RESTRICTED
WORLD TRADE WT/DSB/M/14
10May1996
ORGANIZATION(96-1838)
DISPUTE SETTLEMENT BODY
17April 1996
MINUTES OFMEETING
Held intheCentre William Rappard
on17April 1996
Chairman: Mr.Celso Lafer (Brazil)
Subjects discussed: Page
1. United States -Measures affecting imports ofwomen 'sandgirlswool coats 1
- Request byIndia fortheestablishment ofapanel 1
2. United States -Measures affecting imports ofwoven wool shirts andblouses 4
- Request byIndia fortheestablishment ofapanel 4
3. Proposed nominations fortheindicative listofgovernmental andnon-governmental
panelists 5
4. Turkey -Action onimports oftextile andclothing products 6
- Statement byHong Kong 6
1. United States -Measures affecting imports ofwomen 'sandgirlswool coats
- Request byIndia fortheestablishment ofapanel (WT/DS32/1)
TheChairman recalled thattheDSBhadconsidered thismatter atitsmeeting on27March
andhadagreed torevert toitatthepresent meeting.
Therepresentative ofIndiarecalled thatalltherelevant details concerning thismatter hadbeen
circulated inWT/DS32/1 on15March 1996, andthathehadmade astatement onthismatter atthe
DSBmeeting on27March1.Atthatmeeting theUnited States hadnotagreed totheestablishment
ofapanel, andIndia hadrequested thattheDSBconvene ameeting inaccordance withfootnote 5
toArticle 6.1oftheDSU. Heregretted that,sincethe27March therehadbeennochange withregard
totheunilateral restraint which hadbeenapplied bytheUnited States foroneyearoncategory 435.
On27March theUnited States hadmade astatement inwhich, interalia,ithadmentioned that"several
months ago,based onthese developments, theUnited States became convinced thattherestraint on
category 435wasnolonger necessary. Werequested consultations withIndia andindicated thatwe
wanted thissubject putontheagenda forthese bilateral talks". TheUnited States hadalsoobserved
that"accordingly, wearenotinaposition tojoinconsensus atthismeeting ontheestablishment of
1WT/DSB/M/13WT/DSB/M/14
Page2
apanel. TheUnited States Chief Textile Negotiator willbecommunicating directly tohercounterpart
theUSdecision todroptherestraint oncategory 435". Atthe27March DSB meeting India had
questionedtheneedfortheUnitedStates,ifithadbecomeconvincedseveralmonthsagothattherestraint
oncategory 435wasnolonger necessary, toconsult withIndia priortothewithdrawal oftherestraint.
Subsequently acommunication dated 15April 1996 sentbytheUSchief textile negotiator toher
counterpart inIndia stated, interalia,that: "AtthetimeoftheTMB review ofthisaction, Iagreed
toreviewfutureimportdataforcategory435withtheviewtorescindingthesafeguardactionifeconomic
developments warranted it.Initially, import trends continued toworsen anditwasnotpossible to
rescind therestraint. Since thisrestraint hasbeeninplace foralmost oneyearby18April, theUnited
States mustinstruct theUSCustoms tocontinue therestraint inforce foranother year. Thatiswhy
Ihoped tomeetwithyouearlier." Thecommunication further stated that: "Inconducting areview
ofthelatest economic datarelated tothiscategory, wehaveconcluded thisrestraint might berescinded.
However, asyouknow andastheUnited States stated attheMarch 27Dispute Settlement Meeting,
thisisanissueIintended toraisewithyoubilaterally. Ifnomutual solution isreached, Iamcontent
toleave therestraint inplace anddefend thesafeguard action toadispute settlement panel based on
theinformation available tomeconcerning category 435atthetimeoftheTMB review ofthismatter."
Atthemeeting on27March India hadpointed outthattheabsence ofconsensus onthismatter had
indicated thattheTMB hadnotdetermined thisaction tobejustified andtherefore themeasure had
notbeenjustified under theprovisions ofArticle 6oftheAgreement onTextiles andClothing (ATC).
