CONSTRUCTING AN EFFECTIVE DISPUTE SETTLEMENT SYSTEM:
RELEVANT EXPERIENCES IN THE GATT AND WTO
Rosine M. Plank-Brumback
TABLE OF CONTENTS
I. INTRODUCTION ........................................................................................................................1
II. THE DEVELOPMENT OF THE GATT/WTO DISPUTE SETTLEMENT SYSTEM .............2
A. ARTICLES XXII AND XXIII OF THE GENERAL AGREEMENT .............................................2
B. THE DEVELOPMENT AND CODIFICATION OF THE GATT PANEL PROCEDURE ...................4
C. THE WTO DISPUTE SETTLEMENT UNDERSTANDING AND ITS RELATIONSHIP
WITH THE GATT ...........................................................................................................16
III. GATT/WTO EXPERIENCE IN HANDLING CERTAIN PROCEDURAL
ISSUES ....................................................................................................................................18
A. HOW TO ACHIEVE COHESION IN A SYSTEM INVOLVING SEVERAL AGREEMENTS? ............19
B. WHAT ISSUES OR DISPUTES MAY BE RAISED? (SCOPE AND JUSTICIABILITY) ...................21
C. WHO MAY RAISE ISSUES OR DISPUTES AGAINST WHOM? (STANDING OF DISPUTANTS
AND INTERESTED PARTIES) ......................................................................................24
D. HOW TO ENCOURAGE CONCILIATION OR DISPUTE RESOLUTION BY OTHER THAN
FORMAL ADJUDICATION BY A PANEL? .....................................................................28
E. HOW AUTOMATIC SHOULD BE THE RECOURSE TO ADJUDICATION BY A PANEL? ..............31
F. HOW TO ASSURE THAT SOLUTIONS ARRIVED AT BY THE PARTIES DO NOT VIOLATE THE
AGREEMENTS OR INTERFERE WITH THE RIGHTS OF OTHERS THEREUNDER? ..............32
G. HOW TO ASSURE THE PANEL PROCESS IS FAIR AND IMPARTIAL? .....................................34
H. HOW TO ASSURE THE PANEL PROCESS IS PROMPT AND EFFICIENT? .................................37
I. WHAT MAY THE PANEL DECIDE AND HOW SHOULD IT ARRIVE AT ITS FINDINGS AND
CONCLUSIONS? ........................................................................................................40
J. HOW TO ASSURE THE PANEL FINDINGS AND CONCLUSIONS ARE RIGHT? ..........................48
K. HOW TO ASSURE COMPLIANCE WITH RULINGS AND RECOMMENDATIONS? .....................52
IV. CONCLUDING REMARKS ..................................................................................................59
ANNEX: WTO SECRETARIAT OVERVIEW OF THE STATE-OF-PLAY OF WTO DISPUTES ...................62
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I. INTRODUCTION
At their meeting in Belo Horizonte in May, 1997, Trade Ministers, representing the thirty-four
countries which had participated in the Summit of the Americas, established the Working Group on
Dispute Settlement and its terms of reference. Among other tasks, the Working Group has been
mandated “to identify areas of commonality and divergence among dispute settlement systems in the
hemisphere, including with respect to the extent to which these systems have been employed.” To this
end, the Group is considering an analytical compendium1 prepared by the OAS, which compares the
dispute settlement provisions of eighteen regional agreements and the World Trade Organization
(WTO), on the basis of the written texts of these agreements.
To assist further the Group in carrying out its mandate, this paper seeks to examine more
closely the practical operation of the dispute settlement system of the WTO--the most detailed
interstate trade dispute mechanism being used--and that of its GATT predecessor. The intent at this
stage is not to provide a comprehensive catalogue of the disputes raised by member states2 nor an
analysis of the substantive case law.3 Rather the focus is to begin to analyze how the GATT and now
the WTO have attempted to solve the procedural and other problems encountered in constructing an
effective dispute settlement system--a continuing work in progress. Relevant panel cases will be
referred to only as illustrative examples, sometimes of worst case scenarios. Even though the emphasis
is on procedure, it will be apparent that procedure is not without controversy or substance.
A preliminary section of the paper discusses the development of dispute settlement under the
GATT and the WTO, including their relationship and overall objectives. The core analysis is
organized around certain procedural themes that could be regarded as critical to a well-functioning
dispute resolution system, like many of those suggested in the compendium; e.g., how to assure
cohesion in a system which includes several separate agreements and interested parties; how to
encourage the parties to work out their differences before resorting to more formal procedures; how to
assure that disputes are settled promptly; how to assure that the adjudicative tribunal or panel is fair
1
Organization of American States, Dispute Settlement Mechanisms in Regional and Sub-regional Trade
and Integration Arrangements, OAS Doc. SG/LA-TU/WG.DISP/97/DOC.1/Rev.1 (7 July 1997).
2
There were 196 complaints referred to the GATT under Art. XXIII from 1947 to 1994. The United States
(52), the European Community (44 - not counting individual member states), and Japan (15) were most frequently
targeted. The United States (61), the European Community (28 - not counting individual member states), and
Canada (17) raised the most complaints. Legal Affairs Division, GATT Secretariat, Analytical Index of the GATT:
Guide to GATT Law and Practice [hereinafter GATT Analytical Index 1995], at 771-87 (6th ed. 1995). The number
of Art. XXIII complaints understates the extent of GATT dispute settlement, as a large number of disputes were dealt
with in consultations which were not notified to the GATT. Also additional complaints were submitted after 1979
under the dispute settlement provisions of the various plurilateral MTN agreements concluded pursuant to the Tokyo
Round. See infra note 36. Under the WTO, there have been 109 requests for consultations on 76 distinct matters, as
of Dec. 19, 1997. There are seventeen active cases, seven completed cases and twenty settled or inactive cases. An
overview of the state-of-play of WTO disputes prepared by the WTO Secretariat for general distribution over the
Internet is provided as Annex.
3
There were 101 panel reports adopted under the GATT and several unadopted panel reports. GATT
Analytical Index 1995, supra note 2. The full text of the adopted GATT panel reports is available at
http://www.sice.oas.org./dispute. Under the WTO as of Dec. 19, 1997, the reports of seven panels as modified by
the Appellate Body have been adopted. Action is pending on the reports of three panels, two of which have been
appealed to the Appellate Body. The full text of the WTO Panel and Appellate Body reports which have been
issued, is available at http://www.sice.oas.org/dispute. Other WT/DS series documents are available at
http://www.wto.org./wto (“documents-on-line”).
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and impartial; how to assure that the panel gets it right; how to assure that solutions mutually arrived at
by the parties do not violate the rights of others under the agreements; how to assure that
recommendations or rulings are complied with, etc. Under each such issue, the problems encountered
in and the practice of the GATT will be discussed, followed by the pertinent provisions of the WTO
Understanding on Rules and Procedures Governing the Settlement of Disputes4 (hereinafter referred to
as the WTO Dispute Settlement Understanding or DSU) which were drafted in the light of this GATT
experience. WTO members have affirmed their adherence to the principles for managing disputes
heretofore applied under GATT Articles XXII and XXIII, along with the rules and procedures further
elaborated in the DSU.5 Also discussed in this section is what has been the experience so far in the
WTO in applying the DSU in connection with these procedural issues. Concluding remarks highlight
how the GATT/WTO system is evolving towards a greater “thickening of legality,” which raises
further areas that might be examined in any consideration of the practical operation of the DSU.
The lessons that the working group may draw from the GATT/WTO experience in tackling
procedural and other problems in settling disputes, as illustrated in the paper, may be useful to the
group in carrying out its ultimate tasks. These are to “recommend methods to promote understanding
of the procedures of the WTO Understanding,” to “exchange views on possible approaches to dispute
settlement under the FTAA agreement, in line with the [WTO] Understanding,” and to “make specific
recommendations on how to proceed in the construction of the FTAA in [the] area” of dispute
settlement.
II. THE DEVELOPMENT OF THE GATT/WTO DISPUTE SETTLEMENT SYSTEM
This section traces the history of the codification of the rules and procedures governing GATT
dispute settlement, culminating in the WTO Dispute Settlement Understanding. A few panel cases are
cited as examples of procedural problems encountered along the way, which highlighted the need for,
and propelled the negotiation of, ever more elaborate systemic disciplines.
A. Articles XXII and XXIII of the General Agreement6
In the beginning there were many words in the General Agreement on Tariffs and Trade, but
not “dispute settlement” nor “panels.” The General Agreement or contract, which the original twentythree “contracting parties” signed in 1947 to protect the value of the tariff concessions these
governments had exchanged, spoke of “consultations” on a matter in Article XXII, and of “nullification
or impairment” of a benefit in Article XXIII. Additionally in the Agreement, there were several other
provisions requiring consultations or providing for multilateral review of trade matters.
Art. XXII:1 obligates a contracting party to “accord sympathetic consideration to, and [to]
afford adequate opportunity for consultation regarding, such representations as may be made by
another contracting party with respect to any matter affecting the operation of this Agreement.” Art.
XXII:2 provides for the “CONTRACTING PARTIES”--which are the contracting parties acting jointly
4
Understanding on Rules and Procedures Governing the Settlement of Disputes, Annex 2 at 353, Final Act
Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, GATT Doc. UR-94-0083 (Mar.
30, 1994).
5
Id. at art. 3.1.
6
GATT Basic Instruments and Selected Documents [hereinafter BISD] Vol. IV at 39, (1969). Citations to
the BISD will follow the GATT/WTO practice; e.g., BISD 14S/18 refers to the BISD 14 th Supplement at page 18.
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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as a decision-making body--to hold consultations with any contracting party or parties on “any matter
for which it has not been possible to find a satisfactory solution through consultation under paragraph
1.” Thus Article XXII provides for mandatory bilateral consultations by request, and if these fail to
solve the matter satisfactorily, also allows for--but does not require--multilateral consultations. The
object of these consultations is broadly “any matter affecting the operation of [the General]
Agreement.”
Art. XXIII also provides a bilateral and multilateral track for dealing with “matters” or disputes.
But more formally and concretely under Art. XXIII:1, a contracting party must allege that a “benefit
accruing to it directly or indirectly under this Agreement is being nullified or impaired or that the
attainment of any objective of the Agreement is being impeded as the result of” any of three specified
situations. These are: (a) the infringement by another contracting party of an obligation under the
General Agreement (so-called violation case), or (b) the application by another of a measure, whether
or not it conflicts with the Agreement (so-called non-violation case), or (c) any other situation. The
party making this allegation may make written representations or proposals to the other “with a view to
the satisfactory adjustment of the matter.” The other contracting party so approached is obligated to
“give sympathetic consideration to the representations or proposals made to it.”
If the matter is not resolved directly by the parties “within a reasonable time,” or in case of a
XXIII:1(c) situation, “the matter may be referred to the CONTRACTING PARTIES,” as provided
under Art. XXIII:2. They then “shall promptly investigate any matter so referred to them and shall
make appropriate recommendations to the contracting parties which they consider to be concerned, or
give a ruling on the matter, as appropriate.” Bilateral consultations on an alleged violation or nonviolation case, which the provision implies should be held in good faith, are the necessary prerequisite
to referral of the matter to the collective decision-making body. Such referral is not, however,
automatic under the Art. XXIII:2 text. Once referral occurs, a prompt investigation must follow, which
may lead to collective recommendations or a legal ruling.
Art. XXIII:2 further provides, inter alia, that “[i]f the CONTRACTING PARTIES consider that
the circumstances are serious enough to justify such action, they may authorize a contracting party or
parties of such concessions or other obligations under this Agreement as they may determine to be
appropriate in the circumstances.” If concessions or other benefits to a party are in fact suspended, the
latter is free to withdraw from the GATT upon written notice within a specified time period. Art.
XXIII:2 does not spell out how the CONTRACTING PARTIES are to carry out their investigation of
the matter, nor arrive at their recommendations or rulings. Neither does Art. XXIII:2 state per se that
the party targeted by such recommendations or rulings should comply with them. The ultimate
sanction is retaliation against the recalcitrant party, which may take the form of suspension by other
contracting parties of tariff concessions, or more broadly of other benefits, to which GATT
membership entitles the party. But this broad-based retaliation is cabined by the requirement that it be
authorized multilaterally.
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B. The Development and Codification of the GATT Panel Procedure7
1. The Creation of the GATT Article XXIII:2 Panel
Art. XXIII:2 is at the heart of what was to develop as the dispute settlement system of the
GATT, and eventually the WTO. As explained above, the provision authorizes collective
recommendations and rulings, as well as concerted retaliation, when appropriate. Following the
signing of the General Agreement, the GATT lacked a full-blown institutional structure, as it was
presented then as merely an interim trade agreement to be provisionally applied, while a more
comprehensive plan for an International Trade Organization was going through the domestic
ratification and acceptance process of individual states. The CONTRACTING PARTIES, or all the
contracting parties acting jointly as the decision-making organ of the GATT, met biannually in plenary
session lasting for several weeks. During these initial sessions, they resolved complaints or issues by
adopting via consensus,8 rulings made by the Chairman, or reports of ad hoc working parties
containing negotiated conclusions and recommendations. Representatives of the major trading
signatories and the disputants themselves fully participated in their official capacity in these working
parties.
Then on the basis of a proposal by their Chairman, the CONTRACTING PARTIES established
a Panel on Complaints in 1952 to deal during the seventh session with several complaints which had
been raised under Art. XXIII. As the GATT secretariat described it, the panel was “composed of
representatives of countries not directly affected by the charges to be examined. Each party concerned
was invited to present its case and was afforded an opportunity to discuss the various points arising
therefrom. The Panel then considered the information and arguments laid before it and prepared its
findings and recommendations which, after discussion with all the parties concerned, were submitted in
final form to the CONTRACTING PARTIES.”9 This new method of dealing with complaints, which
some herald as GATT’s finest achievement, namely the ad hoc independent tribunal or panel, was
introduced with little discussion, almost as if it were a minor variation of an ordinary working party.
Over the years, the GATT panel process evolved through use with greater systematization of its
7
The principal decisions and agreements laying down procedural rules governing GATT panels include:
Procedures Under Article XXIII [hereinafter 1966 Procedures] (adopted on Apr. 5, 1966), BISD 14S/18 (1966)
(laying down special procedures, including time limits, for settling disputes between a developing and a developed
GATT contracting party); Understanding Regarding Notification, Consultation, Dispute Settlement and
Surveillance [hereinafter 1979 Understanding] (adopted on Nov. 28, 1979), BISD 26S/210 (1980) (including an
agreed description of the customary practice of GATT panels at 215); Dispute Settlement Procedures in Ministerial
Declaration [hereinafter 1982 Ministerial Declaration] (adopted on Nov. 29, 1982), BISD 29S/13 (1983); Dispute
Settlement Procedures [hereinafter 1984 Procedures] (adopted on Nov. 30, 1984), BISD 31S/9 (1985); and
Improvements to the GATT Dispute Settlement Rules and Procedures in the Midterm Agreement [hereinafter 1989
Midterm Agreement] (decision of Apr. 12, 1989) BISD 36S/61 (1990). For a comprehensive history and analysis of
the GATT legal system see generally Robert E. Hudec, The GATT Legal System and World Trade Diplomacy
[hereinafter The GATT Legal System] (1975); and Robert E. Hudec, Enforcing International Trade Law: The
Evolution of the Modern GATT Legal System [hereinafter Enforcing Int’l Trade Law] (1993).
8
Under the GATT practice of consensus, a proposal is adopted unless one or more parties formally object(s)
to its acceptance. Silence does not constitute formal objection.
9
GATT Secretariat, International Trade 1952, at 96 (1953), cited in Hudec, The GATT Legal System,
supra note 7, at 79.
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practices. These were written down and codified from time to time. In 1955, the primary function of
the panel was stated as being “to prepare an objective analysis for consideration by the contracting
parties, in which the special interests of individual governments are subordinated to the basic objective
of applying the Agreement impartially and for the benefit of the contracting parties in general.”10 For
greater transparency and institutional monitoring of the consultation stage, it was agreed in 1958, that
any request for Art. XXII:1 consultations should be notified to the GATT. Within forty-five days any
contracting party claiming a substantial interest in the matter could ask to join the consultations, and
could join, subject to the approval of the party to which the initial request for consultations was
addressed. The outcome of the consultations was to be notified to the GATT for the information of all
contracting parties.11 In 1960, it was agreed that in case Art. XXII:1 consultations on residual import
restrictions did not lead to a satisfactory solution, any party to the consultations could seek multilateral
consultations under XXII:2, or alternatively, have recourse directly to Art. XXIII:2.12
2. The Uruguay Panel
In 1962, Uruguay tried to use the panel process as a tool to illustrate the unfavorable terms of
trade for temperate primary producers in developing countries. It sought action by the
CONTRACTING PARTIES under Art. XXIII:2 against various restrictive measures applied by fifteen
developed contracting parties, which had been the object of earlier bilateral consultations. Uruguay,
did not, however, argue any specific legal theory or trade damage before the Panel. The latter was
reluctant to do so in Uruguay’s place.
Advancing GATT jurisprudence nonetheless, the Panel found that measures applied clearly
inconsistently with the General Agreement, and not covered under a grandfather clause,13 “would,
10
Considerations Concerning Extended Use of Panels, GATT Doc. L/392/Rev.1 para. 5 (Oct. 6, 1955)
(note by the Executive Secretary), reprinted in Hudec, The GATT Legal System, supra note 7, at 297. The note
stressed the importance of objectivity in the differences between the composition and working methods of the panel,
as opposed to an ordinary working party. Members of the panel were selected as individuals taking into account
“personal qualifications and special knowledge of the General Agreement and of the matters to be dealt with by the
Panel.” Moreover, “[t]he contracting parties immediately concerned with a complaint are not represented on the
Panel. They appear before the Panel in a capacity that is similar to that of the plaintiff and the defendant before a
court of law. After having heard the parties and any other contracting party which might have an interest in the case,
the members of the Panel meet in closed session and arrive at their own conclusions. The report is then drafted
under their individual responsibility and does not prejudice the attitude of the parties to the dispute. Nor does it
prejudice the later position that may be taken by the governments during the subsequent consideration of the report
by the CONTRACTING PARTIES. Id. at paras. 5 & 6. The note also suggested that the CONTRACTING
PARTIES consider extending the use of the panel procedure to cases other than complaints where “it may be
especially desirable to obtain an objective and technical consideration of the issues involved before the
CONTRACTING PARTIES are called upon to reach their final judgement.” In this connection, balance-of-payment
consultations and the review of matters under a waiver, such as the European Coal and Steel Community at that time,
were mentioned. Id. at paras. 7-10.
11
Procedures under Article XXII on Questions Affecting the Interests of a Number of Contracting Parties
(adopted on Nov. 10, 1958), BISD 7S/24 (1959).
12
Procedures for Dealing with New Import Restrictions Applied for Balance-of-Payments Reasons and
Residual Import Restrictions (approved on Nov. 16, 1960), BISD 9S/18 at 19-20, paras. 8-9 (1961). Residual import
restrictions were measures, applied inconsistently with the General Agreement, which were no longer justifiable for
balance-of-payments reasons.
13
Under the Protocol of Provisional Application for the original contracting parties, or for those who
acceded after 1948 under their respective Protocols of Accession, contracting parties applied Part II of the General
Agreement (Articles III-XXIII) “provisionally” to the extent not inconsistent with (mandatory) legislation existing at
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prima facie, constitute a case of nullification or impairment, and would ipso facto require consideration
of whether the circumstances [were] serious enough to justify the authorization of suspension of
concession or obligations.”14 With respect to a non-violation case, the Panel did not preclude that a
prima facie case of nullification or impairment could arise even if there were no GATT infringement,
but the burden of proof would lie on the invoking party.15 The Panel did not sustain Uruguay’s claims
where the defending party had invoked the grandfather clause, or replaced the measures with new ones
like variable levies, the GATT consistency of which had not been resolved. But the Panel concluded
that the CONTRACTING PARTIES should recommend that the interested defending parties consider
removing some other measures complained against, which the Panel had to assume as nullifying or
impairing benefits accruing to Uruguay and as a priori affecting adversely its exports.
3. The 1966 Procedures
Among other events, the experience with the Uruguayan panel led to proposals aimed at
assuring the prompt settlement of complaints raised by a developing contracting party against a
developed contracting party. To this end, the CONTRACTING PARTIES decided on additional
procedures under Art. XXIII in 1966.16 The decision provided for recourse to the Director-Genera’s
good offices, and if no mutually satisfactory solution were reached within two months, the
establishment of a panel. The panel was to take due account of the impact of the measures complained
of on the trade and economic development of the affected contracting parties, and within sixty days
issue its findings and recommendations to the CONTRACTING PARTIES or Council17 for
consideration and decision. The contracting party to which a decision was directed, then had ninety
days to report on the action it had taken in pursuance of the decision.
By 1963, panels (or working parties) had been used to make rulings under Art. XXIII:2 on
twenty-six cases.18 No panel was appointed again until 1970. During this hiatus, GATT members
concerned themselves, inter alia, with the Kennedy Round trade negotiations, the consolidation of the
original European Economic Community and its preferential arrangements with former colonies, the
establishment of the European Free Trade Area, the inclusion in the General Agreement of Part IV
(best efforts commitments to promote the trade and development of developing countries), and the
Anti-Dumping Code. This period has been called one of “anti-legalism,”19 signifying the resolution of
policy conflicts through a negotiated, diplomatic approach. Such an approach to dispute settlement
continues to be favored by the European Union.
the time of their respective application or accession. 1966 Procedures, supra note 6, at 77, para. 1.
14
Uruguayan Recourse to Article XXIII (Report adopted on Nov. 16, 1962), BISD 11S/95, 100 (1963).
15
Id.
16
Conciliation: Procedures under Article XXIII (Decision of Apr. 5, 1966), BISD 14S/18 (1966). There
was no consensus among contracting parties to adopt other elements of a proposal by Brazil and Uruguay, which
inter alia would have accorded money damages to developing contracting parties injured by illegal measures
maintained by a developed contracting party. Committee on Trade and Development (Report adopted on Apr. 5,
1966), BISD 14S/129, 144.
17
The CONTRACTING PARTIES established in 1960 a Council of the representatives of all contracting
parties to deal with matters between sessions. Decision of 4 June 1960 Establishing the Council of Representatives,
BISD 9S/8 (1961).
18
GATT Analytical Index 1995, supra note 2, at 771-76.
19
Hudec, Enforcing Int’l Trade Law, supra note 7, at 12.
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Panel activity picked up again sporadically through the 1970s, with many of the twenty cases
settling without the need for a panel to submit its findings. One notable exception follows.
4. The DISC Panel
The complaint launched in May 1973 by the European Community against the U.S. Domestic
International Sales Corporation (DISC) legislation, and counterclaims by the United States against the
income tax practices of Belgium, France and the Netherlands, respectively, broke new procedural
ground for panels, most of it not good. It was the first time a defending party had reciprocated with
countercomplaints, raising the level of contentiousness. It took almost three months to agree to
establish a single panel to examine all four complaints and its terms of reference. It was the first time
non-governmental experts were used to complete a panel--the U.S. had insisted that at least one
panelist be a tax expert. The selection process took over two-and-a-half years. The panel submitted its
reports to the Council almost nine months later in November, 1976.20 There was no consensus in the
Council to adopt the panel’s reports, since the defending parties objected to the panel’s findings that
the practices constituted impermissible export subsidies. Without adoption by the Council, acting on
behalf of the CONTRACTING PARTIES, the panel’s reports would not have the status of GATT case
law. In December, 1981, six years after the reports had been issued, the Council finally adopted them
on the basis of an understanding, which essentially overruled the panel’s conclusions of nullification or
impairment.21
The larger lesson from the DISC procedural debacle was the lack of substantive consensus
among GATT members as regards disciplines on subsidies. More rigorous rules on subsidies and on
other non-tariff measures figured prominently on the agenda22 of the Tokyo Round of multilateral trade
negotiations, which ran from 1973 to 1979. Dispute settlement reform figured in the subtext as a result
of DISC and other panel experience.
5. The 1979 Understanding and Tokyo Round MTN Agreements
At the conclusion of the Tokyo Round in 1979, the CONTRACTING PARTIES adopted an
Understanding aimed at improving the GATT dispute settlement mechanism.23 The 1979
Understanding represented the first comprehensive codification of panel practices. The following are
some of its key provisions. The use of Art. XXIII:2 procedures “should not be intended or considered
as contentious acts,” all parties were to “engage in these procedures in good faith in an effort to resolve
the disputes,” and “complaints and counter-complaints in regard to distinct matters should not be
linked.”24 After securing the agreement of the parties concerned, the Director-General (secretariat)
should propose a panel composition of three or five members to the CONTRACTING PARTIES for
approval. A panel should be constituted normally within thirty days of its establishment.25 Parties to
20
United States Tax Legislation (DISC) (Report of the Panel presented to the Council of Representatives on
Nov. 12, 1976) BISD 23S/98 (1977); Income Tax Practices Maintained by France, id. at 114; Income Tax Practices
Maintained by Belgium, id. at 127; and Income Tax Practices Maintained by Netherlands, id. at 137.
21
Tax Legislation, BISD 28S/114 (1982).
22
Declaration of Ministers Approved at Tokyo on 14 September 1973, BISD 20S/19, 20, para. 3(b) (1974).
23
1979 Understanding, supra note 7.
24
Id. at 211-12, para. 9.
25
Id. at 212, para. 11.
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the dispute would respond to nominations of panelists by the secretariat within seven working days and
“not oppose nominations except for compelling reasons.”26 Panel members would preferably be
governmental, but serve in their individual capacities.27 The secretariat would maintain an informal
indicative list of qualified governmental and non-governmental persons available to serve on panels.28
Any contracting party having a substantial interest in the matter before a panel, having so notified the
Council, “should have an opportunity to be heard by the panel.”29 The function of a panel was to
“make an objective assessment of the facts of the case and the applicability of and conformity with the
General Agreement and, if so requested...other findings as will assist the CONTRACTING PARTIES
in making the recommendations or in giving the rulings provided for in Article XXIII:2.”30 “[P]anels
should consult regularly with the parties to the dispute and give them adequate opportunity to develop a
mutually satisfactory solution.”31 In case a solution is arrived at by the parties, “any contracting party
with an interest in the matter has a right to enquire about and be given appropriate information about
that solution in so far as it relates to trade matters.”32 Panels should aim to deliver their findings
without undue delay, and in cases of urgency normally within three months.33 The CONTRACTING
PARTIES should take appropriate action on reports within a reasonable period of time and keep under
surveillance any matter on which they make recommendations or give rulings.34
The 1979 Understanding also included an agreed description of the customary practice of
GATT panels.35 It stated that the aim of GATT dispute settlement “has always been to secure a
positive solution to a dispute. A solution mutually acceptable to the parties to a dispute is clearly to be
preferred.” Where this was not possible, the first objective was to secure the withdrawal of the
measures found to be inconsistent with the General Agreement. Only if immediate withdrawal were
impracticable, should there be resort to compensation as a temporary measure pending withdrawal.
The last resort would be GATT-authorized retaliation on a discriminatory basis against the offending
contracting party, which had occurred in only one case.
Also concluded pursuant to the Tokyo Round were a series of Multilateral Trade Negotiations
or MTN Agreements, open to contracting (and in some cases to non-contracting) party signatories, and
aimed at improving GATT disciplines on technical barriers to trade (standards), government
procurement, subsidies and countervailing duties, customs valuation, licensing, anti-dumping duties,
and trade in bovine meat, dairy products, and civil aircraft. These codes or side agreements were an
attempt to further disciplines beyond GATT obligations for those willing to be so bound, without
amending the General Agreement, a cumbersome process. The provisions for settling disputes among
signatories arising from their rights and obligations under these specific plurilateral agreements,
generally followed the lines of the traditional procedures under Articles XXII and XXIII,36 but were not
26
Id. at para. 12.
Id. at paras. 11 & 14.
28
Id. at para. 13.
29
Id. at 213, para. 15.
30
Id. at para.16.
31
Id.
32
Id. at 214, para. 19.
33
Id. at para. 20.
34
Id. at paras. 20 & 21.
35
Id. at 215.
36
Agreement on Technical Barriers to Trade (so-called Standards Code), BISD 26S/8, 22-26 & 31-32
27
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uniform nor consistent in their interface with those procedures. The existing rights and benefits
enjoyed by contracting parties under the GATT, who were not parties to the MTN Agreements, could
not be affected by the agreements.37 Moreover, any contracting party which felt that an agreement was
implemented in a way contrary to the General Agreement could bring a complaint under Article XXIII.
