
action for a period of 200 days.  If such an ac tion was taken, Hungary would be concerned about a
retroactive attempt to create the legal justifica tion of the measure in order to avoid or delay its
examination by a panel.  His country was also concerned that the Safeguard Agreement would be usedas a means of providing ex post legitimacy to the arbitrary increase of tariff rates above bound rates.
In addition, the envisaged measure would, inter alia,  be inconsistent with Article 2 of the Safeguard
Agreement.  This Article provided that safeguard measures might be applied only if import quantities
increased in absolute or relative terms to domestic production.  According to available statistics,
neither condition could be met in this case.  Although its legal basis and scope would be altered, themeasure, as outlined in Hungary's request, remained  essentially the same.  Hungary was confident that
a panel would be in a position to adequately address the systemic issues involved in this case.  In the
light of the above, Hungary requested that a panel be established pursuant to Article 4.9 and 6 of the
DSU and Article XXIII:2 of GATT 1994, with standard terms of reference as set out in Article 7 of
the DSU, to examine the compatibility of the measur e with the WTO provisions.  Taking into account
that this measure was inconsistent with the most fundamental WTO-obligations and as a result
farmers and exporters suffered severe economic and trade losses, the seasonal character of the
measure and the serious threat of its recurren ce and proliferation, Hungary wished to invoke
Article 4.9 of the DSU, and expected the panel to accelerate its proceedings to the greatest extent
possible, in accordance with the provisions of that Article.
The representative of the Slovak Republic said that her delegation was not in a position to
agree to the establishment of a panel at the present meeting.
The DSB took note  of the statements and agreed  to revert to this matte r.
6. India – Patent protection for pharmaceutical and agricultural chemical products:
complaint by the European Communities and their member States
(a) Implementation of the recommendations of the DSB
The Chairman said that in accordance with the DSU provisions, the DSB was required to
keep under surveillance the implementation of recommendations and rulings of the DSB in order to
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 ofthe DSU provided that the Member concerned should inform the DSB, within 30 days from the date
of the adoption of the panel or Appellate Body report, of its intentions in respect of implementation of
the recommendations and rulings of the DSB.  He  recalled that on 22 September, the DSB had
adopted the Panel Report on this matter.
The representative of India recalled that at the DSB meeting on 22 September, he had made a
detailed statement concerning his country's views on the Panel Report.  At that meeting, he had stated
that with respect to both Articles 70.8 (a) and 70.9 of the TRIPS Agreement, the difference of opinion
between the EC and India had been based on certain legal niceties.  He had highlighted the fact that
the dispute had not arisen due to any disinclination on the part of India to accept its obligations butdue to the difference of opinion between the tw o parties about the manner of implementing the
obligations under Article 70.8 (a) of the TRIPS Agreement, and the timing of the implementation ofWT/DSB/M/49
Page 15
the obligation under Article 70.9 of the TRIPS Agreement.  The Panel had merely interpreted the
obligations of Articles 70.8 (a) and 70.9 of the TRIPS Agreement in a particular manner.  In
accordance with Article 21.3 of the DSU, India was required to inform the DSB of its intention in
respect of implementation of the DSB's recommendations.  He therefore wished to state that it was
India's intention to meet its WTO obligations with rega rd to this matter.  In order to comply with the
DSB's recommendations, India would require a reason able period of time.  His country would enter
into bilateral consultations with the EC with a view to agree on a period of time for implementation
acceptable to both parties.  His delegation would report to the DSB on the results of these
consultations.
The Chairman said that in accordance with Article 21.3 (b) of the DSU, a period of time
mutually agreed by the parties to the dispute should  be indicated to the DSB within 45 days after the
date of adoption of the recommendations.
The DSB took note of the statements and of the information provided by India regarding  its
intentions to implement the DSB's recommendations .
7. European Communities – Measures affecting the importation of certain poultry
products
(a) Reasonable period of time
The representative of the European Communities, speaking under "Other Business", informed
the DSB that pursuant to Article 21.3 of the DSU, the EC and Brazil had reached a mutual agreement
on a reasonable period of time ending on 31 March 1999 for compliance with the DSB's
recommendations on this matter.  A communication c ontaining this information would be circulated
shortly.
The representative of Brazil said that his delegation wished to confirm the understanding
reached with the EC on the implementation of the DSB's recommendations in this case.
The DSB took note of the statements.
8. Czech Republic – Measure affecting import duty on wheat from Hungary
(a) Statement by Hungary
The representative of Hungary, speaking under "Other Business", said that one of the main
reasons to invoke the urgency provisions of the DSU with regard to the measure imposed by the
Slovak Republic (item 5 of the agenda) was a need to act expeditiously due to a potential threat thatsimilar measures could proliferate.  Unfortun ately, on 9 October 1998, the Czech Republic had
introduced import measures similar to those applied by the Slovak Republic.  At the present meeting,
he did not wish to reiterate the same arguments concerning the legal implications of the measure in
question.  He only wished to inform the DSB that on 13 October, Hungary had requested urgent
consultations with the Czech Republic pursuant to Article 4.8 of the DSU.  These consultations hadbeen held on 20 October in Budapest.  In light of the consultations, Hungary hoped that a mutually
satisfactory solution would be found shortly and that it would no longer be necessary to pursue this
matter in the DSB.
The representative of the Czech Republic said that his delegation had noted the statement
made by Hungary.  On 13 October 1998,  Hungary had requested urgent consultations with regard to aWT/DSB/M/49
Page 16
provisional safeguard measure imposed by the Czech Republic on imports of wheat originating in
Hungary.  He wished to confirm that in its reply to the request made by Hungary, the Czech Republic
had expressed its readiness to enter into consultations and had stressed that in imposing the measure,
the Czech authorities had exercised the right accruing to them from a bilateral agreement which
provided a legal justification for this action.  Furthermore, the Czech authorities had stated that theirreadiness to consult at short notice should not be interpreted as accepting the urgency provisions of
the DSU in this case.  He added that his country did not consider it appropriate to create any linkages
between this particular measure and the measure adopted by another Member.  He had been informed
that the bilateral consultations were underway and he believed that there was a good prospect of
reaching a successful result.
The DSB took note of the statements.
9. Next meeting of the DSB
The Chairman, speaking under "Other Business",  said that the Appellate Body Report on
"United States – Import Prohibition of Certain Shrimp and Shrimp Products" had been circulated on
12 October in document WT/DS58/AB/R.  Pursuant to Article 17.14 of the DSU, "an Appellate Body
report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unlessthe DSB decides by consensus not to adopt the Appe llate Body report within 30 days following its
circulation to Members"  The 30-day period in th is case would expire on 11 November.  Since the
next regular meeting of the DSB was scheduled for 25 November, the DSB would have to hold a
special meeting before the 11 November deadline.  He therefore proposed that the DSB hold its
special meeting on 6 November for the purpose of adoption of the Report.  Another report of theAppellate Body on "Australia – Measures Affectin g the Importation of Salmon" had been circulated
on 20 October in document WT/DS18/AB/R and if  the parties concerned had no objections, this
report could also be adopted by the DSB at its meeting on 6 November.  He recalled that the current
practice was to limit the agendas of special meetings only to those matters which required the
convening of special meetings, without including items that could be taken up at regular DSBmeetings.  This practice had helped to avoid overloading the agendas of special meetings and
disrupting the organization of the DSB's work through inclusion of unexpected items on agendas for
special meetings.  It was hoped that this practice would continue.
The DSB took note of this statement.
__________