Since theUnited States hadadifferent viewonArticle 6,andonthebasis ofthedata, itwasIndia's
viewthattheUSaction hadnotbeenjustified, ithadtherefore requested theestablishment ofapanel.
Indiafullyrecognized theUnited States 'rights todefend thesafeguard action before apanel. However,
itwasnecessary tohighlight some specific concerns onthismatter.
First, attheDSBmeeting on27March, theUnited States hadmade anunequivocal statement
thatithadbecome convinced several months agothattherestraint oncategory 435wasnolonger
necessary. TheUnited States hadalsomentioned thattheUSChief Textile Negotiator would be
communicating tohercounterpart theUSdecision towithdraw therestraint oncategory 435. What
theUSChief Textile Negotiator hadstated inhercommunication didnotexactly conform towhathad
beenstated atthatmeeting. Hedidnotwishtoquestion theUSaction ofintroducing therestraint
onthiscategory, butheprofoundly regretted themisleading statement made bytheUnited States at
theDSBmeeting on27March. Herecalled thatattheendofthatmeeting, hehadnotresponded to
delegations which hadasked whyIndia hadnotwithdrawn itsrequest fortheestablishment ofapanel
aftertheUnited States hadmade thestatement. Hebelieved thatsuchaninaccurate statement before
theDSBwasneither consistent withitsstature, norconducive toitssmooth functioning.
Second, hewasconcerned thathaving concluded "several months ago", thatarestraint was
nolonger necessary andhaving made astatement tothateffect before theDSB, animporting country
continued tomaintain itsrestraint. Hewasraising thispoint without reference toeither justification
orlackofit,fortheUSaction atthetimeaction wasinitiated andanewrestraint wasintroduced.
Hequestioned whether animporting country could continue tomaintain arestraint while acknowledging
thatitwasnolonger necessary, evenassuming thattheaction wasoriginally justified. Article 6.1
oftheATCstated thattransitional safeguards should beapplied assparingly aspossible. Under Article
6.12oftheATC aMember maymaintain measures invoked pursuant tothese provisions uptoa
maximumperiodofthreeyears.Thistime-limitwasthesamewhetherarestraintwasappliedunilaterally
oragreed bilaterally. Inthiscase, animporting country hadstated before theDSBthatitwasentitled
tocontinue aunilateral restraint evenafterithadreached aconclusion, many months ago,thatitdid
notconsider thisrestraint necessary. Thiswasaverystrange interpretation oftheATC. Itwasup
tothecollective wisdom oftheDSBtodecide howtodealwiththissituation.
Third, India wasconcerned thattheUnited States hadtreated every textile matter asbeing
purely bilateral despite thefactthattheATC --amultilateral agreement --hadentered intoforce onWT/DSB/M/14
Page3
1January 1995. Since then,India'sgreatest grievance withregard towhatwashappening inthetextile
areahadbeenthatatevery stage efforts werebeing made toundermine multilateralism andpromote
bilateralism. Onmore thanoneoccasion andinmore thanoneforum, strong concerns hadbeen
expressed onthismatter byexporting countries. Atpresent, India wasbeing toldthatinorder to
withdraw therestraint considered bytheimporting country asunnecessary, bilateral consultations should
beheld. TheATC provided forbilateral consultations prior totheintroduction ofarestraint but,for
theUnited States, consultations seemed necessary inorder towithdraw therestraint. Atthe27March
DSBmeeting, India hadmentioned thattheUnited States probably sought asignificant concession for
theremoval oftherestraint oncategory 435evenafterithadreached theconclusion thatthecontinuation
ofsuchrestraint wasnotnecessary. Previously, inother fora,Indiahadpointed outthatalargenumber
ofrequests, including those which theimporting country itself knew tobetotally unjustified, were
deliberately being initiated inorder topressure exporting countries toaccept some oftherestraints,
bygiving theimpression thatrestraints onsome other categories werebeing rescinded. Inother words,
theUnited States wasoffering towithdraw gracefully oneunjustified restraint, iftheexporting country
applauded andaccepted another unjustified restraint. India feltthatthiswaseuphemistically referred
toasa"mutual solution" intheletter from theUnited States dated 15April. India didnotbelieve
thatthiswasinconformity withtheletter orthespirit ofArticle 6oftheATC. India'sgreat concern
regarding thefunctioning oftheTMB wasthatinstead ofdeciding onthemerits ofeachrestraint
individually, asexpected under Article 6oftheATC, theTMB appeared tobepromoting theso-called
"mutual-solution", implying trade-offs. Thisapproach, besides being contrary totheletter andthe
spirit oftheATC, encouraged importing countries toissue more requests forconsultations thanthey
themselves believed tobewarranted. Hehoped theDSBunderstood thepredicament inwhich hefound
himself atthepresent meeting, namely whether tobelieve theUSstatement made attheDSBmeeting
on27March orthecommunication toIndia dated 15April. Within itsrights, India wished torequest
theestablishment ofapanel unless theUnited States would make anexplicit andunconditional
commitment atthepresent meeting towithdraw therestraint onthiscategory withimmediate effect.
