RESTRICTED
WORLD TRADE WT/DSB/M/19
10July1996
ORGANIZATION(96-2700)
DISPUTE SETTLEMENT BODY
19June 1996
MINUTES OFMEETING
Held intheCentre William Rappard
on19June1996
Chairman: Mr.Celso Lafer (Brazil)
Subjects discussed: Page
1. Canada -Certain measures concerning periodicals 1
- Request bytheUnited States fortheestablishment ofapanel 1
2. United States -Standards forreformulated andconventional gasoline 2
- Implementation oftherecommendations oftheDSB 2
3. United States -Tariff increases onproducts from theEuropean Communities 3
- Request bytheEuropean Communities foraspecial meeting oftheDSB
toestablish apanel 3
4. European Communities -Régime fortheimportation, saleanddistribution of
bananas 4
- Third-party rights toparticipate inthepanel 4
1. Canada -Certain measures concerning periodicals
- Request bytheUnited States fortheestablishment ofapanel (WT/DS31/2)
TheChairman recalled thattheDSBhadconsidered thismatter atitsmeeting on6June, and
hadagreed torevert toitatthepresent meeting. Hethendrew attention tothecommunication from
theUnited States inWT/DS31/2.
Therepresentative oftheUnited States saidthathiscountry wasrequesting theestablishment
ofapanel toexamine Canada 'smeasures concerning treatment ofperiodicals. These measures included
animport banoncertain periodicals anddiscriminatory treatment ofcertain imported periodicals with
respect toexcise taxes andpostal rates. These measures wereinconsistent withCanada 'sobligations
under GATT 1994 andnullified andimpaired benefits accruing totheUnited States under theWTO
Agreement. TheUnited States hadraised these measures withCanada onanumber ofoccasions, both
informally andinconsultations. Since theconsultations hadnotsettled thematter, theUnited States
wasnowrequesting theestablishment ofapanel.WT/DSB/M/19
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Therepresentative ofCanada saidthathercountry 'smeasures related tothemagazine sector
reflected long-standing policy objectives inthecultural sector. These measures didnotprevent the
fullparticipation intheCanadian market byUSorother non-Canadian magazines. Onthecontrary,
over80percentofmagazines soldatCanadian news-stands wereofforeign origin, mainly from the
United States. More than450USmagazine titles were available inCanada. Hercountry believed
thatCanada 'smeasures were fully consistent withitsinternational obligations. Nevertheless, it
recognized theright oftheUnited States torequest theestablishment ofapanel toexamine these
measures. Canada wasprepared tofullydefend these measures before apanel.
TheDSBtooknoteofthestatements andagreed toestablish apanel withstandard terms of
reference inaccordance withtheprovisions ofArticle 6oftheDSU.
2. United States -Standards forreformulated andconventional gasoline (WT/DS2/9)
- Implementation oftherecommendations oftheDSB
TheChairman saidthattheDSU provisions required theDSBtokeepunder surveillance the
implementation ofrecommendations andrulings oftheDSBinorder toensure effective resolution
ofdisputes tothebenefit ofallMembers. Inthisrespect, Article 21.3oftheDSUrequired theMember
concerned toinform theDSB, within 30daysafterthedateofadoption ofthePanel andAppellate
Body report, ofitsintentions inrespect ofimplementation oftherecommendations andrulings ofthe
DSB. Herecalled thatatitsmeeting on20May, theDSBhadadopted theAppellate Body report in
WT/DS2/AB/R andthePanel report inWT/DS2/R withregard totheUSstandards forreformulated
andconventional gasoline asmodified bytheAppellate Body report.
Therepresentative oftheUnited States saidthat,ashisdelegation hadnoted attheDSBmeeting
on20May,theUnitedStates,whiledisappointedthattheAppellateBodyreporthadfoundtheregulations
atissuenotconsistent withtheobligations oftheUnited States under theWTO, believed thatthereport
contained anumber ofpositive messages regarding WTO rules andprotection oftheenvironment.
Inaccepting much oftheUnited States 'interpretation ofArticle XXoftheGeneral Agreement, the
Appellate Body hadunderscored thattheWTO Agreement recognized thefreedom ofMembers to
protect theenvironment andconserve natural resources. TheUnited States alsowelcomed thatthe
report acknowledged thatArticle XXprovided flexibility toMembers totakeintoaccount important
enforcement concerns inadopting environmental measures. Asrequired inArticle 21.1oftheDSU,
itwasnowtheresponsibility oftheUnited States toinform theDSB ofitsintentions inrespect of
implementation oftherecommendations andrulings oftheDSB. Itwastheintention oftheUnited
States tomeetitsobligations under theWTO withrespect tothismatter.
