RESTRICTEDWORLD TRADE
ORGANIZATIONTN/DS/M/6
31 March 2003
(03-1816)
Special Session of the Dispute Settlement Body
13 – 15 November 2002
MINUTES OF MEETING
Held in the Centre William Rappard
on 13 – 15 November 2002
Chairman:  Mr. Péter Balás (Hungary)
Subjects discussed: Page
1. Discussion of proposals submitted by participants................................................................1
(a) Proposal by Japan .......................................................................................................... ............1
(b) Proposal by  Mexico ......................................................................................................... ..........3
2. General comments on the proposals .......................................................................................6
The Chairman welcomed participants to the sixth meeting of the Special Session of the DSB
and referred to the proposed agenda of the meeting which comprised three items, namely  (i)
discussion of new proposals submitted by delegations;  (ii) discussion of specific issues raised in theproposals (in the order listed in the checklist of i ssues – JOB(02)86/Rev.4); and (iii) "Other Business".
Under the first item, the Chairman proposed to invite participants which had submitted new proposals
to present them formally and give other participan ts the opportunity to react to them formally if so
they wished.  He said that participants could also comment on any of the earlier proposals under the
second agenda item.  He, however, cautioned them against making lengthy comments on the
proposals at this stage, as participants would ha ve the opportunity to discuss informally all the
elements of the proposals when the second agenda item was taken up.  The item relating to "OtherBusiness" was deleted prior to the adoption of the ag enda, as no participant had indicated that it would
like to make a statement under this agenda item.
1. Discussion of proposals submitted by participants
(a) Proposal by Japan (TN/DS/W/22)
1. The representative of Japan  recalled that her delegation introduced informally this proposal at
the fifth meeting of the Special Session. She said that to a large extent the present proposal was based
on the joint proposal (WT/MIN(01)/W/6) submitted to the Doha Ministerial Conference by a group of
countries including Japan.  The new proposal, however, contained some novel elements concerning
status reports and compensation.  It did not, however, include the suggestions in the original proposalrelating to overall time-frames and special and differential treatment of developing countries.  She
said that like the previous proposal, this new proposal also focussed primarily on the "sequencing"
issue, to which Japan attached great priority as evidenced by the sponsorship of a number of
documents on this issue, including most recently the concept paper (JOB(02)/45), which had been
submitted in May 2002.  She said that while there were a number of similarities between the newJapanese proposal and that of the EC proposal, there were differences in the approaches adopted on a
number of issues, including:  (i) whether consultations should be held before a request for the
establishment of a compliance panel could be made;  (ii) whether the Member concerned should beTN/DS/M/6
Page 2
obliged to submit a compensation proposal;  and (iii) when should arbitration take place to decide the
level of the nullification and impairment.
2. She said that Japan's proposal also addressed the so-called "mandatory law" issue, under
which a Member was obliged by domestic legislation to adopt certain measures that were inconsistent
with its WTO obligations.  The implementation of such measures meant that the Member would have
violated its obligations towards other Members.  The practice under Article 22.4 of the DSU was thatthe level of the suspension of concessions should be equivalent to the level of the nullification and
impairment resulting from the specific WTO-inconsistent measure in question.  In cases where a
"mandatory law" was involved, it might be difficult to establish "equivalence" between the impact of
the law and the level of retaliation.  Given that only the actual impact of the law in the case in
question was taken into account for purposes of determining the level of nullification and impairment,
the level of retaliation could not be equivalent to the total trade-distorting effects that the mandatory
law might have when additional measures were pursuant to it in the future.  Given this imbalance,there was no incentive for Members to comply, as retaliation in the event of non-compliance was
likely not to be effective.  To address this situation, Japan had proposed that the scope of Article 22.4
of the DSU should be broadened to encompass not only the trade effects created by the measure in
question under a "mandatory law", but also those that would be created in the future by subsequent
measures that might be adopted pursuant to the law.
3. She further stated that Japan's proposal also covered the so-called "discretionary law" theory,
under which the legislation of a Member entitled it to choose between WTO-consistent and WTO-
inconsistent measures.  It had been held by panels and the Appellate Body that such laws, per se , did
not violate WTO rules and that only measures taken pursuant to them could be found to be in breach
of WTO rules.  In Japan's view, such a situation was not satisfactory as it did not deal with theunderlying problem, which was the enabling "discretionary law".  If trade remedy measures were
abused pursuant to a "discretionary law", trade with third countries would be affected when an
investigation was initiated.  Attempting to get back subsidies or reversing a government procurement
after tendering would be practically difficult.  It was conceivable that a Member might decide to
protect a domestic industry under a "discretionary law", even after it had been found to be in breach ofWTO rules in an earlier case involving the same law.  It might adopt the position that it had a right to
maintain the new measure, until such time that a decision was made by a panel or the Appellate Body.
It might even be encouraged by the fact it could not be required to amend or repeal the "discretionary"
law.  The possibility for abuse was real and it was necessary to address this issue.  Accordingly, Japan
had proposed that an exception to the application of the "discretionary law" theory, when repetition ofthe same violation was highly probable.  For instance, when it was evident that a Member had
deliberately ignored the recommendation of the DSB not to apply a particular measure enacted
pursuant to the law and applied similar measures subsequently.  Regarding modalities, Japan was of
the view that the changes that it had proposed could be achieved through an amendment of the
relevant WTO provisions or through an authoritative interpretation of Article XVI:4 of the Marrakesh
Agreement Establishing the WTO, in accordance with  Article IX:2 thereof.  She said that Japan had
also suggested that the burden of proof in cases involving "discretionary" laws should be shifted to theMember imposing the measure, if there was evidence that repeated violation had taken place.  In such
situations, the measure would be presumed to be inconsistent with WTO rules, unless proven
otherwise.  Japan had also proposed that such cases should be referred to the original panel or division
of the Appellate Body, whenever possible with a shorter deadline for recommendations and rulings.
4. She further said that Japan's proposal also called for an increase in the number of the
Appellate Body members, given the increase in the number of cases being appealed and the difficult
nature of the legal issues that had to be resolved.  She said that if Members expected the Appellate
Body to maintain its high standards and avoid any delay in the issuance of reports, it was necessary to
increase the number of Appellate Body members.  In that context, Japan had proposed an amendment
of Article 17.1 of the DSU, so that the number of the Appellate Body members could be adjusted, asand when required, by a decision of the DSB or the General Council.  Flexibility was required andTN/DS/M/6
Page 3
Japan's proposal would obviate the need to amend Article 17.1, each time it was decided to adjust the
number of Appellate Body members.  In the mean time, it would be helpful to commission a report on
which number would be adequate, taking into account all related factors such as workload and the
financial implications of any increase in the membership of the Appellate Body.  Regarding
transparency, she said that Japan had proposed improved access to submissions by Members and the
general public.  Arguments and rebuttals in a dispute were of interest not only to the parties and thirdparties, but also to other Members, especially those that might be contemplating having recourse to
the DSU in the same or a similar matter.  With the exception of confidential business information, it
was Japan's view that the submissions of parties and third parties should be made accessible to all
WTO  Members as well as to the general public within two weeks from the date of each relevant
meeting of a panel or oral hearing of the Appell ate late Body.  She said that Japan was ready to
respond to any queries that participants might have  and looked forward to receiving their support for
its proposal.
(b) Proposal by Mexico (TN/DS/W/23)
1
5. The representative of Mexico said that the primary objective of the dispute settlement system
was to provide security and predictability to the multilateral trading system.  It was therefore
imperative for Members to comply promptly with  the recommendations and rulings of the DSB.  By
signing the Marrakesh Agreement Establishing the WTO, all Members committed themselves toensuring the conformity of their laws, regulations and administrative procedures with WTO
disciplines in the various agreements.  The two hundred and seventy-four cases which had been
initiated since January 1995, when the WTO Agreement went into force, seemed to suggest that
Members had not been faithfully implementing their obligations.  It was Mexico's considered view
that the DSU had a structural problem which had to be addressed in order for it operate to its fullestpotential.  The main weakness of the system was the excessive length of time that a Member could
maintain a measure which had been found to be WT O-inconsistent without any consequences.  Based
on rough estimates made by Mexico, a Member could maintain a WTO-inconsistent measure for more
than three years "for free", which invariably translat ed into losses of millions of dollars a year for the
exporting Members.  Based on arbitration awards that had been circulated excluding the case onUnited States – Tax Treatment for Foreign Sales Corporation, the average was almost 370 million
dollars per case.  There would be no better way of fulfilling the mandate given by Ministers at Doha
than by addressing the structural problems that had prevented the dispute settlement system from
achieving its full potential.  To contribute to realising this objective, Mexico was proposing the
introduction of four concepts in the DSU, namely:  (i) early determination and application ofnullification or impairment;  (ii) retroactive determination and application of nullification or
impairment;  (iii) preventive measures;  and (iv) negotiable remedies.
6. Regarding the early determination and application of nullification or impairment, he said that
the Mexican proposal was quite simple.  It would involve moving forward the arbitration procedure
foreseen in Article 22.7 to the original Panel proceeding's phase and granting authorization to suspend
concessions or other obligations upon adoption of the original Panel/Appellate Body report.  Under
the suggested framework, the parties could engage in discussions concerning the level of nullificationan impairment after the issuance of the interim Panel report.  The level could be adjusted depending
on the findings of the Appellate Body.  The main advantage of this proposal was that it created
incentives for Members to promptly comply with th e recommendations and rulings of the DSB.  The
early suspension of concessions would induce the Member concerned to bring its measures into
conformity "immediately" or "in the shortest period possible within its legal system".  It wouldfurthermore be inclined to consult with the co mplaining Member in order to seek a mutually
satisfactory solution, without which it might be difficult to determine when the suspension of
concessions would be lifted. Besides, this proposal would encourage and facilitate negotiations,
because Members would be aware of the level of nullification or impairment even before the adoption
                                                     
1 See attachments to the proposal on pages 4 and 5.TN/DS/M/6
Page 4
of the original Panel or Appellate Body report.  Finally, the period of non-compliance with the DSB's
recommendations and rulings would be greatly reduced.  (See Fig.1, box (a)).
7. Regarding retroactive determination and application of nullification or impairment, he said
that the objective was not only to authorize the prevailing Member to suspend concessions and other
benefits prospectively, but also retrospectively for a period which could start as early as:  (i) the date
of establishment of the Panel;  (ii) the date of request of consultations;  or (iii) the date of impositionof the measure.  The advantage of this proposal was that it created incentives for the Member
concerned to bring its measures into conformity with the DSB's recommendations and rulings as
promptly as possible.  With retroactivity, it would not be in the interest of the Member concerned to
deliberately delay the proceedings, as any benefits obtained were likely to be offset by the amount it
would have to pay in compensation or the loss es it would incur following the suspension of
concessions or other benefits by the prevailing Member.  Furthermore, benefits would be allocated in
a more equitable manner, ensuring the preservation of the balance of rights and obligations under theWTO Agreement.  (See Fig. 1, box (b)).
8. With regard to preventive measures, he said that the objective was to allow panels to request
the responding Member to suspend the application of a measure, which was causing or threatening to
cause damage which would be difficult to repair at a later date.  If the responding Member did not
comply with the decision to suspend its measure, the Panel could then authorize the complainingMember to take the necessary measures to prevent the damage from occurring.  This would provide
an adequate level of protection for the complaining Member during the proceedings and obviate the
need for that Member to adopt an inconsistent WTO measure in response which could affect other
Members who had nothing to do with the underlying dispute.  (See Fig. 1, box (c)).
