WORLD TRADE
ORGANIZATIONWT/DS113/14
5 January 2001
(01-0039)
Original:  English
CANADA – MEASURES AFFECTING THE IMPORTATION OF MILK
AND THE EXPORTATION OF DAIRY PRODUCTS
Understanding between Canada and New Zealand
Regarding Procedures under Articles 21 and 22 of the DSU
The following communication, dated 22 December 2000, from the Permanent Mission of
Canada and the Permanent Mission of New Zealand to the Chairman of the Dispute Settlement Body,
is circulated at the request of these delegations.
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Canada and New Zealand would like to inform the Dispute Settlement Body that they have
agreed on the attached "Agreed Procedures between Canada and New Zealand under Articles 21 and
22 of the Dispute Settlement Understanding in the follow-up to the dispute in Canada – Measures
Affecting the Importation of Milk and the Exportation of Dairy Products  (WT/DS113)".
For Canada: For New Zealand:
(s) Hon. Sergio Marchi (s) Mr. John Adank
Permanent Representative Acting Permanent RepresentativeWT/DS113/14
Page 2
Agreed Procedures
between Canada and New Zealand
under Articles 21 and 22
of the Dispute Settlement Understanding
in the follow-up to the dispute in
Canada – Measures Affecting the Importation of Milk
and the Exportation of Dairy Products  (WT/DS113)
The Panel and Appellate Body reports in this dispute were adopted by the Dispute Settlement
Body (DSB) on October 27, 1999.
On December 23, 1999, pursuant to Article 21.3(b) of the DSU, Canada, the United States
and New Zealand agreed on the reasonable period of time for implementation of the DSB's
recommendations and rulings (WT/DS103/10;  WT/D S113/10).  According to the terms of the
December 23, 1999 agreement, as amended on December 11, 2000, the staged implementation
process is to be completed by January 31, 2001.
Pursuant to this implementation process, Canada has undertaken certain measures, including
the development of new mechanisms for the export of dairy products replacing the measures found to
be inconsistent with Canada's obligations under the WTO Agreement.
Canada and New Zealand (the "parties") have agreed on the following procedures:
1. After the end of the period available to Canada to implement the DSB recommendations and
rulings in Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy
Products , as extended by the December 11 agreement, should New Zealand consider that the
situation described in Article 21.5 of the DSU exists, New Zealand will request consultations
which the parties agree to hold within 10 days from the date of the request.  Canada and
New Zealand agree that at the end of such consultations, should either party so state, the
parties will jointly consider that the consultations have failed to settle the dispute.
Thenceforward New Zealand will be entitled to request the establishment of a panel pursuant
to Article 21.5 of the DSU (the "Article 21.5 compliance panel").
2. At the first DSB meeting at which the New Zealand request for the establishment of an
Article 21.5 compliance panel appears as an item on the agenda, Canada will accept the
establishment of that panel.
3. New Zealand and Canada will cooperate to enable the Article 21.5 panel to circulate its report
within 90 days of the panel's composition, excluding such time as the panel's work may be
suspended pursuant to Article 12.12 of the DSU.
4. Either party may request the DSB to adopt the report of the Article 21.5 compliance panel at a
DSB meeting that is held at least 20 days after the circulation of the report, unless either partyappeals the report.
5. In case of an appeal of the Article 21.5 compliance panel report, the parties will cooperate to
enable the Appellate Body to circulate its report within no more than 90 days from the date of
notification of the appeal to the DSB.
6. In the event of an appeal, either party may request the DSB to adopt the reports of the
Appellate Body and the Article 21.5 compliance panel (as modified by the Appellate Body
report) at a DSB meeting held within 30 days of the circulation of the Appellate Body report.WT/DS113/14
Page 3
7. New Zealand may request authorization to susp end concessions or other obligations pursuant
to Article 22.2 of the DSU simultaneously with or after any New Zealand request for the
establishment of a panel pursuant to paragraph 1.
8. Under Article 22.6 of the DSU, Canada will obj ect to the level of suspension of concessions
or other obligations and/or make a claim under DSU Article 22.3 before the date of the DSB
meeting considering the New Zealand request and the matter shall be referred to arbitration
pursuant to DSU Article 22.6.  New Zealand will not  pose any objection to the referral of the
matter to such arbitration.
9. Where the matter has been referred to arbitration, the parties agree to request the Article 22.6
arbitrator, at the earliest possible moment, to suspend its work until either (a) the adoption ofthe Article 21.5 compliance panel report;  or (b) if there is an appeal, the adoption of the
Appellate Body report.
10. In the event that the DSB finds that Canada has failed to comply with the recommendations
and rulings of the DSB or that the measures taken by Canada to comply with therecommendations and rulings of the DSB are inconsistent with the covered agreements as
referred to in the Article 21.5 compliance panel request, the arbitrator will automatically
resume its work.  The parties will cooperate to enable the arbitrator to circulate its report
within 60 days of the resumption of its work.
11. In the event that the DSB finds that Canada has complied with the recommendations and
rulings of the DSB and that the measures taken by Canada to comply with the
recommendations and rulings of the DSB are not inconsistent with the covered agreements as
referred to in the Article 21.5 compliance panel request, New Zealand will withdraw its
request under Article 22.2 of the DSU, thereby terminating the arbitration procedure.
12. The parties will cooperate to facilitate the pa rticipation of the original panelists in the
Article 21.5 compliance panel and the Article 22.6 arbitration.
13. If any of the original panelists are not available within a reasonable period of time for either
the Article 21.5 compliance panel or the Article 22.6 arbitration, or both, the parties agree to
request the Director-General of the WTO to appoint, as soon as possible, a replacement forthe proceeding or proceedings in which such a replacement is required.  If an original panelist
is unavailable to serve in the Article 21.5 proceedings, the parties will further request that in
making this appointment, the Director-General seek a person who will also be available to act
in the Article 22.6 arbitration.
14. The parties agree to continue to cooperate in all matters related to these agreed procedures
and not to raise any procedural objection to any of the steps set out herein.  If, during the
application of these procedures, the parties consider that a procedural aspect has not been
properly addressed, they will endeavour to find a solution within the shortest time possible
that will not affect the other aspects and steps herein agreed.
15. These agreed procedures do not prejudice either party's rights to take any action or procedural
step to protect its rights or interests, including the activation of any aspect of the provisions of
the DSU.WT/DS113/14
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Geneva, December 21, 2000
For Canada: For New Zealand:
(s) Hon. Sergio Marchi (s) Mr. John Adank
Ambassador Acting Permanent Representative
Permanent Mission of Canada Permanent Mission of New Zealand
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