Therepresentative oftheUnited States recalled thatatthe27March DSBmeeting hisdelegation
hadnoted thatwellbefore India hadinitiated dispute settlement procedures on14March, theUnited
States hadtriedwithout success toschedule bilateral consultations toresolve thismatter. Theinitial
safeguard action oncategory 435wasfullyjustified bytheeconomic situation atthattime. Although
itwasnotrequired bytheATC, theUnited States hadreviewed thiscasewithaviewtowithdrawing
therestraint. TheUnited States hadproposed todiscuss withdrawing itssafeguard action andhad
repeatedly attempted toarrange ameeting between theChief Textile Negotiators whowerethemost
competent representatives toadequately resolve theproblem. TheUnited States could notstand in
thewayofaconsensus ontheestablishment ofapanel atthepresent meeting, however, itregretted
thatIndia wasunable topostpone itsrequest toallow fortheproposed meeting between thetwotextile
negotiators.
TheDSBtooknoteofthestatements andagreed toestablish apanel withstandard terms of
reference inaccordance withtheprovisions ofArticle 6oftheDSU.
Therepresentatives ofCanada, Costa Rica, theEuropean Communities, Norway, Pakistan,
andTurkey reserved theirthird-party rights toparticipate inthepanel proceedings.
TheDSBtooknoteofthisinformation.WT/DSB/M/14
Page4
2. United States -Measures affecting imports ofwoven wool shirts andblouses
- Request byIndia fortheestablishment ofapanel (WT/DS33/1)
TheChairman recalled thattheDSBhadconsidered thismatter atitsmeeting on27March
andhadagreed torevert toitatthepresent meeting.
Therepresentative ofIndiarecalled thatalltherelevant details concerning thismatter hadbeen
circulated inWT/DS33/1 on15March andthathehadmade astatement onthismatter attheDSB
meeting on27March2.Atthatmeeting, theUnited States hadnotagreed totheestablishment ofa
panel andIndiahadrequested theDSBtoconvene ameeting inaccordance withfootnote 5toArticle 6.1
oftheDSU. Heregretted thattodatetherehadbeennosignificant change withregard totheunilateral
restraint which hadbeeninplace foroneyear. On27March, theUnited States hadregretted India's
decision torequest theestablishment ofapanel despite theTMB'srecommendations. Thisregret had
beenconveyed toIndia inaletter dated 15April from theUnited States. Hereiterated thatIndia's
request forapanel wasanexercise ofitsrightunder Article 8.10oftheAgreement onTextiles and
Clothing (ATC) andtheDSU. India didnotaccept theUnited States 'argument thatitsaction
undermined thecredibility oreffectiveness oftheTMB process, justasthecredibility ofthepanel
system wasnotundermined byanyMember appealing apanel report totheAppellate Body. Since
thismatter remained unresolved, herequested theDSBtoestablish apanel. Hethendrew attention
toArticle 3.10oftheDSUwhich, interalia,stated that"theuseofdispute settlement procedures should
notbeconsidered ascontentious actsandthatifadispute arises, allMembers willengage inthese
procedures ingood faithinaneffort toresolve thedispute". ThiswaswhatIndia intended todoand
hoped thattheUnited States would alsoapproach these proceedings withthesame spirit.