Fig. 1
(a) Early determination and application of nullification or impairment
(b) Retroactive determination and application of nullification or impairment
(c) Preventive Measures
a)b)
c)
TimeNet
concessions *MeasurePanel established1st panel meetingMeasure in
conformity
Retaliation /
compensation
Adoption of
panelAB reportLevel of
nullification orimpairment set
Level of nullification orimpairment
Net concessions = Concessions  received - concessions grantedOver 3 years
370 million USD
ConsulltationsTN/DS/M/6
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9. Regarding negotiable remedies, he said that the objective was to allow Members to
"negotiate" their right to suspend concessions in exchange of a specific benefit from any interested
Member.  Currently, a number of Members were of the view that suspension of concessions was not a
real option for them considering the harm that it could do to their economies.  This proposal would
make suspension of concessions a viable option and attractive to them.  He proceeded to explain how
the proposal would work in practice.  He said that if the responding Member had been unwilling tonegotiate with the complaining Member with a view  to agreeing on compensation, the former could
transfer its right to suspend concessions or other benefits to another Member in exchange of a
negotiated benefit (i.e., "A" might agree with "B" the transfer of the right to suspend concessions or
other benefits to "C" in exchange of a mutually agreed benefit, which might even take the form of
cash).  He said that this proposal would have two main advantages: first, it would provide incentives
for the responding Member to comply, since in all likelihood, it would not want the involvement of a
third party with real power to retaliate; and second, it would provide tangible benefits at the end of theprocess for the complaining Member, even though it could not retaliate itself, thus guaranteeing a
better readjustment of concessions.
Fig. 2
Negotiable Remedies
CURRENT SYSTEM  
The illegal measure imposed by “B” costs "A", the
affected Member, the sum of 10$, yet, “A” cannot
impose retaliatory measures for an amountexceeding 3$. “C” is a third Member which isunder pressure to impose an illegal measure
against "B".
                                10$
“A”                                            “B”
                                  3$
                         “C”
/g167Not a proper rebalance of concessions/g167Not an inducement to comply/g167“C” anyhow will impose an illegal measure/g167Possible two panels instead of onePROPOSED SYSTEM BY MEXICO  
With the same facts under the proposed system, “A” in
exchange to an agreed benefit, would be able to
transfer the right to retaliate to “C.”
/g167“B´s” illegal measure costs “A”  10$ (nullification or impairment)/g167“A” obtains 7$ from “C” in exchange for the transfer of rights to retaliate/g167“C” imposes a measure against “B” and obtains 7-10$
10$
“A”                                 “B”
              7$                           7-10$
“C”
/g167Inducement to comply/g167“A” gets a benefit/g167Reduction and control of illegal measures
10. He said that while these concepts might appear to be new to the WTO dispute settlement
system, they had been successfully applied in most Members' domestic legislation and in other areas
of international law.  In adopting these concepts, the WTO would only be bringing its regime in linewith other systems.  These proposals offered the dispute settlement system the best chance of
achieving its full potential.  The incentives provided by the current system were weak and encouraged
non-compliance.   It was likely that these proposals would lead to fewer disputes and an expedited
process for settling disputes, as well as a more equitable allocation of rights and obligations.  He noted
that there were a number of similarities between Mexico's proposal and those tabled by otherparticipants.  All these proposals shared one thing in common and that was streamlining and
improving the functioning of the dispute settlement system.  He concluded by saying that it wasTN/DS/M/6
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domestic policy-making agencies which would benefit the most from these proposals, as they could
rely on them to resist calls from special interest groups to adopt protectionist policies.
2. General comments on the proposals
11. The representative of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
(Chinese Taipei) said that her delegation attached great importance to the dispute settlement system,
as it was central to the effective functioning of the multilateral trading system.  It was the expectationof Chinese Taipei that the improvement and clarification of the DSU would result in the greater
participation of developing-country Members in the system. She said that her delegation wished to
comment on the proposals of the United States, the European Communities, Costa Rica and Jamaica,
particularly those sections addressing transparency and the rights of third parties.  Regarding
transparency, she said that Chinese Taipei was strongly in support of it, as it could facilitate greater
participation of Members in the dispute settlement system.  Effective participation in the system by all
Members would enhance its credibility and lead to greater compliance with the recommendations andrulings of the DSB.  Notwithstanding its broad support for increased transparency and third party
rights, Chinese Taipei had some strong reservations against some of the proposals that had been
tabled.
12. Regarding the proposal by the United States (TN/DS/W13) that the dispute settlement process
should be opened up to the general public and also provided with all the relevant submissions, shesaid that her delegation had some hesitation in supporting these proposals.  The dispute settlement
system was unique and opening it up in the manner suggested by the United States would compromise
the process and make it particularly difficult for the parties to reach mutually satisfactory solutions to
their disputes.  With respect to a micus curiae  submissions, she said that her delegation was in
disagreement with the proposal by the EC (TN/DS/W /1) that panels and the Appellate Body should be
authorized to accept unsolicited submissions.  This proposal, if accepted, would place an unfair
burden on Members, particularly those with the least resources.  Regarding the proposal by the United
States (TN/DS/W/17) that guidelines should be drawn up to regulate the handling of such
submissions, she said that her delegation did not see the need for them, as the case law currently being
developed by panels and the Appellate Body was replete with such guidelines.
13. On third party rights, she said that Chinese Taipei was conscious of the uneasiness of some
participants who seemed to be of the view that enhanced third party rights would make the dispute
settlement process cumbersome and frustrate the efforts of the parties to find a mutually satisfactory
solution to their dispute.  In Chinese Taipei's view, these concerns were misplaced and did not take
into account the profound effects a case could have on third parties.  It was against this backgroundthat Chinese Taipei supported the proposals by Costa Rica (TN/DS/W/12) , Jamaica (TN/DS/W/21),
and the European Communities (TN/DS/W/1) aimed at enhancing the participation of third parties in
the dispute settlement process, particularly their access to all relevant information except for business
confidential information and the final report at the same time as the parties to the dispute, and being
present at all meetings of panels and the Appellate Body, except when business confidential
information was being considered.
14. She said that while Chinese Taipei was in favour of strengthening third-party rights, it was
also of the view that their rights should be less than those of the parties to the dispute.  In that context,
it was not in agreement with Costa Rica that the "substantial trade interest" provision in Article 4.11
of the DSU should be amended to make it easier for third parties to participate in consultations
between the parties to the dispute.  It was also not in agreement with the proposal that would require
the arguments of third parties to be reflected by Panels in their report, not the proposal that thirdparties should have the right to provide comments on the descriptive part of the Panel report and the
interim Panel report.  Chinese Taipei was of the view  that the extensive involvement of third parties in
the dispute settlement process could compromise the basic function of the dispute settlement process,
which was to secure a positive solution to the dispute between the parties.  If panels and the AppellateTN/DS/M/6
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were to reflect the arguments of third parties in their reports, it could delay the process and
consequently undermine one of the basic tenets of the dispute settlement system.
15. The representative of Chile welcomed the proposals by Japan and Mexico and said that they
would make an important contribution to the work of the Special Session.  Regarding the proposal of
Mexico, he said that it correctly identified the main weakness of the dispute settlement system.  It was
pointless attempting to improve and streamline the rules and procedures for dispute settlement, ifMembers would not comply with the recommendati ons and rulings of the DSB.  Although the
statistics revealed that the general level of compliance was satisfactory, there were certain cases in
which the failure to comply was testing the limits of the system.  A distinction could be broadly drawn
between Members who had managed to obtain a waiver from their WTO obligations in exchange of
the imposition of retaliatory measures by the complaining Members, and those who had simply found
it difficult to bring their measures into conformity with the recommendations and rulings of the DSB.
These cases continued to multiply casting a doubt on the effectiveness of the dispute settlementsystem.  There at least eight cases where implementation of the recommendations and rulings of the
DSB was still outstanding.
16. Given the growing list of unimplemented r ecommendations and rulings of the DSB, Chile
would support any proposal that would create incentiv es for compliance.  Chile was not particularly
attracted to the proposals on compensation, as there was the tendency to see it as a substitute forcompliance.  He said that whereas the stated purpose of the Mexican proposal was to create incentives
for prompt and effective compliance, it appeared that it would generate more doubt than certainty.
Careful thought should be given to the proposal relating to the retroactive determination of
nullification and impairment.  In Chile's opinion, this proposal could be implemented more easily in
the area of trade remedies such as in anti-dumping  cases. Should a panel or the Appellate Body find
that an anti-dumping duty had been imposed in contravention of the relevant WTO rules, the
concerned Member should not only be required to ab olish that duty, but it should also be made to
refund all the duties it had collected illegally with interest.  This proposal might not lend itself to easy
application in other types of disputes.  It would be essential to ensure that the calculation of
nullification or impairment was not merely a statistical exercise, but that it took into account dynamiceffects as well.
17. Regarding preventive measures, he said that while the proposal was attractive, it would imply
a change in the current terms of reference of panels.  The proposal as it currently stood could
inadvertently lead to the pre-judging of issues by panels.  He said that in Chile's view, it would be
difficult to require a Member to withdraw or suspend the application of a measure when no finaldecision had been made about its consistency with WTO rules.  It was not very clear whether under
the proposal, the panel could recommend the adoption of a preventive measure or impose that
decision on the Member in question.  It was also not certain whether the decision of the panel would
have direct application or needed to be adopted by the DSB before taking effect, nor was it clear
whether the decision of the panel could be appealed.  These issues needed to be clarified before a
proper assessment of the proposal could be made.
18. Regarding the proposal relating to the transfer of the right to retaliate, he said that while it
was innovative, it was doubtful whether it could be easily implemented in the context of the WTO.
Implementation of this proposal would turn the WTO into a market where rights to retaliate were
trafficked.  It could create a situation where Members with resources would always acquire a right to
retaliate. This "acquired" right could be misused to further the interests of the Member wielding it,
including those that might not be related to dispute settlement.  Regarding the appropriate time todetermine the level of nullification and impairment, he said that while Chile was generally supportive
of early determination, as it would help the parties to know exactly what was at stake, it was sceptical
about Mexico's proposal which would result in dete rminations being made before the final settlement
of disputes.  It was necessary to take into account the partial implementation of the recommendations
and rulings of the DSB in the determination of the level of nullification and impairment.  At theTN/DS/M/6
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minimum, provision should be made for a review of the determined level.  A possible solution would
be the procedure under Article 22.6 of the DSU.  He concluded by saying that the Mexican proposal
was very interesting, but it needed to be elaborated further.
19. Turning to the Japanese proposal, he said that it contained some interesting suggestions that
merited further consideration.  As regards mandatory laws, he said that they presented no serious
challenges, as it could be assumed that they were inconsistent with the relevant WTO disciplines, andthat the only way for the Member concerned to fulfill its WTO obligations was to amend or abolish
them.  The case of discretionary laws was different, as they could not be said to be inconsistent with
WTO disciplines.  However, they undermined security and predictability, as there was always an
element of uncertainty as to how they would be applied.  It was in that context that Chile was
supportive of the Japanese proposal that a mechanism should be found to ensure that Members did not
abuse such laws.  Regarding whether the membership of the Appellate Body should be increased, he
said that Chile was of the view that the present number was adequate.  He said this view was sharedby former members of the Appellate Body.  Regard ing the nature of their employment, he said that
given the intensity of the work done by Appellate Body members, they should be employed on a full-
time basis.  He said in that connection that Chil e would be interested in hearing the views of the
members of the Appellate Body on the proposal bein g discussed in the negotiations.  Regarding the
proposal on the "sequencing" issue, he said that since the proposal was based on an earlier proposalby a group of countries including Chile, his delegation was supportive of it.
20. The representative of Paraguay welcomed the proposals by Japan, Mexico and Chinese Taipei
and said that his delegation would like to make a few preliminary comments.  Regarding the Mexican
proposal, he said that it was very innovative and designed to solve one of the major problems
confronting the dispute settlement system.  He said that his delegation shared Mexico's concern aboutthe growing number of unimplemented reports and lack of effectiveness of WTO remedies, hence its
decision to submit a proposal on good offices, conciliation and mediation. He said that Paraguay,
however, had some doubts about how the proposa l on retroactivity would work in practice.
