RESTRICTEDWORLD TRADE
ORGANIZATIONWT/DSB/M/48
20 October 1998
(98-4073)
Dispute Settlement Body
22 September 1998
MINUTES OF MEETING
Held in the Centre William Rappard
on 22 September 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 periodicals; Status report 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 -Tax treatment fo r "Foreign Sales Corporations".........................................3
(a) Request for the establishment of a panel by the European Communities...................................3
3. United States – Measure affect ing government procurement...............................................4
(a) Request for the establishment of a panel by the European Communities...................................4
(b) Request for the establishm ent of a panel by Japan .....................................................................4
4. European Communities – Regime for the importation, sale and distribution of
bananas ........................................................................................................................ ..............5
(a) Recourse to Article 21.5 of the DSU by Ecuador, Guatemala, Honduras, Mexico and
the United States .............................................................................................................. ...........5
5. India – Patent protection for pharmaceutical and agricultural chemical products .........14
(a) Panel Report................................................................................................................ ..............14
6. Proposed nominations for the indicative list of governmental and non-
governmental panelists ......................................................................................................... ..19
7. United States – Imposition of Anti-Dumping Duties on Imports of Colour
Television Receivers  from Korea...........................................................................................20
(a) Statement by Korea.......................................................................................................... .........20
8. Indonesia – Certain measures affecting the automobile industry ......................................20
(a) Statement by the Eu ropean Comm unities.................................................................................20
9. Review of the DSU ............................................................................................................ ......22
Prior to the adoption of the agenda, the representative of the European Communities thanked
the Chairman for holding consultations in an attempt to resolve certain issues concerning item 4 of theWT/DSB/M/48
Page 2
agenda and inquired whether this item had been included on the agenda for information only.
Depending on the answer he would indicate whether he could accept item 4 to remain on the agenda.
The representative of the United Stated also thanked the Chairman for organizing the consultations
held early in the morning and in the afternoon.  She responded that item 4 was on the agenda for
information purposes only.  The representative of the European Communities welcomed the USresponse and asked whether the United States ha d also spoken on behalf of Ecuador, Guatemala,
Honduras and Mexico.  The representative of the United States confirmed that she had also spoken on
behalf of the above-mentioned countries.
1. Surveillance of implementation of recommendations adopted by the DSB
(a) Canada – Certain measures concerning periodicals; Status report by Canada
(WT/DS31/9/Add.4)
(b) European Communities – Regime for the importation, sale and distribution of bananas: Status
report by the European Communities (WT/DS27/17/Add.1)
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.4 which contained Canada's fifth status report regarding its progress in
the implementation of the DSB's recommendations.
The representative of Canada said that her country was pleased to present its fifth status report
on the implementation of the DSB's recommendations on this matter.  As noted in its report, Canada
would comply with the DSB's recommendations by  the expiry of the reasonable period of time.
Currently, her Government was seeking approval for the Executive Order in Council to repeal theexisting customs tariff code item and its intention was to eliminate this item by 30 October 1998.
Changes to the postal subsidy programme and the harmonization of the domestic and foreign rates
would also be in place by 30 October 1998.  With regard to the elimination of Part V.1 of the Excise
Tax Act, Canada would table a Ways and Means motion containing the legal text revoking the tax
before 30 October.  Because it was not expected that the actual legislation to amend the Excise Tax
Act would be tabled and passed until after 30 October 1998, the Ways and Means motion would
enable Revenue Canada to administer the amendmen t.  Therefore, Part V.1 of the Excise Tax Act
would no longer be enforced after 30 October 1998.
The representative of the United States said that Canada's status report described the changes
to its WTO-inconsistent magazine regime announced on 29 July 1998.  However,  there was an
important omission.  On the date that Canada had announced the plans outlined in the report it hadalso announced its intention to introduce legislati on that contained the same discrimination against
imported magazines.  In describing this proposed legislation, Canadian officials had made it very
clear that their intent was to continue Canada's long-standing policy of banning from its market
competitive foreign-produced magazines  Although the legislation had not yet been introduced in
Parliament it was clear that it would simply carry forward the same discrimination already condemnedby the Panel and the Appellate Body.  Canada's planned legislation raised a question of whether
Members considered that the dispute settlement system was effective in resolving disputes or whether
it only served as a means of prolonging and deepening such disputes.  Canada's plan to replace one
WTO-inconsistent regime with another WTO-inconsistent legislation suggested an answer that was
not expected from one of the major architects of the system.  The United States was particularlyconcerned because this was the first case in which Canada had to respond to the Panel and theWT/DSB/M/48
Page 3
Appellate Body reports and many Members would closely watch the actions taken by Canada.
Therefore, her country urged Canada to change its course of action.  The United States was prepared
to use its legal rights, if necessary.
The DSB took note of the statements and agreed  to revert to this matter at its next regular
meeting.         
The Chairman drew attention to document WT/DS27/17/Add.1 which contained the second
status report by the European Communities on its progress in the implementation of the DSB's
recommendations with regard to its banana import regime.
The representative of the European Communities said that his delegation was pleased to
present its second status report.  At the present meeting, he only wished to underline three new
elements.  First, on 20 July 1998, the EC Council had adopted Council Regulation No. 1637/98 which
had been published on 28 July in the Official Journal of the European Communities.  This Regulation
which had already entered into force would be applicable as of 1 January 1999, the expiry date of the
reasonable period of time.  He noted that that this decision had been taken in good time.  Second, thiswas partial implementation of the DSB's recommendations.  In the next months, another regulation
concerning the detailed rules for the management of the import licensing regime would be adopted by
the EC Commission, and the Council had given an express delegation of powers for that process.
Third, the Communities had been authorized to op en negotiations with substantial suppliers with
regard to the allocation of shares in the EC banana tariff-rate quotas.  These negotiations had alreadybegun and he was not in a position to know whether they had been terminated at this stage and if
agreement had been reached.  This would be known in the next few weeks.  The Communities had
also entered into consultations with the complaining parties and third parties with regard to their
claims concerning the EC banana import regime.
The DSB took note of the statements and agreed
 to revert to this matter at the next regular
meeting.
2. United States -Tax treatment for "Foreign Sales Corporations"
(a) Request for the establishment of a panel by the European Communities (WT/DS108/2)
The Chairman recalled that the DSB had considered this matter at its meeting on 23 July and
had agreed to revert to it.  He drew attention to the communication from the European Communities
contained in document WT/DS108/2.
The representative of the European Communities said that at the DSB meeting on 23 July, his
delegation had made a lengthy statement concerning this issue.  He therefore did not wish to reiterate
the points made at that meeting.  In the EC's view,  the tax system at issue was an export instrument
designed to assist the US exports.  The US admini strative pricing rules did not bear any relationship to
real economic processes which took place outside of the United States.  In practice, as a result of this
taxation system, the profits of US parent companies were exempted from taxes and this constituted
export subsidies.  In accordance with the US statistics, the FSC scheme was of considerable valueand, in the Communities' view, constituted a violation which had detrimental effects on the US
trading partners.  He therefore requested that a panel be established to make findings with regard to
the compatibility of this legislation with the WTO obligations of the United States.
The representative of the United States said that since a panel would be established at the
present meeting to examine the FSC provisions of the US Internal Revenue Code, she did not wish to
reiterate all the points made at the DSB meeting on 23 July.  She only wished to state that the EC'sWT/DSB/M/48
Page 4
reinstitution of a matter considered by the United States as resolved was a legally unwarranted and
commercially unjustified action which would not prove helpful to the multilateral trading system or to
the US bilateral relationship with the EC and its member States.  The United States was confident to
prevail on the merits of this case and would state its arguments before the panel.
The DSB took note of the statements and agreed  to establish a panel in accordance with the
provisions of Article 6 of the DSU with standard terms of reference.
The representative of Canada reserved the th ird-party rights to participate in the Panel
proceedings1.
   
3. 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 sub-items be considered together.  First, he drew attention to
the communication from the European Communities contained in document WT/DS88/3.
The representative of the European Communities drew attention to document WT/DS88/3
describing the law adopted by the Commonwealth of Massachusetts on 25 June 1996, which the
Community had requested to be examined by a panel.  He recalled that in January 1997, the
Community had sent a letter to the US State Department containing its view that this law wasincompatible with a number of provisions of the Agreement on Government Procurement (GPA).
