RESTRICTED
WORLD TRADE WT/DSB/M/12
21March 1996
ORGANIZATION(96-1035)
DISPUTE SETTLEMENT BODY
5March 1996
MINUTES OFMEETING
Held intheCentre William Rappard
on5March 1996
Chairman: Mr.Celso Lafer (Brazil)
Subjects discussed: Page
1. Brazil -Measures affecting desiccated coconut 1
- Request forestablishment ofapanel (WT/DS22/5) 1
2. United States -Restrictions onimports ofcotton andman-made fibreunderwear 2
- Request byCosta Ricafortheestablishment ofapanel (WT/DS24/2) 2
1. Brazil -Measures affecting desiccated coconut
- Request forestablishment ofapanel (WT/DS22/5)
TherepresentativeofthePhilippinessaidthathercountrywishedtorequesttheDSBtoestablish,
atthepresent meeting, apanel withstandard terms ofreference inaccordance withArticle 7.1ofthe
DSU. ThePhilippines requested thatthepanel consider andfindthat: (i)thecountervailing duties
imposed byBrazil ondesiccated coconut were inconsistent withparagraphs 3and6(a)ofArticle VI
ofGATT 1994; and(ii)Brazil should desist from further imposing thecountervailing dutyonthe
Philippines 'exports ofdesiccated coconut, andreimburse whatever duties were collected.
Therepresentative ofBrazil saidthathiscountry noted therequest forapanel made bythe
Philippines andagreed thatthepanel beestablished toexamine thecountervailing measures imposed
onimports ofdesiccated coconut from thePhilippines. HesaidthatBrazil would request thepanel
togiveapreliminary ruling ontheissue ofapplicable lawasstated inSCM/193 which hadbeen
circulated asanannex toWT/DS22/3. Brazil therefore requested thePhilippines toholdconsultations
ontheterms ofreference ofthepanel inaccordance with Article 7.3oftheDSU.
TheDSBtooknoteofthestatements, agreed toestablish apanel andauthorized theChairman
oftheDSBtodrawuptheterms ofreference ofthepanel inconsultation withtheparties tothedispute
inaccordance withofArticle 7.3oftheDSU. TheChairman saidthathewould request theSecretariat
tocarry outtheconsultations provided forinArticle 7.3oftheDSU onhisbehalf.
Therepresentatives oftheUnited States, theEuropean Communities, Canada, Indonesia, and
Malaysia reserved theirrights toparticipate inthePanel'sproceedings asthirdparties.
./.WT/DSB/M/12
Page2
TheDSBtooknoteofthisinformation.
2. United States -Restrictions onimports ofcotton andman-made fibreunderwear
- Request byCosta Ricafortheestablishment ofapanel (WT/DS24/2)
TheChairman drewattention tothecommunication fromCosta Ricacontained inWT/DS24/2.
Therepresentative ofCosta Ricarecalled thaton27March 1995theUnited States hadrequested
consultations withCosta Ricaontheabove-mentioned textiles category under Article 6oftheAgreement
onTextiles andClothing (ATC). After thebilateral consultations hadfailed andthequantitative
restrictionshadbeenimposedonCostaRicanexports,theTextilesMonitoringBody(TMB)hadreviewed
thematter on21July.TheTMB hadfound thatserious damage, asenvisaged inparagraphs 2and
3ofArticle 6oftheATC, hadnotbeendemonstrated. Itcould notreach aconsensus ontheexistence
ofactual threat ofserious damage. Ithadrecommended that"further consultations beheldbetween
theUnited States andtheparties concerned, withaviewtoarriving atamutual understanding, bearing
inmind theabove, andwithdueconsideration totheparticular features ofthiscase, aswellasequity
considerations."1Theparties heldfurther bilateral consultations inAugust 1995butthese didnotlead
toamutually satisfactory understanding. Discussions intheTMB during itssubsequent review on
19October hadconfirmed itsprevious conclusions. Onthatoccasion, theTMB hadconsidered its
review ofthematter completed. Subsequently, Costa Ricahadrequested consultations withtheUnited
States under Article 4andother relevant provisions oftheDSU, Article XXIII oftheGATT 1994
andthecorresponding provisions oftheATC. These consultations didnotproduce asolution tothe
dispute. Therefore, Costa Ricarequested theDSBtoestablish apanel withstandard terms ofreference
inaccordance withArticle 7.1oftheDSU. Italsorequested thatthepanel review andfindthat:(i)
thequantitative restrictions introduced bytheUnited States wereinconsistent withArticles 2,6,and
8oftheATC; (ii)themeasure inquestion nullified orimpaired thebenefits accruing toCosta Rica
fromtheWTOandundertheATCinparticular;and(iii)theUnitedStatesshouldwithdrawthemeasure.
Therepresentative oftheUnited States recalled that,asMembers wereaware, thetransitional
safeguard waspermitted under theATC iftheproper conditions were met. TheUnited States had
metallthese conditions andbelieved thatithadacted fullywithin itsrights under theATC. TheUS
imports from Costa Ricaoftheproduct indispute --category 352/652 --hadrisen sharply andhad
displaced theUSdomestic production. In1995, Costa Rican imports hadequalled almost 10percent
oftheUSdomestic production ofthisproduct. Cotton andman-made fibreunderwear from Costa
Ricawerethelowest priced goods entering intotheUSmarket. Their prices werewellbelow theUS
producers 'average prices ofthesameproduct. TheUnited States believed thatitwasjustified infinding
serious damage oractual threat thereof, asreferred toinArticle 6oftheATC. Ithadcomplied with
allprocedural requirements: ithadgonethrough theTMB process twice, andhadconsulted withCosta
Ricasixtimes insearch ofasolution. Despite Costa Rica'sviews, expressed inconsultations and
initsstatement made atthepresent meeting, theUnited States wasconvinced thatitssafeguard measure
wasnecessary andfullyconsistent withitsobligations under theATC. TheUnited States would not
stand inthewayofaconsensus ontheestablishment ofapanel atthepresent meeting. Itlooked forward
toresolving thisdispute through thedispute settlement process.
TheDSBtooknoteofthestatements andagreed toestablish apanel withstandard terms of
reference inaccordance withArticle 6oftheDSU.
1G/TMB/R/2