Regarding the Japanese proposal, he said that his delegation was in agreement with the approach
advocated for settling the "sequencing" issue.  He said that his delegation was in agreement withcertain elements of Chinese Taipei's proposal and that it would provide comments at a future meeting
of the Special Session.
21. The representative of Thailand welcomed the Japanese proposal and said that his delegation
broadly shared the views of Japan on the "sequenc ing" issue.  As regards the proposal relating to
mandatory and discretionary laws, he said that his delegation was in agreement that the burden ofproof should be shifted to the Member taking the measure in question.  On the proposal relating to the
membership of the Appellate Body, he recalled that his delegation had introduced a similar proposal
suggesting that the number of Appellate Body members should be increased in order for the Appellate
Body to continue discharging its duties effectively and efficiently.  Regarding the proposal on access
to submissions by the general public, he said that his delegation was not convinced about its
underlying reasons, as under the current system, the general public could access panel and Appellate
Body reports on the Internet.
22. Turning to address the Mexican proposal, he said that his delegation was supportive of the
idea of determining the level of nullification and impairment at an earlier stage.  Arbitration under
Article 22.7 was an integral part of the DSU and was frequently being resorted to by Members.  He
said that his delegation was encouraged to learn that Mexico had an open mind as to when the
determination of the level of nullification or impairment should be made public.  In Thailand'sopinion, it would be better for the determination to be kept confidential, until the circulation of the
Appellate Body report.  He noted that the Mexican proposal was complementary to the proposal that
Thailand and Philippines  (TN/DS/W/3) submitted to amend Article 22.7 of the DSU.  As regards
retroactivity, he said that it would be helpful if Mexico could clarify further its proposal.  It was not
clear if Mexico had in mind restitutio in integrum , i.e., restoring the injured Member to the position itTN/DS/M/6
Page 9
would have been had the damage not occurre d.  If this was what was contemplated, then
compensation would need to be calculated from the date the damage occurred or when the injured
Member became aware of it.  Given these options, he said that Thailand could consider the point of
reference for calculation of the damage as proposed by Mexico.  Alternatively, it could be left to the
discretion of panels and the Appellate Body to decide .  Regarding preventive measures, he said that it
was implicit that Mexico had in mind a type of injunctive relief.  He said that his delegation had somedoubts about how it would work in practice, given the possibility that a panel might sanction the
adoption of a preventive measure, only to decide later that it was not warranted and that compensation
should be provided to the alleged wrongdoer.  It would in such cases make sense for the requesting
party to pay compensation as and when it became evident that the request was frivolous.  Probably,
compensation made on account of some punitive damage could be an option to preventive measures,
as was the case under some domestic laws.
23. The representative of Ecuador welcomed the proposals by Japan, Chinese Taipei and Mexico
and said that they would make an important contribution to the work of the Special Session.  He said
that at this stage, his delegation only wanted to offer some comments on the Mexican proposal, which
it considered to be very innovative and an attempt to address one of the major problems confronting
the dispute settlement mechanism.  He recalled his delegation's proposal and said that it shared
Mexico's concern that under the current system, some Members acted as if they had been granted awaiver from implementing the recommendations and rulings of the DSB.  According to their
estimates, this de facto waiver could remain in force for approximately five years. Mexico's statistics
showed that it was more than three years, starting from the date of the establishment of the panel.  If
you took account of the time spent on formal and in formal consultations between the parties, the total
time spent on each case was nearer the estimate they had provided.  He referred to the figuresprovided by Mexico regarding the amount of losses incurred as a result of the non-implementation of
the recommendations and rulings of the DSB and said that this was proof that the current dispute
settlement system rewarded countries which did not comply with their obligations.  It actually created
incentives for countries to violate their obligations.
24. He reiterated his delegation's view that top priority should be given to addressing the lack of
implementation of the DSB's recommendations and rulings.  He said in that context that even if other
reforms were made, but nothing was done about the "de facto" waiver that Members had, then it was
doubtful if they would achieve their stated objective of improving the DSU.  He said that his
delegation favoured an early determination of the level of nullification and impairment and had made
a proposal in that regard, although it differed from the Mexican proposal under which thedetermination would be made at an earlier date.  What was of paramount importance, however, was
addressing the de facto  waiver that Members had under the current system.  Specifying the level of
nullification and impairment in the panel report would be positive, as the responding Member would
know exactly what was at stake and accordingly weigh its options.  If it chose not to comply, it would
be aware that it could face retaliatory action in the amount specified in the report.  As regards
retroactivity, he said that his delegation was also in support of the Mexican proposal.  Currently, the
remedies provided under the DSU were prospective in nature.  They did not fully cure the damagedone by the inconsistent measure. With respect to preventive measures, he said that they should enter
into force immediately after the adoption of panel and Appellate Body reports or after the
authorization to suspend concessions or other obligations. This would force the hand of the
responding Member to comply with the recommendatio ns and rulings of the DSB.  Finally, he urged
participants who have submitted similar proposals to work together and explore the possibility ofpresenting a joint proposal given the May 2003 deadline.
25. The representative of Uruguay welcomed the proposals by Japan, Mexico and Chinese Taipei
and said that they would make an important contribution to the work of the Special Session.  In
respect of the Japanese proposal, he recalled that his delegation had offered some comments at the
previous meeting of the Special Session and as such would not be commenting on it at the present
meeting, except to reiterate its support for the ideas put forward to resolve the "sequencing" issue.  AsTN/DS/M/6
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regards Chinese Taipei's proposal, he said that his delegation could agree to some of its elements and
would be making a detailed statement at a future meeting of the Special Session.  Turning to the
Mexican proposal, he said that it had correctly identified one of the major problems confronting the
dispute settlement system and proposed solutions which, in his delegation's view, merited further
consideration.  The lack of implementation of the recommendations and rulings of the DSB was
severely affecting the credibility of the dispute settlement system and the multilateral trading systemas a whole and needed to be addressed as a matter of priority.  He said, however, that Uruguay was in
agreement with Chile that some of the proposals tabled by Mexico needed further elaboration,
particularly in terms of how they would work in practice.  Given the far-reaching implications of the
Mexican proposal for the dispute settlement system, it was doubtful if consensus could be reached on
it before the May 2003 deadline.
26. The representative of Brazil welcomed the proposal by Japan and said it would make an
important contribution to the work of the Special Session.  In relation to Article 4.7 of the DSU, he
said that developing countries should have the right to request that consultations be extended up to
60 days.  Thus, the phrase "if the parties agree" should be deleted from the proposal.  Brazil was in
agreement that a new Article 10.3 should be inserted into the DSU, which would provide for
enhanced access to documentation, although it was of the view that the participation of third parties in
any of the substantive meetings should be reflected upon further.  He said that his delegation couldalso support the insertion of a deadline into Article 3.6 of the DSU, which would oblige parties to
notify their mutually agreed solutions within a specified time-period.
27. With respect to measures implemented by a Member under a WTO-inconsistent mandatory
law, he said that it was Brazil's view that it would not be easy to establish precisely the trade effects
that might be generated in the future, as a result of measures that might be implemented under thelaw. As regards the "hit and run" situation that could happen under a discretionary law implemented
by a Member, he said that his delegation was in agreement with Japan that in cases of repeated
violations, the matter should be dealt with as expeditiously as possible by the panel or the Division of
the Appellate Body that handled the original case.  He said in that context that proceedings under
Article 21.5 of the DSU could serve as a model for cases of repeated violations of a discretionary law.He said that proposals aimed at expediting the dispute settlement process, including the Australian
proposal, deserved to be given further consideration.
28. With respect to the proposal by Mexico, he said that it was remarkable in that it addressed
some of the most contentious and difficult issues which were central to operation of the dispute
settlement system.  Turning to the specifics, he said that his delegation was supportive of the proposalthat would require the determination of the level of nullification and impairment during the interim
review stage of the panel proceedings.  He said that the question was whether it made sense to
determine the level of nullification and impairment when it was still possible that the panel report
might be appealed. Given the proposal to eliminate the interim review stage in the panel proceedings,
he said that it was Brazil's view that it might be advisable to determine the level of nullification and
impairment after the adoption of the panel report.  Analogies to domestic legislation might
mischaracterize the nature of the international trading system, but if that should be consideredrelevant, then it might be reasonable to require the complaining Member to request a determination of
the level of nullification and impairment in its first submission.  As regards preventive measures, he
said that his delegation would like Mexico to further elaborate on its proposal.  It was not clear from
the proposal how a Member could prove " fumus boni iuris " (appearance of a good right) and
"pericolum in mora " (danger in the delay).  It would also be helpful if Mexico could indicate whether
these measures would be generally available or restricted to some areas such as trade remedies.
29. The representative of Argentina welcomed the proposals by Japan and Mexico and said that
they would make an important contribution to the work of the Special Session.  Regarding the
proposal by Japan, he said that his delegation could support it as it reflected most of the ideas
contained in the proposal of the co-sponsors which (WT/MIN(01/W/6), otherwise referred to as theTN/DS/M/6
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"Suzuki" text, which was submitted in 2001 to Ministers for their consideration at Doha.  He said that
Argentina had reservations against some of the proposals, but it was willing to discuss them with
Japan.  He further said that his delegation attached the highest priority to the sequencing issue, as it
had been a source of contention between Members.   Resolving it definitively would help ensure
security and predictability.
30. As regards the proposal on mandatory laws implemented by Members, he said that his
delegation appreciated the reasons behind its introduction by Japan.  He said that the proposal in its
present form did not shed light on a number of issues .  It was, for example, not clear how Article 22.4
of the DSU could be amended so as to take into account trade effects that might be created in the
future as a result of the application of the mandatory law by the concerned Member. It was also not
clear how similarity between measures could be esta blished.  In relation to the repeated application of
WTO-inconsistent measures under a "discretionary law", he said that the proposal was interesting, but
it also needed to be elaborated further.  It was imperative for there to be clear benchmarks forestablishing similarity between measures implemented by the concerned Member under the
discretionary law.  He inquired whether the mere proof that a measure was adopted under the
discretionary law, which had itself not been found to be WTO-inconsistent, created any presumption
that the Member concerned was in breach of its WTO obligations?   He said that Argentina was of the
view that rules concerning burden of proof should be based on objective criteria.
31. Regarding the proposal relating to the increase in the membership of the Appellate Body, he
said that Argentina was of the view that the opinions of the Appellate Body members should be
sought before a decision was made.  He further said that Argentina could support the proposal relating
to the amendment of Article 17.1 of the DSU, so that the number of Appellate Body members could
be modified by a DSB or General Council decision.  Regarding access to submissions, he said that hisdelegation was still considering it, but was likely to agree to it in one form or the other.
32. With respect to the proposal by Mexico, he said that while his delegation was appreciative of
the underlying concerns and possible benefits in terms of time-savings and inducing compliance with
the DSB's recommendations and rulings, it was sceptical of the proposal to bring forward the
arbitration procedure in Article 22.7 of the DSU, w ith a view to determining the level of nullification
and impairment during the panel stage.  In Argen tina's view, it would be ta ntamount to requiring the
responding Member to defend two actions in parallel, namely the consistency of the challenged
measure with WTO rules and the appropriate level of nullification and impairment.  This could be
unfair to the responding Member, as there was the possibility of the measure being found
subsequently to be consistent with WTO rules.  Another reason why it might be premature todetermine the level of nullification and impairment at the panel stage was the possibility of the
responding Member adopting a new measure in response to the recommendations and rulings of the
DSB.  It would only be equitable to take into account this new measure in the calculation of the level
of nullification and impairment.  In relation to the proposal on retroactive application of remedies
under the DSU, he said that it would be in accord with the general principles of international law on
state responsibility.  He further said that if this proposal were to be accepted, then retroactive
application of remedies should only apply to measures implemented after the entry into force of thecorresponding amendment to the DSU.  He expressed doubts about whether there would be consensus
on this proposal before the May 2003 deadline.