Since then, the Community had received repeated assurances from the US Administration that it was
working with the State of Massachusetts to address the EC's concerns.  He acknowledged and
appreciated the efforts made by the US Administration in this respect.  However, this law was still in
place in its original form and there was no indication that it would be modified.  In June 1997, theCommunity had requested consultations with the Unite d States with regard to this matter.  Three
rounds of consultations had been held in 1997 and 1998.  Although these consultations had enabled
the parties to have a better understanding of their positions it had not been possible to find a mutually
acceptable solution.  The Community's concerns related to the GPA were contained in its request for
the establishment of a panel.  The main point was that companies  wishing to supply goods or services
to the State of Massachusetts were penalized if they were doing business in Myanmar.  The
Community believed that if this law was allowed to stand it would undermine one of the fundamentalprinciples of the GPA, namely that political considerations should not be part of decision-making with
regard to awarding procurement contracts.  In certain limited circumstances, the GPA allowed for
agreed exceptions to this principle.  For example, under the provisions applicable to developing-
country Members or if derogations had been mutually agreed.  However, this law could not fall under
any of the exceptions permitted under the GPA.  The Community could not allow for any precedent tobe created for other law-making authorities which had agreed to abide by the GPA rules.  It therefore
requested that a panel be established to examine the compatibility of this law with the US obligations
under the GPA.  He stressed that this was not intended to mean that the Community approved the
practices of Myanmar, but to underline the need for Members to respect their international
obligations.
The Chairman drew attention to the communication from Japan contained in document
WT/DS95/3.
                                                     
1 After the meeting, Barbados and Japan reserved their third-party rights to participate in the Panel
proceedings.WT/DSB/M/48
Page 5
The representative of Japan said that his Government requested the establishment of a panel
to examine the Act regulating state contracts with  companies doing business with or in Myanmar
enacted by the Commonwealth of Massachusetts on 25 June 1996.  Under the Act, the public
authorities of the Commonwealth of Massachusetts were, in principle, not allowed to procure goods
or services from the person, whether US or foreign listed in the restricted purchase list as doing
business with or in Myanmar.  In particular, the Executive Offices of Massachusetts offered by the
United States under the GPA were not allowed to award a contract to such persons if there was a
comparable law bid or offer by a person not on the list.  Japan considered that the measure in question
was inconsistent with the US obligations under the GPA.  Consultations held on 22 July, 2 October
and 17 December 1997 by Japan and the United States had unfortunately failed to settle the dispute on
this matter.  Furthermore, the 1998 session of the Senate and the House of Representatives of theCommonwealth of Massachusetts had been terminat ed in July without any amendment to the Act.
Therefore, Japan requested that a panel be established at the present meeting pursuant to Article 4.7
and 6 of the DSU, Article XXII of the GPA, with st andard terms of reference provided for in Article
XXII:4 of the GPA.
The representative of the United States said that her country regretted and was disappointed
that the Community and Japan had requested the establishment of a panel given the strong interest of
all three parties in improving the human rights s ituation in Myanmar.  The United States remained
concerned about the extensive abuses of human rights  by the regime in Myanmar, which had been
internationally condemned.  Her country with the assistance and in consultations with theMassachusetts officials, would continue its efforts to reach a mutually agreed solution with the
Community and Japan without prejudice to its WTO rights.  Therefore, the United States was not in a
position to agree to the establishment of a panel at the present meeting.  If a panel were to be
established to examine this matter the United States would defend the measure.
The representative of Japan said that it was necessary to make a distinction between the
human rights issues and trade.  This was similar to the distinction between labour standards and trade
as discussed in the First Ministerial Conference.  With regard to the question of human  rights, Japan
had worked closely with Myanmar for many years both bilaterally and through the Human Rights
Commission in Geneva.  He underlined that Japan did not wish to indicate that the human-rights
record in Myanmar was perfect.  On the contrary, improvements were required in this area but this did
not justify an imposition of trade measures by any government.
The DSB took note of the statements and agreed  to revert to this matter.
4. European Communities – Regime for the importation, sale and distribution of bananas
(a) Recourse to Article 21.5 of the DSU by Ecuador, Guatemala, Honduras, Mexico and the
United States (WT/DS27/21)
The Chairman said that the item was on the agenda of the present meeting at the request of
Ecuador, Guatemala, Honduras, Mexico and the United States.
The representative of the United States, speaking also on behalf of Ecuador, Guatemala,
Honduras, Mexico and Panama, expressed concerns a bout the EC's failure to comply with the DSB's
recommendations, its disregard for the importance placed in the DSU on prompt implementation of
the DSB's recommendations, as well as the serious consequences of its tactics for the dispute
settlement system.  Therefore, the complaining parties believed it necessary to have recourse toArticle 21.5 of the DSU for the DSB to consider this issue at the present meeting.  Unfortunately, the
Community had refused that the original panel examine the consistency of the EC's revised measuresWT/DSB/M/48
Page 6
with the DSB's recommendations.  Since this matter was placed on the agenda, the complaining
parties had entered into consultations at the insistence of the Community without prejudice to their
continued view that such consultations were not required as a prerequisite to reconvening the panel
pursuant to Article 21.5 of the DSU.  The consultations had confirmed that the Community and the
complaining parties could not agree on the WTO-consistency of the measures taken by the EC tocomply with the DSB's recommendations by 1 January 1999, which was the only threshold issue
under Article 21.5 of the DSU.  Therefore, they believed that the DSB should take action to permit
their recourse pursuant to Article 21.5 of the DSU to reconvene the same panel if the same panellists
would be in a position to serve on it.  She did not wish to reiterate the specific concerns of the
complaining parties raised in the DSB about the WTO-inconsistency of the measures taken by the EC
Council in June and July 1998 with respect to the EC's banana regime.  She regretted that these
concerns had not been taken into account by the Community.  Despite repeated efforts by thecomplaining parties to engage in serious discussions concerning WTO-consistent solutions, the
Community had taken a unilateral approach.  First, it had fixed its position through its own internal
procedures and then it had refused to consider any proposal for substantive changes despite the fact
that these measures constituted a breach of its WTO obligations.     
It was obvious from a comparison between the EC's new measures and the DSB's
recommendations that these measures breached the WTO provisions: (i) the EC's market allocation in
particular for the ACP countries and Latin American countries was almost the same, and as legally
flawed, as the one that both the Panel and the Appellate Body had found to be inconsistent with
Article XIII of GATT 1994; (ii) the EC's new criteria for distributing import licenses appeared only toperpetuate the discrimination that the Panel and the Appellate Body had found to be inconsistent with
the GATS.  The complaining parties disagreed th at these so-called "new" measures were WTO-
consistent as claimed by the Community.
The DSU provisions permitted the complaining pa rties to request that the original panel be
reconvened in case of a disagreement on whether the EC's new measures complied with the
recommendations of the Panel and the Appellate Body.  There was no doubt with regard to the
existence of such a disagreement between the Comm unity and the complaining parties.  In the past
three months, the complaining parties had attempted to work with the Community in order to be able
to invoke the DSU procedures with a view to reconvening the original panel to resolve the
disagreement over implementation of the DSB's recommendations.  They had tried to ensure that this
recourse was timely and expeditious in order to enable the Community to change its course of actionand to comply with its WTO obligations by the end of the reasonable period of time on 1 January
1999.  These efforts, however, had been frustrated by the invocation of procedural roadblocks by the
EC to avoid a rapid recourse to the original panel.
In the consultations held on 17 September, the Community had asked  numerous repetitive
questions which had already been answered in the numerous and detailed statements made at past
DSB meetings.  She recalled that the EC had suggested  in the past that these statements should not be
permitted to be made in the DSB.  In the consulta tions, the EC representative had suggested that there
was no disagreement but only some confusion over the WTO-consistency of the EC's measures.  The
Community had declined to clarify its intentions concerning recourse to Article 21.5 of the DSU.  Bythe end of the consultations it had become obvious that there was a clear disagreement between the
EC and the complaining parties with regard to the consistency of the revised banana measures with
the DSB's recommendations.  The complaining parties had made it clear that there was no basis for
any further consultations and had no plans to hold further consultations.
In the view of the complaining parties, if the Community believed that its measures were
WTO-consistent it should welcome the opportunity to quickly prove this to the panel.  If these
measures were WTO-consistent a prompt decisi on by the panel would be beneficial.  The EC's
insistence on consultations only delayed the process.  This delay would only prolong the disputeWT/DSB/M/48
Page 7
beyond the reasonable period of time established by the arbitrator.  These delaying tactics, if tolerated,
would have serious consequences for the DSU and the multilateral trading system.  This system could
not operate solely on the good faith of some Members, while others used what they  perceived as
carte blanche  for obfuscation and attempts to delay resolution of the dispute.  The DSU provisions
had to be read in conjunction with the DSU's objectives and no single provision of the DSU such asArticle 21.5 could be read so as to render other DSU provisions inoperative.  The EC's concept of the
DSU procedures could find trade complaints tied up in WTO procedures for years, even after a
measure had been determined to be inconsistent with the WTO Agreement.  The Community as a
complaining party in numerous ongoing disputes in  the WTO could not accept the procedural position
that it was now advocating as a defending party.  She said that justice delayed was justice denied and
believed Members could not be expected to rely on such instruments to settle multilateral trade
disputes.  As already indicated, the complaining parties had requested the EC to agree to thereinstitution of the original panel to resolve the dispute.  But the EC had refused to do so.  She
regretted that the EC had objected to the prompt submission of this disagreement to the original panel
under Article 21.5 of the DSU.  She reminded the DSB members, and in particular the EC, that
Article 21.1 of the DSU stated that prompt compli ance with the DSB's recommendations and rulings
was essential in order to ensure effective resolution of disputes to the benefit of all Members.