Therepresentative oftheUnited States saidthattheTMB hadtwice reviewed theUnited States '
safeguard action oncategory 440andhadfound, byconsensus, thattherestraint wasfullyjustified.
India hadtheright torequest apanel under Article 8.10oftheATC. However, theUnited States
urged India andtheother Members toreflect onthewisdom ofestablishing apanel inacasewhere
theTMB hadissued anunequivocal finding, particularly inacaseasclear asthis,where theTMB
hadtwice reviewed thecircumstances andhadtwice reached thesame conclusions. TheUnited States
heldthestrong viewthattheeffective functioning oftheTMB required thataMember gavefullregard
toArticle 8.9oftheATC andendeavoured tocomply withTMB findings andrecommendations. In
considering action under thisitem, Members should notethedifferences between rulings bydispute
settlement panels andTMB recommendations. TheATC didnotrequire TMB recommendations to
beadopted byanother body nordiditprovide foranappeal. Panel reports must beadopted bythe
DSBandtheirprecedential importance wassuchthatanappeal procedure hadbeenestablished asa
safeguard against errors oflaw.Article 8.10oftheATC wasintended toallow thedispute settlement
process tocome intoplayifthematter remained unresolved evenaftertheTMB hadmade "further
recommendations".
Therepresentative ofIndia wished toregister thathedidnotfullyunderstand thestatement
bytheUnited States. Inhisviewwhatwasbeing suggested wasafundamental amendment totheATC.
However, hedidnotwanttogointodetails atthisstage.
TheDSBtooknoteofthestatements andagreed toestablish apanel withstandard terms of
reference inaccordance withtheprovisions ofArticle 6oftheDSU.
Therepresentatives ofCanada, theEuropean Communities, Norway, Pakistan andTurkey
reserved theirthird-party rights toparticipate inthepanel proceedings.
2WT/DSB/M/13WT/DSB/M/14
Page5
Therepresentative ofNorway saidthathiscountry didnotcontest India'srighttorequest the
establishment ofapanel. However, Norway wasconcerned thatsince aconsensus hadbeenreached
onthismatter twice bytheTMB, thisrequest could undermine theeffectiveness andauthority ofthe
TMB. Another equally important aspect wasthatrequesting apanel inasituation where theTMB
hadreached aconsensus might have negative effects inthefuture ontheimplementation of
recommendations incases where aconsensus hadbeenreached. Norway wasnotfullyconvinced that
there wasaparallel between therelationship oftheTMB andadispute settlement panel, tothatof
thelatter andtheAppellate Body.
Therepresentative oftheEuropean Communities agreed withNorway, thatthisdispute involved
animportant question ofprinciple, namely under what conditions when theTMB hadreached a
consensus, amatter would thenbecontested indispute settlement. TheDSBwasnottherightforum
todiscuss thisingreater detail, butclearly thematter under consideration hadabearing ontherôle
oftheTMB intheWTO. TheCommunities wished todiscuss thematter further atalaterstage and
made itclear thatitconsidered thisaveryimportant issue intheWTO.
Therepresentative ofCanada said,thatalthough hercountry didnotquestion therightofa
Member tobring amatter before apanel, itwasconcerned thataMember could notjustabide bya
consensus decision oftheTMB. Ithoped thatthefactthatIndia hadrequested theestablishment of
apanel would notcreate aprecedent which inthelongruncould possibly undermine theeffectiveness
oftheTMB.
Therepresentative ofPakistan said, thatforhiscountry thismatter alsoinvolved issues of
general systemic interests andimplications, inparticular those related tothesubmission ofinformation,
theinvoking oftransitional safeguard provisions oftheATC, thefunctioning oftheTMB andreasons
foritsrecommendations. Therefore, Pakistan wished toreserve itsrights toconsider thesystemic
implications oftheissues which ithoped would beconsidered bythepanel.