33. Regarding preventive measures such as requiring the responding Member to suspend the
application of the challenged measure or authorizing the complaining Member to suspend concessions
or other obligations towards the responding Member, he said that while his delegation wassympathetic to the proposal, there was the issue of how panels could distinguish between well-
founded and frivolous claims that the challenged measure was causing or threatened to cause
irreparable damage.  With respect to the proposal that would entitle a Member to transfer its right to
suspend concessions or other obligations to another Member, he said that his delegation was unsure as
to how it would work in practice.  It was difficult to ascertain why another Member would "purchase"TN/DS/M/6
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a right to suspend concessions or other obligations towards another Member whom it had no
complaints against.  There was also the broader issu e of the compatability of this proposal with the
basic principles of the multilateral trading system.
34. The representative of Israel thanked Japan, Mexico and Chinese Taipei for their proposals and
said that they would make an important contribution to the work of the Special Session.  With respect
to the proposal by Chinese Taipei, she said that it touched on issues of importance to Israel in thesenegotiations and that her delegation would comment on it at a future meeting of the Special Session.
With respect to Japan's proposal, she recalled that pa rticipants had an opportunity at the fifth meeting
of the Special Session to discuss informally the proposals relating to mandatory and discretionary
laws.  She noted the usefulness of these discussions, but said that it was necessary for Japan to further
elaborate on its proposal.  With respect to the proposal on the "sequencing" issue, she said that her
delegation attached the highest priority to it and would like to see it resolved definitively during these
negotiations.
35. With regard to the proposal by Mexico, she said that her authorities were studying it and that
she would only make some preliminary comments at this stage.  She noted that the proposal had
identified some of the major problems confronting the dispute settlement system including the lack of
incentives to induce compliance with the recommendations and rulings of the DSB, and proposed
interesting solutions to deal with them.  She, however, expressed some doubts about the proposalwhich would require the determination of the level of nullification and impairment at the panel stage.
36. The representative of the United States thanked Japan, Mexico and Chinese Taipei for their
proposals.  With respect to Japan’s proposal, he said that his delegation welcomed Japan’s suggestion
that dispute settlement submissions be made public.  The United States believed that, with the
exception of confidential information, they should be made public upon submission.  The UnitedStates also looked forward to discussing Japan’s other proposals, as it had a number of questions
about them.  For example, the United States wondered how it would be possible to calculate the trade
effects of a measure that might be taken in the future.  This would appear to require some speculation.
The United States also wondered about the basis for presuming that a measure similar to a WTO-
inconsistent measure was also inconsistent.  This would appear to presume that the specifics of aparticular measure were unimportant in determining consistency, whereas the United States'
experience was the opposite.  With respect to Mexico’s proposal, the United States said that it
appeared to call for radical changes in the dis pute settlement process, particularly in how the
suspension of concessions would operate.  The proposal needed to be studied very carefully, and the
United States looked forward to a thorough debate on its implications.  With respect to thecontribution of Chinese Taipei, the United States welcomed Chinese Taipei’s support for greater
transparency in the dispute settlement system and looked forward to discussing the paper more after
having had some time to review it.
37. The representative of Canada welcomed the proposal by Mexico and said that his delegation
would only be making some preliminary comments.  He said that his delegation sympathised with the
underlying concerns behind Mexico's proposal and ag reed that the lack of implementation of DSB's
recommendations and rulings was affecting the credibility of the dispute settlement system.  InCanada's view, the focus of the Mexican proposal should be on how to create greater incentives to
comply, rather than on facilitating retaliation for non-compliance.  He said in that connection that
Canada had a number of questions and concerns, which it would like to get responses and
clarifications from Mexico.  With respect to the proposal for an "early determination and application
of nullification and impairment", he said that it was not clear what the net benefit would be, if theprocedure for determining the level of nullification and impairment under Article 22.7 of the DSU
was advanced to the panel stage.  It should be noted that a significant number of panel decisions were
reversed or modified on appeal by the Appellate Body.  The Mexican proposal might be overly
optimistic as to the benefits that an early Article 22.7 process could bring in terms of facilitating
negotiations between the parties and easing the burden on the dispute settlement system.  Should oneTN/DS/M/6
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of the parties come to the conclusion that the level of retaliation set by the panel was not correct, it
was more likely to appeal that aspect of the repor t, rather than enter into  negotiations with the
prevailing party with a view to reaching a settlement.  Members seemed to eschew other equally
important considerations before they initiated or defended cases in the dispute settlement system.  The
mere indication of the level of nullification and impairment was unlikely to convince a Member to
abandon its legal strategy.
38. Regarding the proposal that compensation or suspension of concessions could take effect
"from the date of adoption of the Panel or Appellate Body report", he said that his delegation also had
some concerns, as it appeared to do away with the right of Members to a reasonable period of time, if
immediate implementation was not practicable.  The Mexican proposal seemed to be based on the
belief that responding Members were somehow deliberately stalling the system in order to gain more
time.  While that might be true in some instances, it could not be said that was the situation in all
cases.  There was a presumption that Members would implement their obligations arising out of thedispute settlement system in good faith.  He said that his delegation would like to leave open the
argument that it was only when there had been a determination of inconsistency with WTO
obligations and a reasonable period of time for implementation had been fixed that domestic policy
issues get addressed in anything other than a defensive manner.   Indeed, the Mexican proposal might
in certain cases make compliance less enticing, i.e. - create domestic pressure to "just pay for it".
39. With regard to the proposal on "retroactive determination and application of nullification and
impairment", he recalled that his delegation, along with many other Members, voiced strong
opposition to retroactivity at the time of the adoption of the compliance panel report in the
Australia-Automotive Leather case and said that Canada's views had not changed since then.  He cast
some doubts about Mexico's reference to the Agreements on Anti-Dumping and Subsidies andCountervailing Measures in support of its proposal for "preventive measures".  In Canada's view, it
would not be appropriate to consider a practice in the field of domestic trade remedies as a benchmark
for the WTO dispute settlement. Furthermore, the proposal that "... if a complaining party considers
that the challenged measure is causing or threatens to cause damage ... it should be able to have the
Panel request the defending party to suspend applying the challenged measure …", appeared  quiteclose to permitting a unilateral determination of WTO-inconsistency.  The proposal also raised some
practical questions, including whether the responding Member would be able to adopt some measures
during the period of suspension of its challenged measures?  In some situations, applying no measure
at all might be a feasible option, but in other situations, some type of interim measure might be
essential.  Would it be reasonable to assume that a Member would be able to immediately apply newmeasures and did Mexico envisage any constraints being placed on the Member in terms of its choice
of interim measure?  As regards the proposal on "tradeable remedies" proposal, he said that his
delegation was concerned that it could create a market in trade-restrictive measures and thus run
contrary to the object and purpose of the WTO.
40. The representative of Norway welcomed the proposal by Mexico and said that it was a
significant contribution to the work of the Special Session.  He said that Norway shared the
underlying concerns which the proposal sought to address, namely the lack of incentives to complywith the recommendations and rulings of the DSB.  He, however, said that his delegation had some
questions and comments on the proposal.  Regarding the proposal on "early determination of
nullification and impairment", he said that like Brazil, his delegation found it to be very interesting.
In several domestic jurisdictions, a claim for compensation would normally be contained in the
plaintiff's statement of claim.  Could an analogy be made and require that a claim for compensationhad to be included in the complaining Member's pa nel request? This would ensure that the issue was
within the terms of reference of the Panel.  Regarding the early determination of the level of
nullification and impairment, it was the view of Norw ay that this would necessitate an amendment to
Article 17 of the DSU, as the level had to be changed by the Appellate Body, if it reversed or
modified the panel findings.  This determination was not a question of law.  He said that hisdelegation would appreciate the views of Mexico on this point.  He said that his delegation could notTN/DS/M/6
Page 14
understand why Mexico was proposing that the determination should be kept confidential.  Did
Mexico have any special reasons for this position?   Norway would prefer if the determination was
made public with the possibility of challenging it be fore the Appellate Body. This seemed to be the
practice in most domestic jurisdictions.
41. With regard to the proposal that compensation could be computed as of the date of the panel
report, he said that given the overall objective of the proposal to make WTO remedies more effective,it might probably be more effective if "daily fines" were imposed on the responding Member, with the
provision that failure to pay the fine on a timely basis would attract the payment of a penalty, as was
the case in some domestic jurisdictions. This suggestion would make it prohibitively expensive for
Members who chose not to comply with th e recommendations and rulings of the DSB.
42. Regarding the proposal on retroactive determination and application of nullification or
impairment, he said that his delegation found it very interesting.  Based on the reasons given by
Mexico and the general rules on state responsibility under public international law, his delegationwould favour the calculation of compensation from th e date of the establishment of the panel, as it
was more likely to take care of the loss sustained by the complaining Member.  On preventive
measures, he said that this was a concept common to all legal systems and other international
tribunals, including the International Court of Justice and as such could be seriously considered.  He,
however, expressed the view that Mexico's proposal might lead to abuses, as the threshold standard-
"damage that would be difficult to repair" - did not seem to be high enough if compared with other
international tribunals, which expected the country making the request to adduce evidence which
indicated positively that irreparable damage would be  caused if the other country did not terminate its
actions.  He said that Norway had an open mind on the sort of standard that should be applied to trade
disputes and requested if Mexico could elaborate further on its proposal and demonstrate how itwould work in practice.  With respect to the proposal on negotiable remedies, he said that his
delegation had some doubts and wondered how it would work in practice.  He concluded by inviting
Mexico to comment on whether its proposal and that of Ecuador regarding mandatory compensation
were mutually supportive?
43. The representative of India stated that the dispute settlement system of the WTO had worked
satisfactorily since its inception in 1995.  However, the seven years that it had been in operation had
also showed that it had some serious weaknesses, particularly in the implementation phase of the
process.  It was some of these weaknesses that the Japanese and Mexican proposals sought to address.
He said that his delegation was therefore sympathetic to these proposals and looked forward to
participating in the discussions that would be held on them and on other proposals. With regard to the
proposal by Japan, he recalled his delegation's support for the earlier proposal on the "sequencing"
issue which was submitted to the Doha Ministerial Conference by Japan and a group of countries.  As
the new proposal incorporated most of the elements of the old proposal, he said that his delegation
could support it as well as the other proposals put forward by Japan.  On the proposal relating to
measures taken pursuant to a "mandatory law", he said that his delegation understood the concern of
Japan that the mere finding of the law as WTO-inconsistent might not compel the Member to
withdraw the measure, unless there was a threat of retaliation in case non-compliance.  He askedwhether Japan was suggesting that WTO law should provide remedies for future measures under such
law and, if so, how could the level of retaliation be assessed for such non-existent measures.   He
further inquired as to how Article 22.4 of the DSU could be amended to accommodate the proposal by
Japan.
44. With regard to the proposal that would create an exception to the application of the
"discretionary law" theory, when repetition of the sa me violation was highly probable, he said that his
delegation was supportive of it, as well as the other proposals relating to the expeditious conduct of
proceedings and the shifting of the burden of proof onto the defendant in cases of repeated violations
under a "discretionary law".  With respect to the proposal on authorizing the DSB or General Council
to modify the number of Appellate Body members depending on the workload, he said that hisTN/DS/M/6
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delegation would like Japan to clarify whether the present number of seven could be reduced in the
event of a considerable reduction in the workload of  the Appellate Body in the future?  With regard to
the proposal for enhanced access to submissions by the general public, he said that it was his
delegation's view that the decision should be left to the discretion of each Member.  With regard to the
proposal by Mexico, he said that his delegation wa s studying it with interest and that they would
provide their comments at the next meeting of the Special Session.