The representative of the European Communities said that it was not his intention to respond
to all the points made at the present meeting.  However, he contested the implication that only some
of the parties had acted in good faith.  He believed that no Member had the right to state that it had
acted in good faith and that other Members had not.  Statements made in the DSB by the complainingparties, which the Community had regularly contested, were only statements, not established facts.
He recalled that the first statement on this issue had been made in January 1998 after the EC had made
its proposal before any decision had been taken.  Since then, the complaining parties had continued to
make the same statements in the DSB.  The complaining parties had stressed the need for prompt
implementation pursuant to Article 21 of the DSU and that "justice delayed was justice denied".  Inthis context, he wished to recall that the reasonable period of time had not yet expired and the
Community had stated that it would need this time due to its complicated legislative process.  The
Community was on schedule and if it had chosen, like some Members, to reveal its intentions only
before the deadline, it would not have been criticiz ed by the complaining parties.  In his view, prompt
implementation was a matter of interpretation and the Community believed that it was within the
reasonable period of time for implementation of th e DSB's recommendations.  Although a lot of work
was still required, the Community would promulgate its regulation in good time not only to meet itsDSU requirements but also for the reasonable conduct of trade and transparency.           
With regard to the recent consultations concerning implementation, he said that at the end of
July the parties to the dispute had sent a letter to the Community containing their request to reconvene
the original panel.  This request had appeared to be rather unusual since the Community'sinterpretation of Article 21.5 of the DSU was that the DSB should reconvene the original panel, not
the Community.  This had led to several discussions on the interpretation of Article 21.5 of the DSU.
There was no agreement on this matter.  The Community believed that the dispute which fell under
Article 21.5 of the DSU should be resolved in accordance with the normal dispute settlement
procedures except as otherwise provided in this Article.  This was provided by the wording of Article21.5 of the DSU which read as follows: "… such dispute shall be decided through recourse to these
dispute settlement procedures."  In the Community's view this meant that the ordinary dispute
settlement  procedures would apply with the additi on of two specific elements, namely resort to the
original panel, if possible, and the requirement that the panel circulate its report within 90 days.  The
normal dispute settlement procedures implied the need to hold consultations and the Community hadinsisted on this point.  The parties to the dispute had wished third parties to participate in these
consultations which the Community had accepted.  However since third parties had to be informed
that consultations would be held, these consultations could not have been held at short notice.  He
noted that these were not delaying tactics but a simple application of the DSU procedures.  It wasWT/DSB/M/48
Page 8
clear that there was a disagreement on this issue.  However, the Community had only defended its
position during the process and was pleased that this position had been accepted by the parties to the
dispute.  In light of this, the Community had been surprised by a letter, dated 8 September, which in
its title referred to recourse to Article 21.5 of the DSU.  However, the content of this letter was not
clear.  The letter had requested that the matter be included on the DSB's agenda and  a series of pointshad been made.  By placing this matter on the agenda, the complaining parties wished to preserve
their procedural rights.  However, it was not clear whether this letter constituted a request for a panel.
Therefore, at the outset of this meeting, he had asked some questions in order to clarify this issue.
The Community believed that since the normal procedures would have to be followed, these
consultations had not yet been concluded and therefore it was inappropriate to request a panel at the
present meeting.  The Community was neither short of time nor was utilising delaying tactics.
Furthermore,  the parties to the dispute had complained about one element of the EC's regime onwhich a decision had not yet been taken.  The procedures required that measures that had been taken
to comply with the DSB's recommendations would be  referred to the original panel.  The Community
was therefore not in a position to accept this point since no measures had yet been taken.  Although
this issue had also been subject to consultations, the Community could not accept the position of the
complaining parties  since legally the measures had not yet been taken and there was  no decision  onthe import licensing regime.  There was some ambiguity concerning the request made by the
complaining parties and a disagreement on the interpretation of Article 21.5 of the DSU.  A decision
on its import licensing regime was in process in the EC and by the time of the next DSB meeting, if a
panel request was made, the Community would make its response.  The Community had no objections
with regard to the idea of referring this matter to the original panel provided that the same members of
the panel were available and were confident to work  speedily to make their decision before the end of
the year.       
The representative of Colombia said that her co untry, as a third party to this dispute, had a
continued interest in this matter which was a test case for the DSU provisions.  Colombia expected
that at its next meeting, the DSB would consider a request to reconvene the original panel to examine
the EC Regulation No.1637/98.  In accordance with Article 21.5 of the DSU the panel would have to
circulate its report within 90 days after the date the matter was referred to it.  Her country was
concerned that at present there were no procedures for the 90-day period stipulated in Article 21.5 of
the DSU.  She noted that the working procedures of the DSU Appendix 3 had been designed for the
six-month period.  In view of the complexity of this case there was a need for clear procedures.
Therefore, it would probably be realistic to envisage new procedures similar to those of the AppellateBody.  She  proposed that the DSB Chairman hold consultations in order to clarify the procedures
with a view to meeting two objectives: (i)  to be able to comply with the 90-day period; and (ii) to
ensure that the rights of third parties were respected.  In accordance with Article 12 of the DSU a
panel had discretion to decide on its procedures.  However, due to the fact that this subject was new
and that a large number of third parties was involved in this dispute and since not much time was left,such consultations would provide important input for the panel without prejudice to its rights under
Article 12.1 of the DSU.
The representative of Cuba said that he wished to state his country's position on this matter
which had been made public in August 1998 by the Head of State during his visit to the Caribbean
nations.  He wished to address the issue of substance and not procedure.  Cuba considered that the EC
regulations on imports, sale and distribution of bananas should take into account the fragile and
critical economic situation of the Caribbean nations which were highly dependent on banana exports
to the Community.  Such exports accounted for more  than 60 per cent of the total income of these
countries, and therefore the EC market was vital to the subsistence of the small Caribbean producersand to their national survival.  Cuba considered th at the current preferential tariffs and tariff-rate
quotas granted by the EC to the ACP countries should be respected.  The withdrawal of such
preferences would have negative consequences and would not ensure fair treatment to those countries.WT/DSB/M/48
Page 9
The representative of Saint Lucia believed that legal arguments and procedural questions
should not overshadow the fact that real trade and economic issues were at stake in this dispute.  The
regulations currently proposed by the EC were in line with the Lomé Convention.  His delegation
hoped that rather than dealing with procedural issues, consultations would be held in good faith to
enable the parties to seek a genuine solution to this dispute.  Such consultations would also help toavoid the prolongation of this dispute which thus far had caused considerable uncertainty in the
countries concerned and had undermined confidence in their fragile economies.  He believed that it
was still possible to negotiate and understand their positions and interests.  To-date, the ACP countries
had not been in a position to understand the intentions of the complaining parties.  On the one hand
the complaining parties had stated that they respected the Lomé Convention and that the ACP
countries should keep their shares in the EC market.  On the other hand their strategy seemed to be
aimed at the elimination of the ACP countries from  the EC market.  The EC banana market was the
largest and most lucrative in the world.  However, this market was only profitable because it was
regulated.  It would not be in the interest of any party if new measures resulted in oversupply and the
collapse of prices thereby rendering the impoverishment of many countries.
The representative of Jamaica said that her delegation had noted the procedural arguments
outlined by both the EC and the complaining parties.  Her delegation appreciated that this item had
been placed on the agenda for information purposes only.  Jamaica, as a banana producer and
exporter, shared the concerns expressed by Cuba and Saint Lucia.  Her country had participated as a
third party in the banana dispute both under the GATT and the WTO dispute settlement system.
Jamaica wished to retain its rights as a third party as provided for in the DSU and to ensure that these
rights were not eroded if the original panel was reconvened.  Jamaica supported Colombia's proposal
and urged that the Chairman guide any consultations  towards drawing up the terms of reference of the
reconvened panel taking into account its particular concerns.  In light of the implications of a
disagreement on the interpretation of Article 21.5 of the DSU it might be necessary to clarify the
procedures of Article 21.5 of the DSU.
The representative of Brazil said that at the DSB meeting on 23 July, his delegation had
expressed Brazil's interest in discussions relating to the allocation of quotas as a result of the DSB's
recommendations.  Subsequently, Brazil had been informed that the Community would consult with
interested parties on implementation of the DSB's recommendations.  It had therefore requested to be
joined in these consultations.  During the consultations, held on 17 September, Brazil had clearly
stated its position.  At the present meeting, he wished to reiterate for the benefit of those Membersthat had not participated in the consultations that, at this stage, Brazil only wished to take part in and
be informed of discussions with regard to the allocation of quotas.  Although the discussion on Article
21.5 of the DSU was important, Brazil did not have any position regarding the procedural issues
involved in this case.                  