6. Some “Hard Cases”: Spanish Oil, Citrus, and Nicaragua
The period covering the immediate aftermath of the Tokyo Round in 1979 to the conclusion of
the Uruguay Round in 1994 represented in many ways, the worst moments in GATT dispute
settlement, as it stumbled through various procedural and substantive impasses through an
unprecedented case load. But it also represented some of GATT’s finest moments as most disputes
were settled successfully, and progress was made in addressing the many fault lines in the system,
culminating in the Dispute Settlement Understanding. One could characterize some of the use of
panels during this period as a negotiating helpmate or negotiating weapon, depending on one’s point of
view. Dispute settlement was one of several tracks used to further multilateral disciplines over the
measures governments applied which affected trade. Governments brought complaints to the GATT to
legitimate their claims and strengthen their negotiating hand; e.g., in Art. XXIV:6 negotiations on EC
enlargement. Many complaints submitted immediately after the Tokyo Round were motivated by the
desire to test the new rules under the plurilateral agreements, particularly as regards export subsidies, in
the expectation that the panel procedure would sharpen the rules’ teeth. Much litigation concerned
unfinished business--areas where it had not been possible in that round to agree on adequate disciplines
over governmental measures affecting trade or new areas of concern; e.g., agriculture, state-trading,
internal taxation, federal-state relations, investment, intellectual property, health and environmental
measures. Also there was a drive to clear the decks ahead of the serious bargaining in the next round to
clarify how far governments had strayed even from their exception-loaded commitments under the
GATT, and the extent to which the rules were transgressed or ambiguous or simply non-existent.
This raised to the forefront the question of the proper role of GATT panels in interpreting
provisions which were ambiguous, sometimes deliberately so by their drafters given the necessities of
political compromise. Should panels be expansionist by adapting these provisions in the interest of
trade creation and elimination of trade-distorting measures, perhaps beyond the intentions of all the
drafters? Or should they be more circumspect and construe the specific wording strictly, leaving the
task of plugging any gaps to negotiators in a future round?
(1980); Agreement on Government Procurement, id. at 33, 49-51; Agreement on Interpretation and Application of
Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade (Subsidies Code), id. at 56, 71-72 & 7577; Arrangement Regarding Bovine Meat, id. at 84, 88; International Dairy Arrangement, id. at 91, 94-95;
Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (Customs Valuation
Code), id. at 116, 128-30 & 149-50; Agreement on Import Licensing Procedures, id. at 154, 159; Agreement on
Trade in Civil Aircraft, id. at 162, 166-68; and Agreement on Implementation of Article VI of the General Agreement
on Tariffs and Trade (Anti-Dumping Code), id. at 171, 185-86. It should also be noted that an earlier plurilateral
agreement on textiles negotiated in 1973 contained provisions for dispute settlement by a Textile Surveillance Body.
Arrangement Regarding International Trade in Textiles, BISD 21S/3, 14-15 (1975). See also, Conclusions of the
Textiles Committee Adopted on 22 December 1981, BISD 28S/4, 4 and 8 (1982). It is beyond the scope of this
paper to analyze the operation of these provisions and the settlement of disputes involving specific measures covered
by these plurilateral agreements.
37
Action by the CONTRACTING PARTIES on the Multilateral Trade Negotiations (decision of Nov. 28,
1979), BISD 26S/201, para.3 (1980).
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During 1979-94, 112 cases were referred to the GATT under Article XXIII (almost 1 1/2 times
the number of complaints brought in twice as many years prior). Fifty-four of these cases led to a panel
being established and issuing a report. The following focuses on the procedural difficulties
encountered in three of the ten panels whose rulings were never adopted; in other words, some of the
hard cases.
The first GATT panel report not to be adopted--but merely taken note of--by the Council,
concerned a complaint filed in 1979 by the United States against Spanish restrictions on the domestic
sale of soybean oil alleged to discriminate against imported soybeans.38 One could argue that the panel
made a mistake by considering inter alia, that a drop in trade had to be demonstrated for there to be a
finding that internal regulations protected domestic production contrary to Article III:1. After receiving
the panel’s findings, the U.S. had withdrawn its complaint in an effort to quash the report, but Spain
had insisted on its circulation. In the absence of an agreed understanding among the parties concerned
to overrule the panel à la DISC, there was no other way for the system to deal with “incorrect” legal
findings, other than for the CONTRACTING PARTIES to refuse to adopt them as their own, by not
adopting the panel report; i.e., for the losing party (and others) to block consensus in the Council.
The U.S. complaint against the European Community’s tariff preferences on imports of citrus
from certain Mediterranean countries set new procedural lows for time taken to establish a panel (at the
fourth Council meeting devoted to the matter following panel request and unsuccessful good offices
undertaken by the Director-General), and to agree on its terms of reference (six months).39 The
Community had argued that the U.S. complaint was inadmissible, as the preferences were one element
of agreements which already had been examined under Article XXIV:7. The terms of reference were
agreed to on the basis of understandings among the several parties involved as to what the panel should
consider, and the participation in the panel process of the eight preference-receiving countries, not all
of which were contracting parties. Some interested third country parties initially blocked adoption in
the Council of the special terms of reference, given their precedent value. Following agreement on the
terms of reference of the panel, it took another two months to finalize its five-member composition in
July, 1983, as one party systematically waited the requisite seven days before refusing any nominee.
Parties were late in submitting their briefs and supplementary answers. Some panelists were re-posted
outside of Geneva but returned periodically to complete the panel work. The legal issues were
complex, and the case was one of first impression, as regards the relationship between Articles XXIII
and XXIV, with important commercial and political ramifications. The Panel delivered its unanimous
findings and conclusions to the parties in December, 1984. From the initial request by the U.S. for a
panel, to the circulation of the panel report to the Council in February, 1985, the panel process lasted
almost thirty-one months.
The Panel dealt with the matter as a non-violation case, in the light of the unresolved legal
status of the overall agreements of which the citrus tariff preferences were a part. Based on trade and
customs valuation data, the panel concluded that the United States was entitled to compensatory
adjustment as a result of the adverse effects the preferences had had on the competitive relationship of
U.S. exports of fresh oranges and lemons into the EC, thereby impairing benefits accruing to the
38
Spain - Restrictions on Domestic Sale of Soybean Oil, GATT Doc. L/5142 (June 17, 1981) (Report by the
Panel - not adopted) & GATT Doc. C/M/152 (Nov. 3, 1981).
39
European Community - Tariff Treatment on Imports of Citrus Products from Certain Countries in the
Mediterranean Region (Report of the Panel - not adopted), GATT Doc. L/5776 (Feb. 7, 1985), at 1-3, paras. 1.1-1.5.
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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United States under the most-favored-nation principle of Article I.40 The Community and virtually all
parties benefitting from preferential access to its market, blocked the report’s adoption, on the grounds
that it would set precedents prejudicial to agreements entered under Article XXIV.41 The United States
and the Community eventually settled the dispute.42 The many procedural delays experienced in the
citrus case served as catalyst for dispute settlement reform in the Uruguay Round. It also highlighted
the need to clarify the relationship between Articles XXIII and XXIV; i.e., what was the extent of the
GATT m-f-n rights of non-parties to preferential trade agreements, when there was no consensus
among contracting parties that these agreements would lead to customs unions or free-trade areas
within a reasonable period of time, as sanctioned by Article XXIV.
A third case concerned the sensitive issue of politically-motivated trade embargoes. A panel
had found that the United States had acted inconsistently with Article XIII when it had reduced in 1983
the sugar import quota allocated to Nicaragua.43 The U.S. had not defended its action in GATT
terms,44 and did not oppose adoption of that panel report. As regards compliance with the ruling, the
United States declared that the matter was outside the GATT’s competence. In May, 1985, President
Reagan issued an Executive Order applying a general trade embargo against Nicaragua. The United
States refused Nicaragua’s request for Article XXII:1 consultations in July, and initially opposed the
establishment of a panel on the matter.45 In the U.S. view, a panel could not address the validity of
invoking Article XXI:(b)(iii), which left it to each contracting party to judge what actions it considered
necessary for the protection of its essential security interests. Moreover there was no practical function
for a panel to perform as the ultimate power of the CONTRACTING PARTIES was to authorize
Nicaragua to suspend the application of its obligations in respect of the United States. This would be
meaningless in the instant case since the embargo also covered U.S. exports to Nicaragua.46
Four months later, a panel was established on the understanding, at U.S. insistence, that it could
not examine or judge the validity of, or motivation for, the Article XXI invocation by the United States
40
Id. at 102-04, paras. 5.1-5.3.
GATT Doc. C/W/462 (Mar. 27, 1985) (communication from the European Communities); GATT Doc.
C/M/186 at 6-17 (Apr. 19, 1985) (minutes of Council meeting of Mar. 12, 1985); GATT Doc. C/M/187 at 21-28
(May 31, 1985) (minutes of Council meeting of Apr. 30 - May 1, 1985); & GATT Doc. C/M/188 (July, 1985)
(minutes of Council meeting of June 5-6, 1985).
42
Using its authority under Section 301, the U.S. administration retaliated unilaterally in June 1985 against
the Community by raising tariffs on pasta. In this way the U.S. also struck against the Community’s earlier blocking
of the adoption by the MTN Subsidies Committee of a panel report, the majority opinion of which had found EC
export subsidies on pasta to be contrary to the Community’s obligations under the Subsidies Code. The EC
counterretaliated by raising its tariffs on walnuts and lemons. The citrus-pasta war came to an end with the
implementation of a settlement in 1987, whereby the EC reduced the m-f-n rates on certain citrus products and nuts,
and the United States reduced its tariffs on certain products of interest to Mediterranean countries like olive oil and
anchovies, in some cases within tariff quotas. The United States also pledged not to challenge further anticipated EC
tariff preferences on citrus for the Mediterranean countries. Donna U. Vogt, Congressional Research Service, The
“Citrus-Pasta Dispute” Between the United States and the European Community, Report No. 86-1030 ENR (1987).
43
United States - Imports of Sugar from Nicaragua (Report of the Panel adopted on Mar. 13, 1984), BISD
31S/67 (1985).
44
Id. at 72, para. 3.10.
45
United States - Trade Measures Affecting Nicaragua (Report by the Panel - not adopted), GATT Doc.
L/6053 (Oct. 13, 1986), at 1, para. 1.1.
46
Id. at para. 1.2.
41
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in the matter47. Agreement was reached five months later on special terms of reference designed to so
limit the panel’s jurisdiction.48 As a result, the panel made no finding on whether the embargo was
justifiable under the national security exception of Article XXI, and no finding as to nullification or
impairment of benefits under Article XXIII. The panel concluded there was no decision the
CONTRACTING PARTIES could take under Article XXIII:2 which would re-establish Nicaragua’s
balance of GATT advantages in the light of a two-way embargo. Nicaragua opposed adoption of the
panel report because the Council failed to recommend: removal of the U.S. embargo, a waiver for other
contracting parties to grant special preferences to Nicaragua as compensation for the trade damage
effects of the embargo, and an interpretation limiting the invocation of Article XXI.
7. 1982 and 1984 Improvements
Meanwhile the GATT was moving forward by incremental steps to streamline the dispute
settlement system. In 1982, the CONTRACTING PARTIES meeting at Ministerial level declared that
no major change was required in the 1979 Understanding, “but that there is scope for more effective
use of the existing mechanism and for specific improvements in [dispute settlement] procedures to this
end.”49 The improvements consisted of: explicit recognition of the availability in general of recourse to
the Director-General’s good offices; greater monitoring by the Council over the time taken to establish
a panel and for the panel to deliver its report, and over compliance with recommendations by
CONTRACTING PARTIES; the formulation of terms of reference to permit a clear finding by the
panel of GATT infringement and/or of nullification or impairment of benefits; and the possibility of a
recommendation for compensatory adjustment on other products, as appropriate. The blocking of
adoption of panel reports was dealt with in largely hortatory terms. The consensus rule was reaffirmed,
but it was agreed that “obstruction in the process of dispute settlement shall be avoided.”
Continuing in their tentative steps to improve the system, the CONTRACTING PARTIES
agreed in 1984, on a trial basis for one year, to allow the Director-General, upon request of either party
to the dispute, to draw from a roster of non-governmental panelists to complete a panel, when the
parties were still deadlocked over its composition thirty days after its establishment.50 Moreover,
panels should set precise deadlines for written submissions by the parties, who should respect the
deadlines.51
47
Id. at para. 1.3.
Id. at para. 1.4.
49
1982 Ministerial Declaration, supra note 7, at 14.
50
1984 Procedures, supra note 7, at 9-10.
51
Id. at 10.
48
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Panels had always established their own working procedures with the assistance of the GATT
Secretariat. In 1985, the Office of Legal Affairs52 circulated suggested standard working procedures
based on customary practice, for the benefit of newly-established panels.53
8. The Uruguay Round Negotiations and the 1989 Midterm Agreement
Ministers launched the Uruguay Round of negotiations on trade in goods and services at Punta
del Este in 1986, specifying that the outcome, at least for goods, was to form part of a “single
undertaking.” This was in contrast to the fragmentation of the GATT system resulting from the
previous round. The negotiations would concentrate not only on access through reduction
commitments, but also on rule-making, enforceable through strengthened rules and procedures on
dispute settlement. In particular, arrangements were to be developed for facilitating compliance with
adopted recommendations.54
In the initial phase of the work of the Negotiating Group on Dispute Settlement, participants
submitted their analyses of the functioning of the process and tabled specific proposals on issues
identified for negotiations.55 It was easily admitted that stricter time deadlines should be imposed in
the various stages of the dispute settlement process, and that alternative means of settlement like
arbitration might be provided for. The tougher issues for the negotiators were whether and how to
reform the consensus rule as it applied to panel establishment, adoption of panel reports, and
authorization for retaliation. Another difficulty was the nature and breadth of a commitment to refrain
from taking unilateral trade measures outside the GATT framework.
Based on the ground work carried out in the negotiating group and following the Mid-Term
Review at Montreal, CONTRACTING PARTIES adopted in April 1989 an “early harvest” of
improvements on dispute settlement, applicable on a trial basis until the end of the Uruguay Round.56
The decision stated that: “the dispute settlement system of GATT serves to preserve the rights and
obligations of contracting parties under the General Agreement and to clarify the existing provisions of
the General Agreement. It is a central element in providing security and predictability to the
multilateral trading system.”57 This was an explicit recognition of the role of dispute settlement in
rule-making.
The 1989 decision reaffirmed that contracting parties had to solve their disputes consistently
with the General Agreement58; i.e., no discriminatory or trade-managing bilateral deals. Such
“solutions” to matters formally raised under the GATT had to be notified to the Council, where any
contracting party “may raise any point relating thereto.”59 The same was true for arbitration awards.
52
Created in 1981 within the GATT Secretariat.
GATT Dispute Settlement System (note by the Secretariat), GATT Doc. MTN.GNG/NG13/W/4 (June 10,
1987), at 44-49.
54
Ministerial Declaration on the Uruguay Round (declaration of Sept. 20, 1986), BISD 33S/19, 25 (1987).
55
Id. at 44.
56
1989 Midterm Agreement, supra note 7.
57
Id. at para. A.1.
58
Id. at para. A.2.
59
Id. at para. B.
53
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Arbitration by mutual agreement within GATT was recognized as an alternative means of dispute
resolution on clearly defined issues.60
To minimize the possibility of procedural deadlock, the 1989 decision imposed time deadlines-which could be shortened by mutual agreement of the parties-- and default procedures on certain stages
(consultations, panel establishment, composition, terms of reference) with a view to keeping the
process rolling. A request for consultations under Article XXII:1 or XXIII:1 had to be in writing,
giving the reasons for the request, and also notified to the GATT Council.61 The other party, to which
the request was addressed, had to respond thereto within ten days, and hold consultations in good faith
within thirty days. If not, and barring mutual agreement otherwise, the complaining party could
proceed directly to request a panel or working party under Art. XXIII:2.62 If consultations were held,
but failed to settle the dispute within sixty days of the consultation request, the complaining party could
also then request a panel or working party. It could do so within less time, if both parties agreed jointly
that the consultations had failed to settle the dispute.63 The time periods were shorter in cases of
urgency, particularly for perishable products en route: consultations within ten days of request, request
for panel or working party within thirty days in case of impasse.64 However, all these time periods
could be extended by the Chairman of the Council if the defending party was a developing contracting
party.65
Good offices, conciliation and mediation, undertaken voluntarily, could begin and end at any
time.66 They were not mandatory. But if entered into within sixty days of a request for consultations,
and barring mutual agreement otherwise, the complaining party must wait sixty days from that request
before seeking the establishment of a panel or working party; i.e., no end run around the sixty day
period for consultations. This tried to assure that the complaining party also operated in good faith to
solve the dispute before resorting to more formal procedures. The decision also provided that on his
own initiative, the Director-General could offer his good offices in an ex officio capacity.67
Most importantly, the 1989 decision introduced a semi-automatic or de facto right to a panel on
request. “If the complaining party so requests, a decision to establish a panel or working party shall be
taken at the latest at the Council meeting following that at which the request first appeared as item on
Council’s regular agenda, unless the Council decides otherwise.”68 This new procedure was referred to
as reverse or negative consensus. Under the prior practice, a panel was not established unless there
was consensus in the Council to establish a panel. Under the negative consensus rule, a panel was
established unless there was consensus not to establish a panel. This was counterbalanced by a stricter
delineation as to what the request for a panel, or complaint, should contain: indication as to whether
consultations were held, brief summary of factual and legal basis sufficient to present the problem
clearly, and if other than standard terms of reference were desired, a proposed text for special terms of
60
Id. at para. E.1.
Id. at para. C.3.
62
Id. at para. C.1.
63
Id. at para. C.2.
64
Id. at para. C.4.
65
Id. at para. F.7.
66
Id. at para. D.1.
67
Id. at para. D.3.
68
Id. at para. F(a).
61
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reference. The decision set out standard terms of reference, based on customary practice, which would
come into effect “unless parties to the dispute agree otherwise within twenty days from the
establishment of the panel.”69 Even special terms of reference agreed to by the parties would still be
reviewed by the Council where “any party may raise any point relating thereto.”70 A panel would be
composed of three members, unless the parties agreed within ten days to a panel of five.71 If there was
no agreement on panel composition within twenty days, the Director-General upon either party’s
request, would appoint the panelists, as he considered most appropriate, within ten days.72
The 1989 decision set out procedures for dealing with multiple complainants. To the extent
feasible, a single panel should be used to examine the various complaints, without prejudice to the
rights each complainant would have enjoyed under separate panels.73 Written submissions by each
complainant would be available to the other complainants and each would have the right to be present
during oral argumentation of the other before the panel.74 If more than one panel were established, it
should have the same panelists and timetable75. As regards interested third contracting parties, their
submissions should be given to the parties and be reflected in the report.76 In turn, the panel could give
the third parties access to the written submission of the parties if the latter agreed.77
The decision also provided timetables for the various phases of the panel’s work; e.g., as a
general rule, a panel should circulate its final report to the parties within six months of agreement on its
composition and mandate, within three months in case of urgency.78 Delays in this connection had to
be reported to the Council but “in no case” could exceed nine months.79
The GATT Secretariat could provide a legal expert to assist a developing contracting party,
upon request, and also conduct special training courses on dispute settlement practices.80
The 1989 decision did not extend the negative consensus rule to the adoption of panel reports,
nor to the authorization of retaliation. These would continue to be governed by the consensus rule.
The decision did require contracting parties to explain their objections to reports in writing.81 It set a
deadline of fifteen months for Council action on the report from the date of request for bilateral
consultation.82 The decision required the party which was the object of rulings or recommendations to
inform the Council about its intentions to comply with them, if impracticable immediately, “within a
69
Id. at para. F(b)1.
Id. at para. F(b)2.
71
Id. at para. F(c)4.
72
Id. at para. F(c)5.
73
Id. at para. F(d)1.
74
Id. at para. F(d)2.
75
Id. at para. F(d)3.
76
Id. at para. F(e)2.
77
Id. at para. F(e)3.
78
Id. at para. F(f)5.
79
Id. at para. F(f)6.
80
Id. at paras. H.1-2.
81
Id. at para. G.2.
82
Id. at para. G.4.
70
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reasonable period of time.”83 To keep the spotlight on the party, the Council was required to put the
matter on its agenda six months after adoption of rulings or recommendations, and thereafter. At each
meeting, the party had to provide the Council with a written status report on progress in implementing
the panel recommendations or rulings.84
The procedures adopted under the 1989 decision operated until the entry into force of the
WTO. Sixteen panels were established under the negative consensus rule of the decision.
85
C. The WTO Dispute Settlement Understanding and Its Relationship with the GATT
By signing the Final Act in Marrakesh on April 15, 1994, government representatives thereby
attested that the act embodied the results of the Uruguay Round of Multilateral Trade Negotiations.
They also thereby agreed to adopt the declarations and decisions contained in it, and to submit the
Agreement Establishing the World Trade Organization (WTO Agreement) for ratification and
acceptance by their respective authorities.86 The WTO Agreement largely accomplished the single
undertaking goal expressed in the Punta del Este Declaration. The Agreement established the World
Trade Organization, an institution with legal personality to deal with trade relations among its members
in matters arising from the WTO Agreement and the annexed agreements and legal instruments. The
Multilateral Trade Agreements--the Multilateral Agreements on Trade in Goods, the General
Agreement on Trade in Services (GATS), the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS), the DSU, and the Trade Policy Review Mechanism--are annexed to, and
integral parts of the WTO Agreement, therefore binding on all WTO members. Four plurilateral trade
agreements87 (PTAs) are also annexed, and are part of the WTO Agreement for and binding on, the
members who have accepted them.
GATT did not die with the birth of the WTO, but continues as its legal rules by reference
through the incorporation clause in Annex 1A of the WTO Agreement under “GATT 1994.” To
counter the possibility of free-riders--GATT contracting parties who might otherwise benefit pursuant
to most-favored-nation treatment from the concessions on goods negotiated in the Uruguay Round
without becoming WTO members--a legal construct of two GATTs was invented. The original
General Agreement was named “GATT 1947.” A new General Agreement based on the 1947 text as
rectified, amended, and modified up through the Uruguay Round was named “GATT 1994.” GATT
1947 and the WTO Agreement (and the GATT 1994 annexed thereto) co-existed until Jan. 1, 1996.
All contracting parties have now withdrawn from the GATT 1947. The GATT is dead. Long live the
83
Id. at para. I.2.
Id. at para. I.3.
85
GATT Doc. L/7416 ( Feb. 22, 1994).
86
Final Act, supra note 4, at 7.
87
The parties to two plurilateral agreements, the International Dairy Agreement and the International
Bovine Meat Agreement, decided respectively to terminate these agreements as of Jan. 1, 1998. Termination of the
International Dairy Agreement (decision pursuant to Article VIII:3), WTO Doc. IDA/8 (Sep. 30, 1997) and
Termination of the International Bovine Meat Agreement (decision pursuant to Article VI:3), WTO Doc. IMA/8
(Sep. 30, 1997). Accordingly at the request of the parties, the General Council decided to delete the two agreements
from Annex 4 of the WTO Agreement effective as of Jan. 1, 1998. Deletion of the International Dairy Agreement
from Annex 4 of the WTO Agreement (decision of Dec. 10, 1997), WTO Doc. WT/L/251 (Dec. 17, 1997) and
Deletion of the International Bovine Meat Agreement from Annex 4 of the WTO Agreement (decision of Dec. 10,
1997), WTO Doc. WT/L/252 (Dec. 16, 1997).
84
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GATT.
A full text of GATT 1994 was not republished as a discrete instrument, since consolidation
inevitably would have entailed renegotiation. GATT 1994 comprises all the following: the GATT
1947; past protocols and certifications of tariff concessions; GATT accession protocols (minus
grandfather clauses); almost all waiver decisions in force as of Jan. 1, 1995 (including a waiver
covering measures taken under the U.S. Jones Act, but not U.S. Section 22); other decisions of the
CONTRACTING PARTIES; the Understandings on GATT Articles negotiated in the Uruguay Round;
and finally, the Marrakesh Protocol of market access concessions in goods. Article XVI of the WTO
Agreement further provides that the WTO will be guided by the “decisions, procedures and customary
practices followed by the CONTRACTING PARTIES to GATT 1947" and their subsidiary bodies.
The DSU applies to disputes concerning and brought under, the “covered agreements.” These
are the WTO Agreement itself, the Multilateral Agreements on Trade in Goods (including GATT
1994), the GATS, the TRIPS Agreement, the DSU itself, and the Plurilateral Trade Agreements.88
Under Article 3 of the DSU, WTO members affirm “their adherence to the principles for the
management of disputes heretofore applied under Articles XXII and XXIII of GATT 1947, and the
rules and procedures as further elaborated and modified” in the DSU. Not only has past GATT
practice been enshrined via this provision, the DSU has also incorporated verbatim many of the dispute
settlement rules or formal statements of practice adopted by the CONTRACTING PARTIES in 1979,
1982, 1984, and 1989, which were discussed in the previous section of this paper. But the DSU has
gone much further than GATT dispute settlement.
The major innovations brought about by the DSU are: to establish a standing Dispute
Settlement Body; to introduce an appellate process; to extend the negative or reverse consensus rule to
the adoption of panel and appellate body reports, and to the authorization of retaliatory suspension of
concessions; to provide for cross-retaliation across goods, services and intellectual property
obligations; to provide for arbitration specifically to determine a reasonable period of time for
compliance with rulings, or the proper level of suspension of concessions; and to commit members
explicitly to redressing violations or other nullifications or impairment of benefits exclusively within
the confines of the DSU; i.e., not engage in unilateral determination and suspension. In the end, it was
the U.S. pledge to avoid unilateralism, which was the political quid pro quo for other members to
forego their veto power over adopting rulings and authorizing retaliation.
How would the DSU have affected the outcome of the three unadopted panel reports--the
examples of “hard cases”--discussed in section II.B.6 of this paper? With respect to the Spanish
soybean oil case, the appellate review would have afforded the possibility of correcting the panel
findings in an apolitical manner. With respect to the Citrus preference case, the procedural delays
encountered in establishing the panel, its composition and terms of reference would have been curtailed
by the DSU--and even already by the prior decisions taken in 1984 and 1989 under the GATT.
However, given the complexity of the case and the numerous parties involved, the panel might well
have taken longer than the DSU deadlines to organize its work and issue its report. Whether the Citrus
panel would have treated the case as a non-violation one is problematic in the absence of a specific
claim to this effect in the U.S. complaint, as an alternative theory to the violation claim initially
88
As between the members of the respective plurilateral trade agreement, subject to their adoption of a
decision setting out the terms on which the DSU was to apply.
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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presented. It is also an open question how the reverse consensus rule would have operated in the
consideration of the panel report, when so many delegations opposed its adoption, notwithstanding the
DSU tilts in favor of adoption in case of impasse. Had a finding of non-violation nullification and
impairment been adopted, of course, the European Community would still have not been obligated to
withdraw the preferences, but only urged to make a “mutually satisfactory adjustment.” This is in fact
what the EC ultimately did in exchange for U.S. tariff concessions, albeit almost three years after the
panel submitted its report. With respect to the Nicaraguan case, it is also problematic whether the
panel operating with standard terms of reference would have examined whether the United States was
sufficiently justified in invoking the national security exception. The DSU has not changed the fact
that the ultimate remedy available against a non-complying party under the dispute settlement system is
to authorize retaliation by the affected party to the dispute. At its most extreme possible expression,
this is the same situation as would exist already in a two-way embargo.
The next section of this paper describes the main provisions of the DSU in more detail.
III. GATT/WTO EXPERIENCE IN HANDLING CERTAIN PROCEDURAL ISSUES
This section analyzes what has developed as the GATT/WTO practice in dealing with certain
procedural issues or themes, which could be regarded as critical to a well-functioning system for
resolving trade disputes between and among member governments. Under each such issue, the practice
of the GATT will be discussed as it stood before the entry into force of the WTO. This is followed by
a paraphrase or summary of the pertinent provisions of the WTO Dispute Settlement Understanding
(DSU) addressing the issue(s), which were drafted in the light of this GATT experience. Then is
discussed what has been the practical operation or experience so far in the WTO with respect to the
procedural issue or theme. Terms of the DSU which are particularly relevant to the issue are
highlighted in boldface type for emphasis. Under some sections, an introductory paragraph(s) provides
a composite description of the GATT/WTO system, where the salient features of the situation prior to,
and of that with the advent of, the WTO, are the same as regards the procedural issue or theme.
A. How to achieve cohesion in a system involving several agreements?
GATT Practice
The early GATT was said to operate well by consensus as a club of limited membership. By
the time of the Uruguay Round, it was recognized that greater systematization of the consultation and
dispute settlement process was in order. The first comprehensive codification of notification,
consultation, dispute settlement and surveillance procedures was adopted in 1979.89 But at the same
time, the MTN Agreements fragmented the trading system into different levels of rights and
obligations, and separate dispute resolution. The plurilateral trade agreements could not nullify GATT
rights enjoyed by contracting parties, who were not parties to the agreements.
DSU
One central authority enforces all the agreements, almost all of which are binding on all
89
1979 Understanding, supra note 7.
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members. The DSB, open to all WTO members, establishes panels, adopts panel and Appellate Body
(AB) reports, monitors implementation of rulings and recommendations, and authorizes retaliation.
Only PTA parties participate in DSB decisions on PTA disputes. Also provisions address how to
resolve conflicts between the rules and obligations under the different agreements.
Art. 1.1 DSU rules and procedures apply to disputes brought pursuant to consultation and dispute
settlement provisions under al “covered agreements.” These are: WTO Agreement, Multilateral Agreements
on Trade in Goods (GATT 1994, and agreements on agriculture, sanitary and phytosanitary measures, textiles
and clothing, technical barriers to trade, trade-related investment measures, anti-dumping, customs valuation,
preshipment inspection, rules of origin, import licensing procedures, subsidies and countervailing measures, and
safeguards), GATS, TRIPs, DSU, and PTAs (agreements on trade in civil aircraft, government procurement,
dairy and bovine meat--the latter two until the end of 199790).