45. The representative of New Zealand welcomed the proposals by Mexico and Japan and said
that they would make an important contribution to the work of the Special Session.  With respect to
the Mexican proposal, he said that it correctly identified one of the major problems confronting the
dispute settlement system, namely the ability of Members to maintain WTO-inconsistent measures for
a long period of time without any consequences.  He said that his country had experienced this sort of
situation before and was consciously aware of the ineffectiveness of trade sanctions as a tool to induce
compliance with the recommendations and rulings of the DSB.  With regard to the proposal onretroactivity, he said that his delegation was sympathetic to it given its own past experience.  A
victory under the DSU was not able to make up the losses that New Zealand had incurred as a result
of the breach of WTO commitments by other Members. He said that his delegation would make
further comments on the Mexican proposal during the issue-by-issue discussion which would take
place in an informal mode.  One way of addressing  the problem of lack of timely implementation of
the recommendations and rulings of the DSB was by  expediting the dispute settlement process,
especially in areas such as safeguards.  He mentioned in that context his delegation's support for the
Australian proposal.  If the process was streamlined and made more expeditious, there was the
possibility that it could lead to faster implementation of the DSB's recommendations and rulings.
Turning to Japan's proposal, he said that as one of the co-sponsors of the original paper on the"sequencing" issue, his delegation attached priority to this issue and would like to see it resolved
during these negotiations.  In that context, New Z ealand was of the view that the proposal by Japan
provided a good basis for further discussions on this issue.  He also said that his delegation could also
support the proposal relating to grater access of submissions by the general public.
46. The representative of Peru welcomed the proposals by Japan, Mexico and Chinese Taipei and
said that they would make a significant contribution to the work of the Special Session.  With respect
to the proposal by Japan on the sequencing issue, she said that her delegation was in support of it.
She further said that there appeared to be consensus among participants on this issue, and that it was
the expectation of her delegation that it would be included in the final package that would be adopted
at the end of the negotiations.  She, however, expressed some doubts about the other proposals ofJapan, particularly the one relating to the need to broaden the scope of Article 22.4 of the DSU to
encompass not only the trade effects created by the measure in question under a "mandatory law", but
also those that would be created in the future by subsequent measures that might be adopted pursuant
to the law.  With respect to the proposal by Mexico, she said that her delegation was studying it with
great interest and would give its comments at a future meeting of the Special Session.  As a
preliminary comment, however, she said that her delegation could support a number of its elements,
including the early determination of nullification and impairment.  As regards the proposal onnegotiable remedies, she said that her delegation could not support it, as it would fundamentally alter
the way the DSU operated.
47. The representative of Pakistan welcomed the proposals by Mexico, Japan and Chinese Taipei
and said that his delegation would like to offer some preliminary comments, on the understanding that
they would make substantive comments at a future meeting of the Special Session after they had hadthe opportunity to review the proposals thoroughly.  With respect to the proposal by Mexico, he said
that it contained very interesting proposals which merited further consideration by the Special
Session.  The dispute settlement process was cumbersome and could be protracted, especially during
the implementation phase.  As Pakistan saw it, the objective of the Mexican proposal was to
streamline the dispute settlement procedures and make it easier for a Member to get relief after itsrights had been impaired or nullified by a WTO-inconsistent measure.  According to the statisticsTN/DS/M/6
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provided by Mexico, a WTO-inconsistent measure could remain in place for a long time after it had
been declared inconsistent by a panel or the Appellate Body.  From Pakistan's experience with the
dispute settlement system, it was clear that most of these measures were maintained so as to protect
domestic industries from competition.  Instead of encouraging Members to promptly comply with the
recommendations and rulings of the DSB, the current system rather created incentives for non-
compliance.  He made reference to the statement by Japan that Members could get around theirdiscretionary laws by adopting "hit-and-run tactics", and said that under the WTO dispute settlement
system, a Member could maintain an inconsistent measure to protect its domestic industry, until such
time a panel or the Appellate Body pronounced on its illegality and, even then, the Member could
delay the implementation of the DSB's recommendations and rulings.  While the time it took for
disputes to be resolved was partly responsible for the delays associated with the implementation of the
DSB's recommendations and rulings, it was Pakistan's  view that given the complexity of the process,
the present time-frame should be preserved, unless it was absolutely necessary.
48. With regard to the Mexican proposals on interim relief and retroactivity, he said that his
delegation saw a need for their introduction in the dispute settlement process.  It was imperative to
remove the incentives which encouraged Members to delay the implementation of the
recommendations and rulings of the DSB.  Granting interim relief to a complaining Member could
forestall the damage that would have been done to its economy, if the responding Member were tocontinue to maintain its measures which might be WTO-inconsistent.  Currently, WTO remedies were
only prospective, thus past wrongs were not compensated.  Changing the rules to allow for
compensation would be equitable.  The proposal on "negotiable remedies" appeared to be too radical
and required further consideration. As an initial comment, it would politicize the dispute settlement
and marginalize countries which lacked economic clout.  Turning to the proposal by Chinese Taipei,he said that his delegation was in agreement with it that opening up meetings to the general public and
enhancing their access to submissions would not necessarily improve the DSU and that it was
essential that for the inter-governmental nature of the WTO to be preserved.  Regarding amicus curiae
briefs, he said that his delegation was in agreement with the position taken by Chinese Taipei and that
the acceptance of such briefs would put developing countries in a disadvantageous position given thelimited resources at their disposal.
49. The representative of Cuba thanked Japan, Mexico and Chinese Taipei for their proposals and
said that they all deserved to be discussed further by the Special Session considering the very
important issues that they addressed.  She said that her delegation had some comments and questions
which they would like to raise.  Regarding the proposal by Japan, she said that while her delegationwas in agreement that equivalence had to be established between suspension of concessions and the
level of nullification and impairment, she wondered whether Japan was suggesting that in calculating
trade effects, account had to be taken not only of trade effects created by the existing measure, but
also of those that might be created in the future by similar measures.  In Cuba's view, making such a
judgment would amount to pre-judging the content of future measures that might be adopted by
Members.  As regards the proposal by Japan aimed at enhancing the access of the general public to
submissions, she said that her delegation was, in principle, not opposed to it, but thought it should beleft to the discretion of each Member.  It was unnecessary to have a provision in the DSU governing
this issue.
50. With respect to the proposal by Mexico, she said  that her delegation shared the view that one
of the fundamental problems of the current dispute settlement system was the ability of Members to
delay the implementation of the DSB's recommendations and rulings without any consequences.With respect to the proposal on early determination and application of nullification and impairment,
she said that her delegation could, in principle, support it.  However, as regards preventive measures,
she said that Cuba shared the view of Chile th at it was currently beyond the terms of reference of
panels to grant such orders.  Moreover, given the possibility of the reversal of conclusions reached at
first instance on appeal, it was necessary to exercise caution.  With respect to the proposal onretroactivity, she said that her delegation was still considering it and would comment on it at a laterTN/DS/M/6
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date. She said that her delegation was also interested in the proposal relating to costs – counsel fees
and litigation expenses -  and was studying it with great interest.  With respect to negotiable remedies,
she shared her delegation shared the view of Pakistan that it might politicize the dispute settlement
system.  Turning to the proposal by Chinese Taipei , she said that her delegation supported the views
expressed by Chinese Taipei on access to submissions by the general public and also on amicus
curiae  submissions.  She recalled that her delegation and other countries had co-sponsored a proposal
(TN/DS/W/18) which covered, inter alia , the way Article 13 of the DSU should be interpreted.
51. The representative of Colombia thanked Mexico and Japan for their proposals and said that
they would make an important contribution to the work of the Special Session.  She noted that while
the WTO dispute settlement system was a significant improvement over its GATT counterpart, there
were some drawbacks, including the ability of a Me mber to maintain inconsistent measures for around
three years without any consequences.  It was in this light that her delegation supported any proposal
that aimed to address this issue and contribute to the objective of securing prompt resolution of tradedisputes.  Turning to the Mexican proposal, she said that it was a bold and imaginative proposal which
should be considered thoroughly by participants.  The suggestions on early determination of
nullification and impairment, retrospective remedies, preventive measures and negotiable remedies
were novel ideas which could address the problem of how to compensate at the national level losses
sustained by industry, as a result of protectionist policies implemented by a Member in breach of itsWTO obligations.  With respect to the proposal by Japan, she recalled that her country was among the
group of countries which co-sponsored a proposal on the DSU which covered, inter alia , the
sequencing issue and other aspects of the DSU during the preparatory process for the Doha
Ministerial Conference.  As the proposal by Japan was modelled on the proposal by the co-sponsors,
her delegation could support many of its elements.  As regards the proposal by Japan on mandatoryand discretionary laws, she said that her delegation was still analysing them and would provide its
comments at a later date.  She, however, expres sed doubts about the possibility of resolving the
problem of discretionary laws through an authoritative interpretation of the relevant DSU provisions.
With respect to the proposal on enhanced access to submissions by Members and the general public,
she said that it was reasonable and capable of being supported by her delegation.  She observed,however, that the distinction betw een Members who were non-parties to the dispute and the general
public was not very clear in the proposal, although it appeared that submissions would be made
available to the public after they had been circulated to Members.
52. The representative of Poland thanked Japan, Mexico and Chinese Taipei for their
contributions and said that his comments would only focus on the proposal by Mexico relating to
negotiable remedies.  In Poland's view, the intro duction of this concept to the DSU would be an
unfortunate development for at  least three reasons.  First, it would undermine one of the basic tenets
of the dispute settlement system and the multilateral trading system, which was that the rights of
Members should be protected under multilateral surveillance and that it was up to each and every
Member to ensure that its rights and legitimate expectations were not being impaired or nullified.
Second, if Members were able to negotiate away th e remedies that they were entitled to, it might
discourage parties from negotiating seriously to find mutually agreed solutions to their disputes,which was also one of the objectives of the disp ute settlement system.  Third, it would diminish
transparency of the system, as the surveillance powers of the DSB would be severely compromised.
For these reasons, participants should critically examine the proposal by Mexico before drawing any
conclusions.
53. The representative of Korea thanked Mexico for its proposal which demonstrated its
commitment to strengthening the dispute settlement sy stem and to enhancing its credibility.  He said
that his delegation would like to make a few preliminary comments on some aspects of the proposal.
With respect to the proposal that the level of nullification and impairment should be determined by
the original panel, he recalled that his delegation had made a proposal that the level of nullification
and impairment should be determined by the compliance panel established under Article 21.5 of theDSU.  He said that it might not be appropriat e to make a comparison between the Korean andTN/DS/M/6
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Mexican proposals, as the latter was conceived with a retrospective remedy system in mind, whereas
the former was inspired by the current system, which was prospective in character, as no relief was
provided for damages suffered in the past.  Against this background, what needed to be considered
was the value to the DSU of a retrospective system.  He stressed that Korea had an open mind on this
issue.  It was aware that a retroactive remedy system would provide a strong incentive for prompt
compliance with the DSB's recommendations and rulings as well as respect for multilateral rules.However, its introduction would necessitate a fundamental change to the current DSU provisions.  For
example, the first sentence of Article 19.1 of the DSU which provided for the prospective remedy
principle would have to be amended.  The second sentence of Article 19.1 which conferred
discretionary power on panels to make specific recommendations might also need to be re-visited.
With respect to the proposal on preventive measures, he said that it was incompatible with the terms
of Article 7 of the DSU concerning the terms of reference of panels, and Article 11 of the DSU
concerning the functions and standard of review to be followed by panels, as well as the principle that
the recommendations and rulings of the DSB could not  add to or diminish the rights and obligations
provided in the covered agreements (Articles 3.2 and 19.2 of the DSU).  This might be tantamount to
a substantial rewriting of the DSU.  Given the magnitude of the implications of the Mexican proposal,
it would require careful analysis.  With respect to the proposal by Japan, he recalled that Korea was
among the group of countries which co-sponsored with Japan and other countries the proposal on thesequencing issue which was submitted to Ministers for their consideration at Doha.  As such, Korea
could support the proposal aimed at resolving the sequencing issue.  As regards the proposal on
mandatory and discretionary laws, he said that his delegation was sympathetic to the concerns of
Japan and looked forward to further detailed discus sions on these issues.  Concerning the contribution
by Chinese Taipei, he said that Korea was generally in agreement with the views expressed byChinese Taipei and would comment on them during the issue-by-issue discussion .