The representative of Argentina said that since this item had been included on the agenda for
information purposes, he only wished to draw attention to three systemic points.  Argentina was
concerned about the timing of the request for reconvening the panel pursuant to Article 21.5 of the
DSU before the expiry of the reasonable period of time for implementation of the DSB's
recommendations.  Argentina believed that it was not appropriate to request that the original panel bereconvened before the expiry of the reasonable period.  The publication or entry into force of a
measure, per se,  without being actually implemented should not automatically cancel the rights with
respect to the reasonable period of time.  Once the measure was implemented there would be no need
to wait for the expiry of the reasonable period before invoking Article 21.5 of the DSU.  A similar
approach could also be taken in cases in which a respondent would recognize that it would not bepossible to modify a measure aimed at implementing the DSB's recommendations.
With regard to the procedural nature of recourse to Article 21.5 of the DSU, his delegation
did not know whether the provisions of Articl e 21.5 constituted new, accelerated or specialWT/DSB/M/48
Page 10
procedures and whether they had to comply with th e procedural stages provided for in the DSU.  In
other words, whether it was necessary to hold prior consultations.  Argentina believed that the
wording of Article 21.5 in connection with implementation "…through recourse to these dispute
settlement procedures",  did not mean that this was not a case of special procedures as the accelerated
time-limit contained therein would indicate.  This clause should be analysed in a broader context ofthe DSU and since this matter had been discussed at length in the course of the previous proceedings
there was no need to hold consultations.  It would not be reasonable that a process which had to be
completed within a 90-day period should be preceded by a 60-day consultation period which would be
fruitless since the parties had been unable to reach agreement during the implementation period.
With regard to the procedures for the reconven ing of the original panel, there was a need to
consider from the systemic point of view the modality  for reconvening of the original panel.  In other
words,  such questions as the inclusion of this matter on the DSB's agenda, the timing of such an
inclusion and the role of the DSB thereon.  This issue should be approached from the premise that the
procedures initiated as a result of  recourse to Article 21.5 of the DSU should focus on the objective
of settling the "disagreement as to the existence or consistency with a covered agreement of measures
taken to comply with the recommendations and rulings".  The aim should not be to start newproceedings or another appeal procedure, nor to establish a forum that would indirectly enable a
resumption of discussions on the content of the Panel reports modified by the Appellate Body.  The
reconvening of the original panel should be strictly  confined to determining the existence of measures
aimed at implementing the DSB's recommendations and, if necessary, an evaluation of the
consistency of such measures with the WTO Agreement.
The representative of Costa Rica said that his country had a substantial trade interest in this
matter.  For that reason, his delegation had participated as a third party in the banana dispute.  Costa
Rica shared the concerns expressed by Colombia, in particular the need to ensure that the rights of
third parties were recognized in the procedures to be initiated shortly.  His country wished to
participate in this process and to be able to contri bute towards the efforts made thus  far in clarifying
the provisions of  Article 21.5 of the DSU.
The representative of Japan said that although his country was not a party to this dispute it
had an interest in systemic implications.  In his view, three key-issues were involved in this matter.
One was prompt compliance with the DSB's recommendations in accordance with Article 21.1 of the
DSU.  The second issue was full implementation of the DSB' recommendations within the reasonableperiod of time.  As long as the Community assured that the DSB's recommendations would be fully
implemented within 15 months, it was premature to state that it was not fully implementing.
However,  Japan was concerned about  the EC's interpretation of Article 21.5 of the DSU, namely that
in this case normal dispute settlement procedures  would apply with the two additional elements:
possible referral to the original panel and the 90-day period for the circulation of the panel report.  Hewas not in a position to know whether this interpreta tion was correct.  He noted that if normal dispute
settlement procedures were to apply in this case, including the 60-day consultation period which had
begun on 18 August 1998, then this period had not yet expired.  The Communities had stated that not
all the measures had yet been implemented.  He was concerned that at this stage it was not known
when these measures would be implemented.  He questioned  that if this information would onlybecome available at the last moment and if the co mplaining parties would not be satisfied with the
outcome then implementation could not be completed within the reasonable period of time.  In order
to implement the DSB's recommendations, it was necessary to go through domestic legislative
procedures which was a long process and to consult with other parties to the dispute on how to
implement these recommendations.  In light of this, some concerns expressed by the complainingparties at the present meeting  were justified.WT/DSB/M/48
Page 11
The representative of Côte d'Ivoire supported the statements made by Saint Lucia, Jamaica,
Cuba, Costa Rica and Colombia and wished to reserve his country's rights, including its third-party
rights, with regard to this matter.
The representative of Venezuela wished to indicate his country's interest as a third party and
supported the proposal made by Colombia.  His delegations had some doubts with regard to the
interpretations of this Article since these procedures had been invoked for the first time.  He drew
attention to the word "existence" contained in the first sentence of Article 21.5 of the DSU which in
his view did not have any legal value.  This word referred to the existence of a measure and its
implementation.  References had also been made in this Article to recommendations.  The wording
stipulated the obligations of the parties with regard to implementation.  In accordance with Article
21.5 of the DSU,  the process should not lead to a new panel but constituted an interpretative recourse
aimed at examining the consistency of a measure that had been implemented pursuant to the DSB's
recommendations.  The Community had stated that certain measures had not yet been implemented.
The procedures referred to in Article 21.5 of the DSU could mean both the DSU and the Appellate
Body procedures.  He considered that this matter required further examination.  His delegation
supported Colombia's proposal that the Chairman hold consultations.
The representative of Australia said that since this item was on the agenda for information
purposes she wished to make comments on some of the issues raised on interpretation of Article 21.5
of the DSU.  Like other members, Australia considered that Article 21.5 of the DSU did not provide
clarity on the subject.  First, there was a need for prior consultations, or alternative of good offices,conciliation or mediation under Article 5.3 of the DSU.   The text of Article 21.5 of the DSU refered to
"these dispute settlement procedures" but there was no thing in the text to suggest that the procedures
were limited to the panel stage.  Article 21.5 should also be read in conjunction with other relevant
provisions of the DSU, including the Article 5.3 opt ion, together with Articles 6.1 and 7 of the DSU.
It was important for the measures and other relevant issues to be fully clarified before embarking on apanel.  As emphasized by the Appellate Body, consultations were also the key to the terms of
reference of the panel.  Clarification with regard to specific measures and specific legal issues before
embarking on a panel could also serve to expedite the completion of the panel's report.
Second, the right of recourse to the Appellate Body by the complainant and respondent should
be kept in mind.  Article 21.5 had to be read in conjunction with Article 17.1 of the DSU which
concerned panel reports.  A panel examining implementing measures would in all likelihood beaddressing substantially different legal issues.  It would be inequitable to deny rights of appeal which
were available to both complainants and respondents.
Finally, if the implementing measure was already in place there would be no reason to await
the end of the implementation period before invoking the DSU procedures.  If a measure was not inplace, Article 21.5 would not be applied in accordance with the textual reference which stated
"measures taken to comply with the recommendations".   As a general point, recourse to Article 21.5
procedures before the end of the implementation period could be adverse to the transparency
objectives of Article 21 of the DSU.  Losing parties could then be dissuaded from providing precision
to their implementation programme until close to the end of a 15-month period.  This would not beparticularly helpful to exporters wishing to have adequate notice of measures.  Deferral of invoking
Article 21.5 action until the end of the implementation period could provide scope for rolling over
implementation at 15 month intervals.  It was noted that the complaining parties would retain the right
to make a case for a shorter arbitrated time-period as provided by the last sentence of Article 21.3(c)
of the DSU.
The representative of the Dominican Republic thanked the Chairman for holding
consultations on this matter and supported the points made by Saint Lucia, Costa Rica, Cuba and
Jamaica with regard to the interest of the ACP countries in the EC's market.  The Dominican RepublicWT/DSB/M/48
Page 12
wished to maintain its third-party rights and theref ore wished to be fully associated with Colombia's
proposal that the Chairman hold consultations to ensure the participation of third parties.
The representative of Nicaragua  said that his delegation supported the statements made by
Colombia, Costa Rica and Venezuela and wished to retain its third-party rights with regard to this
matter.
The representative of Ecuador asked the DSB members to conceive this issue as if it were any
other panel which had examined goods and services not related to bananas, and in this panel a party
had won the case.  As a result, a responding party had been granted a reasonable period of time to
modify and bring its legislation examined by the panel into line with the DSB's recommendations.
During this period of time, a responding party would be obliged to pass new legislation in order tocomply the DSB's recommendations.  Suppose that these new measures would produce adverse
effects for the party that had won the case. He believed that these situations were covered by Article
21.5 of the DSU.  Article 21 of the DSU referred to prompt compliance which entailed more than just
procedures.