Art. 1.2 DSU is subject to special or additional rules contained in covered agreements, which
prevail in case of conflict. In case of conflict between special or additional rules under more than one covered
agreement, DSB Chairman is to determine within ten days the rules and procedures, upon request of a party, in
case parties still disagree twenty days after panel established. Appendix 2 lists provisions of MTAs deemed
“special or additional.”
Art. 2.1 Dispute Settlement Body (DSB) is established to administer rules and procedures and
consultation and dispute settlement provisions of covered agreements, except as otherwise provided therein.
DSB establishes panels, adopts panel and Appellate Body reports, maintains surveillance of
implementation of rulings and recommendations, and authorizes suspension. Only members which are
paties to PTA participate in DSB decisions relating to a PTA dispute.
Art. 2.2 DSB informs relevant WTO Councils and Committees re disputes under respective covered
agreements.
Art. 2.3 DSB meets as necessary.
Art. 3.2 WTO dispute settlement is central element in providing security and predictability to the
multilateral trading system. It serves to preserve the rights and obligations of members under the covered
agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of
interpretation of public international law. DSB recommendations and rulings cannot add to or diminish the
rights and obligations provided in covered agreements.
Art. 3.9 DSU does not prejudice Members’ rights to seek authoritative interpretation of covered
agreements through decision-making under the WTO Agreement or a PTA.
Art. 22.3 Suspension of concessions or other obligations may relate to same sector where violation found
by panel or Appellate Body (AB); or where not practicable or effective, to other sector under the same agreement;
or where not practicable or effective and circumstances serious enough, to other covered agreement.
Art. 23.1 Redress of nullification or impairment or benefits under, or impediment to attainment of
objective of, covered agreement is through recourse to DSU.
Art. 23.2 No unilateral determination by member as to nullification or impairment, or to reasonable
period for compliance, or to level of suspension, except through recourse to DSU.
Art. II:2 of the WTO Agreement states that the Multilateral Trade Agreements are integral parts of the
WTO Agreement and binding on all WTO members.
Art. XVI:3 of the WTO Agreement provides that in the event of a conflict between a provision thereof
and one of any of the MTAs, the WTO Agreement will prevail to the extent of the conflict.
Note to Annex 1A to WTO Agreement: in the event of conflict, the WTO Agreement prevails over
any of the MTAs, and the provisions of any of the other agreements in Annex 1A prevail over GATT 1994.
Art. IX:2 of the WTO Agreement confers the authority to adopt interpretations on the Ministerial
Conference and the General Council.
90
Supra note 87.
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WTO Experience
The DSB--basically the WTO General Council, meeting in dispute settlement mode with its
own chairperson--has met regularly, and sometimes in special session as needed to carry out its
functions. Notifications regarding consultations and disputes are circulated to the DSB, and to all other
bodies with competence for the issues raised.
Some of the panels established by the DSB have interpreted the rights and obligations under
several agreements, within the scope of their examination of a matter. For example, the Banana panel
had to rule on several claims raised under GATT 1994, and four other WTO Agreements (Agriculture,
Import Licensing Procedures, TRIMs, and GATS), including the relationship among the obligations
thereunder.91 The panel determined inter alia that neither the inclusion of tariff quota shares for certain
(BFA) countries in the EC’s Schedule of concessions which was attached to the WTO Agreement, nor
the Agreement on Agriculture, prevailed over the requirements of GATT 1994 Article XIII.92 The
panel also found that GATT 1994, the Licensing Agreement, and the TRIMs Agreement could each
apply to the EC’s import licensing procedures on bananas.93
With reference to the General Interpretative Note to Annex 1A of the WTO Agreement above,
the panel defined the term “conflict” as dealing only with “(i) clashes between obligations contained in
GATT 1994 and obligations contained in agreements listed in Annex 1A, where those obligations are
mutually exclusive in the sense that a Member cannot comply with both obligations at the same time,
and (ii) the situation where a rule in one agreement prohibits what a rule in another agreement
explicitly permits.”94 Conflict did not occur where rules in one agreement provided for “different or
complementary obligations in addition to those contained in GATT 1994" such that both sets of
obligations could “be complied with at the same time without the need to renounce explicit rights or
authorizations.”95
The Banana panel found further that the scope of GATT and the GATS could overlap. They
were not mutually exclusive. To rule otherwise, in the panel’s view, would undermine the value of
members’ obligations and frustrate the object and purpose of both agreements.96 There was no legal
basis for an a priori exclusion of the EC banana import licensing regime from the GATS.97 Its scope
“encompasses any measure of a member to the extent it affects the supply of a service regardless of
whether such measure directly governs the supply of a service or whether it regulates other matters but
nevertheless affects trade in services.”98
91
European Communities - Regime for the Importation, Sale and Distribution of Bananas (Reports of the
Panel [hereinafter Banana Panel Reports] adopted on Sept. 25, 1997, as modified by the Appellate Body, which
however upheld the Panel’s conclusions discussed here, in WT/DS/27/AB/R (Sept. 9, 1997)), WTO Docs.
WT/DS27/R/ECU, WT/DS27/R/GTM, WT/DS27/R/HND, WT/DS27/R/MEX, and WT/DS/R/USA (May 22, 1997).
92
Banana Panel Reports, at paras. 7.118, 7.127.
93
Id. at para. 7.163. The Appellate Body found, however, that the panel should have applied the provisions
of the Licensing Agreement first, as it is the more specific and detailed agreement. WT/DS27/AB/R supra note 91 at
paras. 204, 205, & 255(m).
94
Banana Panel Reports, at para. 7.159.
95
Id. at para. 7.160.
96
Id. at para. 7.283.
97
Id. at para. 7.286.
98
Id. at para. 7.285.
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Similarly, the Periodicals panel ruled, on the basis of the ordinary meaning of the relevant texts
taken together, that obligations under GATT 1994 and GATS could co-exist, and one instrument did
not override the other. The absence of provisions similar to Art. XVI:3 of the WTO Agreement or the
General Interpretative Note to Annex 1A, implied that GATT and GATS stood on the same plane in
the WTO Agreement without any hierarchical order between them.99
B. What issues or disputes may be raised? (Scope and justiciability)
A governmental measure which allegedly nullifies or impairs a benefit accruing directly or
indirectly under a covered agreement is justiciable. This includes a measure which infringes an
obligation under a covered agreement, or one which is not necessarily illegal but erodes the anticipated
value of a concession. It may include: a measure not yet implemented, but legislated and mandatory on
the executive; or a measure no longer in effect; or an issue previously adjudicated. If adjudication by a
panel is requested, the matter must have been the object of prior consultations with the defending party,
and sufficiently described in the request/complaint. There is no consensus on whether the validity of
invoking national security exceptions for taking trade sanctions, may be inquired into and ruled on.
Measures taken by regional or local authorities which are subject to federal jurisdiction are justiciable.
So is the issue of whether the federal government has taken all reasonable measures available to it to
assure observance with a covered agreement of measures taken by regional or local authorities, which
fall outside of federal control.
GATT Practice
Under Article XXII, a contracting party could request bilateral or multilateral consultations
broadly on “any matter affecting the operation of [the General] Agreement.” Under Article XXIII, a
contracting party had to consider that a benefit accruing to it directly or indirectly under the General
Agreement was being nullified or impaired, or the attainment of any objective thereunder was being
impeded, as a result of: (a) another party’s failure to carry out its obligations (violation case); or (b)
another’s application of a measure, whether illegal or not (non-violation case); or (c) any other
situation. In such circumstances, the contracting party could make written representations to another
with a view to resolving the matter under Article XXIII:1. When these consultations failed to resolve
the matter, it could be referred under Article XXIII:2 to the CONTRACTING PARTIES to investigate
the matter and make recommendations or give a ruling, as appropriate. They sometimes established
panels to assist them for this purpose, as discussed in section II.A and B. of this paper.
Nullification or impairment of a GATT benefit was the primary ground for invoking dispute
settlement proceedings. It was established practice that an action which infringed an obligation
assumed under the General Agreement constituted a prima facie case of nullification or impairment for
purposes of Article XXIII:1(a).100 Non-violation cases under paragraph 1(b) have been limited
generally to instances where the anticipated value of a tariff concession has been eroded allegedly by
99
Canada - Measures Concerning Periodicals (Report of the [hereinafter Periodicals] Panel adopted on
July 30, 1997, as modified by the Appellate Body (WT/DS31/AB/R) (June 30, 1997) but not as concerns the panel’s
rulings discussed here), WTO Doc. WT/DS31/R, para. 5.17 (Mar. 14, 1997).
100
Uruguayan Recourse, supra note 14, at 100. 1979 Understanding, supra note 7, at 216, para. 5.
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the introduction of a domestic subsidy on a like product by the grantor.101 The contracting party
bringing such a claim has to provide a detailed justification of nullification or impairment. There has
never been a finding that a benefit was nullified or impaired, or an objective impeded under Article
XXIII:1(c).102
It has been a settled rule in the GATT that measures not yet implemented by administrative
bodies, but mandated by existing legislation were justiciable.103 The provisions of the General
Agreement--at least Articles III and XI--are there “not only to protect current trade but also to create the
predictability needed to plan future trade.”104 However, measures not yet taken under discretionary
legislation which authorized GATT-inconsistent action, were not justiciable.105
Panels have ruled on measures which have been disinvoked after the panel was established,106
even where the parties have arrived at a bilateral settlement.107 Otherwise restrictions on perishable
products, for example, would be capable of repetition but continually evade review. Issues that
previously have been adjudicated by a panel have been revisited by another in the context of a separate
complaint, sometimes with different legal results.108
101
For example, a panel found that benefits accruing to the United States under Article II of the General
Agreement were impaired as a result of the introduction by the Community of domestic production subsidies, which
operated to protect domestic oilseed producers from price movements of imports, thereby preventing the tariff
concession from impacting on the competitive relationship between domestic and imported oilseeds. European
Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related AnimalFeed Proteins (Report of the panel adopted on Jan. 25, 1990), BISD 37S/86, 132, para. 156 (1991). European
Economic Community - Follow-Up on the Panel Report: Payments and Subsidies Paid to Processors and Producers
of Oilseeds and Related Animal-Feed Proteins (Report of the Members of the Original Oilseeds Panel - not
adopted), BISD 39S/91, 118, para. 90 (1993).
102
For example, a panel was established in 1974 but never convened, on a Canadian complaint that an EC
tariff schedule failed to maintain a general level of reciprocal and mutually advantageous concessions between the
two. GATT Doc. C/M/101 at 7-8. GATT Doc. C/M/102 at 4.
103
"The Panel recalled that it had been recognized by the CONTRACTING PARTIES in previous cases
that legislation mandatorily requiring the executive authority of a contracting party to act inconsistently with the
General Agreement may be found to be inconsistent with that contracting party’s obligations under the General
Agreement, whether or not an occasion for its actual application has yet arisen...” United States - Restrictions on
Imports of Tuna (Report of the Panel - not adopted [hereinafter Tuna Panel]), BISD 39S/155, 197, para. 5.21 (1993)
(citing United States - Taxes on Petroleum and Certain Imported Substances (Report of the Panel adopted on June
17, 1987 [hereinafter Superfund Panel]), BISD 34S/136, 160, 163-34, paras. 5.2.2, 5.2.9-10 (1988); and EEC
Regulation on Imports of Parts and Components (Report of the Panel adopted on May 16, 1990), BISD 37S/132,
paras. 5.25-26 (1991)).
104
Superfund Panel, BISD 34S at 160, para. 5.2.3.
105
"[L]egislation merely giving those executive authorities the power to act inconsistently with the General
Agreement is not, in itself, inconsistent with the General Agreement.” Tuna Panel, BISD 39S at 197, para. 5.21.
106
E.g., EEC - Measures on Animal Feed Proteins (Report of the Panel adopted on Mar. 14, 1978), BISD
25S/49 (1979); EEC Restrictions on Imports of Apples from Chile (Report of the Panel adopted on Nov. 10, 1980),
BISD 27S/98 (1981).
107
United States - Prohibition of Imports of Tuna and Tuna Products from Canada (Report of the
[hereinafter Canadian Tuna] Panel adopted on Feb. 22, 1982), BISD 29S/91 (1983) (at Canada’s insistence, the
panel submitted a comprehensive report with findings, even though the embargo at issue had been lifted, and the
parties had concluded a treaty on fisheries jurisdiction at issue).
108
E.g., EEC - Restrictions on Imports of Dessert Apples (Complaint by Chile - Report of the Panel adopted
on June 22, 1989), BISD 36S/93 (1990), and EEC - Restrictions on Imports of Dessert Apples (Complaint by the
U.S. - Report of the Panel adopted on June 22, 1989), BISD 36S/135 (1990) (finding that the EC market withdrawal
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Panels have ruled on specific trade-related aspects of legislation or policies, not otherwise
covered by the General Agreement.109 It has been argued that complaints seeking to question the
justification for politically-motivated sanctions under Article XXI, or the GATT-consistency of
preferences covered by agreements already reviewed under Article XXIV, were inadmissible.110 Panels
have rejected the argument that only the federal contracting party concerned could judge whether it had
taken all the reasonable measures available to it pursuant to Article XXIV:12, to assure compliance by
its regional authorities with the provisions of the General Agreement.111
DSU
Art.1.1 DSU applies to disputes brought pursuant to the consultation and dispute settlement
provisions of covered agreements.
Art. 3.2 Dispute settlement system serves inter alia to preserve the rights and obligations of members
under the covered agreements and to clarify the existing provisions thereof in accordance with customary rules
of interpretation of public international law.
Art. 3.3 The prompt settlement of situations in which a WTO member considers that any benefits
accruing to it directly or indirectly under the covered agreement are being impaired by measures taken by
another member is essential to the effective functioning of the WTO and maintenance of a proper balance
between the rights and obligations of members.
Art. 4.2. Each member is to accord sympathetic consideration to, and afford adequate opportunity for,
consultation regarding another member’s representations concerning measures affecting the operation of any
covered agreement taken within the territory of the former.
Art. 4.4 Member requesting such consultations shall so notify DSB and other relevant bodies. Request
shall be in writing, giving reasons for the request, including identification of the measures at issue and
indication of the legal basis for the complaint.
Art. 26 A panel or AB may only make rulings and recommendations under Article XXIII:1(b) of GATT
1994, where a party to the dispute raises such a non-violation complaint, and presents a detailed justification in
support thereof. The same is true for Article XXIII:1(c) complaints.
WTO Experience
system for apples did not entitle the Community to take restrictive measures against imports under Art. XI:2(c)
exception, in contrast to 1980 panel on EEC - Restrictions on Imports of Apples from Chile, supra note 106.
109
E.g., on domestic purchase and export performance requirements pursuant to legislation regulating
foreign direct investment. Canada - Administration of the Foreign Investment Review Act (Report of the [hereinafter
FIRA] Panel adopted on Feb. 7, 1984), BISD 30S/140 (1984).
110
In opposing Nicaragua’s request for a panel to rule on the U.S. trade embargo of 1985, the United States
stated that “a panel had no power to address the validity of, or motivation for, invocation of Article XXI:(b)(iii).”
GATT Doc. C/M/191 at 41. In opposing the United States’ request for a panel to rule on EC tariff preferences on
citrus imports from certain Mediterranean countries, the Community stated that these were one element of
agreements which had already been examined under Article XXIV procedures, and therefore the complaint was
inadmissible. GATT Doc. L/5776 at para. 1.2. See sections II.B.6 for discussion of these two panels.
111
Canada - Measures Affecting the Sale of Gold Coins (Report of the Panel - not adopted) GATT Doc.
L/5863, paras. 68-69. Canada - Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Market
Agencies (Complaint by EEC - Report of the Panel adopted on Mar. 22, 1988), BISD 35S/37, 92, paras. 4.34-4.35
(1989). Canada - Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Marketing Agencies
(Complaint by the U.S. - Report of the Panel adopted on Feb. 18, 1992), BISD 39S/27, 86-87, paras. 5.36-5.37
(1993). United States - Measures Affecting Alcoholic and Malt Beverages (Report of the [hereinafter U.S. Malt
Beverages] Panel adopted on June 19, 1992), BISD 39S/206, 296-97, paras. 5.78, 5.80 (1993).
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The Gasoline panel declined to make a finding on a claim that a rule violated most-favoured
nation treatment under Art. I. No importer had qualified under the rule, and therefore it had never been
applicable.112
The Banana panel rejected the EC’s argument that the complainants’ case should be dismissed
because prior consultations held among the parties had not clearly set out to the EC’s satisfaction the
different claims involved in the dispute, nor performed their minimum function of affording a
possibility for arriving at a mutually satisfactory solution. Nothing in the DSU required that
consultations must lead to an adequate explanation of the complainants’ case.113
C. Who may raise issues or disputes against whom? (Standing of disputants and interested
parties)
Only member states have rights and obligations under the covered agreements, and accordingly
only governments, not private parties, have standing to request formal consultation and dispute
settlement thereunder. Similarly, representations and complaints are directed against member
governments regarding measures they have taken. Of course private parties may be impacted by these
governmental measures, but their interests must be espoused by their respective member governments,
who thus would exercise the rights they hold to the benefit of these private parties. Member federal
governments are responsible (to the extent of taking all measures available to them to correct), and may
be sued, for measures taken by their state or local governments, which nullify or impair benefits
accruing to a member state under a covered agreement. A member does not necessarily have to
demonstrate a legal or trade interest on a matter in order to have a right to raise a complaint on it. All
members can be said to have a vested interest in the maintenance of competitive opportunities through
the fulfillment of all obligations under a covered agreement, and in the overall balance of rights and
obligations among members. There may be several complainants on a particular matter, which may be
dealt with by a single panel, without prejudice to the rights all the parties would enjoy in case of
separate panels. A third-party member having a substantial trade interest in bilateral consultations
being held, may ask to join the consultations, or be free to request consultations on its own. Members
self-elect to be a party bringing a complaint or an interested third party to the dispute. Interested
parties have a right to be accorded an opportunity to be heard by a panel, but do not enjoy the same
procedural rights as disputants.
112
United States - Standards for Reformulated and Conventional Gasoline (Report of the [hereinafter
Gasoline] Panel on Jan. 17, 1996), WTO Doc. WT/DS2/R, para. 6.19 (adopted as modified by the Appellate Body
on May 20, 1996 (WT/DS2/AB/R) (Apr. 22, 1996)).
113
Banana Panel Reports, supra note 91, at paras. 7.20-7.21.
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GATT Practice
Only contracting parties had GATT rights and obligations. Contracting parties were
governments which applied the General Agreement, either as original contracting parties of 1947, or
which had acceded thereafter. Art. XXIV:12 required each contracting party to take such reasonable
measures available to it to ensure that regional and local authorities within its territory observe the
General Agreement.
The practice was for states to self-elect by notification as to whether they were parties to a
dispute or interested parties. Interested parties had a right to be given an opportunity to be heard by the
panel. A single panel has been used to deal with complaints brought by one contracting party against
several contracting parties,114 and also to deal with complaints brought by more than one contracting
party on the same matter.115
Although its report was not adopted, the first GATT Banana panel, found that contracting
parties were not stopped from a right of action against a measure merely by failing to invoke their
rights in the past. Parties could in fact sit on their rights at a particular point in time, without it being
assumed implicitly that this released another contracting party from its obligations forever more.116
That same panel also decided, based on agreement with the parties to the dispute, to invite five parties-ACP preference-receiving countries, who had notified to the Council their interest in participating in
the work of the panel--to attend all meetings of the panel, at which the parties of the dispute were
present. The panel declined to admit another party as full participant, which had sent its request to the
panel after the latter’s terms of reference had been decided upon.117
DSU
Art. 3.3 The prompt settlement of situations in which a WTO member considers that any benefits
accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by
another member is essential to the effective functioning of the WTO and maintenance of a proper balance
between the rights and obligations of members.
Art. 3.7 Before bringing a case, a member shall exercise its judgment as to whether action under
DSU would be fruitful.
Art. 3.8 An infringement of obligations under a covered agreement is considered prima facie
nullification or impairment, meaning a breach of the rules is presumed to have an adverse impact on other
member parties to that covered agreement, and it is up to the member against whom the complaint has been
brought to rebut the charge.
Art. 3.9 DSU does not prejudice rights of members to seek authoritative interpretation of covered
agreements through decision-making under the WTO Agreement or a PTA.
Art. 4.1 Members resolve to strengthen and improve effectiveness of consultation procedures employed
by members.
Art. 4.2 Each member is to accord sympathetic consideration to, and afford adequate opportunity for,
114
Uruguayan Recourse, supra note 14.
E.g., Superfund Panel, supra note 103 at 136. Canada, the EC, and Mexico were complainants.
116
EEC - Member States’ Import Regimes for Bananas (Report of the [First Banana] Panel of June 3, 1993
- not adopted), GATT Doc. DS32/R, paras. 361-63 (citing previous panels which had ruled on measures that had
remained unchallenged for a long time; e.g., Japan - Restrictions on Imports of Certain Agricultural Products
(Report of the Panel adopted on Feb. 2, 1988), BISD 35S/163 (1989)).
117
First Banana Panel, id. at paras. 7-10.
115
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Page 26
consultation regarding another member’s representations concerning measures affecting the operation of any
covered agreement taken within the territory of the former.
Art. 4.3 Member to which request for consultation is made must reply within 10 days, and enter into
consultations in good faith within 30 days. If not, the member that requested holding of consultations may
request establishment of panel.
Art. 4.5 Before resorting to further action under DSU, members should attempt to obtain satisfactory
adjustment of the matter.
Art. 4.7 If consultations fail to settle dispute within 60 days after request for consultations was received,
or if both parties jointly consider consultations have failed, complaining party may request panel
establishment.
Art. 4.11 A member other than consulting members, which considers it has a substantial interest in
consultations, under Art. XXII:1 of GATT 1994 or of GATS or under the corresponding provisions of other
covered agreements, may notify consulting members and DSB within 10 days of its desire to be joined, and
shall be joined provided the consulting members consider its claim of substantial interest well-founded. If the
request to be joined is not accepted, the member is free to request consultations under the appropriate
provisions.
Art. 7.2 Panels shall address the relevant provisions cited by parties to the dispute.
Art. 9.1 A single panel may be established--and should be where feasible--to examine the complaints of
more than one member on the same matter.
Art. 9.2 The single panel shall organize its work and present its findings in such a manner that the rights
the disputants would have enjoyed separate panels examined the complaints are not impaired. Upon request
by a disputant, the panel shall submit separate reports. Written submissions by each complainant shall be made
available to the other complainants, and each shall have the right to be present when any other presents its views
to the panel.
Art. 9.3. If more than one panel is established to examine complaints related to the same matter, the
panels should have the same panelists to the extent possible and their timetables should be harmonized.
Art. 10.1 The interests of disputants and other members under a covered agreement at issue shall be
taken into account fully during the panel process.
Art. 10.2 A third party having a substantial interest in a matter before a panel and having notified its
interest to the DSB shall have an opportunity to be heard by the panel and to make written submissions
thereto. These submissions shall be given to the disputants and be reflected in the panel report.
Art. 10.3 Third parties shall receive the submissions of the disputants to the first panel meeting.
Art. 10.4 Recourse to DSU is available to a third party, which considers a measure already subject to a
panel, nullifies or impairs a benefit accruing to it directly or indirectly under a covered agreement. Such a dispute
shall be referred to the original panel wherever possible.
Art. 15.1 Parties to the dispute are given the descriptive part of the draft panel report and may comment
thereon in writing.
Art. 15.2 After fixed period, parties to the dispute are given the panel’s interim report containing panel’s
findings and conclusions. Upon a disputant’s request, panel may review report and hold further meeting with the
parties before final panel report is circulated.
Art. 15.3 Final panel report shall discuss arguments made at the interim review stage.
Art. 17.4 Only parties to the dispute, not third parties, may appeal a panel report, but third parties
may make written submissions to, and be given an opportunity to be heard by the AB.
Art. 18.2 Written submissions to the panel or AB shall be treated as confidential but made available to
the parties to the dispute.
Art. 22.9 Dispute settlement provisions under the covered agreements may be invoked in respect of
measures affecting their observance taken by regional or local governments or authorities within the territory
of a member. When DSB rules that provision of a covered agreement has not been observed, the responsible
member shall take such reasonable measures as may be available to it to ensure its observance. Compensation
and suspension are available in case of non-observance.
Art. 24.1 Special situation of least-developed country members shall be taken into account at all stages of
dispute settlement involving a least-developed country member. Members shall exercise due restraint in raising
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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matters under DSU involving a least-developed country member.
Appendix 3 Working Procedures for Panels provides inter alia that at the first substantive meeting of the
panel with the parties, the complaining party shall present its case, and subsequently the party against which the
complaint has been brought will present its point of view. All third parties which have notified their interest in
the dispute to the DSB shall be invited in writing to present their views during a session of the first substantive
meeting set aside for that purpose. They may be present during the entire session. Presentations, rebuttals, and
statements by disputants and interested parties shall be made in the presence of the parties. Each party’s written
submissions, including any comments on the descriptive part of the panel report and responses to panel questions
shall be made available to the other party or parties.
WTO Experience
The Banana panel had to make a number of decisions regarding standing and other procedural
rights of parties. The EC argued that the United States had no legal right to bring a claim pursuant to
Article 3.3 and 3.7. The U.S. could not avail itself of the available remedies of compensation or
retaliation, given the United States’ token production and lack of export interest in bananas. According
to the EC, the GATT/WTO system did not recognize an actio popularis or right to sue as private
attorney-general by any and all members against any alleged infringement by any other member.118
The panel found, however, that the DSU did not explicitly require that a member have a legal interest
as a prerequisite for requesting a panel.119 GATT/WTO rules protected competitive opportunities as
opposed to actual trade flows. The panel noted that “[g]enerally, it would be difficult to conclude that a
member had no possibility of competing in respect of a product or service....Indeed, with the increased
interdependence of the global economy, which means that actions taken by one country are likely to
have significant effects on trade and foreign direct investment flows in others, Members have a greater
stake in enforcing WTO rules than in the past since any deviation from the negotiated balance of rights
and obligations is more likely than ever to affect them, directly or indirectly.”120 Thus, in the panel’s
view, “a Member’s potential interest in trade in goods or services and its interest in a determination of
rights and obligations under the WTO Agreement are each sufficient to establish a right to pursue a
WTO dispute settlement proceeding.”121
The Banana panel accorded broader participatory rights to the ACP preference-receiving parties
and BFA countries in the panel process, than is provided in Article 10 and Appendix 3 of the DSU for
third parties. The panel allowed these parties to observe the whole of the first substantive meeting as
well as its second substantive meeting with the parties to the dispute.122 However, the panel declined
to let the third parties participate in the interim review process beyond the normal practice of
permitting them to review the draft of the summary of their arguments.123 The panel also allowed only
members of governments, including the European Commission and an international civil servant from
the ACP Secretariat, to attend the panel meetings with the parties. Based on opposition expressed by
the complainants, the panel did not permit private lawyers to be present in the delegations of some
118
Banana Panel Reports, supra note 91, at para. 2.21.
Id. at paras. 7.49-7.50.
120
Id. at para. 7.50.
121
Id.
122
Id. at para. 7.8.
123
Id. at para. 7.9.
119
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third parties during the meetings.124
The Appellate Body upheld the Banana panel’s conclusion that the United States had standing
to bring claims under the GATT 1994.125 A member had broad discretion in deciding whether to bring
a case against another member under the DSU, and was “expected to be largely self-regulating in
deciding whether any such action would be “fruitful.”126 The United States was justified in bringing its
claims because inter alia its potential export interest in bananas could not be excluded, and its internal
market could be affected by the EC regime.127 The Appellate Body noted, however, that any of the
factors it had considered as justifying the U.S. claim in the instant case, would not necessarily be
dispositive in another case.128
The Appellate Body acquiesced to a request by Saint Lucia to be represented by private legal
counsel at the oral hearing before the Appellate Body.129 It noted that the panel’s decision not to allow
private counsel to attend the panel’s meetings had not been specifically appealed by a party to the
dispute.130
D. How to encourage conciliation or dispute resolution by other than formal adjudication
by a panel?
Before requesting establishment of a panel, a member is required to seek bilateral consultations
on the matter under Articles XXII:1 or XXIII:1. Additionally the good offices of the Director-General,
acting in ex officio capacity are available to try to resolve the dispute. Solutions mutually-agreed to by
the parties are preferred to litigation and are encouraged even throughout the panel process. Recourse
to arbitration is also provided for, specifically on the level of proposed retaliation.
GATT Practice
Before seeking multilateral action under paragraph 2 of either Article XXII or XXIII, a
contracting party must have sought consultations to resolve the matter bilaterally under paragraph 1.
The early practice of GATT working parties panels was to assist the parties in negotiating a mutuallyagreed resolution of their disputes.
At the request of the parties, the Director-General could offer his good offices ex officio. This
possibility became institutionalized for disputes between a developed and developing contracting party
under the 1966 procedures.131 Recourse to the Director-General’s good offices was sporadic, and met
with varying degrees of success.132 The decision on improvements to dispute settlement which was
124
125
Id. at para. 7.10-7.11.