TheUnited States hadinitiated anopenprocess toexamine anyandalloptions forcompliance
withtherecommendations oftheDSB. Inevaluating suchoptions, akeycriterion would bethefull
protection ofpublic health andtheenvironment. Theexamination would consider, interalia,thetwo
"omissions" onthepartoftheUnited States thathadbeencitedbytheAppellate Body: (i)toexplore
adequately means ofmitigating theadministrative problems identified intheearlier rule-making process;
and(ii)toconsider thecostsforforeign refiners thatmight result fromtheuseofthestatutory baseline
onimports. Under itslawandregulations, theUnited States wasrequired tofollow certain procedures
andnottoprejudge theresult oftheprocess.
Tobegin thisprocess, theUnited States 'Environmental Protection Agency (EPA) wasissuing
anotice, which would soonbepublished intheUnited States 'Federal Register, providing allinterested
parties withanopportunity forinput intotheprocess, which would setouttheconsiderations toguide
theUnited States regarding theissues thatmustbeaddressed. Asenvisaged under theDSU, theUnited
States would require a"reasonable period oftime" tocomplete itsrule-making process andwould be
meeting withVenezuela andBrazil todiscuss thismatter further. Thepublic interest thatthiscaseWT/DSB/M/19
Page3
hadengendered intheUnited States hadhighlighted thecritical importance oftransparency, inparticular
withrespect todispute settlement, tothestrength andcredibility oftheWTO. TheUnited States believed
thatitwasessential toredouble theefforts tomake progress inthisregard.
Therepresentative ofVenezuela noted withinterest thestatement made bytheUnited States
which hewould convey tohisauthorities. Hisdelegation hoped that,asindicated inthestatement,
theUSGovernment would implement itsintention tocomply withitsWTO obligations. InVenezuela 's
viewthismeant complying withtherecommendations oftheDSBatitsmeeting of20May(WT/DS2/9).
Hisdelegation regretted thattheUnited States, atthisstage, wasnotinaposition tospecify atime-period
fortheimplementation oftherecommendations, buthoped thattheperiod oftimetobeproposed by
theUnited States would bereasonable asrequired inArticle 21oftheDSU. Hisauthorities hoped
thattheUnited States would contact Venezuela withtheviewtodetermining amutually agreed period
oftimeforimplementation oftherecommandations, inaccordance withArticle 21.3(b)oftheDSU.
Therepresentative ofBrazil noted theUnited States 'intentions regarding itscompliance with
theAppellate Body recommendations, butwasdisappointed thattheUnited States didnotpropose
immediate compliance withtheserecommendations. Article 21.3oftheDSUcontemplated immediate
compliance withtherecommendations andrulings andpermitted adelay onlyifimmediate compliance
wasimpracticable. Brazil alsonoted theUnited States 'proposal thatcompliance would beeffected
within a"reasonable period oftime". Heunderlined thatspecific limits andconditions fordetermining
this"reasonable period oftime" werecontained inArticle 21oftheDSU, andurged theUnited States
strictly toobserve them. Hisdelegation noted thattheUnited States intended tomeetwithBrazil to
discuss theissue of"reasonable period oftime". Brazil would work withtheUnited States inevery
possible waywiththeviewtoamicably resolve thismatter. However, atthisstage, hisdelegation
wished toreserve Brazil 'srights under theDSU regarding implementation, orlackthereof, bythe
United States oftheveryfirstrecommendations made bytheAppellate Body.
Therepresentative ofNorway thanked theUnited States foritsstatement. Norway would also
prefer immediate implementation, butinviewofthecomplexity ofthematter some timewasneeded.
Herequested theUnited States toinform Members inwhich issue oftheFederal Register thenotice
oftheEPAwould bepublished.
TheDSBtooknoteofthestatements andoftheinformation provided bytheUnited States
regarding itsintentions toimplement therecommendations oftheDSB.
3. United States -Tariff increases onproducts from theEuropean Communities
- Request bytheEuropean Communities foraspecial meeting oftheDSBtoestablish
apanel
Therepresentative oftheEuropean Communities, speaking under "Other Business", requested
thattheDSBholdaspecial meeting inorder toconsider theCommunities 'request fortheestablishment
ofapanel withregard totariff increases bytheUnited States onproducts from theEuropean
Communities. Theconsultations heldon22May, hadnotresulted inasettlement ofthematter. Since
theCommunities maintained itsposition thatthese measures wereunilateral andwerenotconsistent
withtheWTO provisions, ithadtherefore decided torequest theestablishment ofapanel toexamine
thismatter.