His delegation had noted that the Community had stated that it would implement its measures
before the expiry of  the reasonable period of time.  This demonstrated that the complaining parties
were right when they had argued that the EC did not need 15 months to bring its banana regime into
conformity with its WTO obligations.  He recalled that in the arbitration process, the complainants
had asked that the Community be given a shorter period than 15 months.  Ecuador believed thatdeveloping countries had the right to request compliance as provided for in Article 4.2 of the DSU
and in accordance with this spirit, the Community was not doing enough to meet its obligations.  With
regard to the proposal made by Colombia, his delegation considered that it was not appropriate at this
stage to take a decision on whether such consultations should be carried out or not.  This could be
decided at a later stage and should not stand in the way of rightful expectations of those countries thathad won the case.  Ecuador did not agree to holding such consultations at this stage.
 He drew attention to the fact that the Community had not mentioned that the complaining
parties had received a proposal in order to be able to resolve the procedural differences with regard to
the interpretation of Article 21.5 of the DSU.  This proposal contained certain elements which had not
been acceptable to the complaining parties because they involved delaying procedures which  were
not acceptable to the complaining parties.
The representative of the United States said that with regard to the proposal made by
Colombia, her delegation believed that it would not be appropriate to hold such consultations.  It was
up to the panel when reconvened to determine its wo rking procedures.  Therefore, in the view of the
United States there were no basis for the Chairman to hold such consultations which in any casewould be premature in light of the fact that a panel had not yet been requested.
The representative of the European Communities said that the discussion at the present
meeting demonstrated that there was a problem of interpretation of Article 21.5 of the DSU.  There
were two different interpretations of this Article and at this stage both of them were valid.  It was notup to the DSB to interpret the DSU provisions since this was the responsibility of the General
Council.  The responsibility of the DSB was to apply these provisions.  At present there were different
views and a large number of countries had interests in this dispute.  These were the largest
consultations that had ever been held, since more than 30 parties were involved.  The third parties to
this dispute had legitimate rights and for that reason the Community had not been able to agree to thefirst proposed date for consultations by the complaining parties in order to be able to respect the
legitimate rights of third parties.  The DSU procedures were aimed at protecting the rights of all
parties.  His delegation noted with interest the proposal made by Colombia  and considered that this
proposal should be taken into account.  He hoped that it would be possible to revert to this issue in theWT/DSB/M/48
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future so that the Community would be able to st ate its position.  With regard to the comment made
by Japan, he recalled that the Community had been granted a reasonable period of time until
1 January 1999.  Since January 1998, the Community had been criticised by the complaining parties
and, at the present meeting, Ecuador had stated that the complaining parties believed that the 15-
month period was not necessary and that the Community could have implemented within a shorterperiod of time.  It was not appropriate to sanction the parties that wished to ensure full transparency
and to hold consultations with all the parties in orde r to preserve their legal rights by invoking the
procedures of Article 21.5 of the DSU which wo uld shorten the reasonable period of time for
implementation. Consultations had failed because the complaining parties had asked the Community
to apply its measures before the end of October.  He believed that the intention of the complaining
parties was to question the reasonable period of time established by the arbitrator.
The representative of Honduras said that her delegation wished to support Ecuador and the
United States with regard to their statements concerning the proposal made by Colombia.
The representative of the Philippines said that he wished to address systemic issues regarding
this case.  The question was whether a specific measure was in conformity with the  DSB's
recommendations.  He drew attention to Article 19  of the DSU which provided that where a panel
concluded that a measure was inconsistent with a covered agreement it should recommend to bring
such a measure into conformity with the WTO Agr eement.  If a panel concluded that a measure was
in conformity with the WTO Agreement such a  dispute would be terminated.  However, if a panel
concluded that a measure was not in conformity the process of bringing a measure into conformitywould need to start again.  His delegation had some doubts whether at the second stage a panel could
go beyond recommending that a measure be brought into conformity.  The Philippines was concerned
that this could lead to a repetitious cycle of bringing a measure into conformity without ever resolving
a dispute.  From a systemic point of view, in order to be able to resolve a matter promptly, the parties
might consider to resort to arbitration procedures under Article 25 of the DSU.  It could be argued thatthe arbitration process was not confined to simply recommending that a measure should be brought
into conformity and could provide rulings which would be binding by both parties thereby terminating
the process.
The representative of Guatemala said that with regard to the interpretation of Article 21.5 of
the DSU, Guatemala supported the statements made by Ecuador, the United States and Honduras.
The representative of Colombia said that delegations had stated that prompt compliance of the
DSB's recommendations was important.  Colombia had made its proposal with a view to clarifying
the issue for all the parties involved.  She believed that the complaining parties had a strong interest
in prompt compliance.  It was unusual that these important questions which the parties had been faced
with since August had not been resolved and at this  stage the parties to the dispute did not know what
procedures to apply.  For example, whether to ente r into consultations, how to make recourse to the
original panel or how to determine its terms of reference.  When a panel would be reconvened then
the question of procedures would become urgent.  This panel would have to circulate its report within
90 days and since the working procedures of the DSU appendix 3 would not be helpful, the panel
would first have to deal with procedural issues.  She was concerned that instead of proposals made in
an objective and constructive manner there was a great amount of misinterpretation.  It was therefore
important to clarify procedures for the panel.  She recognized that there was no consensus with regard
to the proposal made by Colombia and hoped that the parties would not devote too much time to
determine the procedures if a panel was established.WT/DSB/M/48
Page 14
The Chairman said that the discussion at the present meeting was useful.  It had shown that a
large number of countries had an interest in this issue and enabled delegations to have an important
exchange of views which could be followed up in another context.  He believed that this matter
required further consideration but at this stage he would not take any action thereon.
The DSB took note of the statements.
5. India – Patent protection for pharmaceutical and agricultural chemical products
(a) Panel Report (WT/DS79/R)
The Chairman recalled that at its meeting on 16 October 1997, the DSB had agreed to
establish a panel to examine the complaint by the European Communities.  The Report of the Panel
contained in document WT/DS79/R had been circulated on 24 August 1998, and was now before the
DSB for adoption at the request of the Community.  In accordance with Article 16.4 of the DSU, this
adoption procedure was without prejudice to the right of Members to express their views on the Panel
Report.
The representative of the European Communities thanked the panel for its work.  He recalled
that the EC and its member States had requested the establishment of a panel to examine this matter
since India had neither provided for the possibility to grant patent protection for pharmaceutical and
agricultural chemical products, nor a system to file patent applications for such inventions in
accordance with Article 70.8 of the TRIPS Agreement.  Furthermore, there was no system wherebyexclusive marketing rights would be granted to those parties which had filed applications under the
mailbox provisions in accordance with Article 70.9 of the TRIPS Agreement.  The Panel's conclusion
that India was in violation of the TRIPS Agreement with respect to both issues confirmed the views of
the EC and its member States.  In light of this, he requested that the DSB adopt the Panel Report at the
present meeting.
The representative of India said that before tu rning to the substance concerning this issue, he
wished to make a comment with regard to the in clusion of this item on the agenda of the present
meeting.  His delegation recognised that Article 16.1 read in conjunction with Article 16.4 of the DSU
envisaged that a panel report be adopted within a time-frame of 20 to 60 days after its circulation.
The Panel Report under consideration had been circulated on 24 August 1998, and since then only 29
days had elapsed.  The current practice was that reports were placed on the DSB's agenda for adoptionnearer the 60 day-period than the minimum requirement  of 20 days.  In this case, the Report had to be
included on the agenda of the present meeting since by 21 October -- the date of the next DSB
meeting -- 61 days would elapse from the date of th e circulation of the Report.  India did not wish to
question the legality of the inclusion of this item on the agenda of the present meeting.  However, he
wished to point out that the time available to examine this Panel Report had been  limited.
India was prepared to join a possible consensus in favour of the adoption of the Panel Report.