WT/DS27/AB/R, supra note 91, at para. 138.
Id. at para. 135.
127
Id. at para. 136.
128
Id. at para. 138.
129
Id. at para. 10.
130
Id. at para. 11.
131
1966 Procedures, supra note 7.
132
E.g., the GATT Director-General was unsuccessful in 1982 in mediating between the U.S. and the EC on
126
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approved in 1989, provided that the Director-General could offer his good offices on his own initiative.
Canada and the EC had recourse to binding arbitration as provided by the 1989 decision, with respect
to the interpretation of negotiating rights of Canada on wheat pursuant to bilateral agreements
concluded in 1962.133
As proof that negotiated solutions were preferable to legal rulings, it was only when it was not
possible for the parties to arrive at a mutually satisfactory resolution of the matter, that the panel
circulated its findings and conclusions to contracting parties.
DSU
Art. 3.7 Before bringing a case a member shall exercise its judgement as to whether action under DSU
would be fruitful. Aim of dispute settlement is to secure a positive solution to a dispute. A solution mutually
acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred.
Art. 3.10 Requests for conciliation and use of dispute settlement procedures should not be intended or
considered as contentious acts. If a dispute arises, all members will engage in these procedures in good faith in
an effort to resolve the dispute. Complaints and counter-complaints in regard to distinct matters should not be
linked.
Art. 4.2 Each member is to accord sympathetic consideration to, and afford adequate opportunity
for, consultation regarding another member’s representations concerning measures affecting the operation of
any covered agreement taken within the territory of the former.
Art. 4.3 Member to whom request for consultation is made must reply within 10 days and enter into
consultations in good faith within 30 days with a view to reaching a mutually satisfactory solution.
Art. 4.5 During consultations and before resorting to further action under DSU, members should
attempt to obtain satisfactory adjustment of the matter.
Art. 5.1 Good offices, conciliation and mediation may be undertaken voluntarily by the disputants.
Art. 5.2 Such proceedings are confidential and without prejudice to the rights of disputants in any further
proceedings under the DSU.
Art. 5.3 Such proceedings may be requested by any disputant at any time. Once terminated, complaining
party may proceed to request establishment of panel.
Art. 5.4 When such proceedings are entered into within 60 days after request for consultations, and
barring agreement by the disputants that the proceedings have failed to settle the dispute, complaining party must
allow 60 days from consultation request before requesting establishment of a panel.
Art. 5.5 If parties agree, good offices, conciliation or mediation proceedings may continue during panel
process.
Art. 5.6 Acting in ex officio capacity, WTO Director-General may offer good offices, conciliation or
mediation to assist members in settling dispute.
the latter’s tariff preferences on citrus imports from certain Mediterranean countries. The U.S. pursued its complaint
before a panel. GATT Doc. C/M/161, p.6. The Director-General appointed a representative in 1987 to exercise
good offices regarding Japan’s pricing and trading practices on copper, who recommended that the parties negotiate
reductions in tariff bindings. BISD 36S/199, 201-02 (1990). At the request of Canada and the EC, the DirectorGeneral gave an advisory opinion in 1988 on whether the scope of a tariff binding previously granted by Portugal
covered wet salted cod. GATT Doc. C/M/225, p.2. In 1992, Colombia, Costa Rica, Guatemala, Nicaragua and
Venezuela requested the Director-General’s good offices on the import regimes maintained by individual EC
members states on bananas. The good offices did not resolve the dispute and these countries proceeded to request
the establishment of the (First Banana) panel. GATT Doc. DS32/R at para. 1, supra note 116.
133
Canada/European Communities Article XXVIII Rights (Award by the Arbitrator), BISD 37S/80 (1991).
The Arbitrator concluded that Canada still maintained negotiating rights under Article XXVIII with respect to
quality wheat, but had relinquished them on ordinary wheat.
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Art. 11 Panels should consult regularly with the disputants and give them an adequate opportunity
to develop a mutually satisfactory solution.
Art. 12.7 Where the disputants have failed to develop a mutually satisfactory solution, the panel shall
submit its findings in the form of a written report to the DSB. Where disputants have settled the matter, panel’s
report shall be confined to a brief description of the case and to reporting that a solution has been reached.
Art. 22.1 If member fails to comply with recommendations or rulings within a reasonable period of time,
it must enter into negotiations with any party having invoked dispute settlement procedures to develop mutually
acceptable compensation.
Art. 22.6-7 Arbitration by the original panel or arbitrator is available to determine whether the
proposed level of suspension is equivalent to that of nullification or impairment.
Art. 24.2 Where satisfactory solution has not been found in the course of consultation, DG or DSB
Chairman may offer their good offices, conciliation and mediation, upon request by a least-developed
country member, with a view to assisting the parties to settle the dispute before panel request is made.
Art. 25.1-4 Arbitration on clearly defined issues may be agreed upon mutually by the parties, but must be
notified to all WTO members before commencing the process. Arbitration awards must be notified to DSB and
the Council or Committee of any relevant agreement, where any member may raise any point thereto. DSB
surveillance and provisions for compensation and suspension apply mutatis mutandis to arbitration award.
WTO Experience
The very first dispute to be brought under the WTO’s dispute settlement procedures was settled
bilaterally, with the complainant withdrawing its request for a panel. So far there has not yet been
recourse to the good offices of the WTO Director-General. However, an arbitrator was appointed on
two occasions to determine the reasonable period for complying with a panel’s rulings and
recommendations, as adopted by the DSB (See section III.K of this paper).
The Banana panel rejected the EC’s claim that the complainants’ claim should be dismissed
because prior consultations among the parties had inadequately afforded the possibility for arriving at a
mutually satisfactory solution. “[D]isputing parties should consult in good faith and attempt to reach
such a solution” but ultimately consultations are “a matter reserved for the parties...[T]he function of a
panel is only to ascertain that consultations, if required, were in fact held or, at least, requested.”134
E. How automatic should be the recourse to adjudication by a panel?
The establishment of a panel at the request of a complaining party has become semi-automatic,
provided that certain procedural requirements are fulfilled; e.g., that the complaining party has first
requested bilateral consultations to resolve the matter. The disputing parties do not both have to agree
that these consultations, if held, have been exhausted before the complaining party may proceed to
request a panel.
GATT Practice
The 1979 Understanding provided that the CONTRACTING PARTIES would decide on a
request for a panel “in accordance with standing practice” and grant such requests “only after the
134
Banana Panel Reports, supra note 91, at para. 7.19.
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contracting party concerned had had an opportunity to study the complaint and respond to it.”135 During
the debate in the GATT Council in 1982 on the U.S. request for a panel to examine the EC’s tariff
preferences on citrus, several delegations referred to the general right of a contracting party to have a
panel established upon request. However, the EC representative stated that “the Council could not
establish panels automatically on a mechanical basis.”136 After four sessions discussing the request-the longest delay in GATT practice--the Council finally agreed to establish a panel.
In 1988, the Legal Adviser to the Director-General expressed the view, in connection with an
EC complaint against Japanese practices on imported alcoholic beverages, that it was not necessary for
both parties to agree that Art. XXIII:1 consultations had been exhausted before moving to set up a
panel under Art. XXIII:2; otherwise “one party could indefinitely block the procedures simply by
saying that bilateral consultations had not yet been terminated.”137
As discussed under section II.B. of this paper, the 1989 decision on dispute settlement
improvements introduced the reverse or negative consensus rule for the establishment of a panel,
whereby a panel is established by the Council unless there is consensus not to establish a panel.138
Sixteen panels were established under this procedure, including one instance where a party (the EC)
had not responded to a request (by Yugoslavia) for Article XXIII:1 consultations on measures taken for
non-economic reasons.139
DSU
Art. 6.1 If complaining party so requests, a panel shall be established at the latest at the second DSB
meeting at which the request is an agenda item, unless at that meeting the DSB decides by consensus not to
establish a panel.
Art. 6.2 The request for establishment of a panel shall be in writing, indicating whether consultations
were held, identifying the specific measure at issue and providing a brief summary of the legal basis of the
complaint sufficient to present the problem clearly. If requesting party seeks other than standard terms of
reference for panel, the written request shall include proposed text of special terms of reference.
WTO Experience
As of Dec. 19, 1997, the DSB has established panels to rule on at least twenty-six distinct
matters pursuant to Article 6.1.140 Some of the panels have been established as a single panel to
examine complaints by multiple parties against a party on a similar matter, or to examine complaints
by a single complainant against multiple parties on a similar matter.
135
1979 Understanding, supra note 7, at para. 10.
GATT Doc. C/M/160 18-20, cited in GATT Analytical Index 1995, supra note 2, at 722. But see GATT
Doc. C/M/176 3 (1984) where EC acknowledged it had been the traditional GATT practice, as embodied in the 1979
Understanding, not to refuse a request for establishment of a panel, and the EC would therefor respect this tradition
as regards Canada’s request for a panel to review the EC tariff quota on imports of newsprint from Canada.
137
GATT Doc. C/M/205 10, cited in GATT Analytical Index 1995, at 673.
138
1989 Midterm Agreement, supra note 7, at para. F(a).
139
GATT Doc. C/M/255, cited in GATT Analytical Index 1995, at 673.
140
See Annex.
136
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The Banana panel rejected the EC argument that the complainants’ request for the panel’s
establishment was a nullity because it lacked concrete claims in the form of brief statements linking a
specific measure with the infringement of a specific rule.141 The panel found that the request generally
fulfilled the requirements of Art. 6.2 of the DSU. However, where the request did not refer specifically
enough to the particular provision of a WTO agreement with which a measure was allegedly
inconsistent, the panel would not consider the claim, unless “cured” by the first written submissions.142
On appeal, the Appellate Body agreed that the complainants’ request for a panel was sufficiently
specific to comply with the minimum standards of Art. 6.2, which required “that the claims, but not the
arguments, must all be specified sufficiently in the request for the establishment of a panel in order to
allow the defending party and any third parties to know the legal basis of the complaint.”143 However,
modifying the panel’s conclusions, the Appellate Body ruled that if a claim was not specified in the
request, a faulty request cannot be subsequently “cured” by the first written submission of a
complaining party.144
F. How to assure that solutions arrived at by the parties do not violate the agreements or
interfere with the rights of others thereunder?
A mutually agreed solution to a dispute must be notified, and can be questioned by any
member.
GATT Practice
The 1979 Understanding stated that any contracting party, with an interest in a matter before a
panel, had a right to enquire about and be given appropriate information about a mutually satisfactory
solution developed by the parties to the dispute, in so far as the solution related to trade matters.145 The
1989 Decision shifted responsibility for transparency more directly on the disputants by providing that
“[m]utually agreed solutions to matters formally raised under GATT Articles XXII and XXIII, as well
as arbitration awards within GATT, must be notified to the Council where any contracting party may
raise any point relating thereto.”146
If a bilateral settlement was reached in the course of panel proceedings, the normal practice was
for the panel to confine itself to a brief description of the case and reporting that the parties had settled
the matter.147 In one case, a panel had finalized its findings and conclusions, when the parties informed
they had reached a bilateral agreement and did not want to receive the panel’s final report. The
141
Banana Panel Reports, supra note 91, at paras. 2.8 and 2.9.
Id. at paras. 7.31.
143
WT/DS27/AB/R, supra note 91, at paras. 141, 143 and 255 (b).
144
Id. at paras. 143 and 255 (b). The Appellate Body also reversed the panel’s findings that certain claims
made by some of the complainants under GATS were beyond the scope of the case, id. at paras. 147 & 255 (c). The
panel’s terms of reference were governed by the request for the establishment of a panel, in which the GATS claims
were made by all complaining parties jointly, id. at paras. 143-46.
145
1979 Understanding, supra note 7, at para. 19.
146
1989 Midterm Agreement, supra note 7, at para. B.
147
1979 Understanding, at annex, para. 6 (v).
142
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complaining party, however, refused to let the panel communicate to the Council that the matter had
been resolved until the agreement was implemented legislatively several months later, at which time
the party withdrew its complaint and the panel issued a brief report.148 In another case,
notwithstanding a bilateral settlement leading to a ratified treaty, the complaining party insisted that the
panel issue a complete report, which it did.149
DSU
Art. 3.5 All solutions to matters formally raised under the consultation and dispute settlement
provisions of the covered agreements, including arbitration awards, shall be consistent with those agreements
and not nullify or impair benefits accruing to any member thereunder, nor impede the attainment of any
objective of those agreements.
Art. 3.6 Mutually agreed solutions to matters formally raised under the consultation and dispute
settlement provisions of the covered agreements shall be notified to the DSB and relevant Councils and
Committees, where any member may raise any point thereto.
Art. 12.7 Where the parties to the dispute have settled the matter, the panel’s report shall be confined to a
brief description of the case and to reporting that a solution has been reached.
Art. 25.3 Arbitration awards must be notified to DSB and the Council or Committee of any relevant
agreement where any member may raise any point thereto.
WTO Experience
Mutually agreed solutions have been notified by the parties to the DSB on at least 11 distinct
disputes raised formally to the WTO.150
G. How to assure the panel process is fair and impartial?
Panels are to be composed of well-qualified persons chosen for their expertise, and nominated
by the Secretariat in consultation with the parties. Panelists serve in their individual capacity, without
instructions from governments on the matters before the panel. The panel deliberates in camera.
Submissions to it are treated as confidential, but made available to the parties. There are to be no ex
parte communications with the panel on matters being considered.
GATT Practice
Section II.B. of this paper traces the development of the GATT panel procedure. The panel was
introduced to produce an objective analysis of the matter raised, with the aim of applying the General
Agreement impartially for the benefit of all contracting parties. To this end, a panel--as opposed to a
working party--was composed of representatives of countries not directly affected by the charges to be
examined. Members were selected for their personal qualifications and special knowledge, and with a
view to ensuring their independence, based on nominations proposed by the secretariat and agreed to
by the parties to the dispute. Later, a roster of qualified individuals from which panelists could be
148
Japanese Restraints on Imports of Manufactured Tobacco from the United States (Report of the Panel
adopted on June 11, 1981), BISD 28S/100 (1982).
149
Canadian Tuna Panel, supra note 107, at 106, para. 4.3.
150
E.g., Pakistan - Patent Protection for Pharmaceutical and Agricultural Chemical Products (Notification
of a Mutually-Agreed Solution), WTO Doc. WT/DS36/4 (Mar. 7, 1997). See Annex.
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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drawn, became more formalized, built on nominations from member governments, and including also
non-governmental persons; i.e., those not or no longer in government service. In a few instances, a
non-governmental individual, who was a citizen of one of the disputing parties, was selected as panelist
with agreement by the parties.151 The GATT Director-General was authorized under procedures
adopted in 1984, to complete the panel by appointing persons from the roster of non-governmental
panelists, at the request of either party, in case panel’s composition had not be agreed upon within
thirty days of its establishment.152 Under the 1989 Decision, the Director-General was authorized in
case of impasse after twenty days, to compose the panel at either party’s request, with appointees he
considered to be “most appropriate.”153
Panels set up their own working methods. For their guidance, the secretariat drew up suggested
working procedures based on customary practice.154 Panels deliberated in camera, arriving at their
own conclusions on the basis of the written submissions and oral arguments presented by the parties.
There was to be no ex parte contact with the parties. Submissions were treated as confidential, but
made available to the parties to the dispute. Designated members of the Secretariat were available to
assist the panel in its work. Panels attempted to arrive at unanimous conclusions, and only rarely
issued reports with majority and minority findings.155 Opinions expressed by individual panelists in
the panel’s report were anonymous.
There were a few incidences where a disputing party attempted improperly to influence a
panelist.
151
E.g., R. Hudec in United States - Customs User Fee (Report of the Panel adopted on Feb. 2, 1988),
BISD 35S/74, para. 3 (1989).
152
1984 Improvements, supra note 7 at 9, para. 3.
153
The Director-General did so on at least three occasions: United States - Restrictions on Imports of Tuna
Products (Report of the Panel - not adopted), GATT Doc. DS29/R para. 1.3 (June 16, 1994); First Banana Panel,
supra note 116, at para. 4; EEC - Import Regime for Bananas (Report of the [Second Banana] Panel - not adopted),
GATT Doc. DS38/R para. 4 (Feb. 11, 1994).
154
Supra note 53.
155
E.g., EEC - Programme of Minimum Import Prices, Licences and Surety Deposits for Certain Processed
Fruits and Vegetables (Report of the Panel adopted on Oct. 18, 1978), BISD 25S/68, paras. 4.9, 4.14, and 4.15.
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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DSU
Art. 8.1 Panels are to be composed of well-qualified governmental and/or non-governmental
individuals, including persons who have served on or presented a case to a panel, served as a representative of a
WTO member or of a GATT contracting party or to a body of a covered agreement or its predecessor agreement,
or in the Secretariat, or taught or published on international trade law or policy, or served as a senior trade policy
official of a member.
Art. 8.2 Panel members should be selected to ensure their independence, a sufficiently diverse
background and a wide spectrum of experience.
Art. 8.3 Citizens of members whose governments are parties to the dispute or third parties (having
notified the DSB of their substantial interest) shall not serve on the panel concerned with that dispute, unless the
disputants agree otherwise.
Art. 8.4 Secretariat shall maintain an indicative list of governmental and non-governmental individuals
possessing the necessary qualifications, from which panelists may be drawn. Members may periodically suggest
names for inclusion on the list, which shall be added upon DSB approval. The list shall indicate the specific area
of experience or expertise for each individual in the sectors or subject matter of the covered agreements.
Art. 8.6 Secretariat shall propose nominations for the panels to the disputants who will not oppose
nominations except for compelling reasons.
Art. 8.7 If there is no agreement on the panel’s composition within 20 days from its establishment, at
the request of either party, the WTO Director-General, in consultation with the Chairmen of the DSB and of the
relevant Council or Committee, shall determine the panel’s composition by appointing the panelists whom the
DG considers most appropriate.
Art. 8.9 Panelists shall serve in their individual capacities and not as government representatives, nor
as representatives of any organization. Members shall not give them instructions nor seek to influence them
as individuals with regard to matters before a panel.
Art. 8.10 When a dispute is between a developing country member and a developed country member, one
panelist shall be from a developing country member, if the developing country member so requests.
Art. 8.11 Panelists’ expenses shall be met from the WTO budget.
Art. 14.1 Panel deliberations shall be confidential.
Art. 14.2 Panel reports shall be drafted without the presence of the disputants in the light of the
information provided and statements made.
Art. 14.3 Opinions expressed in the panel report by individual panelists shall be anonymous.
Art. 17.3 AB shall comprise persons of recognized authority, with demonstrated expertise in law,
international trade and the subject matter of the covered agreements. They shall be unaffiliated with any
government. AB membership shall be broadly representative of WTO membership. AB members shall be
available at all times and on short notice, and shall stay abreast of relevant WTO activities. They shall not
participate in the consideration of any disputes that would create a direct or indirect conflict of interest of
interest.
Art. 18.1 No ex parte communications with the panel or AB on matters under consideration.
Art. 18.2 Written submissions to the panel or AB shall be treated as confidential but made available to
the parties to the dispute.
Appendix 3 Working Procedures for Panels provides inter alia that the panel shall 0000000meet in
closed session with the parties to the dispute and interested parties present only when invited by the panel to
appear before it. Panel deliberations and documents submitted to it shall be kept confidential. Presentations,
rebuttals, and statements by disputants and interested parties shall be made in the presence of the parties.
Each party’s written submissions, including any comments on the descriptive part of the panel report and
responses to panel questions shall be made available to the other party or parties.
WTO Experience
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Member governments have proposed names of candidates for inclusion in the indicative list of
governmental and non-governmental panelists, indicating particular sectoral experience (trade in
goods, services or TRIPS). The names must then be approved formally by the DSB for inclusion.
After approval, the names are circulated as an addendum to the indicative list.156
The WTO Director-General has been called upon to establish the composition of a few panels
pursuant to Article 8.7 of the DSU.157
The DSB has adopted rules of conduct “designed to maintain the integrity, impartiality and
confidentiality of proceedings conducted under the DSU thereby enhancing confidence in the new
dispute settlement mechanism.”158 Panelists, Appellate Body members, arbitrators, secretariat support
staff, experts, among others, are to be “independent and impartial...avoid direct or indirect conflicts of
interest and...respect the confidentiality of proceedings.”159 Such persons are expected to disclose “any
interest, relationship or matter that that person could reasonably be expected to know and that is likely
to affect or give rise to justifiable doubts as to, that person’s independence or impartiality; and...[avoid]
any direct or indirect conflicts of interest in respect of the subject matters of the proceedings.”160
Moreover, [s]uch person shall not incur any obligation or accept any benefit that would in anyway
interfere with, or which could give rise to, justifiable doubts as to the proper performance of that
person’s dispute settlement duties.”161 The rules contain in annex an illustrative list of information to
be disclosed and a disclosure form which are to be completed by all panelists, arbitrators, experts, and
Appellate Body members.162 No person covered under the rules is to use at any time “such information
acquired during such deliberations and proceedings to gain personal advantage or advantage for
others.”163 A party to the dispute who possesses evidence of a material violation of the obligations
under the rules shall so notify the DSB Chairman, Director-General or Standing Appellate Body in
writing.164 In case of a finding of material violation by a panelist, arbitrator or expert, that person will
156
Indicative List of Governmental and Non-Governmental Panelists, WTO Doc. WT/DSB/12 (Dec. 12,
1997).
157
E.g., Banana Panel Reports, supra note 91 at paras. 1.5-1.6; United States - The Cuban Liberty and
Democratic Solidarity Act (communication from the DSB Chairman), WTO Doc. WT/DS38/3 at para. 3 (Feb. 20,
1997); Japan - Measures Affecting Consumer Photographic Film and Paper (communication from the DSB
Chairman), WTO Doc. WT/DS44/3 at para. 3 (Dec. 17, 1996); Indonesia - Certain Measures Affecting the
Automobile Industry (communication from the DSB Chairman), WTO Doc. WT/DS55/8 at para. 3 (Aug. 5, 1997);
and Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico (communication from the
DSB Chairman), WTO Doc. WT/DS60/3 at paras. 3-4 (May 5, 1997).
158
Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes
[hereinafter Rules of Conduct] (adopted by the DSB on Dec. 3, 1996), WTO Doc. WT/DSB/RC/1 (Dec. 11, 1996).
The rules of conduct were incorporated into the working procedures for appellate review. Rules of
Conduct...(Communication from the Appellate Body), WTO Doc. WT/DSB/RC/2 (Jan. 22, 1997).
159
WT/DSB/RC/1 at II.1.
160
Id. at III.1.
161
Id. at III.2.
162
Id. at VI.4.
163
Id. at VII.1.
164
Id. at VIII.1.
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be disqualified.165 The rules provide for other appropriate action where a secretariat or Appellate Body
is concerned.166
H. How to assure the panel process is prompt and efficient?
GATT Practice
CONTRACTING PARTIES were obligated to “promptly investigate any matter “ referred to
them under Article XXIII:2. The 1966 Procedures set time deadlines on the various stages of good
offices, panel adjudication, and compliance in connection with disputes involving a developing
contracting party; e.g., a panel was to submit its findings and recommendations within sixty days from
the date the matter was referred to it.167 The 1979 Understanding stated that “panels should aim to
deliver their findings without undue delay” and, in cases of urgency, normally within three months
from the time of the panel’s establishment.168 It was further noted thereunder that in most cases panel
proceedings had “been completed within a reasonable period of time, extending from three to nine
months.”169 The average time from the date a complaint was raised in the GATT under Article
XXIII:2, to the adoption of the panel report on the matter, was 14 1/2 months during the period 19791986.170 The average time from the date of the panel’s establishment to the circulation of its report to
all contracting parties was 10 1/2 months.171 There was growing concern during this period about
procedural delays in the panel process. As discussed in section II.B, the 1989 decision imposed time
deadlines--which could be shortened by mutual agreement of the parties-- and default procedures on
certain stages (consultations, panel establishment, composition, terms of reference), with a view to
keeping the process rolling and minimizing the possibility of procedural deadlock. These provisions
have been incorporated into the DSU; in some cases, the deadlines have been shortened.
DSU
Time-limits and default procedures are imposed throughout the stages of the dispute settlement
process: from the initial request for consultations to the adoption of rulings and recommendations.
There is a semi-automatic right to establishment of a panel, to appellate review, and to adoption of
adjudicative rulings, with standard terms of reference, a roster of eligible and qualified panelist
candidates, and written working procedures for panels and experts provided for. Where a panel or the
Appellate Body anticipates delays in completing its report, it must so inform the DSB in writing.
Art. 2.3 DSB to meet as often as necessary to carry out its functions within time-frames provided in
165
166
Id. at VIII.8-10.
Id. at VIII.11-17.
1966 Procedures, supra note 7, at 19, para.7.
168
1979 Understanding, supra note 7, at 214, para. 20.
169
Id. at 218, in annex, para. (ix).
170
GATT Dispute Settlement System (Note by the Secretariat), GATT Doc. MTN.GNG/NG13/W/4 at 103
(June 10, 1987). Five of the twenty-four panel reports submitted during this period were not adopted, and are not
included in this calculation.
171
Id. If the five unadopted panel reports are included in the calculation, the average time was 12 1/2
months.
167
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DSU.
Art. 3.3 The prompt settlement of situations in which a member considers that any benefits accruing to
it directly or indirectly under the covered agreements are being impaired by measures taken by another member is
essential to the effective functioning of the WTO and maintenance of a proper balance between the rights and
obligations of members.
Art. 4.3 Member to which request for consultation is made must reply within 10 days, and enter into
consultations in good faith within 30 days. If not, the member that requested the holding of consultations may
request establishment of panel.
Art. 4.7 If consultations fail to settle dispute within 60 days after request for consultations was
received, or if both parties jointly consider consultations have failed before then, complaining party may
request panel establishment.
Art. 4.8 In cases of urgency, including those concerning perishable goods, member shall enter into
consultations within 10 days, and if these fail to settle the dispute within 20 days after request for
consultations was received, complaining party may request panel establishment.
Art. 4.9 In cases of urgency, including those concerning perishable goods, the parties to the dispute, the
panel, AB shall make every effort to accelerate proceedings to the greatest extent possible.
Art. 6.1 If complaining party so requests, a panel shall be established at the latest at the second DSB
meeting at which the request is an agenda item, unless at that meeting the DSB decides by consensus not to
establish a panel.
Art. 7.1 Panels shall have standard terms of reference unless disputants agree otherwise within 20
days from establishment of panel.
Art. 8.5 Panels shall be composed of three panelists unless disputants agree to panel of five within 10
days from establishment of a panel.
Art. 8.6 Parties shall not oppose nominations for the panel proposed by the Secretariat, except for
compelling reasons.
Art. 8.7 If no agreement on panelists within 20 days after establishment of panel, at the request of
either party, the WTO Director-General, in consultation with the Chairmen of the DSB and of the relevant
Council or Committee, shall determine panel’s composition by appointing the panelists whom the DG
considers most appropriate within 10 days.
Art. 9.1 A single panel may be established--and should be where feasible--to examine the complaints of
more than one member on the same matter.
Art. 9.3. If more than one panel is established to examine complaints related to the same matter, the
panels should have the same panelists to the extent possible and their timetables should be harmonized.
Art. 12.1 Panels shall follow working procedures in Appendix 3, unless the panel decides otherwise after
consulting parties to the dispute.
Art.12.2 Panel procedures should provide sufficient flexibility to ensure high-quality panel reports while
not unduly delaying the panel process.
Art. 12.3. After consulting with disputants, panelists shall fix the timetable for the panel process
within one week after agreement on composition and terms of reference of the panel.
Art. 12.5 Panels should set precise deadlines for written submissions which the parties should respect.
Art. 12.8 As a general rule, the panel process shall not exceed 6 months from the date of agreement on
the composition and terms of reference of the panel to the issuing of the final panel report to the disputants. In
case of urgency, including as concerns perishable goods, the period should not exceed 3 months.
Art. 12.9 Panel shall inform DSB in writing of reasons for delay and estimate of when it will issue its
report. In no case shall period exceed 9 months.
Art. 12.11 Panel may suspend its work at the request of the complaining party for up to no more than
12 months, and thereafter the authority for the panel establishment shall lapse.
Art. 13.1 Panel shall have the right to seek information and technical advice from any individual or body
which it deems appropriate, but before doing so must inform the authorities of the member within whose
jurisdiction the individual or body is. Member should respond promptly and fully to any panel request for
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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information considered necessary and appropriate. Confidential information provided shall not be revealed
without authorization from the provider.
Art. 13.2 Panels may seek information from any relevant source and may consult experts.
Art. 15.1 Within a time period set by panel, parties to the dispute shall submit written comments on
descriptive section of draft panel report.
Art. 15.2 Within a time period set by panel, party may request in writing that panel review precise aspects
of interim report containing descriptive sections and panel’s findings and conclusions and hold further meeting
with disputants on these issues. If no comments received within period, interim report becomes final report and
is circulated promptly to members.
Art. 15.3 Interim review stage shall be conducted within six months--three months in urgent cases-per Art. 12.8.
Art. 16.5 Panel report shall be adopted within 60 days after its circulation at DSB meeting unless a
disputant formally notifies its appeal or DSB decides by consensus not to adopt the report.