54. The Chairman recalled that there were a number of proposals on the table concerning the
appropriate time to determine the level of nullification and impairment and suggested that it might be
helpful from a procedural point of view to compare these proposals with the proposal by Mexico
which advocated the determination of the level of nullification and impairment to be made by theoriginal panel.
55. The representative of Hong Kong, China thanked Japan, Mexico and Chinese Taipei for their
proposals and said that his comments would only focus on certain aspects of the proposal by Mexico.
He said that his delegation shared the concern of Mexico that the credibility of the dispute settlement
system was being undermined by the ability of Members to maintain WTO-inconsistent measures fora long period of time without any consequences.  With respect to the proposal on retroactive
remedies, he said that it deserved further consideration taking into account the position under
international law and past GATT/WTO cases which ha d required the reimbursement of duties levied
in connection with trade remedies legislation.  On the early determination and application of
nullification and impairment, he said that the implications of this proposal had to be carefully
considered.  It would, for example, have implications for the sequencing issue and create uncertainty
should the compliance panel under Article 21.5 reach a different conclusion.  On the proposal relatingto preventive measures, he said that his delegation was in agreement with the views expressed by
some participants that it could be abused by some Members, who might initiate frivolous actions
provoking retaliatory measures in return.  It was necessary to reflect further how it would work in
practice, as there were a number of unanswered questions.  With respect to the proposal on negotiable
remedies, he said that his delegation was also in agreement with other participants that it couldpoliticize the dispute settlement system and undermine its basic character.
56. The representative of the European Communities thanked Japan for its proposal and said that
his delegation would like to make the following co mments.  With respect to the proposal on the
sequencing issue, he recalled the statement made by Japan that there were similarities between its
proposal and that of the EC and said that his dele gation was prepared to work closely with Japan in
order to narrow the differences between the two te xts.  With respect to the proposals on mandatoryTN/DS/M/6
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and discretionary laws, he said that Japan had identified some fundamental problems which needed to
be addressed comprehensively.  He said that the EC was willing to consider any ideas that Japan
might have in this regard.  With regard to the procedure for modifying the number of the Appellate
Body members, he observed that the EC's proposal was similar to that of Japan.  Given that there
would be budgetary implications, the EC was of the view that the decision on this matter should be
taken by the General Council.  With respect to the proposal on enhancing access to documentation byMembers and the general public, he said that the EC was generally supportive of it, as it would
promote transparency.  He asked the reason for the two-week delay before submissions were made
available to the general public and other non-parties to the dispute.
57. With respect to the proposal by Mexico, he said that the EC shared the view that the non-
implementation of the DSB's recommendations and rulings was undermining the credibility of the
dispute settlement system.  The proposal by Mexico was innovative and thought-provoking and as
such it deserved further consideration.  He said th at while the EC was sympathetic to the proposal, it
had a number of questions and comments.  Given that the arbitration procedure in Article 22 of the
DSU was time-consuming, it might be presumptuous to think that panels and the Appellate Body
would be able to cope easily with additional tasks and meet the deadlines foreseen in the DSU.  The
EC wondered whether Mexico had factored this into its proposal.  The second question related to
preventive measures and retroactive remedies.  As they were both intended to protect the interests ofthe complaining Member, the EC wanted to know if Mexico had thought about when each remedy
could be properly invoked or whether the two remedies could be invoked at the same time?  The third
question concerned non-compliance with a preventive measure ordered by a panel.  The EC wondered
if Mexico had thought about the penalties for non-compliance.  The fourth question related to
negotiable remedies.  The EC wondered if Mexico was actually convinced about the potential of itsproposal creating an incentive for Members to comply with the recommendations and rulings of the
DSB?  In the EC's experience, suspension of concessions created the same difficulties for Members
regardless of their size or economic power.
58. The representative of Malaysia thanked Japan, Mexico and Chinese Taipei for their proposals
and said that they would make an important contribution to the work of the Special Session.  He said
that his comments would focus on some aspects of the proposals by Mexico and Chinese Taipei. With
regard to the proposal by Japan, he said that his delegation would provide its comments later, as his
authorities were studying it.  Turning to the Mexican proposal, he said that his delegation found it
intellectually challenging and stimulating.  However, given its potential ramifications, it was very
doubtful if consensus could be found on it before the May 2003 deadline.  Nevertheless, the proposalwas worth considering.  Turning to the specifics, he  said that Malaysia was in agreement with Poland
that the proposal on negotiable remedies would undermine some of the fundamental tenets of the
dispute settlement system and as such it could not support it.  With regard to the proposal on early
determination and application of nullification and impairment, he said that his delegation found it very
interesting and was willing to consider it further.  However, it appeared that it had two major
drawbacks.  The first was that Members would no longer have a reasonable period of time to
implement the recommendations and rulings of the DSB.  This could create problems, as it was notalways that a member could promptly comply with  the recommendations and rulings of the DSB.  The
second difficulty Malaysia had with this proposal related to the confidentiality of the level of
nullification and impairment.  In Malaysia's experience, it would be difficult to keep this information
confidential.  It was more likely to be leaked with its attendant consequences for the relevant actors.
With respect to retroactive remedies and preventive measures, he said that his delegation was willingto consider them, although it also had some difficulties in this regard.
59. With respect to the proposal by Chinese Taipei, he said that his delegation's views on a
number of issues were quite similar to those of Chinese Taipei.  He referred to the US proposal
regarding the creation of guideline procedures for handling amicus curiae  briefs and said that his
delegation did not see any need for such procedures.  He said that the position of Chinese Taipei onthis issue was a little bit ambivalent, as it appeared to  be of the view that they were guidelines alreadyTN/DS/M/6
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in place that had been established by panels and the Appellate Body.  He recalled that Malaysia and a
group of developing countries had strongly voiced their objection to the approach that had been
adopted by some panels and the Appellate Body in the handling of amicus curiae  briefs.  Their
interpretation of the scope of Article 13 of the DSU was wrong and had no textual basis.  As such,
their position should not be legitimized by adopting those standards that they had created.  Lastly, he
referred to the statement by Chile that the views of the members of the Appellate Body should besought in these negotiations and said that Malaysia did not see any advantage in doing that and could
not go along with that suggestion.
60. The representative of India said that his delegation was in agreement with Malaysia on the
issue of whether the views of Appellate Body members should be sought in the negotiations.  He also
inquired about the status of the statement made by Chinese Taipei – was it a comment on the other
proposals or a separate contribution to the process?  The Chairman responded by saying that as he
understood it, it was the latter.
61. The representative of the Philippines thanked Japan, Mexico and Chinese Taipei for their
proposals and said that they would make an importa nt contribution to the work of the Special Session.
He said that the Philippines was still examining the proposal by Chinese Taipei and would provide its
comments at a future meeting of the Special Session.  By way of a preliminary comment, however, he
said that his delegation had taken note of the views of Chinese Taipei on the proposal by the UnitedStates and was in agreement with the views expressed by Malaysia concerning the guidelines that had
been unlawfully established by panels and the Appellate Body.  With respect to the proposal by Japan,
he said that his delegation appreciated the underlying concerns and the commitment of Japan to
strengthen the DSU by addressing real problems th at had been encountered in its application.  The
Philippines was still analysing the problems presented by Japan and its proposed solutions and wouldat a later date provide its comments.
62. With respect to the proposal by Mexico, he said that his delegation fully shared the
underlying concern of Mexico, namely the ability of Members to maintain WTO-inconsistent
measures for a long period of time without any c onsequences.  This was a core problem which had to
be addressed in the negotiations.  With regard to the elements put forward by Mexico to deal with theissue, he said that his delegation had considered them and had the following comments.  With respect
to the proposal on early determination and application of nullification and impairment, he said that it
would make the sequencing issue superfluous and remove the entitlement that members had to a
reasonable period of time to implement the recommendations and rulings of the DSB .  The proposal
appeared to prejudge the intentions of the responding Member vis-à-vis  the implementation of the
DSB's recommendations and rulings, given the fact that the arbitration procedure under Article 22 of
the DSU could be triggered immediately after the circ ulation of the interim panel report to the parties.
It also appeared to prejudge the outcome of the case.  The findings of the panel could be modified or
amended by the Appellate Body.  Given the proposal to discard the interim review stage, the
Philippines wondered if Mexico had taken this in to account.  As regards the complaining Member
quantifying the amount of its losses in its first submission, he said that while his delegation
appreciated that it could help the case of the complaining Member, it was also of the view establishinginjury before it was proved would fundamentally alter the current dispute settlement mechanism and
the way Members prepare their cases.
63. With respect to the proposal on retroactive determination and application of nullification or
impairment, he said that the DSU in its present form provided some leeway to panels and the
Appellate Body to make retroactive determinations in certain cases.  A retroactive determination inthe case of compensation would only make sense where the responding Member had agreed to
provide compensation to the complaining Member.  Similarly in the case of suspension of
concessions, a retroactive determination would be of less utility to a number of Members, particularly
developing countries.  If retroactive determination were to be effective from the date of the imposition
of the measures as had been suggested by Mexico, what would happen in the case of a measure whichTN/DS/M/6
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had been in force for a long time, but had only been  recently challenged?  With regard to preventive
measures, he said that this appeared to be the least controversial among all the four proposals.
However, Philippines was in agreement with Norway  that given the potential for abuse, stringent
criteria would have to be agreed if it was to be accepted by it.  He said that while Mexico had cited
some precedents and WTO Agreements to support its position, his delegation was of the view that the
Agreement on Safeguards probably demonstrated more than any Agreement the need for a verycareful consideration of the conditions which had to be attached to the right to take "preventive
measures".  Indeed it might give rise to the question of whether or not the Member invoking the
preventive measure had exercised the right properly.  If it was perceived that the Member invoking
the preventive measure was acting contrary to the agreed criteria, would the responding Member have
a right to impose a preventive measure to safeguard its position?  It could be envisaged that there
could be multiple complaints, something probably not intended by Mexico.  He requested if Mexico
could clarify the term "harmful effects" and indicate who would determine the existence of sucheffects.  With respect to negotiable remedies, he said that his delegation was not very comfortable
with it, as it would turn the WTO into a market-p lace where countries traded their rights to suspend
concessions or other obligations.  Upon further reflection, it would appear that Members were
engaged in the exercise of exchange of credits earn ed from disputes which they had lost or won.  The
Philippines did not want to contemplate the situation where Members initiated disputes just for thepurpose of accumulating credits with a view to trading them in for other benefits.  He said that his
delegation would comment further on these proposals during the issue-by-issue discussion which
would take place in an informal mode.
64. The representative of Hungary welcomed the proposals by Japan, Mexico and Chinese Taipei
and said that they would contribute significantly to the work of the Special Session.  With respect to
the proposal by Japan, she said that her delegation had always supported efforts aimed at resolving the
sequencing issue.  Removing the ambiguity in the re levant provisions of the DSU would ensure legal
certainty and predictability.  She expressed a preference for the EC's proposal on this issue, but said
that as the two proposals had a lot in common, the EC and Japan could probably work towards
producing a single text on this issue.  She welcomed  in that context the statement by the EC that it
was prepared to engage Japan with a view to narrowing the differences in their texts.  With respect to
the proposal on equivalence between the level of nullification and impairment and the suspension of
concessions, she said that her delegation was still studying it and would welcome any further
clarifications that could be provided by Japan.  With respect to the proposal on increasing the
membership of the Appellate Body, she said that her delegation had an open mind and was preparedto consider it further.  Turning to the proposal by Chinese Taipei, she said that as far as the amicus
curiae  issue was concerned, her delegation was of the view that a consensus-based multilateral
solution was preferable to the current case-by-case approach.  With respect to third party rights, she
said that her delegation was generally in support of their enhancement, although it would like to see a
proper balance between the rights of the parties to the dispute and those of third parties.  Turning to
the proposal by Mexico, she said that the issue of the lack of implementation of the recommendations
and rulings of the DSB was a longstanding one and that her delegation was sympathetic to theunderlying concerns of the Mexican proposal.  However, the proposal contained very radical
suggestions which needed to be considered very carefully in terms of their implications for the
multilateral trading system.
