RESTRICTED
WORLD TRADE WT/DSB/M/10
15March 1996
ORGANIZATION(96-0946)
DISPUTE SETTLEMENT BODY
31January 1996
MINUTES OFMEETING
Held intheCentre William Rappard
on31January 1996
Chairman: Mr.Donald Kenyon (Australia)
Subjects discussed: Page
1. Brazil -Measures affecting desiccated coconut 1
- Statement bythePhilippines 1
2. United States -Restrictions onimports ofcotton andman-made fibreunderwear 2
- Request forconsultations byCosta Rica 2
3. Additional proposed nominations fortheindicative listofgovernmental and
non-governmental panelists 3
4. European Communities -Implementation oftheUruguay Round commitments
concerning rice 3
- Request forconsultations byUruguay 3
5. DSBschedule ofmeetings 4
- Announcement bytheChairman 4
6. Working procedures oftheAppellate Body 4
- Announcement bytheChairman 4
7. Election ofChairperson 4
1. Brazil -Measures affecting desiccated coconut
- Statement bythePhilippines
Therepresentative ofthePhilippines saidthattheitemproposed forconsideration atthepresent
meeting hadoriginally beentitled: "Brazil -Measures Affecting Desiccated Coconut: Request forthe
Establishment ofaPanel" ascontained inWT/DS22/2. Forreasons mutually agreed to,thePhilippines
hadnotobjected topostponing consideration oftheabove-mentioned request. However, herdelegation
would make astatement atthenextmeeting oftheDSBtobeheldon21February when thisrequest
would beconsidered.WT/DSB/M/10
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Therepresentative ofBrazil saidthathiscountry wasstillopen--asithadalways been since
thismatter wasfirstraised intheWTO --forconsultations withthePhilippines onthesubstance of
thedefinitive countervailing measures adopted byBrazil inAugust 1995, following aninvestigation
which hadstarted inJune1994. Brazil 'sarguments concerning thisdispute wereexplained indocument
WT/DS22/3 andtherefore itdidnotwishtoreiterate them atthepresent meeting. Brazil oncemore
invited thePhilippines forconsultations onthequestion oftheapplicable lawbefore anyfurther steps
weretaken towards theestablishment ofaformal dispute settlement mechanism. Brazil sincerely wished
thattheparties involved inthisdispute could succeed insolving thisdeadlock andmove ontoamore
fruitful debate which might leadtoamutually satisfactory solution onthesubstantive issues. Brazil
wished, however, toreserve itsrighttorevert tothequestion oftheapplicable lawintheDSB.
TheDSBtooknoteofthestatements andagreed torevert tothismatter atitsnextmeeting.
2. United States -Restrictions onimports ofcotton andman-made fibreunderwear
- Request forconsultations byCosta Rica(WT/DS24/1 andCorr.1)
TheChairman drew attention tothecommunication from Costa Ricacontained indocument
WT/DS24/1 andCorr.1.
Therepresentative ofCosta Ricasaidthaton22December 1995 hisauthorities requested
consultations withtheUnited States under Article 4andtheotherrelevant provisions oftheDSU, Article
XXIII oftheGATT 1994andthecorresponding provisions oftheAgreement onTextiles andClothing
(ATC), inconnection withtheintroduction andimplementation ofquantitative restrictions onCosta
Rican exports ofcotton andman-made fibreunderwear (category 352/652). On27March 1995, the
United States requested consultations withCosta Ricaontheabove-mentioned textiles category. After
thebilateral consultations hadbroken down on23June1995, theUnited States imposed unilateral
restrictions onCosta Rican exports retroactive to27March 1995. InJuly1995theTextiles Monitoring
Body (TMB) reviewed thematter. Itfound thattheserious damage hadnotbeen demonstrated.
However, asnoconsensus wasreached ontheexistence ofactual threat ofserious damage theTMB
recommended thatfurther consultations beheldbetween theparties concerned. These consultations
hadbeenheldinAugust 1995 butithadnotbeenpossible toreach anunderstanding. Thus, onthe
second occasion when theTMB reviewed thecaseitreaffirmed itsprevious conclusions andconsidered
thattheexamination ofthequestion hadbeencompleted. More thanninemonths hadelapsed since
quantitative restrictions hadbeenimposed onCosta Ricaontheabove-mentioned category oftextiles.