Art. 17.5 As a general rule, AB shall circulate its report within 60 days of formal notification by
disputant of appeal. If not, AB shall inform DSB of reasons for delay an estimated time for submitting its report.
In no case shall proceedings exceed 90 days.
Art. 17.14 AB report shall be adopted by the DSB and unconditionally accepted by disputants, unless
DSB decides by consensus not to adopt AB report within 30 days of its circulation.
Art. 20 Unless otherwise agreed by disputants, period from date of establishment of panel until DSB
considers panel or appellate report for adoption shall not exceed generally 9 months without appeal, or 12
months where report is appealed.
Art. 21.4 Except where panel or AB has extended time of providing its report pursuant to DSU Art.12.9
or Art. 17.5, period from date of panel’s establishment until the determination of reasonable period of time
for complying with rulings or recommendations shall not exceed 15 months, unless disputants agree
otherwise. Where panel or AB has extended time of providing its report, additional time taken shall be added to
15-month period. Total time taken shall not exceed 18 months, unless disputants agree that there are
exceptional circumstances.
Appendix 3 Working Procedures for Panels provides inter alia a proposed timetable for the panel’s
work from receiving first written submissions to the circulation of the final report to WTO members.
Appendix 4 sets forth rules and procedures for expert review groups established by panels.
WTO Experience
The DSB has met in ordinary and special session to carry out its functions under the DSB,
including establishing twenty-five panels upon request by a complaining party at its second meeting,
pursuant to Article 6.1 of the DSU. Notwithstanding the rigorous timetables, some panels have been
unable to submit their findings within the six months provided for, given inter alia the complexity of
the case, and have so notified the DSB pursuant to Article 12.9.172 In at least two instances, the time
period has exceeded even the maximum nine months provided thereunder.173
The Appellate Body has also found itself unable once to submit its rulings within the sixty day
172
E.g., Banana Panel Reports, supra note 91; European Communities - Measures Concerning Meat and
Meat Products (Hormones) (Communication from the Chairman of the Panel), WTO Doc. WT/DS26/8 (Nov. 28,
1996); Canada Periodicals (Communication from the Chairman of the Panel), WTO Doc. WT/DS31/4 (Oct. 23,
1996); and Japan - Measures Affecting Consumer Photographic Film and Paper [hereinafter Japanese
Photographic Film Panel] (Communication from the Chairman of the Panel), WTO Doc. WT/DS44/4 (June 11,
1997).
173
Banana Panel Reports and Japanese Photographic Film Panel, id.
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deadline provided for, and so notified the DSB pursuant to Article 17.5.174 In that case, the Appellate
Body refused to postpone its oral hearing at a third party’s (Jamaica’s) request, because the former
“was not persuaded that there were exceptional circumstances resulting in manifest unfairness to any
participant or third participant that justified the postponement.”175
The Appellate Body has established working procedures for appellate review, which inter alia
set down the procedures for the filing of a notice of appeal by a disputant and of written submissions by
parties, and provide for working schedules and timetables for submissions and the oral hearing.176
I. What may the panel decide and how should it arrive at its findings and conclusions?
A panel must carry out its terms of reference. In their standard form, they call on the panel to
examine in the light of the relevant provisions the matter referred to by the complaining party in its
complaint/request for a panel, and to make such findings as will assist member governments, acting
together, in making recommendations or giving rulings. The scope of a panel’s mandate is therefore
defined by the initial complaint and the legal claims contained therein. A panel must make findings on
the issues raised by the parties to the dispute, as necessary to decide the case; but need not rule on those
claims advanced only by third parties. A panel arrives at its findings and conclusions on the basis of the
written submissions and oral testimony given by the parties, and of any information the panel considers
relevant, including expert opinion. A panel often refers to past panel reports, adopted and unadopted,
although it is not necessarily bound by the reasoning thereunder. There is no rule of precedent or stare
decisis rule as such. The customary practice of international law may also guide a panel in interpreting
the covered agreements or other matters.
Panels make use of rebuttable presumptions and other evidentiary principles which have
developed under the GATT; e.g., an infringement of obligations constitutes prima facie nullification
and impairment, which normally is presumed to have an adverse impact on other members, and also
shifts the burden on the defending party to rebut the charge. The burden of proof lies with a party
pursuing a non-violation complaint or with a party invoking an exception.
Where the panel concludes that nullification and impairment has taken place because the
defending party has breached its obligations under a covered agreement, a panel will state that the
members acting together should recommend that the party bring the inconsistent measure into
conformity. But where it makes a finding of nullification and impairment of a benefit in the sense of
Article XXIII:1(b) (non-violation case), a panel will state that the members acting together should
recommend that the party make a mutually satisfactory adjustment, even though it is under no
obligation to withdraw the measure. In either case, a panel may also make suggestions on how to deal
with the matter, including how the party could implement any recommendations within a reasonable
period of time.
174
E.g., European Communities - Regime for the Importation, Sale and Distribution of Bananas
(Communication from the Appellate Body), WTO Doc. WT/DS27/10 (Aug. 11, 1997).
175
WT/DS27/AB/R, supra note 91, at para. 4.
176
The current version is Working Procedures for Appellate Review, WTO Doc. WT/AB/WP/3 of Feb. 28,
1997.
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GATT Practice
The 1979 Understanding stated that the function of a panel was to “make an objective
assessment of the matter before it, including an objective assessment of the facts of the case and the
applicability of and conformity with the General Agreement and, if so requested by the
CONTRACTING PARTIES, make such other findings as will assist the CONTRACTING PARTIES
in making the recommendations or giving the rulings provided for in Article XXIII:2.”177 It was further
agreed in 1982 that “[t]erms of reference of a panel should be formulated so as to permit a clear finding
with respect to any contravention of GATT provisions and/or on the question of nullification and
impairment of benefits....Where a finding establishing a contravention of GATT provisions or
nullification and impairment is made, the panel should make such suggestions as appropriate for
dealing with the matter as would assist the CONTRACTING PARTIES.”178 Under the 1989 Decision,
it was agreed that panels should have standard terms of reference, unless the parties to the dispute
agreed otherwise within twenty days from the panel’s establishment.179 The terms of reference would
be circulated to all contracting parties. If the parties had agreed to other than standard terms, any
contracting party could question these special terms in the Council.180
One panel took a restrictive view of the legal theories it would consider under its mandate, by
siding with the defending party that certain arguments (under Articles X and XXIII:1(b) and (c)) made
by the complaining party before the panel, fell outside its terms of reference, because they had not been
raised by this party during prior bilateral consultations nor in its request for a panel.181 However, other
GATT panels have considered that “to examine in the light of the relevant GATT provisions” as used
in their terms of reference gave them sufficient authority to make rulings on the basis of other legal
theories; such as, e.g., a non-violation theory, when the complaining party had presented evidence in
this connection additional to violation arguments.182 Panels have tended to exclude from their
177
1979 Understanding, supra note 7, at para. 16.
1982 Ministerial Declaration, supra note 7, at 14-15, para. (v). In this connection, for example, the
Citrus Preference Panel suggested specific measures the European Community could take to reduce the competitve
disparity found to exist between the the United States and Mediterranean preference-receiving suppliers. Citrus
Preference Panel, supra note 39, at 104, para. 5.3.
179
1989 Decision, supra note 7, at F(b)1. The standards terms of reference read: “To examine, in the light
of the relevant GATT provisions, the matter referred to the CONTRACTING PARTIES by (name of contracting
party) in document L/...and to make such findings as will assist the CONTRACTING PARTIES in making the
recommendations or in giving the rulings provided for in Article XXIII:2.”
180
Id. at F(b)2. When this had occurred in the past, a new consensus had to be achieved in the Council on
the terms of reference to satisfy all the contracting parties which intervened in the Council. E.g., Council minutes on
Citrus Preference Panel, GATT Doc. C/M/168.
181
United States - Denial of Most-Favoured-Nation Treatment as to Non-Rubber Footwear from Brazil
(Report by the Panel adopted on June 19, 1992), BISD 39S/147-48, paras. 6.1 and 6.2 (1993).
182
E.g., Citrus Preference Panel, supra note 39, at 84, para. 4.25; First Banana Panel, supra note 116, at
paras. 324-25. The 1980 Chilean Apple Panel also examined the case before it under Article XI, notwithstanding
the complaining party had initially argued on the basis of Article I and II, supra note 108. But see United States Imports of Sugar from Nicaragua, supra note 43, at 73, paras. 4.2 and 4.4 (panel concluded that consideration of the
U.S. sugar quota system under Article XI, as urged by Nicaragua, fell outside panel’s terms of reference because it
read its task as limited to examining reduction in quota allocated to Nicaragua within that system. In this regard, the
panel also declined to consider whether the reduction could be justified under any exceptions in the General
Agreement permitting discriminatory quantitative restrictions contrary to Article XIII, since the United States had
178
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examination any product item or type of measure on which the parties differed as to whether it was
covered under the panel’s terms of reference.183
In arriving at their findings and conclusions, panels have made use of rebuttable presumptions
and other principles which have developed through practice, one of the most important being that a
breach of the rules is presumed to constitute a prima facie case of nullification and impairment under
Article XXIII, which shifts the burden of rebuttal to the party charged.184 Once that burden has shifted,
no party has ever rebutted the charge successfully. Another principle that has developed is that
exceptions to the rules are to be interpreted restrictively, with the burden of proof resting on the
invoking party.185
Panels often referred to previous panel reports, adopted and unadopted, although they were not
necessarily bound by the legal reasoning thereunder.186 Panels have examined the preparatory work of
the draftsmen of the Havana Charter and General Agreement to guide them in interpreting relevant
terms or provisions in the General Agreement, when deciding the case. Panels have also referred to the
Vienna Convention on the Law of Treaties in interpreting the General Agreement.187
GATT practice has been for panels to make findings only on the issues raised by the parties to
the dispute, and not third parties.188
When a panel has made a finding of nullification and impairment as a result of a breach of the
General Agreement, the established GATT practice under Article XXIII:2 has been for the panel to
conclude that the CONTRACTING PARTIES recommend that the inconsistent measure be terminated
or brought into conformity with the GATT. Panels have been reluctant to recommend that the
infringing party provide compensation where the measure in question has already been withdrawn.189
not invoked any such exception.).
183
E.g., EEC - Quantitative Restrictions Against Imports of Certain Products from Hong Kong (Report of
the Panel adopted on July 12, 1983), BISD 30S/129, 139, para. 30 (1984) (product category excluded from panel’s
examination where parties disagreed over its inclusion); FIRA Panel, supra note 109 at 158, para. 5.3
(manufacturing undertakings not covered by terms of reference which related to purchase or export requirements).
184
1979 Understanding, supra note 7, at Annex, para. 5.
185
E.g., FIRA Panel, supra note 109, at para. 5.20 (Article XX(d)); 1989 Chilean Apple Panel, supra note
108, at paras. 12.3 and 12.13 (Article XI:2(c)(i)); First Banana Panel, supra note 116, at para. 350 (grandfather
clause).
186
"[The Panel] would take into account the 1980 Panel report and the legitimate expectations created by
the adoption of this report, but also other GATT practices and Panel reports adopted by the CONTRACTING
PARTIES and the particular circumstances of this complaint. The Panel, therefore, did not feel it was legally bound
by all the details and legal reasoning of the 1980 Panel report.” supra note 108, at 123-24, para. 12.1 and 159, para.
5.1.
187
E.g., U.S. Malt Beverages, supra note 111, at 296, para. 5.79.
188
E.g., U.S. Customs User Fee Panel, supra note 151, at 289, para. 121; United States - Restrictions on
Imports of Sugar (Report of the Panel adopted on June 22, 1989), BISD 36S/331, 344, para. 5.9 (1990); NonRubber Footwear from Brazil, supra note 181, at 154, para. 6.19.
189
E.g., 1989 Chilean Apple Panel, supra note 108, at para. 12.35. Contra 1980 Chilean Apple Panel,
supra note 108, at para. 4.26 (having found that EC’s suspension of Chilean imports was inconsistent with Article
XIII, panel considered that the CONTRACTING PARTIES should recommend that the parties consult bilaterally
with a view to arriving at a “mutually satisfactory solution” even though measure had already been terminated.).
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When a panel has made a finding of nullification or impairment of a benefit under the General
Agreement in the sense of Article XXIII:1(b), which has occurred in the limited context of tariff
concessions, the practice has been for the panel to conclude that the CONTRACTING PARTIES
recommend that the defending party consider ways and means to restore the competitive relationship
between domestic and imported products found to have been upset and to eliminate the impairment.
Panels have made specific suggestions about how a mutually satisfactory adjustment could be
achieved.190
DSU
Art. 3.1 WTO Members affirm their adherence to the principles for the management of disputes
heretofore applied under GATT 1947 Articles XXII and XXIII, and the rules and procedures as further
elaborated and modified in DSU.
Art. 3.2 WTO dispute settlement serves to preserve the rights and obligations of members under the
covered agreements and to clarify the existing provisions of covered agreements in accordance with
customary rules of interpretation of public international law. DSB rulings and recommendations cannot
add to or diminish rights and obligations provided in the covered agreements.
Art. 3.8 An infringement of obligations under a covered agreement is considered prima facie
nullifcation or impairment, meaning a breach of the rules is presumed to have an adverse impact on other
member parties to that covered agreement, and it is up to the member against whom the complaint has been
brought to rebut the charge.
Art. 6.2 The request for establishment of a panel shall be in writing, indicating whether consultations
were held, identifying the specific measure at issue and providing a brief summary of the legal basis of the
complaint sufficient to present the problem clearly. If requesting party seeks other than standard terms of
reference for panel, the written request shall include proposed text of special terms of reference.
Art. 7.1 Panels shall have following standard terms of reference unless the disputants agree otherwise
within 20 days from establishment of panel: “To examine, in the light of the relevant provisions in (name of
covered agreement(s) cited by the parties to the dispute), the matter referred to the DSB by (name of
party) in document...and to make such findings as will assist the DSB in making the recommendations or
in giving the rulings provided for in that/those agreement(s).”
Art. 7.2 Panels shall address the relevant provisions in any covered agreement(s) cited by the
parties to the dispute.
Art. 7.3 If other than standard terms of reference are agreed upon by the parties, any member raise any
point relating thereto in the DSB.
Art. 11.1 Function of panels is to assist DSB in discharging its responsibilities under DSU and covered
agreements. Panel should make an objective assessment of the matter before it, including an objective
assessment of the facts of the case and the applicability of and conformity with the relevant covered
agreements, and make such other findings as will assist the DSB in making the recommendations or in giving
the rulings provided for in the covered agreements.
Art. 12.7 Where the disputants have failed to develop a mutually satisfactory solution, the panel shall
submit a written report to the DSB, setting out the panel’s findings of fact, the applicability of relevant provisions
and the basic rationale behind any findings and recommendations that it makes.
Art. 12.11 Where a party is a developing country member, panel’s report shall explicitly indicate the
form in which account has been taken of relevant provisions on differential and more favourable treatment raised
190
E.g., Follow-up on the Panel Report, supra note 101, at para. 157 (having found continuing impairment
of benefits accruing to the U.S. in respect of zero tariff binding on oilseeds as a result of EC production subsidies,
panel recommended that the Community either modify its new support system for oilseeds or renegotiate its tariff
concessions on oilseeds under Article XXVIII).
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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by developing country member.
Art. 14.2 Reports of panels shall be drafted in the light of the information provided and statements made.
Art. 15.3 Panel’s findings shall discuss arguments made at interim review stage.
Art. 19.1 Where panel or AB concludes that a measure is inconsistent with a covered agreement, it
shall recommend that the member concerned bring the measure into conformity with that agreement.
Additionally panel and AB may suggest ways in which the member could implement recommendations.
Art. 19.2 In its findings and recommendations, panel or AB cannot add to or diminish rights and
obligations provided in covered agreements.
Art. 22.6 Original panel, where available, shall carry out arbitration when member concerned objects to
proposed level of suspension of obligations.
Art. 26 A panel or AB may only make rulings and recommendations under Article XXIII:1(b) of
GATT 1994, where a party to the dispute raises such a non-violation complaint, and presents a detailed
justification in support thereof. The same is true also for Article XXIII:1(c) complaints. Where a panel or AB
finds a benefit is being nullified or impaired under, or attainment of an objective is being impeded of a relevant
covered agreement without violation thereof, under Article XXIII:1(b) of GATT 1994, there is no obligation to
withdraw the measure. The panel or AB shall recommend that the member concerned make a mutually
satisfactory adjustment. If a panel finds that cases involving matters under Article XXIII:1(c) also involve
other matters, panel shall circulate separate report to DSB addressing those matters.
WTO Experience
There have been a number of rulings under the WTO dealing with how a panel should decide a
case. The following highlights specific rulings on what matters a panel may properly examine in
carrying out its mandate; what claims a panel may properly not decide; the assignment of burden of
proof between the parties; the status of prior panel reports for use by a panel; and how a panel should
be guided by the Vienna Convention on the Law of Treaties in interpreting GATT/WTO obligations.
A panel’s terms of reference, the Appellate Body has explained, are important for two reasons.
First, they “fulfil an important due process objective--they give the parties and third parties sufficient
information concerning the claims at issue in the dispute in order to allow them an opportunity to
respond to the complainant’s case. Second, they establish the jurisdiction of the panel by defining the
precise claims at issue in the dispute.”191
It is an error of law, the Appellate Body has ruled, for a panel to fail to address in its
conclusions the full range of products included in its terms of reference.192
The Banana panel rejected the EC’s argument that the panel was not empowered to interpret
what was required under the Lome Convention differently from what the parties to that agreement
held.193 The panel proceeded to examine for itself the provisions of the Lome Convention in so far as
necessary to interpret the Lome waiver, which had been granted to the EC by the CONTRACTING
191
Brazil - Measures Affecting Desiccated Coconut (Report of the Appellate Body adopted by the DSB on
Mar. 20, 1997), WTO Doc. WT/DS22/AB/R 22, VI. (Feb. 21,1997).
192
Japan - Taxes on Alcoholic Beverages (Report of the Appellate Body adopted by the DSB on Nov. 1,
1996), WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, at 29 (Oct. 4, 1996).
193
Banana Panel Reports, supra note 91, at paras. 4.66-.67.
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PARTIES, and extended under the WTO.194 Under that waiver, Article I:1 was waived to the extent
necessary to permit the EC to provide preferential treatment to the ACP countries as “required” by the
Convention.
The Appellate Body upheld the Banana panel in this respect.195 Since the GATT
CONTRACTING PARTIES had incorporated a reference to the Convention in the waiver, there was
no alternative but to determine what was required by the Convention. The Appellate Body for its part
also examined the Lome Convention, and upheld the panel’s findings that certain features of the
preferential import regime were not required under the Convention.196
The Appellate Body reversed the Banana panel’s decision not to consider certain claims under
GATS for some of the complainants, because they had failed to include in their initial written
submissions allegations of inconsistencies with specific GATS provisions.197 These parties had
incorporated by reference into their subsequent submissions to the panel, allegations made by other
complainants in their initial submissions. The Appellate Body ruled that the panel’s terms of reference
were governed by the request for the establishment of a panel, in which the GATS claims were made
by all the complaining parties jointly.198
The Appellate Body has ruled that for reasons of judicial economy, a panel need not decide
every claim contained in the terms of reference if it can decide the case without doing so.199 200
The United States argued before the EC hormone panel that the term “cited by the parties to the
dispute” as used in the standard terms of reference for a panel, provided under Article 7.1 of the DSU,
modified “covered agreements” and not “relevant provisions.”201 This view would signify a more
expansive mandate for a panel to examine measures in the light of the legal provisions it considered
relevant in a covered agreement, when a party had cited that agreement in its request for a panel, but
not necessarily the specific provision the panel wished to consider. The EC hormone panel, however,
194
Id. at para. 7.98.
WT/DS27/AB/R, supra note 91, at para. 167.
196
Id. at para. 178.
197
Id. at paras. 147 & 255 (c).
198
Id. at paras. 143-46. See Sections III.C. and III.E. of this paper for other rulings by the Appellate Body
regarding claims in connection with this case.
199
"Nothing in [DSU Article 11] or in previous GATT practice requires a panel to examine all legal claims
made by the complaining party. Previous GATT 1947 and WTO panels have frequently addressed only those issues
that such panels considered necessary for the resolution of the matter between the parties, and have declined to
decide other issues.” United States - Measures Affecting Imports of Woven Wool Shirts and Blouses from India
(Report of the Appellate Body adopted on May 23, 1997), WTO Doc. WT/DS33/AB/R, at VI (Apr. 25, 1997).
200
The EC hormone panel, for example, having found the EC measures at issue to be inconsistent with the
Agreement on the Application of Sanitary and Phytosanitary Measures, determined that it was not necessary for the
panel to examine whether they were also inconsistent with GATT Article I or III. EC Measures Concerning Meat
and Meat Products (Hormones) - Complaint by the United States (Report of the Panel), WTO Doc.
WT/DS26/R/USA, at paras. 8.272-8.273 (Aug. 18, 1997) and EC Measures Concerning Meat and Meat Products Complaint by Canada (Report of the Panel), WTO Doc. WT/DS48/R/CAN, at paras. 8.275-8.276 (Aug. 18, 1997)
[hereinafter Hormone Panels]. The two complaints presented essentially the same claims and were handled by
parallel panels with the same composition.
201
WT/DS26/R/USA, supra note 200, at paras. 267-68.
195
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made no ruling on this issue.
With respect to the burden of proof to be assigned between the parties, the Appellate Body has
ruled that it is up to the complaining party to present evidence and argument sufficient to establish a
presumption that the measure at issue infringes an obligation. With this presumption thus established,
it is then up to the defending party to bring evidence and argument to rebut the presumption.202 This
did not change the fact that the burden of proof rested on a member invoking an exception as an
affirmative defense.203
In line with prior GATT practice, the Gasoline panel found that the party invoking an exception
under Article XX bore the burden of proving that the inconsistent measures came within its scope.204
The panel concluded that the requirements of Article XX(g) were not satisfied in the instant case.205
The Panel made no separate determination as to the consistency of the measures with the chapeau of
Article XX.206
On appeal, the Appellate Body agreed that the burden of demonstrating that a measure,
provisionally justified as an exception under Article XX, did not in its application constitute abuse,
rested with the party invoking the exception. Such a burden involved a heavier task than merely
showing that the exception encompassed the measure at issue.207 However, the Appellate Body
criticized the legal reasoning of the Gasoline panel, in having asked whether the less favorable
treatment of imported gasoline was primarily aimed at the conservation of natural resources; rather
than asking whether the baseline establishment rules, the “measures” at issue, were primarily aimed at
the conservation of clean air. The chapeau of Article XX made it clear that it was these “measures”
which had to be examined under Article XX(g), and not the legal finding of less favorable treatment.
According to the Appellate Body, in ignoring the terms of Article XX’s chapeau, the Gasoline
panel had overlooked a fundamental rule of treaty interpretation, which had received its most
authoritative and succinct expression in Article 31 of the Vienna Convention on the Law of Treaties.
202
WT/DS33/AB/R, supra note 199, at IV. “In addressing this issue, we find it difficult, indeed, to see how
any system of judicial settlement could work if it incorporated the proposition that the mere assertion of a claim
might amount to proof. It is, thus, hardly surprising that various international tribunals, including the International
Court of Justice, have generally and consistently accepted and applied the rule that the party who asserts a fact,
whether the claimant or the respondent, is responsible for providing proof thereof. Also, it is a generally-accepted
canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof rests upon the
party, whether complaining or defending, who asserts the affirmative of a particular claim or defence. If that party
adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other
party, who will fail unless it adduces sufficient evidence to rebut the presumption.” Id. (citations omitted).
203
"[Several GATT 1947 and WTO panels have required such proof of a party invoking a defence, such as
those found in Article XX or Article XI:2(c)(i), to a claim of violation of a GATT obligation, such as those found in
Articles I:1, II:1, III or XI:1. Articles XX and XI:2(c)(i) are limited exceptions from obligations under certain other
provisions of the GATT 1994, not positive rules establishing obligations in themselves. They are in the nature of
affirmative defences. It is only reasonable that the burden of establishing such a defence should rest on the party
asserting it.” Id. (citations omitted).
204
Supra note 112, at para. 6.31.
205
Id. at para. 6.40.
206
Id. at para. 6.41.
207
WT/DS2/AB/R, supra note 112, at IV.
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This general rule of interpretation had attained the status of a rule of customary or general international
law and, as such, pursuant to Article 3.2 of the DSU, should be applied by panels in seeking to clarify
the provisions of the General Agreement and the other covered agreements.208 Thus the words of a
treaty, like the General Agreement, are to be given their ordinary meaning, in their context and in the
in the Vienna Convention is that interpretation must give meaning and effect to all the terms of the
treaty. An interpreter is not free to adopt a reading that would result in reducing whole clauses or
paragraphs of a treaty to redundancy or inutility.”209
The Japan alcoholic tax panel referred to Articles 31 and 32 of the Vienna Convention in
interpreting Article III:2 of GATT 1994.210 Article 31(3)(b) of the Vienna Convention provides that
subsequent practice in the application of a treaty which establishes the agreement of the parties
regarding its interpretation is to be taken into account together with the context in interpreting the
treaty’s terms. The panel found that panel reports adopted under the GATT or by the DSB constituted
“subsequent practice” in a specific case, and were an integral part of GATT 1994, pursuant to Article
1(b)(iv) of the language of Annex 1A incorporating GATT 1994 into the WTO Agreement.211 These
adopted reports had to be taken into account by subsequent panels dealing with the same or a similar
issue, although they did not necessarily have to follow the former reports’ reasoning or results.212
However, the Appellate Body ruled that the Japanese alcoholic tax panel had erred in law in
concluding that adopted panel reports by virtue of the decision to adopt them, constituted “subsequent
practice” in a specific case, as used in Article 31 of the Vienna Convention.213 The Appellate Body
also overturned the panel’s conclusion that adopted panel reports in themselves constituted “other
decisions of the CONTRACTING PARTIES to GATT 1947" for purposes of Article 1(b)(iv) above.
The Appellate Body did not believe that the CONTRACTING PARTIES, in deciding to adopt a panel
report, intended that their decision would constitute a definite interpretation of the relevant provisions
of GATT 1947. Nor was this contemplated under GATT 1994 in the light of Article IX:2 of the WTO
Agreement, which granted exclusive authority to interpret that agreement and the MTAs to the
Ministerial Conference and the General Council. “Adopted panel reports are an important part of the
GATT acquis. They are often considered by subsequent panels. They create legitimate expectations
among WTO Members, and, therefore, should be taken into account where they are relevant to any
dispute. However, they are not binding, except with respect to resolving the particular dispute between
the parties to that dispute. In short, their character and their legal status have not been changed by the
coming into force of the WTO Agreement.”214 The Appellate Body agreed with the Japan alcoholic tax
panel’s conclusion that unadopted panel reports had no legal status under the GATT or WTO, but
208
Id. at III.B.
Id. at IV.
210
Japan - Taxes on Alcoholic Beverages (Report of the [hereinafter Japanese Alcoholic Tax] Panel
adopted on Nov. 1, 1996, as modified by the Appellate Body, supra note 192), WTO Docs. WT/DS8/R,
WT/DS10/R, and WT/DS11/R at paras. 6.7-6.9. (July 11, 1996).
211
Japanese Alcoholic Tax Panel, id. at para. 6.10.
212
Id.
213
WT/DS8/AB/R, WT/DS10/AB/R, and WT/DS11/AB/R, supra note 192, at E. and I.(a).
214
Id. at E.
209
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nevertheless could provide useful guidance to a panel.215
No WTO panel has yet determined that it would not follow or be bound by the legal reasoning
or rulings of the Appellate Body on a prior separate case involving similar issues. The Appellate Body
has criticized a panel for misapplying a legal test enunciated by the Appellate Body in a prior case,
which the panel was trying to follow.216
J. How to assure the panel findings and conclusions are right?
Panels are to be composed of qualified individuals who are assisted by the secretariat. They
may seek information and technical advice from any source they deem appropriate. Panels may
establish a technical expert review group to assist them. After written rebuttal submissions and oral
arguments have been made by the parties, the secretariat drafts the descriptive section of the panel’s
report containing the facts of the case and the arguments presented by the parties. The panel circulates
this draft section to the parties for their written comments, to assure that the panel understands the case
before it issues its finding and conclusions. The panel then circulates to the parties an interim report
containing a revised descriptive section along with the panel’s findings and conclusions. A party may
request that a panel review an aspect(s) of the report, and hold a further meeting with the disputants on
the issue(s) as appropriate. At the conclusion of this interim stage, the panel issues its final report to
the parties to the dispute, and after a period of time set by the panel, circulates the report to all
members, barring a settlement by the parties on the case.
GATT Practice
An essential ingredient in assuring well-reasoned and legally-sound findings and conclusions by
a panel is the quality of the panel’s members themselves and their secretariat helpmates, not to mention
adequate input from the parties in terms of the facts and legal arguments they present to the panel.
Following the 1979 Understanding, a roster of qualified individuals available to serve as panel
members was continually improved upon and expanded. Secretariat legal support was also expanded.