However, he wished to present his country's views on some aspects of the Report and requested that
these views be fully recorded pursuant to Article 16.3 of the DSU.  The Panel Report constituted an
important contribution, which highlighted, explicitly and implicitly, the complexities of thetransitional provisions of the TRIPS Agreement.  He recalled that on 16 January 1998,  the DSB had
adopted the panel and the Appellate Body reports with regard to India's compliance with its
obligations under Article 70.8 and 70.9 of the TRIPS Agreement, pertaining to the complaint by the
United States.  At the present meeting, the Panel Report submitted for adoption by the DSB pertained
to the EC's complaint.  In India's view, the situ ation was rather unique.  The United States had
previously initiated the proceedings against India on the same subject, in which the Communities had
participated as a third party.  After the panel had completed its work related to the first dispute, theWT/DSB/M/48
Page 15
Community had initiated separate proceedings with regard to India’s obligations under Articles 70.8
and 70.9 of the TRIPS Agreement.  His delegation had raised its concerns in the DSB with regard to
the EC's approach, and had pointed out that this created an avoidable and unnecessary burden on
India.  These  concerns had also been raised before the Panel as contained in paragraph 4.2 of its
Report.  India welcomed that in paragraphs 7.9 to 7.21 of its Report,  the Panel had addressed thissystemic issue in detail.  However, the Panel had not found any violation of either Article 9.1 or
Article 10.4 of the DSU in the procedure adopted by the EC.  While India's understanding of these
two Articles was slightly different it respected the Panel's finding on this issue.  India welcomed the
Panel's observations in paragraph 7.22 which read as follows: "We note that India’s rationale behind
its restrictive reading of Articles 9.1 and 10.4 is that an unmitigated right to bring successive
complaints by different parties based on the same facts and legal claims would entail serious risks for
the multilateral trade order because of the possibility of inconsistent rulings, as well as problems ofwaste of resources and unwarranted harassment.  While we recognise that these are serious concerns,
this Panel is not an appropriate forum to address these issues." India was glad that the Panel had
recognised its concerns and had acknowledged that these concerns were serious.  The Panel had
observed that it was not an appropriate forum to address these issues.  It was the Panel's  interpretation
of Articles 9.1 and 10.4 that had led to this conclusion.  India hoped that these serious concerns wouldbe taken into account in the context of the DSU review.
The next systemic issue related to the extent of the binding nature of precedents.  He recalled
that India had stated before the Panel that although there was an earlier panel report as well as the
Appellate Body report on this subject, since the Co mmunity had chosen to make a separate complaint
on the same subject, instead of becoming a co-complainant in the US case, India was entitled to
"normal dispute settlement procedures" referred to in Article 10.4 of the DSU, and the Panel was
obliged to make an objective assessment of the facts and arguments presented in the proceeding  in
accordance with Article 11 of the DSU.  The Community had asked the Panel "to extend to it the
findings in the earlier dispute".  The Panel had made its ruling in this regard in paragraph 7.30 of itsReport, which read as follows: "It can thus be concluded that panels are not bound by previous
decisions of panels or the Appellate Body even if the subject-matter is the same.  In examining
dispute WT/DS79 we are not legally bound by the co nclusions of the Panel in dispute WT/DS50 as
modified by the Appellate Body report.  However, in the course of “normal dispute settlement
procedures” required under Article 10.4 of the DSU, we will take into account the conclusions and
reasoning in the Panel and Appellate Body reports  in WT/DS50.  Moreover, in our examination, we
believe that we should give significant weight to both Article 3.2 of the DSU, which stresses the roleof the WTO dispute settlement system in providing security and predictability to the multilateral
trading system, and to the need to avoid inconsiste nt rulings (which concern has been referred to by
both parties).  In our view, these considerations form the basis of the requirement of the referral to the
'original panel' wherever possible under Article 10.4 of the DSU."
India was glad that the Panel had concluded that  panels were not bound by previous decisions
of panels or the Appellate Body even if the subject-matter was the same, thus upholding his country's
position.  The Panel had made a fair observation that in the course of normal dispute settlement
procedures pursuant to Article 10.4 of the DSU, it would take into account the conclusions and
reasoning of the panel and Appellate Body reports in WT/DS50.  However, India was concerned that
the Panel had seemed to imply in the last two sentences of paragraph 7.30 that it was obliged under
Articles 3.2  and 10.4 of the DSU to give significant weight to both Article 3.2 of the DSU and the
need to avoid inconsistent rulings.  India had stated before the Panel that in the interpretation of
Articles 9.1 and 10.4 of the DSU, it was important to keep in mind the need to avoid inconsistent
rulings.  As he had already stated, the Panel had not accepted India's interpretation of Articles 9.1 and10.4 of the DSU.  However, it seemed that the Panel had cited this consideration to justify its
excessive reliance on the previous case.  He noted that there was some dichotomy in the reasoning of
the Panel.  On the one hand, the Panel had stated that it was not bound by previous decisions of panels
or the Appellate Body even if the subject matter was the same.  It would imply that in accordanceWT/DSB/M/48
Page 16
with normal dispute settlement procedures the Panel should make an objective assessment of facts.
However,  at the same time, the Panel had been co mpletely swayed by the previous case, which was
contrary to its commitment to make an objective assess ment of the facts.  In India's view when a panel
examined a matter already adjudicated upon, on the basis of a fresh complaint,  it should not attempt -
for the purpose of providing security and credibility to the multilateral trading system - to seek a way
which would endorse the findings in the previous case.  In  India's view, such an approach would
make the second proceedings an empty formality, which as the Panel conceded would not be
appropriate.
It was clear from paragraph 7.33 of its Report that the Panel had totally deferred to the
findings in the previous dispute.  In that paragr aph, the Panel had recalled that in the earlier dispute,
the panel had reached the conclusion that India had failed to take necessary action to implement itsobligations under Article 70.8(a) and that this conclusion had been upheld by the Appellate Body.
The Panel had also stated that it would only analyse the new elements provided by India, if necessary.
India believed that normal dispute settlement procedures would require the Panel to make an objective
assessment of the matter and that it could not simply take the previous decision as a starting point and
add that it had sought new elements.  Furthermore, in paragraph 7.63 of the Report, concerningArticle 70.9, the Panel observed as follows: "we further note that regarding Article 70.9, India has not
brought forward any new factual information".
India regretted that while the Panel had been willing to take into account the earlier panel and
the Appellate Body reports, India’s arguments against different aspects of these reports had not beentaken into account with the same degree of seriousness.  In Section 4 of the Report which contained
the arguments of the parties, India had submitted a number of factual and legal arguments in order to
demonstrate the flawed approach adopted in the previous case.  However, all these arguments were
described as "criticism of panel and Appellate Body reports" (paragraph 6.3).  The Panel had decided,
in principle, that India had been entitled to normal dispute settlement rights, and had refused to acceptthe EC’s argument to extend to it the earlier rulings, but had failed to allow India to exercise this right
in full measure.
He drew attention to another systemic concern.  In paragraph 7.40 of its Report, the Panel had
observed that the findings made in paragraph 7.39 could be confirmed by the negotiating history of
the TRIPS Agreement.  In paragraph 7.72 of its Report, the Panel had refered to the drafting history of
the TRIPS Agreement and had stated that its observations in paragraph 7.11 could be confirmed bythe drafting history of the TRIPS Agreement a nd had expressed its disagreement with India’s
interpretation of Article 70.9.  It was not clear who had this drafting history.  India, which had
participated in the negotiations on Articles 70.8 and 70.9, was seriously concerned about the way
Article 70.9 had been interpreted and had found it unusual to be told that the negotiating history of
Article 70.9 did not support India's view, notwithstanding  that it could not be totally ignorant of thenegotiating history of Article 70.9.  If somebody had provided the Panel with any recorded
negotiating history, India would have wished to have had this record during the proceedings in order
to compare this recorded negotiating history w ith its own records.  If, on the other hand, this
negotiating history was based on personal recollections of those involved in the Panel, it was not
appropriate for the Panel to rely on such personal recollections.  He wished to clarify that, at thisstage, India was not concerned so much about what was the negotiating history of Articles 70.8 and
70.9, but was concerned about the systemic issue resulting from references to negotiating history to
which the parties had no access.  He believed that this was a very important systemic issue which
required further reflection.  It would not be appropriate if panels were provided with a negotiating
history of which the parties to the dispute were not aware.
India was concerned that in paragraph 7.51 of its Report, the Panel had indicated that to some
extent it was influenced by the fact that India had initially attempted to amend the Patents Act but had
subsequently maintained the mailbox system through administrative instructions.  India had arguedWT/DSB/M/48
Page 17
before the Panel that under Article 1.1 of the TRIPS Agreement,  Members were free to determine the
appropriate method of implementing the provisions of the TRIPS Agreement within their own legal
system and practice.  The mere fact that India had initially chosen one particular route and had later
chosen another route did not make the second route per se  illegal.  India regretted that in spite of this,
the Panel had chosen to make its observations contained in paragraph 7.51 of its Report.