Alsosinceninemonths theUnited States hadnotsupplied justification inaccordance withtheAgreement
onTextiles andClothing. Therestrictions werecausing unemployment inasector vitalforCosta Rica's
economy andhadcreated uncertainty foritsexporters andthreatened todivert theinvestment towards
other countries intheregion sinceitwasnotpossible toenterthismarket. Forthesereasons andunder
theabove-mentioned provisions Costa Ricarequested consultations withtheUnited States on22
December 1995. These consultations, which hadalready begun, hadnotfound asolution tothisdispute.
Therefore, Costa Ricaurged theUnited States tojoinitsefforts tofindasolution toexisting differences
ofviews andreaffirmed theintention tocontinue tousethedispute settlement mechanism unless a
solution could befound.
Therepresentative ofIndia saidthathiscountry appreciated Costa Rica'sinitiative inseeking
asolution totheproblem withregard toitsexports ofoneparticular product totheUnited States within
theframeworkoftheDSU,ArticleXXIIIofGATT1994andtheprovisionsoftheAgreementonTextiles
andClothing. India would bewatching theprogress ofthisdispute closely since thematter related
tocertain fundamental concerns ofalarge number ofcountries exporting textiles andclothing. His
delegations 'sunderstanding was,thatoncetheTMB process wasexhausted andthematter remained
unresolved, theeither party tothedispute hadtheoption torequest theestablishment ofapanel underWT/DSB/M/10
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Article 6oftheDSU. Thiswasprovided forinArticle 8.10oftheAgreement onTextiles andClothing
namelythatifthematterremainedunresolvedevenaftertheTMBprocesswasexhausted,eitherMember
involved inthedispute could bring thematter before theDSBandinvoke paragraph 2ofArticle XXIII
ofGATT 1994 andtherelevant provisions oftheDSU.
Therepresentative ofHong Kong saidthatinthiscasetheTMB hadfound thatserious damage
caused byworld imports oftheproduct concerned --cotton andman-made fibreunderwear (category
352/652) --hadnotbeendemonstrated. However, there wasnoconsensus ontheexistence ofactual
threat ofserious injury. Even if"actual threat ofserious injury" hadbeenfound --which wasnot
thecase--itcould notbeassumed thatanysuchthreat could beattributed toimports fromCosta Rica.
Therefore, noconclusion could bedrawn thatimports from Costa Ricahadcaused problems tothe
United States domestic industry which warranted restraint action. Inreality, however, theUnited States
restrictions onCosta Rican underwear hadbeen imposed andremained inexistence. Bilateral
consultations hadfailed toproduce results. Costa Rican trade wasdisrupted. Apparently theeffect
oftheserestrictions amounted to"serious damage" rather than"actual threat". Hong Kong made these
observations nottosuggest thatanyparty hadnecessarily acted outside itsWTO rights. Thiswasnot
amatter forhisdelegation tojudge. However, asreflected inthiscase,there remained many genuine
imminent problems confronted bytextile exporters which called forurgent solutions.
TheDSBtooknoteofthestatements.
3. Additional proposed nominations fortheindicative listofgovernmental and
non-governmental panelists (WT/DSB/W/17)
TheChairman drew attention todocument W/DSB/W/17 which contained additional names
proposedbyMembersforinclusionontheindicativelistofgovernmentalandnon-governmentalpanelists
inaccordance withArticle 8.4oftheDSU. Herecalled thatasagreed byMembers theabove-mentioned
document, following theapproval ofnames contained therein bytheDispute Settlement Body, would
becirculated asunrestricted. Healsoinformed Members thattheSecretariat would soonbeissuing
aconsolidated version oftheindicative listwhich would contain thenames approved bytheDSBthus
far.Heproposed thattheDSBapprove thenames contained inW/DSB/W/171.
TheDSBsoagreed.