Against a backdrop of an increasing number of panel reports going unadopted, the EC
production subsidies on canned fruit panel217 and the U.S. automotive spring assemblies panel218
introduced in 1983 the “interim review” whereby after presenting its findings and conclusions to the
parties, the panel would re-examine its decisions in the light of further arguments presented by the
parties, before circulating the report to all contracting parties. Upon further reflection, the EC canned
fruit panel modified its conclusions in one instance. Its report was not adopted. The U.S. spring
215
Id.
WT/DS31/AB/R, supra note 91, at 24-27, V.A. (Periodicals Panel used incorrect factual example in
applying legal test enunciated by Appellate Body in Japan Alcoholic Tax case for determining “like product” for
purposes of Article III:2 first sentence).
217
EC Production Aids on Canned Peaches, Canned Pears, Canned Fruit Cocktail, and Dried Grapes
(Report of the Panel - unadopted), GATT Doc. L/5778 (1985).
218
United States - Imports of Certain Automotive Spring Assemblies (Report of the Panel adopted on May
26, 1983), BISD 30S/107 (1984).
216
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assemblies panel did not change its conclusions. Its report was adopted.219 However, a subsequent
panel came up with a contrary conclusion.220
As discussed under section II of this paper, before the advent of the appellate review under the
DSU, the only way to correct allegedly faulty findings and conclusions was for the CONTRACTING
PARTIES to adopt the panel’s report with an understanding of what the findings and conclusions
should stand for, or simply not to adopt the panel’s report at all.
Panels have referred technical aspects of their case to experts as provided under the 1979
Understanding.221
DSU
A panel report is adopted by the DSB unless it is appealed or the DSB decides by consensus not
to adopt it. A party to a dispute may appeal any issue of law contained in the panel’s report or any
legal interpretation developed by the panel to a standing appellate body. This body is composed of
seven qualified and impartial non-governmental individuals, broadly representative of WTO
membership, who serve for a limited time. Third parties may be given the opportunity to be heard by
the Appellate Body. The appellate body may uphold, modify or reverse the panel’s legal findings or
conclusions. The Appellate Body report is adopted by the DSB, unless it decides by consensus not to
adopt it.
Art. 8.1 Panels are to be composed of well-qualified governmental and/or non-governmental
individuals, including persons who have served on or presented a case to a panel, served as a representative of a
WTO member or of a GATT contracting party or to a body of a covered agreement or its predecessor agreement,
or in the Secretariat, or taught or published on international trade law or policy, or served as a senior trade policy
official of a member.
Art. 13.1 Panel shall have the right to seek information and technical advice from any individual or
body which it deems appropriate, but before doing so must inform the authorities of the member within whose
jurisdiction the individual or body is. Member should respond promptly and fully to any panel request for
information considered necessary and appropriate.
Art. 13.2 Panels may seek information from any relevant source and may consult experts.
Art. 15.1 Following consideration of rebuttal submissions and oral arguments, panel issues descriptive
219
Albeit with an understanding in the Council that further examination of the consistency of the use of
Section 337 to deal with patent infringement cases was not foreclosed. GATT Doc. C/M/168, 10 (Minutes of the
Council Meeting of May 26, 1983), cited in GATT Analytical Index 1995, supra note 2, at 756.
220
United States - Section 337 of the Tariff Act of 1930 (Report of the Panel adopted on Nov. 7, 1989),
BISD 36S/345, 393-96, para. 5.35 (1990) (finding that U.S. practice of determining allegations of patent violations
under Section 337 could not be justified under Article XX(d).
221
1979 Understanding, supra note 7, at annex, para. 6(iv). E.g., a panel asked the World Health
Organization for its opinion on the health effects of cigarette use and consumption and on related issues for which
WHO was competent. Thailand - Restrictions on Importation of and Internal Tax on Cigarettes (Report of the
Panel adopted on Nov. 7, 1990) BISD 37S/200, 216-20, paras. 50-62. (1991). The Standards Code contained rules
and procedures governing expert review groups, from which DSU Appendix 4 was largely drawn. Agreement on
Technical Barriers to Trade, supra note 36, at 31, Annex 2 Technical Expert Groups.
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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(factual and argument) sections of its draft report to the parties to the dispute for their written comments.
Art. 15.2 Within a time period set by panel, party may request in writing that panel review precise
aspects of interim report containing descriptive sections and panel’s findings and conclusions and hold
further meeting with disputants on these issues. If no comments received within period, interim report
becomes final report and is circulated promptly to members.
Art. 15.3 Findings of the final panel report shall include discussion of arguments made at interim
review stage.
Art. 16.4 Within 60 days from its circulation, the panel report shall be adopted at a DSB meeting unless a
party to the dispute formally notifies the DSB of its decision to appeal--in such case the report shall not be
considered for adoption until after completion of the appeal--or the DSB decides by consensus not to
adopt the report.
Art. 17.1 Standing Appellate Body shall be established by the DSB to hear appeals from panel
cases. AB shall be composed of seven persons, three of whom shall serve on any one case. AB members shall
serve in rotation as determined in its working procedures.
Art. 17.3 AB shall comprise persons of recognized authority, with demonstrated expertise in law,
international trade and the subject matter of the covered agreements generally, and unaffiliated with any
government. AB memberships shall be broadly representative of WTO membership. AB members shall
be available at all times and on short notice, and shall stay abreast of dispute settlement and other relevant
activities of the WTO. They shall not participate in the consideration of any disputes that would create a direct or
indirect conflict of interest.
Art. 17.4 Only parties to the dispute may appeal a panel report. Third parties who have notified the
DSB of a substantial interest in the matter per Art. 10.2 may make written submissions to, and be given an
opportunity to be heard by AB.
Art. 17.6 An appeal shall be limited to issues of law covered in the panel report and legal interpretations
developed by the panel.
Art. 17.7 AB shall be provided with appropriate administrative and legal support as it requires.
Art. 17.8 Expenses of AB members shall be met from WTO budget.
Art. 17.9 AB shall draw up its working procedures in consultation with DSB Chairman and WTO
D-G.
Art. 17.10 AB proceedings shall be confidential. AB reports shall be drafted without the presence of the
parties to the dispute and in the light of the information provided and the statements made.
Art. 17.11 Opinions expressed in AB report by AB members shall be anonymous.
Art. 17.12 AB shall address each of the issues raised in accordance with Art. 17.6 during the appellate
proceeding.
Art. 17.13 AB may uphold, modify or reverse panel’s legal findings and conclusions.
Art. 17.14 AB report shall be adopted by the DSB and unconditionally accepted by the parties to the
dispute unless DSB decides by consensus otherwise within 30 days of report’s circulation.
Art. 19.1 Where panel or AB concludes that a measure is inconsistent with a covered agreement, it shall
recommend that the member concerned bring the measure into conformity with that agreement. Additionally
panel and AB may suggest ways in which the member could implement recommendations.
Art. 19.2 In its findings and recommendations, panel or AB cannot add to or diminish rights and
obligations provided in covered agreements.
Art. 26 A panel or AB may only make rulings and recommendations under Article XXIII:1(b) of GATT
1994, where a party to the dispute raises such a non-violation complaint, and presents a detailed justification in
support thereof. The same is true also for Article XIII:1(c) complaints. Where a panel or AB finds a benefit is
being nullified or impaired under, or attainment of an objective is being impeded of a relevant covered agreement
without violation thereof, under Article XXIII:1(b) of GATT 1994, there is no obligation to withdraw the
measure. The panel or AB shall recommend that the member concerned make a mutually satisfactory adjustment.
If a panel finds that cases involving matters under Article XXIII:1(c) also involve other matters, panel shall
circulate a separate report to the DSB addressing those matters.
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Appendix 4 provides rules and procedures applicable to expert review groups established in accordance
with Art. 13.2.
WTO Experience
Pursuant to DSU Article 13, a WTO panel sought scientific and technical advice with respect to
the scientific basis for the EC ban on imports of meat and meat products from animals, treated with
certain hormones for growth promotion purposes.222 Five experts serving as individual advisers to the
panel, were chosen in consultation with the parties, on the basis of names provided by the Codex
Commission secretariat and the International Agency for Research on Cancer.223 The panel also sought
information from the Codex Commission secretariat.
Virtually every panel report which has been issued under the WTO has been appealed to the
Appellate Body. As of Dec. 19, 1997, the rulings of nine out of ten panels224 were appealed, of which
action by the Appellate Body is pending on one distinct case.225 The Appellate Body has basically
upheld all or most of the conclusions of the eight panels it has reviewed, modifying certain aspects of
their legal reasoning or of their conclusions in six cases. One could almost say that the Appellate Body
has been more critical of how panels have reached their conclusions, than with the conclusions
themselves. No defending member found by a panel to be in breach of its obligations has ever been
fully exonerated by the Appellate Body, although the Appellate Body has in some cases modified or
reversed some of the grounds for the infringement(s).
The Appellate Body has been fairly strict in what it will review: an allegation of error in law
committed by the panel, which is raised on appeal by a party to the dispute. The Appellate Body has
declined to rule on legal issues not brought properly on appeal, absent a compelling reason on grounds
of fundamental fairness or force majeure.
In the Gasoline case, the Appellate Body ruled that arguments advanced by the complainants in
their submissions as appellees, were not properly the subject of appeal. These parties had not appealed
the panel’s findings (or non-findings) on these issues as appellants, via the filing of a notice of appeal
222
Hormone Panels, supra note 200, at VI.
Id. at VI, paras. 6-10.
224
The nine panels whose rulings have been appealed are: Gasoline Panel, supra note 112; Japan Alcoholic
Tax Panel, supra note 208; United States - Restrictions on Imports of Cotton and Man-Made Fibre Underwear
(Report of the [hereinafter U.S. Underwear] Panel adopted on Feb. 25, 1997 as modified by the Appellate Body
(WT/DS24/AB/R) (Feb. 10, 1997)), WTO Doc. WT/DS24/R (Nov. 8, 1996); Brazil - Measures Affecting
Desiccated Coconut (Report of the Panel adopted on March 20, 1997, as modified by the Appellate Body, supra
note 191), WTO Doc. WT/DS/22/R (Oct. 17, 1996); United States - Measures Affecting Imports of Woven Wool
Shirts and Blouses from India (Report of the Panel adopted on May 23, 1997, as modified by the Appellate Body,
supra note 199), WTO Doc. WT/DS33/R ( Jan. 6, 1997); Periodicals Panel, supra note 99; Banana Panel, supra
note 91; Hormone Panels, supra note 200; and India - Patent Protection for Pharmaceutical and Agricultural
Chemical Products (Report of the [hereinafter India Patent] Panel as modified by the Appellate Body in
WT/DS50/AB/R (Dec. 19, 1997) - action by the DSB pending), WTO Doc. WT/DS50/R (Sep. 5, 1997). The parties
to the dispute examined by a tenth panel have not yet notified their intention to appeal. Argentina - Measures
Affecting Imports of Footwear, Textiles, Apparel and Other Items (Report of the Panel - action by the DSB pending)
WTO Doc. WT/DS56/R (Nov. 25, 1997). See Annex.
225
Hormone Panels, supra note 200.
223
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and an appellant’s submission, as provided under Rules 23(1) and 23(4) of the Appellate Body’s
working procedures.226
In the Banana case, the Appellate Body stated that the absence of a specific mention by the EC
in either its notice of appeal or appellant’s submission, of a panel finding explicitly dealing with
Ecuador’s right to invoke Article XIII, signified that Ecuador had no notice that the EC was appealing
this finding. Rule 20(2)(d) of the working procedures requires that a notice of appeal include “a brief
statement of the nature of the appeal, including the allegations of errors.” Rule 21(2)(b)(i) requires that
the appellant’s submission set out “a precise statement of the grounds for the appeal, including the
specific allegations of errors in the issues of law covered in the panel report...and the legal arguments
in support thereof.” Consequently, the Appellate Body ruled that the panel’s finding as regards
Ecuador’s Art. XIII rights, should be excluded from the scope of the appeal.227 Also in this case, the
Appellate Body declined to rule on the panel’s findings with respect to the ownership, nationality, and
market shares of service operators, considering these findings to be factual conclusions not subject to
appeal, rather than issues of law.228
K. How to assure compliance with rulings and recommendations?
Panel rulings are not binding on the parties to the dispute, unless the panel report is adopted by
the members acting jointly. The panel’s recommendations once adopted thus become the
recommendations of the collective body. As noted in section III.I of this paper, a finding of
nullification and impairment based on a breach of obligations under a covered agreement(s), generally
will lead to a recommendation that the inconsistent measure(s) be withdrawn. If the measure(s) is no
longer in force, no further action is required by the party found to have infringed. Compensation is not
awarded generally for past trade damage. If the party is still applying the inconsistent measure(s), it
must inform the collective body how it intends to comply with the recommendations within a
reasonable period of time. The infringing party may offer compensation as a temporary measure
pending withdrawal of the inconsistent measure(s). If the member fails to comply with the
recommendations within a reasonable period of time, and absent agreement between the disputants on
mutually acceptable compensation, the complaining party may seek authorization from the collective
body to retaliate against the recalcitrant party, by withdrawing a level of benefits thereto on a
discriminatory basis, equivalent to the level of nullification or impairment found. Rarely has the
ultimate sanction of suspension been sought, and only once has it been authorized under Article
XXIII:2.
As noted also under section III.I of this paper, a finding of “non-violation” nullification or
impairment--customarily a finding that the unexpected introduction of a domestic subsidy has nullified
or impaired the value of a prior tariff concession--will usually lead to a recommendation that the parties
concerned negotiate a mutually satisfactory adjustment, with a view to restoring the competitive
relationship found to have been nullified or impaired. There is no obligation on the defending party to
226
Working Procedures for Appellate Review, supra note 176. Brazil and Venezuela had raised the issues
of whether clean air was an exhaustible natural resource in the sense of Article XX(g) and whether the panel should
have ruled on the applicability of the TBT Agreement. WT/DS2/AB/R supra note , at 12-14, II.C.
227
WT/DS27/AB/R, supra note 91, at paras. 148-52.
228
Id. at para. 239.
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withdraw the non-inconsistent measure concerned, but it must report within a reasonable period of time
on action it has taken pursuant to the recommendation.
The collective body keeps under surveillance any matter on which it has made
recommendations or rulings, receiving written progress reports from the party concerned, until the
implementation issue is resolved.
GATT Practice
Only once have the CONTRACTING PARTIES authorized retaliatory measures pursuant to
Article XXIII:2 of the General Agreement. Following a resolution adopted by the CONTRACTING
PARTIES that import restrictions maintained by the United States on cheese, pursuant to Section 104
of the Defense Production Act of 1951, were contrary to Article XI, and that the circumstances were
sufficiently serious to justify retaliation by the affected countries, the Netherlands sought authorization
to restrict imports of U.S. wheat flour to 57,000 metric tons in calendar year 1953 (representing a drop
of 15,000 m.t. from the previous annual level of 72,000 m.t.).229 Under the prevailing GATT
consensus rule, for the CONTRACTING PARTIES to find the United States in breach and authorize
retaliation, required that the United States acquiesce to these results. In fact, the U.S. delegation did
not defend the consistency of the quotas, and did not object to the right of affected countries to
withdraw concessions to restore the balance of the General Agreement.230 But the United States
disagreed with the level proposed by the Netherlands for compensatory retaliation.231 A working
party was established to examine whether the proposed measure was appropriate in character, and
equivalent to the level of impairment suffered by the Netherlands. The latter argued that the U.S.
restrictions had affected adversely Dutch efforts to promote its exports and overcome balance-ofpayments difficulties. The working party proceedings resulted in a compromise settlement of a 12,000
m.t. reduction.232 The CONTRACTING PARTIES authorized the Netherlands to suspend application
to the United States of the former’s obligations under the General Agreement to the extent necessary to
limit imports of U.S. wheat flour to 60,000 m.t.233 The United States and the Netherlands both
abstained from voting on this decision.234 The authority to retaliate was renewed annually until 1960,
when it was no longer requested as a result of a relaxation in U.S. quotas on Edam and Gouda
cheese.235
The 1979 Understanding stated that the CONTRACTING PARTIES should keep “under
surveillance” any matter on which they had made recommendations. If these “were not implemented
229
GATT Docs. GATT/CP.6/SR.10 and GATT/CP.6/26 (Sep. 1951) cited in GATT Analytical Index 1995,
supra note 2, at 684-85, 690.
230
Hudec, The GATT Legal System, supra note 7, at 167, 175.
231
Id. at 177.
232
Netherlands Action Under Article XXIII:2 To Suspend Obligations to the United States (Report of
Working Party adopted on Nov. 8, 1952), BISD 1S/62, 64, paras. 6, 7 (1953).
233
Netherlands Measures of Suspension of Obligations to the United States (Determination of Nov. 8,
1952), BISD 1S/32, 33 (1953).
234
GATT Doc. SR.7/16, cited in GATT Analytical Index 1995, supra note 2, at 695-96.
235
Hudec, The GATT Legal System, supra note 7, at 181. Actually, the quota on U.S. wheat flour was
never fully enforced. Id. at 181-82. “The point is not to punish but to get across a message.” Id. at 180.
Constructing an Effective Dispute Settlement System: Relevant Experience in the GATT and WTO
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within a reasonable period of time, the contracting party bringing the case may ask the
CONTRACTING PARTIES to make suitable efforts with a view to finding an appropriate solution.”236
The 1989 Decision provided somewhat more concretely that the contracting party concerned
should inform the Council of its intentions to implement recommendations or rulings, and if
impracticable to comply immediately therewith, should have a reasonable period of time in which to do
so.237 Moreover, the issue of implementation of recommendations or rulings could be raised in the
Council by any party at any time after their adoption. The issue also would be automatically on the
Council’s agenda, unless it decided otherwise, six months after the adoption of the recommendations or
rulings. Ten days before each such Council meeting, the party concerned would have to provide a
status report in writing of its progress in implementing the recommendations or rulings.238
Acting pursuant to the 1989 Decision, the Council reconvened the original EC oilseeds panel to
determine whether a new EC support system would result in bringing into conformity with the General
Agreement the production subsidies, which had been ruled to be inconsistent with Article III:4, and in
eliminating the impairment to tariff concessions accruing to the U.S., which had been found. The
panel concluded that the new scheme continued to impair U.S. benefits. It recommended that the EC
either modify its support system or renegotiate its tariff concessions for oilseeds under Article XXVIII.
In the event the dispute was not resolved expeditiously in either of these ways, the panel stated that
there was no reason for the CONTRACTING PARTIES to continue to defer action under Article
XXIII:2. They should consider further action, if so requested by the United States. The United States
then proposed that the Council establish an arbitral body, whose decision would be binding on both
parties, to determine the value of nullification or impairment.239 The EC opposed such a procedure for
the GATT precedent it would create. The Community announced it would renegotiate its concessions
under Article XXVIII. The U.S. then sought authorization to withdraw concessions against the
Community in the amount of US$1 billion. This proposal was also blocked by the EC.240 The two
parties eventually resolved the matter within the Uruguay Round.
There is no provision in the General Agreement obliging contracting parties to provide
compensation.241 1979 Understanding gave contracting parties the possibility of offering compensation
as a temporary measure when the immediate withdrawal of a measure found to be inconsistent with the
General Agreement was impracticable. A contracting party could choose to grant compensation
therefore to forestall a request for an authorization of retaliatory measures under Article XXII:2, but the
Understanding did not oblige it to do so.242
236
1979 Understanding, supra note 7, at para. 22.
1989 Midterm Agreement, supra note 7, at para. I.2.
238
Id. at I.3.
239
GATT Doc. DS28/3 (Sep. 1992), cited in GATT Analytical Index 1995, supra note 2, at 700.
240
GATT Doc. C/M/260, 15 (Minutes of the Council Meeting of Nov. 1992), cited in GATT Analytical
Index 1995, supra note 2, at 695.
241
1989 Chilean Apple Panel, supra note 108, at 134, para. 12.35.
242
United States - Restrictions on the Importation of Sugar and Sugar-Containing Products Applied under
the 1955 Waiver and Under the Headnote to the Schedule of Tariff Concessions (Report of the Panel adopted on
Nov. 7, 1990), BISD 37S/228, para. 5.22 (1991).
237
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DSU
Unless the DSB decides by consensus not to adopt it, a panel report, as may be modified by the
Appellate Body, is adopted by the DSB--making the rulings and recommendations contained therein
those of the DSB and binding on the disputants. The member concerned has a reasonable period of
time to comply with the rulings and recommendations, which period may be determined through
binding arbitration. As a last resort against a member which has not brought an inconsistent measure
into conformity within a reasonable period of time in compliance with DSB recommendations, the
complaining party, upon request, may be authorized by the DSB to suspend equivalent concessions or
other obligations to the member concerned, within the same sector where panel or AB found
nullification or impairment; or if not practicable, under the same agreement; or if not practicable, under
another covered agreement.
Art. 3.4 Recommendations or rulings made by the DSB shall be aimed at achieving a satisfactory
settlement of the matter in accordance with the rights and obligations under the DSU and the covered
agreements.
Art. 3.7 The aim of dispute settlement mechanism is to secure a positive solution to a dispute. A
solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is
clearly to be preferred. In the absence of a mutually agreed solution, the first objective of the dispute
settlement mechanism is usually to secure the withdrawal of the measures found to be inconsistent with
the covered agreement(s). The provision of compensation should be resorted to only if the immediate
withdrawal of the measure is impracticable and as a temporary measure pending the withdrawal of the
inconsistent measure. The last resort the DSU provides to the member invoking the dispute settlement
procedures is the possibility of suspending the application of concessions or other obligations under the
covered agreements on a discriminatory basis vis-à-vis the other member, subject to DSB authorization.
Art. 16.1 Panel reports shall not be considered for adoption by DSB until 20 days following their
circulation to members.
Art. 16.2 Members having objections to a panel report shall explain their reasons in writing for
circulation at least 10 days prior to DSB meeting when report will be considered.
Art. 16.3 Disputants have a right to participate fully in DSB’s consideration of panel report and their
views shall be fully recorded.
Art. 16.4 Within 60 days after circulation of panel report to members, it shall be adopted at a DSB
meeting unless a disputant formally notifies its decision to appeal or DSB decides by consensus not to adopt
the report.
Art. 17.8 AB report shall be adopted by the DSB and unconditionally accepted by disputants
unless DSB decides by consensus not to adopt AB report within 30 days after its circulation to members.
Art.21.1 Prompt compliance with DSB recommendations or rulings is essential in order to ensure
effective resolution of disputes to the benefit of all members.
Art. 21.2 Particular attention should be paid to matters affecting developing country member interests.
Art. 21.3 30 days after adoption of panel or AB report, member concerned shall inform DSB of the
member’s intentions with respect to implementing DSB recommendations and rulings. If immediate
compliance is impracticable, member shall have a reasonable period of time to comply, which shall be the
time period:
a) proposed by member if approved by DSB; or
b) mutually agreed by disputants within 45 days of adoption of recommendations or
rulings; or
c) determined through binding arbitration within 90 days of adoption of recommendations
or rulings. As guideline, reasonable period of time should not exceed 15 months from adoption of
panel or AB report, but may be shorter or longer depending on particular circumstances.
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Art. 21.5 A dispute as to whether measures taken to comply with the rulings and recommendations are
consistent with the covered agreements, shall be decided through recourse to dispute settlement procedures,
wherever possible resorting to the original panel. The panel shall circulate its report within 90 days after referral
of the matter to it, unless it informs the DSB in writing the reasons why it cannot meet this time frame and an
estimate of when it will submit its report.
Art. 21.6 DSB shall keep under surveillance the implementation of adopted recommendations or
rulings. This issue may be raised at the DSB at any time. Unless the DSB decides otherwise, the
implementation issue shall be on the agenda of the DSB meeting 6 months after the date of establishment
of the reasonable period of time for compliance pursuant to Art. 21.3 and shall remain on the DSB’s
agenda until the issue is resolved. At least 10 days before each such DSB meeting, the member concerned
shall provide the DSB with a written status report of its progress in implementing the recommendations
or rulings.
Art. 21.7 If the matter was raised by a developing country member, DSB shall consider what further
action to take appropriate to the circumstances.
Art. 21.8 Further in this regard, DSB shall take into account trade coverage of measures complained of,
and their impact on the developing country member’s economy.
Art. 22.1 Compensation and the suspension of concessions or other obligations are temporary
measures available if recommendations and rulings are not implemented within a reasonable period of
time. However, full implementation of a recommendation to bring a measure into conformity with a
covered agreement, is preferred to compensation or suspension. Compensation is voluntary, and if
granted, should be consistent with the covered agreements.
Art. 22.2 If the member fails to comply with the recommendations and rulings within the
reasonable period of time determined pursuant to Art. 21.3, the member, if so requested, and no later
than expiry of reasonable period of time, enter into negotiations with any party having invoked the
dispute settlement procedures, to develop mutually acceptable compensation. If no satisfactory
compensation has been agreed within 20 days after expiry of reasonable period of time, any party having
invoked dispute settlement procedures may request DSB authorization to suspend application to member
of concessions or other obligations under the covered agreements.
Art. 22.3 In considering what concessions or obligations to suspend, complaining party shall apply
following principles and procedures:
(a) complaining party shall first seek to suspend concessions or other obligations with respect
to the same sector where panel or AB found nullification or impairment;
b) if not practicable to suspend in same sector, complainant may seek to suspend in other
sectors under the same agreement;
c) if not practicable to suspend in same agreement, and if circumstances serious enough,
complainant may seek to suspend concessions or other obligations under another covered agreement;
d) complaining party shall take into account:
(i) trade in sector or agreement where panel or AB found nullification or impairment, and
importance of such trade to complainant;
(ii) broader economic elements related to nullification or impairment and broader economic
consequences of suspension;
e) complainant shall state reasons for requesting authorization to suspend pursuant to (b) or (c),
forwarding its request to DSB also to the relevant Councils and sectoral bodies;
(f) “sector” means:
(i) for goods, all goods;
(ii) for services, a principal sector identified in current “Services Sectoral Classification
List;”
(iii) for trade-related intellectual property rights, each category covered in TRIPS section 1,
2, 3, 4, 5, 6, or 7 of Part II, or Part III or Part IV.
(g) “agreement” means:
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(I) for goods, the agreements listed in Annex 1A of the WTO Agreement, and for those
disputants who are parties thereto;
(ii) for services, the GATS;
(iii) for intellectual property rights, TRIPS.
Art. 22.4 Level of suspension authorized by DSB shall be equivalent to level of nullification or
impairment.
Art. 22.5 DSB shall not authorize suspension if covered agreement prohibits it.
Art. 22.6 When Art. 22.2 situation occurs, DSB upon request shall authorize suspension within 30
days of expiry of reasonable period of time unless DSB decides by consensus to reject request. However, if
member concerned objects to level of suspension or claims Art. 22.3 principles and procedures have not
been followed, matter shall be referred to arbitration by original panel, if members available, or by
arbitrator appointed by DG, which shall be completed within 60 days of expiry of reasonable period of
time. There shall be no suspension during arbitration.
Art. 22.7 Arbitrator shall not examine nature of concessions or obligations to be suspended but shall
determine whether suspension level is equivalent to nullification or impairment level and any claim that Art.
22.3 principles and objectives have not been followed. If arbitrator determines the latter have not been followed,
complaining party shall apply them. Arbitrator may also determine whether the proposed suspension is allowed
under the covered agreement. Parties shall accept the arbitrator’s decision as final and not seek a second
arbitration. DSB shall be informed promptly of arbitrator’s decision, and shall upon request grant
authorization to suspend consistently with the decision, unless it decides by consensus to reject request.
Art. 22.8 Suspension shall be temporary and apply only until removal of inconsistent measure, or
member provides a solution to the nullification or impairment, or mutually satisfactory solution is
reached. DSB shall continue to keep under surveillance implementation of adopted recommendations or
rulings, including cases where compensation has been provided or concessions or other obligations
suspended, but recommendations to bring measure into conformity with covered agreements have not
been implemented.
Art. 22.9 Compensation and suspension under DSU and covered agreements apply in cases where it has
not been possible for a member to secure observance of a covered agreement by regional or local governments or
authorities within the member’s territory.
Art. 23.1. Members shall seek redress of nullification or impairment through recourse to DSU.
Art. 23.2 Members shall:
a) not determine that a violation or nullification or impairment has occurred except through
recourse to DSU;
b) follow DSU Art. 21 procedures for determining reasonable period of time for implementation
of recommendations and rulings; and
c) follow DSU Art. 22 procedures for determining level of suspension before suspending
concessions or other obligations in response to failure of member concerned to implement
recommendations and rulings within that reasonable period of time.
Art. 24.1 Complaining parties shall exercise due restraint in asking for compensation or seeking
authorization to suspend concessions or other obligations pursuant to these procedures in case nullification or
impairment is found to result from measure taken by a least-developed country member.
Art. 26.1(c) Upon request of either disputant, the arbitration provided under DSU Art. 21.3 may include
a determination of the level of benefits which have been nullified or impaired, and non-binding suggestions as to
ways and means of reaching a mutually satisfactory adjustment.
Art. 26.1(d) Notwithstanding DSU Art. 22.1, compensation may be part of a mutually satisfactory
adjustment as final settlement of the dispute.