65. The representative of Japan thanked participants for their questions and comments and said
that she would like to provide some preliminary res ponses.  With respect to the sequencing issue, she
thanked participants for their positive comments and reiterated that there were a few differences
between the proposal of the EC and that of Japan.  She said that her delegation looked forward to
receiving further comments from participants, so that  they could take them into account in narrowing
the differences between the two texts.  With regard  to the question put by Chile concerning the non-
repeal of mandatory laws, she said that the idea behind Japan's proposal was to create an incentive forthe concerned Member to repeal or modify the incons istent mandatory law.  If there were to be true
equivalence between the level of nullification and impairment and suspension of concessions, theTN/DS/M/6
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responding Member would not have any incentive to maintain the inconsistent measure.  Regarding
the question on how to establish true equivalence, she said that her delegation agreed that it would not
be an easy exercise, but some projections could be made on the basis of past violations.  The current
practice would be instructive in that regard.  She further said that Japan was open to any suggestions
that delegations might have in connection with how equivalence might be calculated.  Regarding how
the scope of Article 22.4 of the DSU could be broadened, she said that her delegation was working ona text which it would share with participants as soon as it was finalised.  Comments by participants on
the draft text that would be welcomed.  On the question from the United States concerning the
presumption that a measure taken pursuant to a discretionary law would be WTO-inconsistent, she
said the idea behind Japan's proposal was to shift the burden of proof onto the responding Member,
where the complaining Member could initially prove that there had been repeated violations involving
the same law.  It would then be up to the responding Member to rebut the claim that the measure
taken pursuant to the discretionary law was intentional and violative of its WTO obligations.Regarding the question on whether the procedure under Article 21.5 could not be used to address this
issue, she said that in its proposal, Japan had advocated an expedited procedure whereby the case
would be referred to the original panel or the division of the Appellate Body which heard the case.
Additional procedures had been suggested in cases involving discretionary laws.  She said in that
context that Japan was of the view that there should be a safeguard mechanism which would ensure
that the discretionary law would not be applied in a WTO-inconsistent manner.  This could be
accomplished by finding the law itself to be WTO-inconsistent or requesting the Member concerned
to adopt some guidelines which would ensure that any measure taken pursuant to the law would be
WTO-consistent.  She said that Japan did not have any preference for any of the options and was
willing to consider the views of participants.  Ha ving only an expedited procedure was not enough; it
should be complemented by other procedures.
66. With respect to the questions on the number of Appellate Body members and the modalities
for modifying the number, she said that Japan was op en to the decision being taken either by the DSB
or the General Council.  However, given the financial implications, it should probably be the General
Council which should make the decision.  Regard ing the comment that instead of increasing the
membership of the Appellate Body, it would be better to convert their current part-time positions into
full-time jobs, she said that Japan was aware that given their current tight schedule, it could be said
that the Appellate Body members were already working on a full-time basis.  However, it was
attracted to the option of increasing the number of Appellate Body members given the fact that some
people might not want to be in Geneva all the time and also the budgetary implications of engagingthem on a full-time basis.  Regarding the question by India whether the present number of Appellate
Body members could be reduced, she said that he r delegation had not thought about that, but they
were prepared to consider it. In any event, the language used in the proposal was permissive, so it was
possible for the number to be increased or decreased according to the exigencies of the relevant time.
It would probably be a good idea to seek informally the views of Appellate Body members on this
issue, as had been suggested by Chile.  Regarding the question on the rationale for delaying the
circulation of submissions to the general public by two weeks, she said that the time-lag was meant toprovide Members with an opportunity to block out any confidential information and also to prepare
for the necessary press briefings and publishing enough copies for circulation.  Regarding the question
as to why it was even necessary to make submissions public when the reports of panels and the
Appellate Body were circulated widely and could be downloaded from the website of the WTO, she
said that her delegation thought that it would promote transparency and enhance the credibility of thedispute settlement system.  It would de-mystify the view that the WTO dispute settlement process was
undemocratic and manipulated in favour of certain interests.  She noted that Japan did not have a
policy of making all its submissions public, but was prepared to make this concession in the interest
of transparency.
67. The representative of Mexico said that his delegation was encouraged by the comments that
had been made by participants.  There was almost an unanimous view that the proposal had identified
the principal shortcoming of the dispute settlement system.  The lack of implementation of theTN/DS/M/6
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recommendations and rulings of the DSB in a timely fashion was undermining the credibility of the
dispute settlement system.  He said that Mexico appreciated the questions and comments on their
proposal and would reflect on them and give detailed responses later.  He said, however, that he
would like to re-state the salient elements of their proposal in order to clarify certain issues which
came up during the discussions.  With respect to early determination and application of nullification
and impairment, he said that under the current system, a Member had to initiate two actions and waitfor two to three years before getting results.  The situation was simply unsatisfactory and needed to be
addressed.  As regards retroactive determination and application of nullification and impairment, he
said that his delegation could accept the view that it would fundamentally alter the dispute settlement
system.  However, given the fact that the lack of implementation causes an average loss of roughly
US$370 million to industry for each case excluding legal fees and related expenses, there was no
option other than to propose a solution which would deal directly with the problem.  With respect to
preventive measures, he said that it was also true that it was novel to the dispute settlement system.Currently, a Member which was suffering injury could not request that a panel to order the responding
Member to suspend its challenged measures until after the case had run its full course.  This situation
was unfair and could be easily abused.  The merely possibility of being able to request a provisional
remedy would increase the confidence of not only Members, but also private parties in the dispute
settlement system.  With respect to negotiable remedies, he said that his delegation was not surprisedby the strong reaction of some participants.  While it was true that it would fundamentally alter the
dispute settlement system, it would also induce compliance with the recommendations and rulings of
the DSB and thereby enhance the credibility of the system.  It was domestic policy-making agencies
which would be the greatest beneficiaries of these proposals, as they would be emboldened to resist
pressures from interest groups to impose WTO-inconsistent measures.  With regard to the viewexpressed by some participants that it would not be possible to reach consensus on the ideas put
forward by Mexico before the May 2003 deadline be cause of the fundamental changes it would make
to the dispute settlement system, he said that it was not impossible and that very much depended on
the will of Members to address a fundamental problem which could paralyse the entire system.  It
would serve no purpose to tinker with the problems and not adopt a lasting solution which wouldstrengthen the dispute settlement system and enhance its credibility.  He concluded by saying that his
delegation would provide specific replies to some of the questions that were posed after having
reviewed them carefully.  He said that his delegation was ready to enter into constructive discussions
with any participant with a view to improving its proposal.
68. The representative of Chinese Taipei welcomed  the comments on its proposal and said that
she would like to give an initial reaction to some of them.  With regard to transparency, she thanked
the representative of the Philippines for his statement, and affirmed the support of her delegation for
the section of the US proposal on transparency advocating the timely circulation of reports.  In
Chinese Taipei's view, this would facilitate the implementation of reports consistently with Article 20
of the DSU.  With respect to amicus curiae  submissions, she said that Chinese Taipei had taken note
of the comments by participants, but had a preference for maintaining the status quo .  Regarding the
contribution of Chinese Taipei, she said that it should be regarded as a formal proposal to the SpecialSession.  On third-party rights, she said that ther e were some differences between the Chinese Taipei's
proposal and that of Costa Rica and that she woul d elaborate on them at the next meeting of the
Special Session.
69. The representative of Chile said that he wanted  to make some general observations about the
negotiations.  He noted that one of the distinctive features was the active participation of developing
countries in the process, with the majority of the proposals tabled by them.  Five general conclusions
could be made as to the state of progress in the negotiations. First , while the discussions had enabled
participants to clarify certain aspects of the proposals on the table, there were still a large number of
outstanding issues which needed to be considered.  The scope of the various solutions put forward by
participants should be determined as soon as practicable.  Second, apart from peripheral issues, therewas no consensus on any of the major issues which needed to resolve so as to improve the functioning
of the dispute settlement system.  Third, a number of the proposals seemed to go beyond the mandateTN/DS/M/6
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of the Special Session, which was to clarify and improve the DSU.  Some of the proposals, for
example, sought to create new mechanisms and ways for resolving disputes.  While some of these
proposals would result in a strengthened DSU, the present mandate was limited and should be adhered
to.  Fourth, not only did some of the proposals go beyond the mandate of the Special Session, they
were intended primarily to address the domestic political problems of some Members.  Fifth, there
was little time left for drafting the final text considering the May 2003 deadline.  Given theseconsiderations, it was imperative for discussions on the proposals to be brought to a close in the next
couple of weeks.  Once that was done, it should be possible for the Chairman to have an idea about
which proposals – considering the scope of the mandate – could have broad support among
participants so as to build a consensus around them.  These proposals should be complied into a single
document and circulated to participants before the end of the year, possible at the meeting scheduled
in December 2002.  Judging by the responses of participants, Chile believed that it might be possible
to include proposals relating to the following su bjects in the document:  (i) sequencing;  (ii)
transparency - access to documentation;  (iii) enhancement of third party rights;  (iv) streamlining of
panel procedures;  (v) early determination of the level of nullification and impairment;  (vi) incentives
for compliance, and (vii) reaffirmation of the bilateral nature of disputes, at least at certain stages,
including the appellate review stage, so that the parties could maintain "control" over the proceedings
if this enabled a positive solution to the found.  The document that would be distributed by theChairman should form the basis for focused discussions starting in January 2003.  Proposals which
did not feature in the document of next year should be left aside otherwise there was a risk of missing
the May 2003 deadline.
70. The representative of Brazil said that he would also like to share Brazil's view on the state of
the negotiations.  He recalled that the mandate given by Ministers at Doha was to improve and clarify
the DSU by May 2003.  Ministers did not give a mandate to draw up a new DSU and did not
authorize continuation of work beyond May 2003.  It was imperative that this mandate be strictly
observed. It was clear that Ministers did not envisage a complete review of the DSU.  It was implicit
from the mandate and the time-frame that the Ministers envisaged only a limited exercise which
would address the most obvious problems that had been encountered in the implementation of theDSU.  It was the expectation that once these problems had been addressed, they would improve the
functioning of the dispute settlement system.  While the mandate did not rule out the consideration of
other proposals which focussed on fundamental reform of the DSU, it was clear that it wanted priority
to be given to those issues which were of germane importance to the functioning of the DSU.  Giving
equal treatment to all the proposals risked paralysing the negotiations and missing the May 2003deadline with no certainty of the mandate being renewed.  Some of the proposals on the table were
very ambitious and would require in-depth discussions and careful consideration before a decision
could be made on them.  It was very doubtful if this process could be accomplished before May 2003.
There would be further opportunities to review the di spute settlement system, so it would be advisable
to focus on the most pressing issues which were likely to be supported by most participants.  In
Brazil's view, it was feasible to build consensus around the following subjects:  (i) sequencing;
(ii) detailed compliance panel procedures;  (iii) improvement in transparency (access todocumentation);  (iv) enhancement of third-party rights;  (v) procedures for lifting of sanctions;
(vi)the time-period for consultations;  (vii) remand authority;  (viii) early determination of
nullification or impairment; and  (ix) notification of mutually agreed solutions within a specific time-
frame.  This was an impressive list which was likely to satisfy almost all the proponents.  It was an
inclusive list and participants should have their focus on the broader picture instead of their ownnarrow interests.