With regard to Article 70.9 of the TRIPS Agreement relating to the grant of exclusive
marketing rights (EMRs), the question of timing was central.  There was a fundamental difference
between the language of Article 70.8(a) and Article 70.9 of the TRIPS Agreement.  While the Panel
had pointed out that the phrase "notwithstanding the provisions of part VI (i.e. Transitional
Arrangements)" was in both Articles, the Panel was silent with regard to one fundamental difference
in the language of these Articles, which India had highlighted during the proceedings.  Article 70.8(a)contained an explicit phrase "as from the date of entry into force of the WTO Agreement" while no
such phrase was contained in Article 70.9.  India considered it unfortunate that the Panel Report
which had repeatedly refered to Article 31 of the Vienna Convention had overlooked the fundamental
difference between the language of Article 70.8(a) and Article 70.9.  With regard to the observations
of the Panel in paragraph 7.64 of its Report, he wished to point out that the phrase "notwithstandingthe provisions of part VI" contained in Articles 70.8(a) and 70.9, did not necessarily mean that the
obligations had to start on 1 January 1995.  If this were to be the case, the phrase "as from the date of
entry into force of the WTO Agreement" would not have been included in Article 70.8(a).  India
regretted  that the Panel  had failed to note that while Article 70.8(a) contained the phrase "as from the
date of entry into force of the WTO Agreement", Article 70.9 did not contain such phrase.
In paragraph 7.68 of its Report, the Panel had referred to the EC's claim that one
pharmaceutical company based in the EC had applied for market approval in India with regard to a
product for which a mailbox application had been filed.  In paragraph 7.69 of the Report, the Panel
observed that the fifth and the last condition for grant of exclusive marketing rights under Article 70.9related to marketing approval in India and that this was under the control of its authorities.  The Panel
had further observed that "however, if marketing a pprovals are denied for the purpose of delaying the
grant of exclusive marketing rights, it would give rise to questions regarding good faith application of
the TRIPS Agreement".  India regretted this comment which, in its view, had no basis.  No allegation
had been made that India had delayed deliberately the grant of marketing approval with a view to
delay or deny the grant of exclusive marketing rights.  The letter in Annex 4 of the Panel Report had
been submitted to the Panel by the complainant during the second hearing on 29 April 1998.  Fromthe text of the letter, which had been written one day before the date of the second hearing, one could
understand that it had been written in response to a request from the EC.  The letter had stated that "a
marketing approval application has been filed in India and we expect launch to occur in early 1999.
We will therefore be making an application for marketing exclusivity before that time."  Thus, neither
the EC nor the companies concerned had made allegations of deliberate delay by India in providingmarketing approval.  In the light of this,  India was concerned about the observations of the Panel
which seemed to imply that it was delaying the grant of marketing approval, because it had not yet
provided a system of grant of exclusive marketing rights in its law.
In order to avoid any confusion he wished to state that India recognised its obligations under
Articles 70.8(a) and 70.9 of the TRIPS Agreement.  India had established on the date of entry into
force of the WTO Agreement, i.e. 1 January 1995, a mailbox, i.e. a means by which applications for
product patents in the pharmaceuticals and agricultural chemical sector could be filed.  This mailbox
operated on the basis of administrative instructions.  The EC's contention was that the present system
did not provide necessary legal security to applicants while India’s position was that the mailbox ithad established was consistent with its law and that it provided necessary legal security to applicants.
The Panel in paragraph 7.58 of its Report had noted the point made by India that the present system
ensured the retention of the necessary facts to determine novelty and priority for the purpose of
decisions on future grant of patent rights pursuant to Articles 70.8 (b) and (c).  However, the PanelWT/DSB/M/48
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considered that this would not alter its concerns regarding the soundness of the legal basis for the
system under its present law.  With regard to Article 70.9 the issue was a narrow one.  Paragraph 7.61
of the Panel Report had defined the issue in clear terms by stating that the central question before the
Panel was that of timing, i.e. as of when should there be a mechanism ready for the grant of exclusive
marketing rights.  India had pointed out that it had not denied exclusive marketing rights to anyeligible product.  India’s contention was that so far it had not failed to implement its obligations under
Article 70.9 and that it was not obliged to make EMRs generally available before all the events
specified  in Article 70.9 had taken place.  However, in the view of the Panel, India should have had a
mechanism in place to provide for the grant of EMRs effective as from the date of entry into force of
the WTO Agreement.
Thus, in respect of Articles 70.8(a) and 70.9, the differences concerned certain legal issues.
He wished to highlight the fact that the issue be fore the Panel was not India's refusal to accept its
obligations but rather the difference of opinion between the parties with regard to the manner of
implementation of the obligation under Article 70.8(a) and the timing of implementation of the
obligation under Article 70.9. India recognised that the Panel had interpreted these obligations in a
particular manner but it had not imposed new obligations.  He did not wish to reiterate India's beliefin, and its commitment to, a rule-based multilateral tr ading system.  It was in this light that he had
stated that India would join in a consensus in fav our of adoption of the Report.  He had highlighted
some of the issues resulting from the Panel Report, notwithstanding India's respect and appreciation
for the efforts of the Chairman and the members of the Panel.  It was India's conviction that only by
raising the concerns resulting from reports of pane ls and Appellate Body at the time of their adoption
it was possible to have a vibrant and well-functioning dispute settlement system.  In other words,
India was convinced that constant vigilance was required within the automatic dispute settlement
system
The representative of Argentina said that pursuant to Article 16.4 of the DSU, his delegation
wished to comment on three systemic implications resulting from the conclusions of the Panel Report.
In paragraph 7.20 of its Report, the Panel in rejecting India's interpretation that Article 10.4 of the
DSU could only be invoked at an early stage of  the proceedings, had based its decision on the
wording of Articles 10.4, 21.5 and 22.6 of the DSU.  The Panel had inferred that since Articles 21.5
and 22.6 might be invoked only when there was a failu re to comply with the DSB's recommendations,
Article 10.4 might be invoked where "the reference is to a panel the final report of which has already
been issued and adopted".  The logic underlying this conclusion was that Article 21.5 had beendrafted to settle a dispute as to whether a measure complied with the DSB's recommendations
Likewise, Article 22.6 refered to a dispute on retaliation which presupposed that the DSB had
already determined that a measure had not been br ought into conformity with a covered agreement.
In order to avoid contradictory reasoning,  the Panel should have found that under Article 10.4  not
only a report  had been issued and had been adopted but also that the reasonable period of time for the
implementation of the DSB's recommendation had expired.  Otherwise, this would lead to a situation
which the Panel had recognized as a serious source of concern in paragraph 7.22:  "… the possibility
of inconsistent rulings, as well as problems of waste of resources and unwarranted harassment".  In
the view of Argentina, if the DSB's recommendations had been made and a reasonable period forimplementation had been notified, the possibility of a series of successive disputes brought by third
parties pursuant to Article 10.4,  which would not allow the respondent to fully use its right to a
reasonable period of time, would not contribute to the strengthening of the dispute settlement system.
Another concern related to the issue of the admissibility of the case under Article 10.4 of the
DSU.  Both parties had based their submissions on arguments concerning the scope and interpretation
that should be given to Articles 9.1 and 10.4 of the DSU.  The Panel had rejected the possibility of
ruling on the admissibility of India's request on the grounds that it could not make a ruling ex aequo et
bono .  Argentina did not think that the argument was that the Panel should resolve the case inWT/DSB/M/48
Page 19
accordance with the  international law principle of equity but rather that it had been asked to assess its
own jurisdiction.  The DSB only carried out a gene ral review of whether a panel would meet the
substantive formal requirements laid down in the DSU.  This was due to the automatic nature of the
establishment of panels, and consequently control of the legality of the establishment of a panel,
appointment of panelists or the matter in dispute could only be carried out  in the proceedings.  Thelegal basis for this possibility was  Article 1.1 of the DSU, which put the DSU in the category of
covered agreements.  This reasoning of the Panel r eaffirmed Argentina's conviction with regard to the
need to analyse the question of preliminary issu es in the context of the review of the DSU.
Argentina was also concerned about the implications of footnote 95 referring to paragraph 1.2
of the Report.  That paragraph stated as follows: "… Informing the parties to the dispute that he had
determined the composition of the Panel pursuant to  Article 10.4 of the DSU, taking into account the
fact that the European Communities and their member States had been a third party to the panel
proceeding on "India – Patent Protection for Pharmaceutical and Agricultural Chemical Products"
(WT/DS50 – complaint by the United States) and the measure at issue in the present dispute had
already been the subject of the earlier proceeding, the Director-General appointed the same Panel
members as in the earlier dispute …".  He stressed that in Argentina's view the only power that  theDirector-General had  under the DSU was to appoint panelists in the absence of agreement pursuant to
Article 8.7 of the DSU.  Argentina did not believ e that the DSU granted the Director-General the
powers of interpreting whether or not other provisio ns of the Understanding, in this case Article 10.4,
should be applied when discharging the functions entrusted to him under Article 8.7 of the DSU.
The representative of the United States said that references had been made to the reports of
the panel and the Appellate Body adopted on 16 January 1998 in the case of the US-India dispute on
the same matter.  The United States still aw aited India's action to comply with the DSB's
recommendations concerning this issue.  He theref ore wished to ask India whether it could provide
any information on steps to be taken towards compliance.
The representative of India said that his delegation would provide such information at the
appropriate time.
The DSB took note of the statements and adopted  the Panel Report contained in document
WT/DS79/R.