WTO Experience
Of the seven WTO panels whose reports have been adopted by the DSB, as modified by the
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Appellate Body, six panels found the defending party to be in breach. Such a finding generally leads
to the recommendation that the inconsistent measures, if still in existence, be brought into conformity
with the obligations under GATT/WTO within a reasonable period of time, with the DSB monitoring
compliance with or implementation of the recommendation. Sometimes the parties to the dispute have
agreed between themselves on how long a time would constitute a reasonable period of time for
implementation. Sometimes this determination has been made through resort to binding arbitration at
the request of a complainant.
In the three instances where a panel found the United States to be in breach, it has withdrawn
the inconsistent measure. In the Indian shirt case, the United States rescinded the measure found to be
inconsistent after the interim review, and before the final panel report was circulated.243 In the U.S.
underwear case, the United States allowed the measure to expire without renewal, shortly after
adoption of the panel report.244
Following the adoption in May 1996 of the report of the Gasoline panel, as modified by the
Appellate Body, the United States reached agreement with Venezuela, one of the two complainants, in
July 1996, that a reasonable period of time for U.S. implementation of the recommendations would be
fifteen months. Pursuant to DSU Article 21.6, the United States provided monthly status reports to the
DSB on its compliance efforts beginning in January 1997.245 A final administrative regulation
amending the U.S. measures at issue was signed in April 1997.246
The reasonable period of time for Japan to comply with the rulings and recommendations of the
Japan alcohol tax panel, as modified by the Appellate Body, was determined by binding arbitration at
the request of one of the complainants, the United States, pursuant to DSU Article 21.3(c). The
arbitrator concluded that a reasonable period for Japanese implementation would be fifteen months
from the adoption by the DSB of the panel report, meaning by February 1998.247 In July 1997, a
mutually acceptable solution between Japan, on the one hand, and the EC, another complainant,
243
After the interim review of the panel report, the United States announced that effective Nov. 22, 1996 it
would withdraw the transitional safeguard measures in effect on imports of woven wool shirts and blouses from
India, the complaining party. The latter insisted on a comprehensive report by the panel. The United States
rescinded the measure on Dec. 3, 1996. The panel circulated its report on January 6, 1997, containing the
conclusion that the U.S. measure had nullified and impaired benefits accruing to India under the Agreement on
Textiles and Clothing. India gave notice of its intent to appeal on Feb. 24, 1997. The Appellate Body circulated its
report on April 25, 1997. WT/DS33/AB/R, supra note 199, at I; WTO Doc. WT/DSB/M/33.
244
The United States informed the DSB at its meeting of April 10, 1997, that the measure which had been
the object of dispute before the U.S. Underwear Panel, supra note 222, had expired on March 27, 1997, and had not
been renewed. WTO Doc. WT/DSB/M/31.
245
United States - Standards for Reformulated and Conventional Gasoline (Status Report by the United
States), WTO Doc. WT/DS2/10 (Jan. 10, 1997).
246
United States - Standards for Reformulated and Conventional Gasoline (Status Report by the United
States: Addendum), WTO Doc. WT/DS2/10/Add.7 (Aug. 26, 1997).
247
The arbitrator was not persuaded that there were particular circumstances which justified a departure
from the fifteen-month guideline. Japan had argued for a period of twenty-three months for it to comply with some
of the rulings and recommendations, and for five years to comply with the remaining ones. The United States had
argued for a period of five months. Japan - Taxes on Alcoholic Beverages: Arbitration under Article 21(3) of the
Understanding on Rules and Procedures Governing the Settlement of Disputes (Award of the Arbitrator), WTO
Doc. WT/DS8/15, WT/DS10/15, WT/DS11/13 (Feb. 14, 1997).
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regarding the modalities for Japanese implementation was notified, whereby the tax rate on whiskey
would be reduced, and the tax rate on sochu and liqueurs increased, in two stages in Oct. 1997 and Oct.
1998. However, the final tax rate adjustment on sochu B to eliminate the tax differential with whiskey
would not be completed until Oct. 2001.248
In the Periodicals case, Canada and the United States, the parties to the dispute, have agreed
that a reasonable period of time for Canada to bring its measures into compliance with the
recommendations of the DSB would be fifteen months, meaning by Oct. 1998.249
With respect to the Banana case, the European Community has proposed to implement the
DSB recommendations by Jan. 1999.250 The complaining parties have requested that the period for
implementation be determined by binding arbitration.251
248
Japan - Taxes on Alcoholic Beverages (Mutually Acceptable Solution on Modalities for
Implementation), WTO Doc. WT/DS8/17, WT/DS10/17, WT/DS11/15 (July 30, 1997).
249
WTO Doc. WT/DSB/M/37 (Sep. 1997).
250
WTO Doc. WT/DSB/M/39 (Nov. 1997).
251
European Communities - Regime for the Importation, Sale and Distribution of Bananas: Surveillance of
Implementation of Recommendations and Rulings (Request for Arbitration by Ecuador, Guatemala, Honduras,
Mexico and the United States), WTO Doc. WT/DS27/13 (Nov. 17, 1997).
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IV. CONCLUDING REMARKS
The above history and analysis illustrate the continuum of refinement in rules and procedures
that is the GATT/WTO dispute settlement system. One sees a slow evolution from an initial reliance
primarily on diplomatic jurisprudence to help parties work out their differences in a mutually agreeable
fashion, and on practical ad hoc negotiated solutions, towards greater institutional discipline and
control over the settlement of disputes and, in the words of a former DSB Chairman, the “thickening of
legality.”252 It has been posited that legal obligations under the GATT, just like trade agreements
during the inter-war period, were not meant to be enforced to the letter.253 But this is less the case
under the WTO. Its dispute settlement system reflects the greater onus on the institution to preserve
the integrity of the rights and obligations among members.
As compared to its GATT predecessor, there has been an exponential rise in the number of
complaints formally raised in the WTO. Requests for bilateral consultations notified to the WTO are
running at more than eight times the rate of that over the previous entire GATT history. More
members are asking to join these consultations and expressing their interests on matters raised before a
panel, reflecting inter alia, the more active participation of a greater number of countries, both
developed and developing, in global markets and in the multilateral trading system.
More rulings by panels are being issued under the WTO, than over a comparable period under
the GATT. But this may be more a function of the total rise in disputes being raised in the WTO,
rather than of adjudicatory fever, as borne out by the number of mutually agreed solutions also
achieved. The reports of WTO panels are far longer and more complex than those of GATT panels.
This is due to the more legalistic approach taken by the disputants in presenting their case, and the
panelists themselves in arriving at their findings and conclusions. It is also because of the broader and
more detailed disciplines and commitments in the Marrakesh Agreement, for example GATS and
TRIPS, which are being interpreted and applied. Nine of the ten panels which have issued their
rulings, have found the defending member to be in breach. Thanks to the negative consensus rule, all
the WTO panel reports are being adopted by the DSB, albeit as modified by the Appellate Body.
Appellate review has become standard procedure. The Appellate Body generally has upheld
most of the legal conclusions of the panels, but modified their legal reasoning in certain respects.
The rulings and recommendations adopted by the DSB are being complied with, meaning
measures found to be inconsistent have been or are in the process of being withdrawn or otherwise
brought into conformity with WTO obligations. There has not yet been the need to resort to the
ultimate sanction of DSB-authorized retaliation against a non-complying member.
Overall, the time-limits and default procedures have worked well, minimizing the possibilities
for deliberate, procedural deadlocking. Delays have occurred nevertheless in some cases because of
the complexity of the substantive issues being examined.
Lest one think of the WTO dispute settlement system as one giant conveyor belt automatically
252
Statement by H.E. Mr. C. Lafer (Brazil), Chairman of the Dispute Settlement Body, WTO Doc.
WT/DSB(97)/ST/1 (Jan. 31, 1997).
253
Hudec, The GATT Legal System, supra note 7.
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channeling issues or disputes placed in the system through various funnels and dumping them into a
final bin labeled justice or right reason, two things must be underscored. The first is that the aim of the
WTO dispute settlement mechanism, remains the same as that of the CONTRACTING PARTIES;
namely a positive solution to the dispute mutually acceptable to the parties. To this end, the system
continues to encourage resolution short of formal adjudication through conciliation or good offices or
bilateral consultation. The number of mutually agreed solutions notified bears witness to this. No
doubt the negotiation of such solutions was aided by the availability, if necessary, of a more credible
adjudicatory mechanism. Secondly, notwithstanding the increasing professionalism of the panel and
appellate process and growth in case law, the WTO members collectively remain the ultimate arbiters
and interpreters of the rights and obligations under the WTO Agreement and Multilateral Trade
Agreements. Adopted panel reports are binding on the parties to the dispute in respect of the particular
dispute, but do not constitute a definite interpretation of the relevant provisions of the GATT or
WTO.254 At the top of the WTO pyramid still sits a political body.
What kind of observations might be made about the practical operation of the GATT/WTO
dispute settlement system that might be relevant in considering possible approaches to dispute
settlement under an FTAA? The design of dispute resolution mechanisms will necessarily depend on
the ultimate form and content of the obligations, rules, and agreements negotiated within the FTAA.
Some of these may, unlike the WTO, concern private parties in addition to states. That being said,
clearly one lesson from the GATT/WTO is that an effective dispute settlement system is an essential
guarantor that commitments undertaken are fulfilled, and that the anticipated benefits to be derived
therefrom are achieved. Negotiations on dispute settlement are integral to the entire negotiating
process and goals. Also not everything in a dispute resolution system can be codified. Certain aspects
may have to be revisited and improvements worked out in the light of practical experience. The most
important element is the shared interests of governments to make the system work.
The Working Group might wish to consider the desirability of exploring further some of the
provisions of the GATT/WTO system described above for possible application to the FTAA: e.g.,
mandatory bilateral consultations undertaken in good faith; availability of good offices or mediation;
recourse to adjudication by impartial experts; time-limits and default procedures; accelerated
proceedings in case of urgency; standing appellate review; negative consensus for adoption of rulings
or recommendations; one central monitoring body; ban on unilateral determinations and sanctions;
surveillance of implementation of rulings or recommendations; multilaterally-sanctioned retaliation;
suspension of benefits across different sectors or agreements; and special procedures for disputes
involving developing countries.
The Working Group might also wish to consider examining the particular experience of the
GATT/WTO in handling disputes involving certain kinds of measures, e.g., subsidies, technical
barriers to trade, government procurement, investment measures, intellectual property protection, etc.;
disputes involving certain sectors, e.g., agriculture, textiles, services, etc.; disputes involving subregional trade agreements; and disputes involving developing countries. Accordingly, the Working
Group might request that an analysis be undertaken in respect of these kinds of disputes.
254
WT/DS8/AB/R, WT/DS/AB/R, and WT/DS11/AB/R, supra note 192, at E.
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ANNEX: WTO SECRETARIAT OVERVIEW OF THE STATE-OF-PLAY OF WTO DISPUTES
13 February 1998
This summary has been prepared by the Secretariat under its own responsibility. The summary is for
general information only and is not intended to affect the rights and obligations of Members.255
This Overview updates the Overview dated 6 February 1998. New developments are reflected in
paragraphs 1(9)(a) and (b), and 5(39).
Overview of the State-of-play of WTO Disputes
Consultation
Requests
118
TOTAL
Distinct
Matters
83
Active Cases
18
Completed
Cases
9
Settled or
Inactive
20
1. Appellate Reports Adopted
(1)
UNITED STATES - STANDARDS FOR REFORMULATED AND CONVENTIONAL
GASOLINE, complaints by Venezuela (WT/DS2) and Brazil (WT/DS4). A single panel considered the
complaints of both Venezuela and Brazil. Complainants alleged that a U.S. gasoline regulation
discriminated against complainants' gasoline in violation of GATT Articles I and III and Article 2 of
the Agreement on Technical Barriers to Trade (TBT). The report of the panel found the regulation to be
inconsistent with GATT Article III:4 and not to benefit from an Article XX exception, (WT/DS2/R, 29
January 1996). The United States appealed on 21 February 1996. On 22 April, the Appellate Body
issued its report (WT/DS2/AB/R), modifying the panel report on the interpretation of GATT Article
XX(g), but concluding that the Article XX(g) was not applicable in this case. The Appellate Report,
together with the panel report as modified by the Appellate Report, was adopted by the DSB on 20
May 1996.
(2)
JAPAN - TAXES ON ALCOHOLIC BEVERAGES, complaints by the European Communities
(WT/DS8), Canada (WT/DS10) and the United States (WT/DS11). Complainants claimed that spirits
exported to Japan were discriminated against under the Japanese liquor tax system which, in their view,
levies a substantially lower tax on "shochu" than on whisky, cognac and white spirits. A joint panel
was established at the DSB meeting on 27 September 1995. The report of the panel, which found the
Japanese tax system to be inconsistent with GATT Article III:2, was circulated to Members on 11 July
1996. On 8 August 1996 Japan filed an appeal. The report of the Appellate Body was circulated to
Members on 4 October 1996. The Appellate Body's Report affirmed the Panel's conclusion that the
Japanese Liquor Tax Law is inconsistent with GATT Article III:2, but pointed out several areas where
255
The full text of all recent DS series documents (e.g., consultation and panel requests) is available at
heading "Documents On-Line".
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the Panel had erred in its legal reasoning. The Appellate Report, together with the panel report as
modified by the Appellate Report, was adopted on 1 November 1996. On 24 December 1996, the US,
pursuant to Article 21(3)(c) of the DSU applied for binding arbitration to determine the reasonable
period of time for implementation by Japan of the recommendations of the Appellate Body. The
Arbitrator found the reasonable period for implementation of the recommendations to be 15 months.
The Arbitrator's report was circulated to members on 14 February 1997.
(3)
UNITED STATES - RESTRICTIONS ON IMPORTS OF COTTON AND MAN-MADE
FIBRE UNDERWEAR, complaint by Costa Rica (WT/DS24). This dispute involves US restrictions on
textile imports from Costa Rica, allegedly in violation of the ATC agreement. The Panel found that the
US restraints were not valid. The report of the panel was circulated to members on 8 November 1996.
On 11 November 1996, Costa Rica notified its decision to appeal against one aspect of the Panel
report. The Appellate Body upheld the appeal by Costa Rica on that particular point. The report of the
Appellate Body was circulated to Members on 10 February 1997. The Appellate Body's report and the
Panel report as modified by the Appellate report, were adopted by the DSB on 25 February 1997. At
the meeting of the DSB on 10 April 1997, the US informed the meeting that the measure which had
been the subject of this dispute had expired on 27 March 1997 and had not been renewed, effectively
meaning that the US had immediately complied with the recommendations of the DSB.
(4)
BRAZIL - MEASURES AFFECTING DESICCATED COCONUT, complaint by the
Philippines (WT/DS22). The Philippines claims that the countervailing duty imposed by Brazil on the
Philippine's exports of desiccated coconut is inconsistent with WTO and GATT rules. The report of the
Panel concluded that the provisions of the agreements relied on by the claimant were inapplicable to
the dispute (WT/DS22/R). The report was circulated to members on 17 October 1996. On 16
December 1996, the Philippines notified its decision to appeal against certain issues of law and legal
interpretations developed by the panel. The Appellate Body upheld the findings and legal
interpretations of the Panel. The report of the Appellate Body was circulated to Members on 21
February 1997. The Appellate Body's report and the Panel report, as modified by the Appellate Body's
report, were adopted by the DSB on 20 March 1997.
(5)
UNITED STATES - MEASURE AFFECTING IMPORTS OF WOVEN WOOL SHIRTS AND
BLOUSES, complaint by India (WT/DS33). This case concerns the transitional safeguard measure
imposed by the United States. India claimed that the safeguard measure is inconsistent with Articles 2,
6 and 8 of the ATC. A panel was established at the DSB meeting on 17 April 1996. The Panel found
that the safeguard measure imposed by the United States violated the provisions of the ATC. The
report of the Panel was circulated to Members on 6 January 1997. On 24 February 1997, India notified
its intention to appeal certain issues of law and legal interpretations developed by the Panel. The
Appellate Body upheld the Panel's decisions on those issues of law and legal interpretations that were
appealed against. The report of the Appellate Body was circulated to Members on 25 April 1997. The
Appellate Body report and the Panel report, as upheld by the Appellate Body, were adopted by the DSB
on 23 May 1997.
(6)
CANADA - CERTAIN MEASURES CONCERNING PERIODICALS, complaint by the
United States (WT/DS31). In its request for consultations dated 11 March 1996, the United States
claims that measures prohibiting or restricting the importation into Canada of certain periodicals are in
contravention of GATT Article XI. The US further alleges that the tax treatment of so-called
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"split-run" periodicals and the application of favourable postage rates to certain Canadian periodicals
are inconsistent with GATT Article III. The DSB established a panel on 19 June 1996. The Panel found
the measures applied by Canada to be in violation of GATT rules. The report of the Panel was
circulated to Members on 14 March 1997. On 29 April 1997, Canada notified its intention to appeal
certain issues of law and legal interpretations developed by the Panel. The Appellate Body upheld the
Panel's findings and conclusions on the applicability of GATT 1994 to Part V.1 of Canada's Excise Tax
Act, but reversed the Panel's finding that Part V.1 of the Excise Act is inconsistent with the first
sentence of Article III:2 of GATT 1994. The Appellate Body further concluded that Part V.1 of the
Excise Act is inconsistent with the second sentence of Article III:2 of GATT 1994. The Appellate Body
also reversed the Panel's conclusion that Canada's "funded" postal rate scheme is justified by Article
III:8(b) of GATT 1994. The report of the Appellate Body was circulated to Members on 30 June 1997.
At its meeting on 30 July 1997, the DSB adopted the Appellate Body Report and the Panel report, as
modified by the Appellate Body.
(7)
EUROPEAN COMMUNITIES - REGIME FOR THE IMPORTATION, SALE AND
DISTRIBUTION OF BANANAS, complaints by Ecuador, Guatemala, Honduras, Mexico and the
United States (WT/DS27). The complainants in this case other than Ecuador had requested
consultations with the EC on the same issue on 28 September 1995 (WT/DS16). After Ecuador's
accession to the WTO, the current complainants again requested consultations with the EC on 5
February 1996. The complainants allege that the EC's regime for importation, sale and distribution of
bananas is inconsistent with GATT Articles I, II, III, X, XI and XIII as well as provisions of the Import
Licensing Agreement, the Agreement on Agriculture, the TRIMs Agreement and the GATS. A panel
was established at the DSB meeting on 8 May 1996. The Panel found that the EC's banana import
regime, and the licensing procedures for the importation of bananas in this regime, are inconsistent
with the GATT. The Panel further found that the Lome waiver waives the inconsistency with GATT
Article XIII, but not inconsistencies arising from the licensing system. The report of the Panel was
circulated to Members on 22 May 1997. On 11 June 1997, the European Communities notified its
intention to appeal certain issues of law and legal interpretations developed by the Panel. The Appellate
Body mostly upheld the Panel's findings, but reversed the Panel's findings that the inconsistency with
GATT Article XIII is waived by the Lome waiver, and that certain aspects of the licensing regime
violated Article X of GATT and the Import Licensing Agreement. The report of the Appellate Body
was circulated to Members on 9 September 1997. At its meeting on 25 September 1997, the Appellate
Body report and the Panel report, as modified by the Appellate Body, were adopted by the DSB. On 17
November 1997, the complainants requested that the "reasonable period of time" for implementation of
the recommendations and rulings of the DSB be determined by binding arbitration, pursuant to Article
for implementation to be the
period from 25 September 1997 to 1 January 1999. The report of the Arbitrator was circulated to
Members on 7 January 1998. Also available in portable document format See footnote 3
(8)
INDIA - PATENT PROTECTION FOR PHARMACEUTICAL AND AGRICULTURAL
CHEMICAL PRODUCTS, complaint by the United States (WT/DS50). This request, dated 2 July
1996, concerns the alleged absence of patent protection for pharmaceutical and agricultural chemical
products in India. Violations of the TRIPS Agreement Articles 27, 65 and 70 are claimed. The United
States requested the establishment of a panel on 7 November 1996. The DSB established a panel at its
meeting on 20 November 1996. The Panel found that India has not complied with its obligations under
Article 70.8(a) or Article 63(1) and (2) of the TRIPS Agreement by failing to establish a mechanism
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that adequately preserves novelty and priority in respect of applications for product patents for
pharmaceutical and agricultural chemical inventions, and was also not in compliance with Article 70.9
of the TRIPS Agreement by failing to establish a system for the grant of exclusive marketing rights.
The report of the Panel was circulated on 5 September 1997. On 15 October 1997, India notified its
intention to appeal certain issues of law and legal interpretations developed by the Panel. The Appellate
Body upheld, with modifications, the Panel's findings on Articles 70.8 and 70.9, but ruled that Article
63(1) was not within the Panel's terms of reference. The report of the Appellate Body was circulated to
Members on 19 December 1997. Also available in portable document format See footnote 3. The
Appellate Body report and the Panel report, as modified by the Appellate Body, were adopted by the
DSB on 16 January 1997.
(9)(a) EUROPEAN COMMUNITIES - MEASURES AFFECTING MEAT AND MEAT
PRODUCTS (HORMONES), complaint by the United States (WT/DS26). On 25 April 1996, the
United States requested the establishment of a panel in this dispute, claiming that measures taken by
the EC under the Council Directive Prohibiting the Use in Livestock Farming of Certain Substances
Having a Hormonal Action restrict or prohibit imports of meat and meat products from the United
States, and are apparently inconsistent with GATT Articles III or XI, SPS Agreement Articles 2, 3 and
5, TBT Agreement Article 2 and the Agreement on Agriculture Article 4. A panel was established at
the DSB meeting on 20 May 1996. The Panel found that the EC ban on imports of meat and meat
products from cattle treated with any of six specific hormones for growth promotion purposes was
inconsistent with Articles 3.1, 5.1 and 5.5 of the SPS Agreement. The report of the Panel was
circulated to Members on 18 August 1997. On 24 September 1997, the EC notified its intention to
appeal certain issues of law and legal interpretations developed by the Panel. The Appellate Body
upheld the Panel's finding that the EC import prohibition was inconsistent with Articles 3.3 and 5.1 of
the SPS Agreement, but reversed the Panel's finding that the EC import prohibition was inconsistent
with Articles 3.1 and 5.5 of the SPS Agreement. On the general and procedural issues, the Appellate
Body upheld most of the findings and conclusions of the Panel, except with respect to the burden of
proof in proceedings under the SPS Agreement. The report of the Appellate Body was circulated to
Members on 16 January 1998. Also available in portable document format (See footnote 3). At its
meeting on 13 February 1998, the DSB adopted the Appellate Body report and the Panel report, as
modified by the Appellate Body.
(9)(b) EUROPEAN COMMUNITIES - MEASURES AFFECTING LIVESTOCK AND MEAT
(HORMONES), complaint by Canada (WT/DS48). On 28 June 1996, Canada requested consultations
with the European Communities regarding the importation of livestock and meat from livestock that
have been treated with certain substances having a hormonal action under GATT Article XXII and the
corresponding provisions in the SPS, TBT and Agriculture Agreements. Violations SPS Articles 2, 3
and 5; GATT Article III or XI; TBT Article 2; and Agriculture Article 4 are alleged. The Canadian
claim is essentially the same as the US claim (WT/DS26), for which a panel was established earlier.
See above. The DSB established a panel on 16 October 1996. The Panel found that the EC ban on
imports of meat and meat products from cattle treated with any of six specific hormones for growth
promotion purposes was inconsistent with Articles 3.1, 5.1 and 5.5 of the SPS Agreement. The report
of the Panel was circulated to Members on 18 August 1997. On 24 September 1997, the EC notified its
intention to appeal certain issues of law and legal interpretations developed by the Panel. The Appellate
Body upheld the Panel's finding that the EC import prohibition was inconsistent with Articles 3.3 and
5.1 of the SPS Agreement, but reversed the Panel's finding that the EC import prohibition was
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inconsistent with Articles 3.1 and 5.5 of the SPS Agreement. On the general and procedural issues, the
Appellate Body upheld most of the findings and conclusions of the Panel, except with respect to the
burden of proof in proceedings under the SPS Agreement. The report of the Appellate Body was
circulated to Members on 16 January 1998. Also available in portable document format See footnote 3.
At its meeting on 13 February 1998, the DSB adopted the Appellate Body report and the Panel report,
as modified by the Appellate Body.
2.
Panel Report Appealed
(1)
ARGENTINA - CERTAIN MEASURES AFFECTING IMPORTS OF FOOTWEAR,
TEXTILES, APPAREL AND OTHER ITEMS, complaint by the United States (WT/DS56). This
request, dated 4 October 1996, concerns the imposition of specific duties on these items in excess of
the bound rate and other measures by Argentina. The United States contends that these measures
violate Articles II, VII, VIII and X of GATT 1994, Article 2 of the TBT Agreement, Article 1 to 8 of
the Agreement on the Implementation of Article VII of GATT 1994, and Article 7 of the Agreement on
Textiles and Clothing. On 9 January 1997, the United States requested the establishment of a panel. At
its meeting on 25 February 1997, the DSB established a panel. The EC and India reserved their
third-party rights to the dispute. The Panel found that the minimum specific duties imposed by
Argentina on textiles and apparel are inconsistent with the requirements of Article II of GATT, and that
the statistical tax of three per cent ad valorem imposed by Argentina on imports is inconsistent with the
requirements of Article VIII of GATT. The report of the Panel was circulated on 25 November 1997.
Also available in portable document format (See footnote 3). On 21 January 1998, Argentina notified
its intention to appeal certain issues of law and legal interpretations developed by the Panel.
3.
Panel Report Issued
(1)(a) EUROPEAN COMMUNITIES - CUSTOMS CLASSIFICATION OF CERTAIN COMPUTER
EQUIPMENT, complaint by the United States (WT/DS62). This request, dated 8 November 1996, is in
respect of the reclassification by the European Communities, for tariff purposes, of certain Local Area
Network (LAN) adapter equipment and personal computers with multimedia capability. The United
States alleges that these measures violate Article II of GATT 1994. On 11 February 1997, the US
requested the establishment of a panel. At its meeting on 25 February 1997, the DSB established a
panel. Japan, the Republic of Korea, India and Singapore reserved their third-party rights. The Panel
found that the EC failed to accord imports of LAN equipment from the US treatment no less favourable
than that provided for in the EC Schedule of commitments, thereby acting inconsistently with Article
II:1 of GATT 1994. The report of the Panel was circulated to Members on 5 February 1998. Also
available in portable document format See footnote 3
(1)(b) UNITED KINGDOM - CUSTOMS CLASSIFICATION OF CERTAIN COMPUTER
EQUIPMENT, complaint by the United States (WT/DS67). This request, dated 14 February 1997, is in
respect of the reclassification by the UK for tariff purposes of certain Local Area Network (LAN)
equipment and personal computers with multimedia capability. The US alleges that these measures
violate Article II of GATT 1994. A nullification and impairment of benefits claim is also alleged. A
similar request concerning these measures was made by the US in respect of the EC (DS62). On 7
March 1997, the US requested the establishment of a panel. At its meeting on 20 March 1997, the DSB
agreed to incorporate this dispute into the Panel already established in respect of DS62. The Panel
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found that the EC failed to accord imports of LAN equipment from the US treatment no less favourable
than that provided for in the EC Schedule of commitments, thereby acting inconsistently with Article
II:1 of GATT 1994. The report of the Panel was circulated to Members on 5 February 1998. Also
available in portable document format See footnote 3
(1)(c) IRELAND - CUSTOMS CLASSIFICATION OF CERTAIN COMPUTER EQUIPMENT,
complaint by the United States (WT/DS68). This request, dated 14 February 1997, covers the same
measures as in WT/DS67/1 in respect of Ireland, except for the reference to multimedia capability.
Again the US alleges a violation of Article II of GATT 1994, as well as a nullification and impairment
of benefits. On 7 March 1997, the US requested the establishment of a panel. On 7 March 1997, the US
requested the establishment of a panel. At its meeting on 20 March 1997, the DSB agreed to
incorporate this dispute into the Panel already established in respect of DS62. The Panel found that the
EC failed to accord imports of LAN equipment from the US treatment no less favourable than that
provided for in the EC Schedule of commitments, thereby acting inconsistently with Article II:1 of
GATT 1994. The report of the Panel was circulated to Members on 5 February 1998. Also available in
portable document format See footnote 3
4.
Active Panels
(1)
JAPAN - MEASURES AFFECTING CONSUMER PHOTOGRAPHIC FILM AND PAPER,
complaint by the United States (WT/DS44). On 13 June 1996, the United States requested
consultations with Japan concerning Japan's laws, regulations and requirements affecting the
distribution, offering for sale and internal sale of imported consumer photographic film and paper. The
US alleges that the Japanese Government treated imported film and paper less favourably through these
measures, in violation of GATT Articles III and X. The US also alleges that these measures nullify or
impair benefits accruing to the US (a non-violation claim). The United States requested the
establishment of a panel on 20 September 1996 and it was established on 16 October 1996.