71. He welcomed the paper by Japan, which built on the co-sponsors' proposal, and said that by
focussing on some of the most pressing issues an d proposing solutions, it helped narrow the focus of
the Special Session.  Together with the proposal by the EC, they could be the basis of any future
agreement among participants.  Some of the sugges tions contained in these two proposals needed to
be considered carefully before a decision was made.  An example was the suggestion that
compensation should be strengthened with a view to making it more attractive than retaliation.  ThereTN/DS/M/6
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was no doubt that the system would be strengthened if it was clarified that compensatory
arrangements should comply with the most-favoured nation principle.  The proposal on the early
determination of the level of nullification and impairment was a double-edged sword.  On the one
hand, it could facilitate compensation negotiations, but on the other it could undermine the primary
remedy of compliance with the recommendations and rulings of the DSB.  The proposal on switching
to a system of permanent panelists also required careful analysis.  How the panelists would beselected and the budgetary implications should be reflected on.  On amicus curiae , he said that the
term was misleading and that they should be called amicus partis  or amicus causae , as their objective
was primarily to assist one party in the dispute, instead of enlightening the court or adjudicator.  He
said that the practice of receiving amicus curiae  at the WTO seemed to be different from that in the
United States, where the consent of all the parties was generally required before such briefs could be
accepted.  According to Rule 37 of the US Supreme Court Rules, it was only in limited circumstances
that the court might grant leave for such briefs to be filed when one of the parties refused to give its
consent.  Thus, it would appear that the WTO practice differed from that of a major common law
country, where the concept was supposedly devised.  With regard to proposals on time-frames, he said
that they should be evaluated carefully, particularly those which advocated a reduction in time-frames
with clauses purporting to give an exemption to developing countries "if the parties agree[d]".  In
Brazil's view, extension of the time-frame would not be automatic and would as such not be in the
interests of developing countries who, because of lack of resources, needed more time in the dispute
settlement process.  In relation to third-party rights, he said that while the proposals appeared to be
very attractive, in reality it would only be a few developing countries that would take advantage of the
enhanced access to panels and the Appellate Body.
72. He reiterated that if the negotiations were to succeed, participants had to look beyond their
own narrow interests and accommodate those of othe r participants.  A strengthened dispute settlement
system would be in the interest of each and every Member and as such participants should work
towards fulfilling the mandate that was given by Ministers.  It was imperative for the DSU evolve and
adapt itself to the needs - not fashions - of a chan ging environment.  The results of the negotiations
should not only be forward-looking, they should also  preserve the most important "acquis juridique"
of the GATT/WTO.  To all intents and purposes, the DSU had been working satisfactorily and only
changes which would actually improve its functioning should be effected during the negotiations.
There were some issues that were quite difficult, including the sequencing issue, but which were
capable of being resolved by participants in the negotiations.  There were other issues such as
"carousel" and transparency which by nature were not that difficult, but given their sensitivity to alarge number of Members, it would require a careful balancing of the proposals and coming up with a
solution which accommodated the various views.  There were some issues such as enforcement
which, by nature, were very difficult and would require a lot of hard work and compromises before a
solution could be found.  The diversity of opinions and interpretations of the DSU was making the
task of participants very difficult.  However, with a clear sense of purpose and flexibility, it should be
possible for the mandate to be fulfilled.
73. The representative of Australia recalled that at the fifth meeting of the Special Session, the
representative of Uruguay asked whether Australia would consider modifying its proposal in relation
to time savings to take account of developing-country interests, and said that her country was willing
to accommodate that request in its revised proposal, which it hoped to circulate as soon as possible.
74. The representative of Jamaica thanked participants which had expressed support for its
proposal and said that her delegation was looking forw ard to working with them in order to ensure the
inclusion of its suggestions in any agreement that might be reached.  She said that her delegation
wished to offer some comments on those proposals which addressed some of the issues reflected in its
paper.  With respect to the proposal by Paraguay, she said that her delegation was in agreement that
recourse to Article 5 of the DSU should be made mandatory.  She recalled that their own proposal
also urged greater use of the Article 5 process and, in general, a strengthening of the consultativeprocess under the DSU.  The objective of the DSU was not only to seek prompt resolution of disputes,TN/DS/M/6
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but also to facilitate the reaching of mutually agreed  solutions by the parties to the dispute.  Recourse
to litigation was costly and should be avoided whenever possible.  With respect to the proposal by the
LDCs Group that the DSU should include special pro cedures which would enable panels to determine
whether a prima facie  case had been made against an LDC or whether due restraint had been
exercised before the initiation of an action against an LDC, she said that her delegation had suggested
in its proposal that panels should be authorized to make preliminary rulings on such questions.  Withregard to the proposal concerning Article 27.2 of the DSU, she said that her delegation had made a
similar observation that the assistance currently provided by the Secretariat under this article was very
limited as to be of any practical use to developing-country Members.  It was necessary for this article
to be operationalized through the provision of increased and focussed legal technical assistance to
developing-country Members.  With respect to the proposal by the African Group concerning
compensation, she said that while her delegation recognised that compensation was a temporary
measure to be resorted to when it was not possible for the Member concerned to promptly complywith the recommendations and rulings of the DSB, it was also of the view that compensation should
not be limited to improving the market access conditions for the complaining Member and that other
forms of compensation, including monetary compensation, should be explored. She also said that her
delegation considered with interest the proposal that would entitle developing-country Members to
receive compensation in cases where the WTO-inconsistent measures were withdrawn before thecommencement of formal dispute settlement proceedings.  There was some similarity between this
proposal by the African Group and that of Mexico on preventive measures and retroactivity, in that
they were both intended to redress the losses th at might have been suffered by the complaining
Member before the commencement and during dispute settlement proceedings.  Finally, she said that
Jamaica was in agreement with the African Group that it was necessary for the WTO and its Membersto make available additional resources that could be used to facilitate the greater participation of
developing-country members in the disp ute settlement system of the WTO.
75. The representative of Argentina said that his delegation was in agreement with the views
expressed by Chile and Brazil concerning the need for the Special Session to prioritize its work, if the
deadline of May 2003 was to be met.  The number of proposals on the table was simply too many andsome of the proposals were very complicated requiring painstaking reflection before a decision could
be made.  Given the short deadline given by Ministers, it was imperative that the Special Session
concentrated on those issues which had broad support among participants and in respect of which it
was easier to build consensus around.  Participants should not feel pressured that they needed to
consider all the proposals on the table and reach a decision on each of them.  The most difficult andsensitive issues could be taken up after May 2003.  He warned against the failure to meet the deadline
and said that it could have far-reaching implications for the entire negotiations.  He said that while
participants' views might differ regarding the issues which needed to be given priority attention, his
delegation was certain that there were a certain number of proposals which broadly enjoyed the
support of participants.  He mentioned in that context that the MERCOSUR member states had
identified at the meeting of the Special Session on 15 July 2002, a number of issues, including the
sequencing issue, a procedure for lifting sanctions, third-party rights, streamlining the panel procedureand reducing the time-frames at some stages of the procedure, enhancement of transparency insofar as
it related to the notification of mutually agreed solutions and access to documentation, which
appeared to enjoy broad support among participants.  While the proposals relating to compensation
and suspension of concessions were interesting, it was very doubtful given their complexity and the
far-reaching changes they would make to the dispute settlement system, if agreement could bereached on them before the May 2003 deadline.  The agenda needed to be manageable, otherwise  it
was certain that the May 2003 deadline would be missed.
76. The representative of Uruguay said that his delegation was in agreement with the views
expressed  by Argentina, Brazil and Chile regarding the need for the Special Session to prioritize its
work.  There was the need for objectivity and realism.  It should be clear at this stage that it would notbe possible for agreement to be reached on all the proposals before the May 2003 deadline.  The
challenge was to determine which issues broadly had the support of participants.  While it was trueTN/DS/M/6
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that there was no consensus on any issue at this stage of the negotiations, it was also equally true that
it would be easier to find a consensus on some issues than others.  He said in that context that there
was a high probability of finding consensus on the list of issues enumerated at the July Special
Session by MERCOSUR and also that of Chile at the present meeting.  He urged the Chairman to
come up with his own list taking into account the degree of support expressed on each proposal by
participants.  There was the need for realism; it would be pointless if no results were achieved by May2003.  Proposals that did not feature in the Chairman's list could be taken up subsequently when the
mandate of the Special Session was renewed.  It was imperative for priority to be given to those issues
on which it was possible to achieve consensus.  It was unlikely for consensus to be reached on
proposals which would fundamentally alter the DSU.
77. The representative of Paraguay said that his delegation was in agreement with the statement
made by Chile and other participants concerning the need for the Special Session to prioritize its work
given the short deadline of May 2003. He urged participants which had tabled proposals to submitdraft legal texts in order to make it clearer which provisions of the DSU they wanted to clarify or
modify.  He said that his delegation was in agreement with those delegations which had requested the
Chairman to come up with a list of issues on which it might be easier to reach consensus.  The
Chairman's text could serve as a basis for the next phase of work of the Special Session.  He said in
that connection that the Chairman's list should include the issue of mediation and good offices, asthere was likelihood of consensus being reached on it.  He urged consistency between the treatment of
special and differential treatment for developing countries under the DSU by the DSB Special Session
and the Special Session of the Committee and Trade and Development (CTD Special Session).  He
said that the African Group had made a proposal on the DSU which was being discussed in the
Special Session of the Committee on Trade and Devel opment, but which did not appear to be in the
list of proposals being discussed by the CTD Special Session.  In Paraguay's view, the proposal by the
African Group should have been submitted to the DSB Special Session.  It was important for the
Secretariat to do its best to follow closely what was being discussed by other negotiating bodies, so as
to ensure consistency and minimise duplication of work.  It was necessary for synergies to be created.
It was imperative for the Special Session to agree on proposals which would make substantive andpositive changes to the DSU, rather than agreeing on proposals which would merely tinker with it and
not fulfil the mandate which was given by Ministers at Doha.
78. The Chairman said that the African Group had submitted its proposal (TN/DS/W/15) on the
DSU to the DSB Special Session and that it would be  discussed in due course by the Special Session.
79. The representative of Paraguay  said that the two proposals differed and that the one presented
to the CTD Special Session contained certain elements which were not reflected in the one submitted
to the DSB Special Session.
80. The representative Ecuador  said that his delegation was in agreement with the views
expressed by a number of participants, including Argentina, Brazil and Chile concerning the need for
the Special Session to prioritize its work given the May 2003 deadline.  He said that among the
priority issues, there were some which were more urgent than others and that these issues deserved to
be considered first.   There was the need for re alism taking into account the mandate of the DSB
Special Session.  The aspirations of some participants had to be adjusted to reflect what was
achievable by May 2003.  He said that his delegation was also in agreement with the suggestion made
by some participants that the Chair should come up with a list of issues in respect of which it might be
possible to reach consensus.  He said that Ecuador would do its best to assist the Chairman in this
regard and would consult with participants which had made similar proposals to that of Ecuador andexplore the possibility of coming up with a common text.
81. The representative of Nigeria thanked Jamaica for supporting several suggestions of the
African Group and said that the Group was willing to  engage any participant which had made similar
proposals in order to explore the possibility of coming up with a common text.   Regarding theTN/DS/M/6
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comment made by Paraguay, he said that the African Group wanted to avoid duplication of work,
hence its decision not to submit the proposal to the CTD Special Session also to the DSB Special
Session.  It was thought by the Group that once a de cision was made on its proposal, it could then be
transmitted to the DSB Special Session for incorporation into any agreement that it might reach.
82. The Chairman  thanked participants for their co mments and said that he agreed that time was
of the essence and that the Special Session had to work very fast and efficiently if it was to meet the
deadline of May 2003.  He inquired whether any participant intended to submit a new proposal.  He
said that he would address some of the comments ra ised by participants when the meeting switched to
an informal mode.
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