TheDSBtooknoteofthisrequest.WT/DSB/M/19
Page4
4. European Communities -Régime fortheimportation, saleanddistribution ofbananas
- Third-party rights toparticipate inthepanel
Therepresentative ofJamaica, speaking under "Other Business", saidthatattheDSBmeeting
on8May, Jamaica andother ACP banana-producing countries, having asubstantial interest inthe
matter, hadsought anenhanced status asthirdparties inthedeliberations ofthePanel ontheEuropean
Communities 'regime fortheimportation, saleanddistribution ofbananas asfollows: (i)tomake
submissions;(ii) toattend allmeetings ofthepanel;(iii) toreceive allsubmissions oftheparties;(iv)
tobeheard (i.e., toaskquestions andtorespond toquestions). Jamaica understood thatthePanel
hadonlygranted those countries averylimited status, namely participation asobservers atthefirst
substantive meeting ofthepanel. Thishardly metthelegitimate interests ofJamaica andtheother
ACPcountries, bearing inmind thattheDSU imposed stricter disciplines andmandatory compliance
withpanel conclusions. Itwasimpossible fordueprocess tobeserved, when aparty, which would
beaffected bysuchconclusions, wasdenied participation andfulltransparency intheprocess.
Thisdispute wasextremely important forthelegitimate trade interests oftheACP countries
secured through treaty obligations under theLomé Convention. Theeconomic stability ofmany of
theACP banana-producing andexporting countries would bethreatened. Jamaica believed thatthe
Panel should enable thirdparties topresent arguments insupport oftheirlegitimate trade interests as
theprocess unfolded. Unless thePanel reconsidered itsposition, theACPcountries would notbeable
adequately toprotect theirinterests inkeeping withthecommitments under theWTO Agreement which
encouraged growth anddevelopment "inamanner consistent withtheirrespective needs andconcerns
atdifferent levels ofeconomic development". TheDSBwastheappropriate forum ofMembers in
acontractual relationship toensure thatthisobjective wasattained. Herdelegation, therefore, hoped
thattheChairman would initiate consultations withallinterested parties, including Jamaica.
Therepresentative ofCameroon saidthatinherdelegation 'sviewtransparency wasoneof
thefundamental principles oftheWTO. Thisbecame evenmore important when substantial interests
ofacountry hadbeenplaced injeopardy, which wasthecaseoftheACP countries, inparticular
Cameroon, withregard tothedispute onbananas. Cameroon could notbesatisfied withthePanel's
decision toparticipate asanobserver onlyduring asession ofthefirstsubstantive meeting ofthepanel.
Herdelegation supported thestatement made byJamaica, inparticular thatconsultations beheldby
theChairman inorder toarrive atasatisfactory solution toallparties.
Therepresentative ofCôted'Ivoire supported thestatements made byJamaica andCameroon.
Atatimewhen much wasbeing saidabout transparency, itwassurprising thattheACPcountries were
being excluded frompanel proceedings. Thefuture recommendations orrulings ofthePanel would
haveanimpact ontheACP trade inbananas. Since theACPcountries would notbeexempted from
theimpact ofthepanel'srecommendations, particularly iftheresults weresimilar tothose which were
already familiar, there wasnobasis forexcluding theACPcountries fromparticipating inthePanel.
Therepresentative oftheEuropean Communities saidthattheCommunities fullysupported
thestatements made bytheprevious speakers andwished tobeassociated withtheir request for
consultations. Itwould beparadoxical, ifcountries having noeconomic interest could participate in
thepanel butnotthose having avitalinterest inthismatter. Inhisunderstanding there wasnothing
intheDSUprecludingparticipationinthepanelofcountrieshavingimportanttradeinterests.Therefore,
arequest toholdconsultations onthismatter wasappropriate andhehoped thatsuchconsultations
would produce asatisfactory result. Hefound encouraging whattheUnited States hadsaidonanother
pointwithrespect tofulltransparency andinthiscontext believed thatinaddition totheACPcountries,
those thatwerepartoftheFramework Agreement withtheCommunities should alsoberepresented.WT/DSB/M/19
Page5
Therepresentative oftheUnited States saidthathisdelegation didnotsupport therequest for
consultations atthisstage because itwould undermine adecision taken already bythePanel.
TheChairman saidthattheissue under consideration wasverycomplex because ithadraised
thequestion ofthescope tobegiven to"substantial interests" andtherôleofthirdparties inthedispute
settlement mechanism, therange ofthenullification orimpairment, andthequestion ofglobal coherence
intheinterpretation oftheWTO legalsystem. Intheory, there wasmore thanonepoint ofviewon
thismatter. Heindicated hisintention toexamine whether theconsultations requested bydelegations
were appropriate.
TheDSBtooknoteofthestatements.