6. Proposed nominations for the indicative list of governmental and non-governmental
panelists (WT/DSB/W/82)
The Chairman drew attention to document WT/DSB/W/82 which contained additional names
proposed for inclusion on the indicative list in accordance with Article 8.4 of the DSU.  He proposed
that the DSB approve the names contained in document WT/DSB/W/82.
The representative of the United States said that his delegation had no objections to the
inclusion of either of the two names on the indicative list but wished to make comments with regard
to one name submitted for approval at the present meeting.  Over the past three years, Mr. A. Mukerji(India)  had become very well known to him and to his delegation. Mr. A. Mukerji's knowledge of the
WTO issues was unsurpassed and the United States hoped that by including his name on the
indicative list his considerable skills would not be lost after his departure from Geneva. He was
certain that the views of the United States were shared by other Members.
The DSB took note of the statements and approved
 the names contained in document
WT/DSB/W/82.WT/DSB/M/48
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7. United States – Imposition of Anti-Dumping  D u t i e s  o n  I m p o r t s  o f  C o l o u r  T e l e v i s i o n
Receivers from Korea.
(a) Statement by Korea
The representative of Korea, speaking under "Other Business", said his country had
withdrawn its request for the establishment of a panel on United States – Imposition of Anti-Dumping
Duties on Imports of Colour TVs from Korea.  Th is withdrawal, which had been circulated in
WT/DS89/8 on 5 January 1998, had been made in response to the United States' preliminary
determination of 19 December 1997 to revoke the anti-dumping duty order upon the fifth request filed
by Samsung Electronics on 24 June 1996.  At the time of the withdrawal, Korea had reserved the right
to reintroduce the request for the establishment of a panel in the event that the content of the final
determination by the United States would differ from that of the preliminary determination.  On 27August 1998, the United States had made a final determination to revoke the anti-dumping duty order
which had been imposed on Samsung in 1984.  Korea considered that the above-mentioned
determination  by the United States had resolved its concerns on this matter.  Therefore, as notified to
the DSB in its communication of 15 September 1998 contained in WT/DS89/9, Korea would not seek
further consideration of this matter by the DSB.
The representative of the United States thanked Korea for its communication of 15 September
in which it had notified that it would not seek further consideration of this matter by the DSB.  The
United States welcomed the fact that Korea would not seek further consideration of this matter by the
DSB and that consideration of this matter had now been terminated.
The DSB took note of the statements
8. Indonesia – Certain measures affecting the automobile industry
(a) Statement by the European Communities
The representative of the European Communities, speaking under "Other Business", drew
attention to Indonesia's communication containe d in WT/DS54/12 – WT/DS55/1 – WT/DS59/10 –
WT/DS64/9 in which it had informed the DSB of its intentions with respect to the  implementation of
the DSB's recommendations.  He recalled that Indonesia had requested 15 months for the
implementation of the DSB's recommendations with regard to its 1993 National Car Programme.  In
the Community's view this period of time was excessively long since modification of  this Programmewould only require an action by the Indonesian executives.  In accordance with the terms of Article 21
of the DSU, Indonesia had to comply immediat ely.  Even if immediate compliance was not
practicable, a 15-month period of time could not be considered as a reasonable period of time in the
sense of Article 21 of the DSU.  On 21 September, the Community had already expressed its concerns
to Indonesia on this matter.
In the Community's view the mere fact that that the 1996 Programme had been terminated did
not imply full implementation of the DSB's recommendations.  In accordance with Article 7.8 of the
SCM Agreement, Indonesia had to withdraw its subs idies or at least remove their adverse effects
within 6 months from the adoption of the Report.  This meant that, within that period, Indonesia wasrequired to ensure that the beneficiary of the 1996 Programme ceased to enjoy any benefits that
continued to have adverse effects on the EC's expor ts.  In that respect, it was not clear whether
Indonesia intended to recover subsidies already granted, which might still cause adverse effects, such
as tax benefits on cars that had already been imported but had not  yet been sold under the
Programme.  The Community requested  further clarification with regard to Indonesia's measures toWT/DSB/M/48
Page 21
be taken to comply with the DSB's recommendations , in particular any steps to be taken to remove
adverse effects of the subsidies granted to its National Car industry.
The representative of the United States said that in his country's view the question of the
reasonable period of time had not yet been resolved.  The United States had consulted with Indonesia
and hoped that these continued consultations would enable the parties to reach agreement on this issue
as well as on other issues regarding the implementation of the DSB's recommendations.
The representative of Japan said that his country appreciated that on 21 August,  Indonesia
had informed the DSB in writing of its intentions to implement the DSB's recommendations.    Japan
had hoped that Indonesia would immediately adjust its measures in order to comply with the DSB's
recommendations.  It was therefore concerned that Indonesia had indicated that it would continue theexemptions of customs duties and luxury tax with regard to National Cars already produced or
imported.  On 21 September, Japan had held consultations with Indonesia on this matter and wished
to have its response as soon as possible.
The representative of Indonesia said that with regard to the 15-month reasonable time period
for implementation of the DSB's recommendations concerning the 1993 Programme, he wished to
underline that this was the maximum period of time required by Indonesia to bring the Programme
into conformity with its WTO obligations.  Indone sia's primary intention was  to act expeditiously
with regard to the DSB's recommendations.  However, as a result of its current domestic economic,
social and political situation -- in addition to normal legislative procedures -- his authoritiesconsidered that it was difficult to fully dedicate their time and efforts in order to complete  their
review of  the 1993 Program in a shorter period of time.  In the consultations with the complaining
parties, Indonesia had explained the following step s taken for the purpose of the implementation of
the DSB's recommendations:  (i) The first step, which had started shortly after the adoption of the
panel report was an inter-departmental discussion to consider policy options for the implementation ofthe DSB's recommendations; (ii) The second step wa s the review of the 1993 program with the aim to
make necessary changes in accordance with Indonesia’s WTO obligations.  For this purpose, the
Department for Industry and Trade had held a series  of discussions with related government agencies
as well as with the automobile industries associations (i.e. GIAMM and GAIKINDO); (iii) As a
preliminary result of the above steps, it had been concluded that the time-frame for the review process
and the consideration of policy options would be, at the latest, the early 1999, during which a new
policy was expected to be ready for issuance.  The effective date for the entry into force of the newpolicy would be October 1999 at the latest.
Members were aware of Indonesia's critical economic situation.  The automotive industry was
one of the industries severely affected by the current financial crisis.  Some industries had halted their
production and many workers had been laid off.  The main reason for Indonesia to request areasonable period of time for implementation was to take account of the concerns of the industries
that would require a transitional period for adjustment.  In the discussions with his authorities, several
companies had indicated the need for such a transitional period in order to be able to adjust gradually
their production when the 1993 Programme would be phased-out.  His authorities were compelled to
accommodate those concerns in an effort to prevent those industries from collapsing, which couldworsen the level of unemployment already approaching 30 million people.  Although the 45-day
period provided in the DSU had elapsed his delegation was confident that the parties would soon be
able to agree on the reasonable period of time for the implementation of the DSB's recommendations.
 With regard to the follow-up measures concerning the 1996 Program, he said that pending
further information, the Presidential Decree No. 20/1998 of 21 January 1998 had revoked Presidential
Instruction No. 2/1996 and Presidential Decree No. 42/1996, thereby terminating the authority for
import duty and luxury tax exemption subsidies to National Car producers.  He wished to assure the
DSB that his Government had no intention to continue the exemptions of import duties and luxury taxWT/DSB/M/48
Page 22
with regard to National Cars.  As of 2 February 1998, the effective date of the 21 January Decree,
none of the remaining national car would receive the exemptions.  He also wished to inform the DSB
that Indonesia was still in the process of collecting from PT. Timor Putra National (TPN) the foregone
taxes and import duties on sold cars and import duties on unsold Timor cars.  In this respect, the
Minister of Industry and Trade had requested the Mi nister of Finance to take necessary action with
regard to reimbursement of the foregone taxes and import duties by PT.TPN.  He reiterated that his
Government would fully comply with the DSB's recommendations.
The DSB took note of the statements.
9. Review of the DSU
The Chairman, speaking under "Other Business", said that he wished to inform delegations
that in accordance with the arrangements for the Review of the DSU outlined at the DSB meeting on
23 July 1998, the Secretariat had prepared a compilation of the informal and preliminary comments
submitted for the DSU Review by Members through 31 August 1998, which had been circulated as
Job. No. 4762.  In addition, the Secretariat had prepared statistical information relating to theoperation of the DSU which had been circulated as Job No. 4750.  Both papers had been circulated in
English and the French and Spanish translations would follow shortly.  It was his intention to convene
an informal meeting of the DSB on 1 October 1998 in order to start the examination of the
compilation of informal and preliminary comments and to discuss how to organize further work.
The DSB took note of this information.
__________