4. European Communities -Implementation oftheUruguay Round commitments concerning rice
- Request forconsultations byUruguay (WT/DS25/1 andCorr.1)
Therepresentative ofUruguay, speaking under "Other Business" recalled thaton18December
1995,hiscountryhadrequestedconsultationsunderArticleXXII:1oftheGATT1994withtheEuropean
Communities withrespect totheimplementation ofthecommitments onriceundertaken bythelatter
intheUruguay Round. Uruguay wished toexpress itsgratitude fortheprompt response received from
theCommunities which enabled holding consultations on9January 1996inBrussels. Theresults of
these consultations werecurrently being examined bythecompetent Uruguay authorities. Therefore,
atthisstage, hisdelegation wasnotinaposition toprovide anysubstantive information onthismatter.
However, itwould keeptheDSBinformed whenever appropriate.
1Thenames contained inWT/DSB/W/17 havebeenincluded intheconsolidated version oftheindicative listcirculated
indocument WT/DSB/4.WT/DSB/M/10
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TheDSBtooknoteofthestatement.
5. DSBschedule ofmeetings
- Announcement bytheChairman
TheChairman, speaking under "Other Business" recalled thattheschedule ofDSBmeetings
for1996hadalready beencirculated toMembers indocument WTO/AIR/237 on12December 1995.
However, hewished toinform Members thatthemeeting originally scheduled for16April would now
beheldon24April.
TheDSBtooknoteofthisinformation.
6. Working procedures oftheAppellate Body
- Announcement bytheChairman
TheChairman, speaking under "Other Business", informed theDSBthatduring themonth
ofJanuary theAppellate Body members hadbeeninGeneva todraw-up theirworking procedures.
AstheChairman oftheDSB, hehadreceived views ontheabove-mentioned working procedures from
individual delegations tobeconveyed totheAppellate Body. These views hadbeenpassed ontothe
Appellate Body members whowere nowreaching anadvanced stage oftheirwork. Inaccordance
withparagraph 14oftheRecommendations ontheestablishment oftheAppellate Body approved by
theDSBon10February 1995(WT/DSB/1) hewished toprovide interested delegations withafurther
opportunity topresent anyviews thattheywould wishtoconvey totheAppellate Body members in
thefinalstages ofthedrawing-up oftheirworking procedures. Inorder todoso,heandAmb. Lafer
would beavailable onThursday, 1February at10a.m.tohearadditional views ofanydelegations
ontheAppellate Body working procedures. TohelpMembers intheirownthinking astowhether
there were anyindividual views thattheywould wishtohavepassed ontotheAppellate Body, he
informed them thatthework oftheAppellate Body, overthepastcouple ofweeks, hadbeenfocused
onsome keyissues oftheworking procedures. These keyissues encompassed thequestion ofrotation,
theissue ofcollegiality towhich hehadreferred inhisstatement on29November while submitting
therecommendation onthecomposition oftheAppellate Body totheDSB. Attention hadbeengiven
totheapplication ofthedraftrules ofconduct inregard tothework oftheAppellate Body. Some
consideration hadalsobeengiven totheissue ofhaving achairman oftheAppellate Body onabasis
ofrotation aswellastotheissues ofmultiple appeals, hearing procedures andthequestion ofnationality
inrelation totherotation procedures namely, which threeoutofseven Appellate Body members would
behearing eachindividual appeal.
TheDSBtooknoteofthisinformation.
7. Election ofChairperson
TheChairman saidthatasMembers wereaware, theChairman oftheGeneral Council carried
outinformal consultations onaslateofnames forappointment aschairpersons todifferent WTO standing
bodies inaccordance withtheestablished guidelines forappointment ofofficers. These proposed
nominations hadbeenapproved bytheGeneral Council atitsmeeting on13December 1995. Therefore,
onthebasis oftheunderstanding reached, heproposed thattheDSBelectAmb. Celso Lafer (Brazil)
asChairman oftheDSBbyacclamation.
TheDSBsoagreed.WT/DSB/M/10
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Theoutgoing Chairman oftheDSB, Amb. D.Kenyon (Australia) made aconcluding statement
subsequently circulated indocument WT/DSB(96)/ST/1.