Therepresentative oftheUnited States saidthathiscountry noted thatthematters atissue in
eachoftherequests byIndia toestablish apanel weresimilar andrelated. Therefore, intheinterest
ofeconomy, efficiency, andconsistency ofresults inthese cases, theUnited States suggested thata
single panel examine these complaints asprovided forinArticle 9.1oftheDSU. Ifaction onthe
suggestion wasnotappropriate atthepresent meeting, theUnited States would takeupthisquestion
withIndia during consultations onthecomposition ofthepanel.
TheDSBtooknoteofthestatements.
3. Proposed nominations fortheindicative listofgovernmental andnon-governmental panelists
(WT/DSB/W/21 andWT/DSB/W/24)
TheChairmandrewattentiontoWT/DSB/W/21andWT/DSB/W/24whichcontainedadditional
names proposed byMembers forinclusion ontheindicative listinaccordance withArticle 8.4ofthe
DSU. Heproposed thattheDSBapprove thenames contained therein.
Therepresentative oftheUnited States saidthatithadbeenhelpful tohavemoretimetoconsider
thismatter since ithadbeenfirstontheagenda oftheDSBmeeting on27March. TheUnited States
hadconsidered thesituation where officials ofother inter-governmental organizations werenominated
forinclusion ontheindicative list.Itnoted thatasageneral rule,under theGATT 1947, staffmembers
oftheSecretariat didnotserve onpanels. Oneofthenominations concerned acandidate whowas
astaffmember oftheWorld Bank. TheUnited States didnotoppose thisnomination. Therelationship
between theWorld Bank andtheWTO didnotnecessarily present aconflict ofinterest. HisauthoritiesWT/DSB/M/14
Page6
hadreviewed thecurriculum vitaeoftheindividual inquestion andwasfavourably impressed byhis
excellent background andcompetence inthefieldoftrade policy. However, hepointed outthatthere
mayariseother instances where anomination might concern anindividual whowasanofficial ofan
intergovernmental organization withaclose working relationship withtheWTO. Anexample was
theInternational Monetary Fund which hadaspecific rôletotheextent provided forintheGATT
andtheGATS. Insuch cases, theUnited States would invite theMembers toreflect onthe
appropriateness ofincluding officials ofthose organizations ontheWTO indicative listofpanelists.
TheDSBtooknoteofthestatement andapproved thenames contained inWT/DSB/W/21 and
WT/DSB/W/24.
4. Turkey -Action onimports oftextile andclothing products
- Statement byHong Kong
Therepresentative ofHong Kong, speaking under "Other Business", recalled thatduring the
DSBmeeting on27March hisdelegation hadfinally obtained confirmation thatconsultations with
Turkey would beheldinGeneva on16-17 April 1996. Hong Kong waspresently awaiting anindication
from theTurkish delegation astowhether consultations would beheldasoutlined byHong Kong in
itsrequest dated 12February 1996, andcirculated inWT/DS29/1, namely thattheybelimited between
Hong Kong andTurkey astheconsulting parties. On20February, Turkey hadagreed toenter into
bilateralconsultations,butittookquitesometimetofindsuitabledatesandvenuefortheseconsultations,
i.e.2.30p.m. on16April until1p.m.on 17April inGeneva. There wasamutual understanding
toextend thethirty-day period provided forinArticle 4.3oftheDSUto17April, 1p.m. Inaddition
totheletter ofacceptance dated 20February, Turkey hadforwarded acopyofaletter received from
theCommunities inwhich thelatter hadexpressed thedesire tobejoined intheconsultations pursuant
toArticle 4.11oftheDSU, given theirsubstantial tradeinterest. On16April, Turkey andHong Kong
hadmetinthepresence ofanumber ofparties thathadrequested tobejoined intheconsultations under
Article 4.11 oftheDSU. However, itwasimpossible toconduct them since Turkey andthe
Communities didnotaccept Hong Kong'sposition thatthese consultations belimited toHong Kong
andTurkey asconsulting parties, withtheCommunities andother parties participating inaccordance
withArticle 4.11oftheDSU. Turkey hadinsisted thatHong Kong should holdconsultations with
Turkey andtheCommunities asaso-called "joint exercise". Hisdelegation remained available until
expiry oftheconsultation period inorder toenterintoconsultations. However, intheirabsence Hong
Kong would consider themutually agreed period provided forinArticle 4.3oftheDSUtohaveexpired.
Therepresentative ofThailand, speaking alsoonbehalf ofMalaysia andthePhilippines, drew
attention tothedevelopments which hadtaken place since theirrequest tobejoined inconsultations
submitted toTurkey twomonths ago. Following thisrequest, several follow-up communications had
been made toTurkey toprovide atimely response tofacilitate necessary arrangements fortheir
delegations fromcapitals toattend theconsultations. Concerns regarding thismatter hadalready been
raised attheDSBmeeting on27March when Turkey hadindicated that,afterdueconsideration to
theirrequest, aresponse would becommunicated tothem assoonaspossible. However, despite the
factthatnotmuch timehadremained, since theconsultations between Hong Kong andTurkey had
beenscheduled on16-17 April, efforts atinducing aresponse from Turkey concerning theirrequest
hadfailed. Turkey 'sresponse hadbeenreceived lessthantwenty-four hours before theconsultations
weretotakeplace, which raised doubts astoTurkey 'sdesire toenterintoconsultations ingoodfaith.
Furthermore, Turkey 'sreply didnotprovide aclearanswer astowhether therequesting parties had
beenaccepted tobejoined intheconsultations under Article 4.11oftheDSU. When further clarification
wasrequested, Turkey wasnotexplicit andsuggested their participation asobservers inthese
consultations. Article 4.11oftheDSU didnotprovide theliberty fortherequested Member togrant
observer status totheparties requesting tobejoined intheconsultations. Intheconsultations heldWT/DSB/M/14
Page7
sofartheirstatus under Article 4.11oftheDSUhadnotyetbeenfullyandclearly addressed byTurkey.
Inviewofsuchdevelopments anddifficulties, theabove-mentioned delegations wished toreserve all
theirrights onthismatter under theWTO Agreement.
Therepresentative ofIndia saidthathisdelegation wished tobeassociated withthestatement
made byHong Kong. Herecalled thaton22February 1996, India hadrequested tobejoined inthese
consultations under Article 4.11oftheDSU since ithadasubstantial trade interest inthismatter.
After repeated reminders, India hadreceived anoralconfirmation fromTurkey on12April 1996that
itsrequest tojoinconsultations hadbeen accepted. Thisgave extremely short notice toIndia to
participate intheconsultations scheduled on16-17 April 1996. Itwasunfortunate thattheconsultations
weredeadlocked onanissueofprocedure. Neither theDSU norArticle XXII ofGATT 1994enabled
aMember tosuddenly acquire arighttoconduct theseconsultations asa"joint exercise". Hisdelegation
reserved itsrights under theWTO Agreement onthismatter.
Therepresentative ofPerusupported thestatement made byThailand. Herecalled thaton
21February 1996, Peruhadrequested tobejoined intheconsultations requested byHong Kong with
Turkey. However, Turkey 'sreply received on15April 1996 indicated theneedforanassessment
ofPeru'ssubstantial trade interest inthismatter. Peruhadparticipated intheconsultations heldon
16April being unofficially treated asanobserver. Inthiscontext, Perureserved itsrighttoparticipate
intheconsultations inaccordance withArticle 4.11oftheDSU.
Therepresentative ofTurkey saidthataround ofconsultations hadbeenheldon16April 1996
onthemeasures taken byTurkey inorder toadapt itscommercial policy inthetextile andclothing
sector consequent tothecustoms union withtheEuropean Communities. Heregretted thatdespite
hisdelegation 'swillingness tohearHong Kong'sarguments regarding thesubstance oftheissue at
hand, andtofindasolution toanydifficulties which these measures might cause forHong Kong, the
consultations heldon16April could notgobeyond theissues ofprocedure. Theprocedures of
Article XXII:1 ofGATT 1994 andArticle 4.11oftheDSU hadnotbeendesigned todealwiththis
situation. Turkey wasthefirst, andperhaps theonlycountry, tohaveentered intoacustoms union
withtheCommunities, without acceding toitasafullmember. Themeasures which hadledHong
Kong torequest consultations hadnotbeentaken unilaterally byTurkey, buthadbeenadopted inorder
tofulfiltheobligations pursuant toArticle 12oftheDecision No.1/95oftheEC-Turkey Association
Council under which Turkey wasexpected totranspose theCommunities 'Regulation No.3030/93
intoitsdomestic legislation. Without this,freecirculation oftextile andclothing products between
Turkey andtheCommunities would havebeenimpossible. Since 40percentoftradebetween Turkey
andtheCommunities consisted oftextiles andclothing, arégime which would exclude these products
from freecirculation between thetwoparties ofthecustoms union would notbeconsistent withthe
commonly accepted definition of"customs union". Forthisreason, Turkey andtheCommunities had
requested Hong Kong torecognize thattheprocedures ofArticle 4.11oftheDSU needed tobe
interpreted withacertain degree offlexibility toallow theCommunities toparticipate intheconsultations
onequal terms withTurkey. Anyother status given totheCommunities would beadenial oftheabove-
mentioned facts.
On16April hisdelegation hadcome tothemeeting prepared toseekasolution totheproblems
ofsubstance thatHong Kong wasexpected toraise. Since July1995, soonafterthemodalities for
thecompletion ofthecustoms union hadbeenadopted bytheEC-Turkey Association Council, Turkey
hadrepeatedly sought bilateral consultations withHong Kong onthemeasures taken intheareaof
textilesandclothingasrequiredbythecustomsunion.Regrettablyandunlikesomethirtyothercountries
towhich similar requests hadbeen addressed, Hong Kong hadnotresponded favourably tothis
suggestion. Although Turkey wasdisappointed thatHong Kong, which waswell-known fordefending
itstrade interests withunparalleled effectiveness, hadfailed toaccept itsoffer. Turkey continued to
remain ready todiscuss thismatter withHong Kong. Withrespect totheother countries which wishedWT/DSB/M/14
Page8
toparticipate intheseconsultations, itwasTurkey 'sunderstanding thatunder Article 4.11oftheDSU
onlycountries which hadsubstantial trade interests intheissue athandcould participate. None of
thecountries which hadexpressed theirdesire toparticipate, hadsubmitted anyinformation supporting
theirclaim ofsubstantial tradeinterest. Withsome delay, Turkey hadunsuccessfully proposed bilateral
consultations toallcountries inorder toexamine thequestion oftheirsubstantial trade interest.
Therepresentative ofBrazil saidthatlikeother countries present atthemeeting on16April,
Brazil considered thatithadbeenaccepted asaparticipant intheconsultations under Article 4.11of
theDSU.
Therepresentative oftheEuropean Communities wished toassociate hisdelegation withthe
statement made byTurkey. TheGATT 1947hadbeencharacterized byapragmatic approach ofwhich
delegations hadbeenproud. TheCommunities hadhoped thatthisapproach could betransposed into
theWTO. Members knew thatalthough theWTO hadbecome more legal, perhaps more legalistic,
there wasstillaneed, asintheGATT 1947, toaddress practical issues inapragmatic manner. The
Communities weredisappointed withtheformalistic approach ofdifferent participants, inparticular
Hong Kong, withrespect toasituation inwhich ameasure hadbeentaken byacountry asapartner
inacustoms union. Consequently, anychanges sought withrespect tothesemeasures would alsoaffect
theinterests oftheother party ofthecustoms union andtherefore itshould alsoparticipate inthe
consultations inthesame manner astheonewhich wasbeing requested tochange itsmeasures. The
Communities believed thatwithapragmatic approach thismatter could beresolved easily, while it
wasrecognized thatthissituation wasunprecedented andwasnotspecifically addressed intheexisting
procedures.
Therepresentative ofCanada wished toassociate hercountry withthestatement made byHong
Kong. Asother delegations, Canada hadnotified itssubstantial trade interest inthismatter andhad
requested tobejoined intheconsultations pursuant toArticle 4.11oftheDSU. Canada hadnotreceived
arequest from Turkey tosubstantiate itstrade interest norhaditreceived arequest toparticipate in
theconsultations. LikeBrazil, Canada hadattended theconsultations on16April andconsidered that
ithadbeenfullyaccepted asaparticipant.
Therepresentative ofHong Kong expressed disappointment thatconsultations todatehadnot
beensubstantive butheremained optimistic. Hong Kong didnotagree withTurkey 'sstatement that
around ofconsultations hadbeenheldon16April. Thediscussion, infact,hadbeenlimited to
establishing thebasisforconsultations inaccordance withthedispute settlement rules. However, no
suchbasis hadbeenestablished. With respect topragmatism andtheformalistic approach referred
tobytheCommunities, hestressed thatthereshould benoconfusion between pragmatism andtendency
tooperate outside theWTO rules, andbetween rule-abiding ontheonehand andsuchdescriptions
asaformalistic approach ontheother. Herecalled thatasoutlined inWT/DS29/1 Hong Kong had
requested consultations withTurkey under Article XXII:1 oftheGATT 1994andpursuant toArticle 4
oftheDSU, regarding theunilateral imposition ofquantitative restrictions byTurkey onimports of
abroad range oftextile andclothing products fromHong Kong asfrom1January 1996. Turkey had
responded initscommunication dated 20February 1996 that"with reference toyour letter dated
12February 1996...I would liketoinform youthatourauthorities areready toenter intobilateral
consultations withyourauthorities." Finally, hedrew attention toWT/DS29/2 which specified that
"pursuant totheprocedures laiddown inArticle 4.11oftheDSU theEuropean Communities wish
tobejoined intheconsultations under Article XXII:1 ofGATT 1994 requested byHong Kong." He
requested delegations toexamine these communications.
Therepresentative ofIndia saidthatlikeCanada hiscountry hadnotbeenrequested byTurkey
toestablish itssubstantial trade interest norhaditbeeninvited toanybilateral consultations. India
considered thatitsparticipation intheconsultations heldon16April hadbeenpursuant toArticle 4.11WT/DSB/M/14
Page9
oftheDSU. India questioned theneedforTurkey toimpose quotas oncountries iftheyhadno
substantial trade interest.
Therepresentative ofTurkey shared Hong Kong'sdisappointment withregard tothelackof
progress atthemeeting on16April. Turkey remained ready toseeksolutions toallmatters ofsubstance
thatHong Kong hadraised inconnection withadoption byTurkey oftheCommunities 'standards with
regard totextiles andclothing asaresult ofthecompletion ofthecustoms union. There wasstilltime
before theexpiry oftheconsultation period tomake progress inthisarea. Hecould notagree with
theinterpretationgivenbyotherdelegationswithrespecttotheirparticipationatthemeetingon16April.
IftheCommunities 'rôlehadbeen clarified during these consultations, Turkey would have then
questioned thepresence ofanumber ofcountries whose trade interest wasextremely negligible. In
1995, oneparticipant hadnoexports while exports ofanother hadbeenlimited toUS$65,000. It
washisunderstanding thatbecause Canada hadnoexports oftextiles andclothing toTurkey but
maintained anumber ofrestrictions onimports from Turkey thatCanada hadwithdrawn itsrequest
toparticipate inthese consultations. Therefore, heapologized thatTurkey hadfailed torespond to
Canada 'srequest asaresult ofthismisunderstanding. Theparticipation ofanydelegation atthemeeting
on16April didnotmean thatTurkey hadaccepted thatthesedelegations hadasubstantial tradeinterest
inthesense ofArticle 4.11oftheDSU.
Therepresentative ofHong Kong saidthathisdelegation remained available untilexpiry of
theconsultation period toresume consultations asoriginally agreed andpursuant totheDSU rules
andprocedures.
TheDSBtooknoteofthestatements.