(2)
UNITED STATES - THE CUBAN LIBERTY AND DEMOCRATIC SOLIDARITY ACT,
complaint by the European Communities (WT/DS38). On 3 May 1996 the European Communities
requested consultations with the United States concerning the Cuban Liberty and Democratic Solidarity
(LIBERTAD) Act of 1996 and other legislation enacted by the US Congress regarding trade sanctions
against Cuba. The EC claims that US trade restrictions on goods of Cuban origin, as well as the
possible refusal of visas and the exclusion of non-US nationals from US territory, are inconsistent with
the US obligations under the WTO Agreement. Violations of GATT Articles I, III, V, XI and XIII, and
GATS Articles I, III, VI, XVI and XVII are alleged. The EC also alleges that even if these measures by
the US may not be in violation of specific provisions of GATT or GATS, they nevertheless nullify or
impair its expected benefits under GATT 1994 and GATS and impede the attainment of the objectives
of GATT 1994. The European Communities requested the establishment of a panel on 3 October 1996.
The DSB established a panel at its meeting on 20 November 1996. At the request of the EC, dated 25
April 1997, the Panel suspended its work.
(3)
UNITED STATES - IMPORT PROHIBITION OF CERTAIN SHRIMP AND SHRIMP
PRODUCTS, complaint by India, Malaysia, Pakistan and Thailand (WT/DS58). This request, dated 8
October 1996, concerns a joint complaint by India, Malaysia, Pakistan and Thailand against a ban on
importation of shrimp and shrimp products from these countries imposed by the United States under
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Section 609 of US Public Law 101-62. Violations of Articles I, XI and XIII of GATT 1994, as well
nullification and impairment of benefits, are alleged. On 9 January 1997, Malaysia and Thailand
requested the establishment of a panel. On 30 January 1997, Pakistan also requested the establishment
of a panel. At its meeting on 25 February 1997, the DSB established a panel. Australia, Colombia, the
EC, Philippines, Singapore, Hong Kong, India, Guatemala, Mexico, Japan, Nigeria and Sri Lanka
reserved their third-party rights. On 25 February 1997, India also requested the establishment of a panel
in the same matter. At its meeting on 10 April 1997, the DSB agreed to establish a panel in respect of
India's request but agreed to incorporate this with the panel already established in respect of the other
complainants.
(4)
GUATEMALA - ANTI-DUMPING INVESTIGATION REGARDING IMPORTS OF
PORTLAND CEMENT FROM MEXICO, complaint by Mexico (WT/DS60). This request, dated 15
October 1996 is in respect of an anti-dumping investigation commenced by Guatemala with regard to
imports of portland cement from Mexico. Mexico alleges that this investigation is in violation of
Guatemala's obligations under Articles 2, 3, 5 and 7.1 of the Anti-Dumping Agreement. On 4 February
1997, Mexico requested the establishment of a panel. At its meeting on 20 March 1997, the DSB
established a panel. The US, Canada, Honduras and El Salvador have reserved their third-party rights.
(5)
AUSTRALIA - MEASURES AFFECTING THE IMPORTATION OF SALMON, complaint
by Canada (WT/DS18). This request for consultations, dated 5 October 1995, is in respect of
Australia's prohibition of imports of salmon from Canada based on a quarantine regulation. Canada
alleges that the prohibition is inconsistent with GATT Articles XI and XIII, and also inconsistent with
the SPS Agreement. On 7 March 1997, Canada requested the establishment of a panel. At its meeting
on 10 April 1997, the DSB established a panel. The US and the European Communities reserved their
third-party rights.
(6)(a) INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY,
complaint by Japan (WT/DS55). This request, dated 4 October 1996, concerns Indonesia's National Car
Programme -- basically the same measures as in WT/DS54. Japan contends that these measures are in
violation of Indonesia's obligations under Articles I:1, III:2, III:4 and X:3(a) of GATT 1994, as well as
Articles 2 and 5.4 of the TRIMs Agreement. On 17 April 1997, Japan requested the establishment of a
panel. At its meeting on 12 June 1997, the DSB established a panel. In accordance with Article 9.1 of
the DSU, a single panel will examine this dispute together with DS54 and DS64.
(6)(b) INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY,
complaint by Japan (WT/DS64). This request, dated 29 November 1996, is in respect of Indonesia's
National Car Programme - the same measures the subject of complaints in WT/DS54, DS55 and DS59.
In its earlier request for consultations on theses measures (WT/DS55) Japan had confined itself to
violations under GATT and TRIMs. In this request Japan is now alleging violations of Articles 3, 6 and
28 of the SCM Agreement. On 17 April 1997, Japan requested the establishment of a panel. At its
meeting on 12 June 1997, the DSB established a panel. In accordance with Article 9.1 of the DSU, the
DSB decided that a single panel will examine this dispute together with DS54 and DS55.
(6)(c) INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY,
complaint by the European Communities (WT/DS54). This request, dated 3 October 1996, concerns
the exemption from customs duties and luxury taxes by Indonesia, on imports of "national vehicles"
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and components thereof, and related measures. The EC contends that these measures are in violation of
Indonesia's obligations under Articles I and III of GATT 1994, Article 2 of the TRIMs Agreement and
Articles 3 of the SCM Agreement. On 12 May 1997, the EC requested the establishment of a panel. At
its meeting on 12 June 1997, the DSB established a panel. In accordance with Article 9.1 of the DSU,
the DSB decided that a single panel will examine this dispute together with DS55 and DS64.
(6)(d) INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY,
complaint by the United States (WT/DS59). This request, dated 8 October 1996, concerns Indonesia's
National Car Programme - basically the same measures being complained of in WT/DS54. The United
States contends that these measures are in violation of Indonesia's obligations under Articles I and III of
GATT 1994, Article 2 of the TRIMs Agreement, Articles 3, 6 and 28 of the SCM Agreement and
Articles 3, 20 and 65 of the TRIPS Agreement. On 12 June 1997, the United States requested the
establishment of a panel. At its meeting on 30 July 1997, the DSB established a panel. At the request of
the US, the DSB agreed that pursuant to Article 9.1 of the DSU, this dispute will be examined by the
same panel established in respect of DS54, DS55 and DS64.
(7)
EUROPEAN COMMUNITIES - MEASURES AFFECTING IMPORTATION OF CERTAIN
POULTRY PRODUCTS, complaint by Brazil (WT/DS69). This request dated 24 February 1997, is in
respect of the EC regime for the importation of certain poultry products and the implementation by the
EC of the Tariff Rate Quota for these products. Brazil contends that the EC measures are inconsistent
with Articles X and XXVII of GATT 1994 and Articles 1 and 3 of the Agreement on Import Licensing
Procedures. Brazil also contends that the measures nullify or impair benefits accruing to it directly or
indirectly under GATT 1994. On 12 June 1997, Brazil requested the establishment of a panel. At its
meeting on 30 July 1997, the DSB established a panel. The US and Thailand reserved their third-party
rights.
(8)(a) KOREA - TAXES ON ALCOHOLIC BEVERAGES, complaint by the European Communities
(WT/DS/75/1). This request, dated 4 April 1997, is in respect of internal taxes imposed by Korea on
certain alcoholic beverages pursuant to its Liquor Tax Law and Education Law. The EC contends that
the Korean Liquor Tax Law and Education Tax Law appear to be inconsistent with Korea's obligations
under Article III:2 of GATT 1994. On 10 September 1997, the EC requested the establishment of a
panel. At its meeting on 16 October 1997, the DSB established a panel, which would also examine the
complaint by the US below. Canada and Mexico reserved their third-party rights.
(8)(b) KOREA - TAXES ON ALCOHOLIC BEVERAGES, complaint by the United States
(WT/DS84/1). This request, dated 23 May 1997, is in respect of the same measures complained of by
the EC in DS75 above. The US also alleges violations of Article III:2. On 10 September 1997, the US
requested the establishment of a panel. At its meeting on 16 October 1997, the DSB established a
panel, which would also examine the complaint by the US below. Canada and Mexico reserved their
third-party rights.
(9)
ARGENTINA - MEASURES AFFECTING TEXTILES AND CLOTHING, complaint by the
European Communities (WT/DS77/1). This request dated 17 April 1997, is in respect of a range of
specific duties on textiles and clothing which have allegedly resulted in increased duties and have led
to applied tariffs that exceed the 35% binding made by Argentina. The EC contends that these
measures are a violation of Argentina's commitments under Article II of GATT 1994, and also of
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Article 7 of the ATC. See similar US complaint in DS56 pending before a panel. On 10 September
1997, the EC requested the establishment of a panel. At its meeting on 16 October 1997, the DSB
established a panel. The US reserved its third-party rights.
(10) INDIA - PATENT PROTECTION FOR PHARMACEUTICAL AND AGRICULTURAL
CHEMICAL PRODUCTS, complaint by the European Communities (WT/DS79/1). This request,
dated 28 April 1997, is in respect of the alleged absence in India of patent protection for
pharmaceutical and agricultural chemical products, and the absence of formal systems that permit the
filing of patent applications of and provide exclusive marketing rights for such products. The EC
contends that this is inconsistent with India's obligations under Article 70, paragraphs 8 and 9, of the
TRIPS Agreement. See similar US complaint in DS50 now pend on appeal. On 9 September 1997, the
EC requested the establishment of a panel. On 9 September 1997, the EC requested the establishment
of a panel. At its meeting on 16 October 1997, the DSB established a panel. The US reserved its
third-party rights.
(11) CHILE - TAXES ON ALCOHOLIC BEVERAGES, complaint by the European Communities
(WT/DS87/1). This request, dated 4 June 1997, is in respect of Chile's Special Sales Tax on spirits,
which allegedly imposes a higher tax on imported spirits than on Pisco, a locally brewed spirit. The EC
contends that this differential treatment of imported spirits violates Article III:2 of GATT 1994. On 3
October 1997, the EC requested the establishment of a panel. The DSB established a panel on 18
November 1997. Canada, Mexico, Peru and the US reserved their third-party rights.
(12) INDIA - QUANTITATIVE RESTRICTIONS ON IMPORTS OF AGRICULTURAL,
TEXTILE AND INDUSTRIAL PRODUCTS complaint by the United States (WT/DS90/1). This
request, dated 15 July 1997, is in respect of quantitative restrictions maintained by India on importation
of a large number of agricultural, textile and industrial products. The US contends that these
quantitative restrictions, including the more than 2,700 agricultural and industrial product tariff lines
notified to the WTO, are inconsistent with India's obligations under Articles XI:1 and XVIII:11 of
GATT 1994, Article 4.2 of the Agreement on Agriculture, and Article 3 of the Agreement on Import
Licensing Procedures. On 3 October 1997, the US requested the establishment of a panel. The DSB
established a panel on 18 November 1997.
(13) JAPAN - MEASURES AFFECTING AGRICULTURAL PRODUCTS, complaint by the
United States (WT/DS76/1). This request, dated 7 April 1997, is in respect of the prohibition by Japan,
under quarantine measures, of imports of agricultural products. The US alleges that Japan prohibits the
importation of each variety of a product requiring quarantine treatment until the quarantine treatment
has been tested for that variety, even if the treatment has proved to be effective for other varieties of the
same product. The US alleges violations of Articles 2, 5 and 8 of the SPS Agreement, Article XI of
GATT 1994, and Article 4 of the Agreement on Agriculture. In addition, the US makes a claim for
nullification and impairment of benefits. On 3 October 1997, the US requested the establishment of a
panel. The DSB established a panel on 18 November 1997. The EC, Hungary, and Brazil reserved their
third-party rights.
(14) EUROPEAN COMMUNITIES - MEASURES AFFECTING BUTTER PRODUCTS,
complaint by New Zealand (WT/DS72). This request, dated 24 March 1997, is in respect of decisions
by the EC and the United Kingdom's Customs and Excise Department, to the effect that New Zealand
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butter manufactured by the ANMIX butter-making process and the spreadable butter-making process
be classified so as to be excluded from eligibility for New Zealand's country-specific tariff quota
established by the European Communities' WTO Schedule. New Zealand alleges violations of Articles
II, II, X and XI of GATT, Article 2 of the TBT Agreement, and Article 3 of the Agreement on Import
Licensing Procedures. On 6 November 1997, New Zealand requested the establishment of a panel. The
DSB established a panel on 18 November 1997. The US reserved its third-party rights.
(15) UNITED STATES - ANTI-DUMPING DUTY ON DYNAMIC RANDOM ACCESS
MEMORY SEMICONDUCTORS (DRAMS) OF ONE MEGABYTE OR ABOVE FROM KOREA,
complaint by Korea (WT/DS99/1). This request, dated 14 August 1997, is in respect of a decision of
the US Department of Commerce (DoC) not to revoke the anti-dumping duty on dynamic random
access memory semi-conductors (DRAMS) of one megabyte or above originating from Korea. Korea
contends that the DoC's decision was made despite the finding that the Korean DRAM producers have
not bumped their products for a period of more than three and a half consecutive years, and despite the
existence of evidence demonstrating conclusively that Korean DRAM producers will not engage in
dumping DRAMS in the future. Korea considers that these measures are in violation of Articles 6 and
11 of the Anti-Dumping Agreement. At its meeting on 16 January 1997, the DSB established a panel.
(16) AUSTRALIA - SUBSIDIES PROVIDED TO PRODUCERS AND EXPORTERS OF
AUTOMOTIVE LEATHER (WT/DS106/1), complaint by the United States. This request, dated 10
November 1997, is in respect of Australia's alleged prohibited subsidies provided to its producers and
exporters of automotive leather. The US contends that these measures by Australia violate Article 3 of
the Subsidies Agreement. On 9 January 1998, the United States requested the establishment of a panel.
At its meeting on 22 January 1998, the DSB established a panel in accordance with the accelerated
procedure under the Subsidies Agreement.
5.
Pending Consultations
(1)(a) KOREA - MEASURES CONCERNING THE TESTING AND INSPECTION OF
AGRICULTURAL PRODUCTS, complaint by the United States (WT/DS3). Request circulated on 6
April 1995. The dispute involves testing and inspection requirements with respect to imports of
agricultural products into Korea. The measures are alleged to be in violation of GATT ArticlesáIII or
XI, Articles 2 and 5 of the Agreement on Sanitary and Phytosanitary Measures (SPS), TBT Articles 5
and 6 and Agriculture Article 4. See below.
(1)(b) KOREA - MEASURES CONCERNING INSPECTION OF AGRICULTURAL PRODUCTS,
complaint by the United States (WT/DS41). This request for consultations, dated 24 May 1996,
concerns testing, inspection and other measures required for the importation of agricultural products
into Korea. The United States claims these measures restrict imports and appear to be inconsistent with
the WTO Agreement. Violations of GATT Articles III and XI, SPS Articles 2, 5 and 8, TBT Articles 2,
5 and 6, and Article 4 of the Agreement on Agriculture are alleged. The United States requested
consultations with Korea on similar issues on 4 April 1995 (WT/DS3/1). See above.
(2)
AUSTRALIA - MEASURES AFFECTING THE IMPORTATION OF SALMONIDS,
complaint by the United States (WT/DS21). This request for consultations, dated 17 November 1995,
concerns the same regulation alleged to be in violation of the WTO Agreements in WT/DS18.
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(3)(a) TURKEY - RESTRICTIONS ON IMPORTS OF TEXTILE AND CLOTHING PRODUCTS,
complaint by Hong Kong (WT/DS29). This request, dated 12 February 1996, claims that Turkey's
quantitative restrictions on imports of textile and clothing products are in violation of GATT Articles
XI and XIII. The background to this dispute is a recently concluded customs union agreement between
Turkey and the European Communities. Hong Kong claims that GATT Article XXIV does not entitle
Turkey to impose new quantitative restrictions in the present case. See below.
(3)(b) TURKEY - RESTRICTIONS ON IMPORTS OF TEXTILE AND CLOTHING PRODUCTS,
complaint by India (WT/DS34). This request, dated 21 March 1996, claims that Turkey's imposition of
quantitative restrictions on imports of a broad range of textile and clothing products is inconsistent
with GATT Articles XI and XIII, as well as ATC Article 2. Earlier, India had requested to be joined in
the consultations between Hong Kong and Turkey on the same subject matter (WT/DS29). See above
and below. On 2 February 1998, India requested the establishment of a panel.
(3)(c) TURKEY - RESTRICTIONS ON IMPORTS OF TEXTILE AND CLOTHING PRODUCTS,
complaint by Thailand (WT/DS47). This request for consultations, dated 20 June 1996, concerns
Turkey's imposition of quantitative restrictions on imports of textile and clothing products from
Thailand. Violations of GATT Articles I, II, XI and XIII as well as Article 2 of the Textiles Agreement
are alleged. Earlier, Hong Kong (WT/DS29) and India (WT/DS34) separately requested consultations
with Turkey on the same measure.
(4)
BRAZIL - COUNTERVAILING DUTIES ON IMPORTS OF DESICCATED COCONUT
AND COCONUT MILK POWDER FROM SRI LANKA, complaint by Sri Lanka (WT/DS30). This
request, dated 23 February 1996, claims that Brazil's imposition of countervailing duties on Sri Lanka's
export of desiccated coconut and coconut milk powder is inconsistent with GATT Articles I, II and VI
and Article 13(a) of the Agriculture Agreement (the so-called peace clause). See 3(1) above
(WT/DS22).
(5)
JAPAN - MEASURES AFFECTING DISTRIBUTION SERVICES, complaint by the United
States (WT/DS45). This request, dated 13 June 1996, concerns Japan's measures affecting distribution
services (not limited to the photographic film and paper sector) through the operation of the
Large-Scale Retail Store Law, which regulates the floor space, business hours and holidays of
supermarkets and department stores. Violations of the GATS Article III (Transparency) and Article
XVI (Market Access) are alleged. The US also alleges that these measures nullify or impair benefits
accruing to the US (a non-violation claim). See 5(4) above. The United States requested further
consultations with Japan on 20 September 1996, expanding the factual and legal basis of its claim.
(6)
BRAZIL - EXPORT FINANCING PROGRAMME FOR AIRCRAFT, complaint by Canada
(WT/DS46). On 19 June 1996, Canada requested consultations with Brazil, based on Article 4 of the
Subsidies Agreement, which provides for special procedures for export subsidies. Canada claims that
export subsidies granted under the Brazilian Programa de Financiamento do Exportadores (PROEX), to
foreign purchasers of Brazil's Embraer aircraft are inconsistent with the Subsidies Agreement Articles
3, 27.4 and 27.5. Canada requested the establishment of a panel on 16 September 1996, alleging
violations of both the Subsidies Agreement and GATT 1994. The DSB considered this request at its
meeting on 27 September 1996. Due to Brazil's objection to the establishment of a panel, Canada
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agreed to modify its request, limiting the scope of the request to the Subsidies Agreement. The
modified request was submitted by Canada on 3 October 1996 but was subsequently withdrawn prior
to the DSB meeting at which it was to be considered.
(7)(a) BRAZIL - CERTAIN AUTOMOTIVE INVESTMENT MEASURES, complaint by Japan
(WT/DS51). This request, dated 30 July 1996, concerns certain automotive investment measures taken
by the Brazilian government. Violations of the TRIMs Agreement Article 2, GATT Articles I:1, III:4
and XI:1 as well as the Subsidies Agreement Articles 3, 27.2 and 27.4 are alleged. In addition, Japan
makes a non-violation claim under GATT Article XXIII:1(b).
(7)(b) BRAZIL - CERTAIN MEASURES AFFECTING TRADE AND INVESTMENT IN THE
AUTOMOTIVE SECTOR, complaint by the United States (WT/DS52). This request, dated 9 August
1996, concerns the same measures as identified in Japan's request above. Violations of the TRIMs
Agreement Article 2, GATT Articles I:1 and III:4 as well as the Subsidies Agreement Articles 3 and
27.4 are alleged. In addition, the United States also makes a non-violation claim under GATT Article
XXIII:1(b).
(7)(c) BRAZIL - CERTAIN MEASURES AFFECTING TRADE AND INVESTMENT IN THE
AUTOMOTIVE SECTOR, complaint by the United States (WT/DS65). This request, dated 10 January
1997, concerns more or less the same measures as in WT/DS52 above. However, this request also
includes measures adopted by Brazil subsequent to consultations held with the United States pursuant
to the request under WT/DS52, which measures confer benefits to certain companies located in Japan,
the Republic of Korea, and the European Communities. The United States alleges violations under
Articles I:1 and III:4 of GATT 1994, Article 2 of the TRIMs Agreement, and Articles 3 and 27.4 of the
SCM Agreement. The United States has also made a nullification and impairment of benefits claim
under Article XXIII:1(b) of GATT 1994.
(7)(d) BRAZIL - MEASURES AFFECTING TRADE AND INVESTMENT IN THE AUTOMOTIVE
SECTOR, complaint by the European Communities (WT/DS81/1). This request, dated 7 May 1997, is
in respect of certain measures in the trade and investment sector implemented by Brazil, including in
particular, Law No. 9440 of 14 March 1997, Law No. 9449 of 14 March 1997, and Decree No. 1987 of
20 August 1996. The EC contends that these measures violate Articles I:1 and III:4 of GATT 1994,
Articles 3, 5 and 27.4 of the Subsidies Agreement, and Article 2 of the TRIMs Agreement. The EC also
makes a claim for nullification and impairment of benefits under both GATT 1994 and the Subsidies
Agreement. See also DS51, 52 and 65.
(8)
MEXICO - CUSTOMS VALUATION OF IMPORTS, complaint by the European
Communities (WT/DS53). This request, dated 27 August 1996, concerns the Mexican Customs Law.
The EC claims that Mexico applies CIF value as the basis of customs valuation of imports originating
in non-NAFTA countries, while it applies FOB value for imports originating in NAFTA countries.
Violation of GATT Article XXIV:5(b) is alleged.
(9)
UNITED STATES - IMPORT PROHIBITION OF CERTAIN SHRIMP AND SHRIMP
PRODUCTS, complaint by the Philippines (WT/DS61). This request, dated 25 October 1996, is in
respect of a complaint by the Philippines regarding a ban on the importation of certain shrimp and
shrimp products from the Philippines imposed by the United States under Section 609 of U.S. Public
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Law 101-62. Violations of Articles I, II, III, VIII, XI and XIII of GATT 1994 and Article 2 of the TBT
Agreement are alleged. A nullification and impairment of benefits under GATT 1994 is also alleged.
(See WT/DS58).
(10) UNITED STATES - ANTI-DUMPING MEASURES ON IMPORTS OF SOLID UREA FROM
THE FORMER GERMAN DEMOCRATIC REPUBLIC, complaint by the European Communities
(WT/DS63). This request, dated 28 November 1996, is in respect of Anti-Dumping duties imposed on
exports of solid urea from the former German Democratic Republic by the United States. The EC
contends that theses measures violate Articles 9 and 11 of the Anti-Dumping Agreement.
(11) JAPAN - MEASURES AFFECTING IMPORTS OF PORK, complaint by the European
Communities, (WT/DS66). This request, dated 15 January 1997, is in respect of certain measures
affecting imports of pork and its processed products imposed by Japan. The EC contends that these
measures are in violation of Japan's obligations under Articles I, X:3 and XIII of the GATT 1994. The
EC also contends that these measures nullify or impair benefits accruing to it under the GATT 1994.
(12)(a) CANADA - MEASURES AFFECTING THE EXPORT OF CIVILIAN AIRCRAFT, complaint
by Brazil (WT/DS70). This request dated 10 March 1997, is in respect of certain subsidies granted by
the Government of Canada or its provinces intended to support the export of civilian aircraft to Brazil.
The request is made pursuant to Article 4 of the Subsidies Agreement. Brazil contends that these
measures are inconsistent with Article 3 of the Subsidies Agreement.
(12)(b) CANADA - MEASURES AFFECTING THE EXPORT OF CIVILIAN AIRCRAFT, complaint
by Brazil (WT/DS71). This request dated 10 March 1997, is in respect of the same measures
complained of in WT/DS70. However, the request is made pursuant to Article 7 of the Subsidies
Agreement. In this request, Brazil contends that the measures are actionable subsidies within the
meaning of Part III of the Subsidies Agreement, and cause adverse effects within the meaning of
Article 5 of the Agreement.
(13)(a) PHILIPPINES - MEASURES AFFECTING PORK AND POULTRY, complaint by the United
States (WT/DS74/1). This request, dated 1 April 1997, is in respect of the implementation by the
Philippines of its tariff-rate quotas for pork and poultry. The US contends that the Philippines'
implementation of these tariff-rate quotas, in particular the delays in permitting access to the in-quota
quantities and the licensing system used to administer access to the in-quota quantities, appears to be
inconsistent with the obligations of the Philippines under Articles III, X, and XI of GATT 1994, Article
4 of the Agreement on Agriculture, Articles 1 and 3 of the Agreement on Import Licensing Procedures,
and Articles 2 and 5 of TRIMs. The US further contends that theses measures appear to nullify or
impair benefits accruing to it directly or indirectly under cited agreements.
(13)(b) PHILIPPINES - MEASURES AFFECTING PORK AND POULTRY (WT/DS102/1),
complaint by the United States. This request, dated 7 October 1997, is in respect of the same measures
complained of by the US in DS74, but also includes Administrative Order No. 8, Series of 1997, which
purports to amend the original measure complained of in DS74.
(14) UNITED STATES - SAFEGUARD MEASURE AGAINST IMPORTS OF BROOM CORN
BROOMS, complaint by Colombia (WT/DS78/1). This request, dated 28 April 1997, is in respect of
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US Presidential Proclamation 6961 of 28 November 1996, adopting a safeguard measure against
imports of broom and corn brooms. Colombia contends that the adoption of this safeguard measure is
inconsistent with the obligations of the US under Articles 2, 4, 5, 9 and 12 of the Agreement on
Safeguards, Articles II, XIII and XIX of GATT 1994. Colombia also makes a claim for nullification
and impairment of benefits under GATT 1994.
(15) BELGIUM - MEASURES AFFECTING COMMERCIAL TELEPHONE DIRECTORY
SERVICES, complaint by the United States (WT/DS80/1). This request, dated 2 May 1997, is in
respect of certain measures of the Kingdom of Belgium governing the provision of commercial
telephone directory services. These measures include the imposition of conditions for obtaining a
license to publish commercial directories, and the regulation of the acts, policies, and practices of
BELGACOM N.V. with respect to telephone directory services. The US alleges violations of Articles
II, VI, VIII and XVII of GATS, as well as nullification and impairment of benefits accruing to it under
the specific GATS commitments made by the EC on behalf of Belgium.
(16)(a) IRELAND - MEASURES AFFECTING THE GRANT OF COPYRIGHT AND
NEIGHBOURING RIGHTS, complaint by the United States (WT/DS82/1). This request, dated 14
May 1997, is in respect Ireland's alleged failure to grant copyright and neighbouring rights under its
law. The US contends that this failure violates Ireland's obligations under Articles 9-14, 63, 65 and 70
of the TRIPS Agreement. On 9 January 1998, the United States requested the establishment of a panel.
(16)(b) EUROPEAN COMMUNITIES - MEASURES AFFECTING THE GRANT OF COPYRIGHT
AND NEIGHBOURING RIGHTS, complaint by the United States (WT/DS115/1). This request, dated
6 January 1998, raises exactly the same measures as in 16(a) above in respect of Ireland but makes the
complaint to the EC. On 9 January 1998, the United States requested the establishment of a panel.
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(17) DENMARK - MEASURES AFFECTING THE ENFORCEMENT OF INTELLECTUAL
PROPERTY RIGHTS, complaint by the United States (WT/DS83/1). This request, dated 14 May
1997, is in respect of Denmark's alleged failure to make provisional measures available in the context
of civil proceedings involving intellectual property rights. The US contends that this failure violates
Denmark's obligations under Articles 50, 63 and 65 of the TRIPS Agreement.
(18) UNITED STATES - MEASURES AFFECTING TEXTILES AND APPAREL PRODUCTS,
complaint by the European Communities (WT/DS85/1). This request, dated 23 May 1997, is in respect
of changes to US rules of origin for textiles and apparel products. The EC alleges that the US has
introduced changes to its rules of origin for textile and apparel products, which affect exports of EC
fabrics, scarves and other flat textile products to the US. As a result, the EC alleges that EC products
are no longer recognised in the US as being of EC origin and lose the free access to the US market that
they had hitherto enjoyed. The EC contends that these changes in US rules of origin are in violation of
the obligations of the US under Articles 2.4, 4.2 and 4.4 of the ATC, Article 4.2 of the Agreement on
Rules of Origin, Article III of GATT 1994, and Article 2 of the TBT Agreement.
(19) SWEDEN - MEASURES AFFECTING THE ENFORCEMENT OF INTELLECTUAL
PROPERTY RIGHTS, complaint by the United States (WT/DS86/1). This request, dated 28 May
1997, is in respect of Sweden's alleged failure to make provisional measures available in the context of
civil proceedings involving intellectual property rights. The US contends that this failure violates
Sweden's obligations under Articles 50, 63 and 65 of the TRIPS Agreement.
(20)(a) UNITED STATES - MEASURE AFFECTING GOVERNMENT PROCUREMENT, complaint
by the European Communities (WT/DS88/1). This request, dated 20 June 1997, is in respect of an Act
enacted by the Commonwealth of Massachusetts on 25 June 1996, entitled Act regulating State
Contracts with companies doing Business with Burma (Myanmar). The Act provides, in essence, that
public authorities of the Commonwealth of Massachusetts are not allowed to procure goods or services
from any persons who do business with Burma. The EC contends that, as Massachusetts is covered
under the US schedule to the GPA, this violates Articles VIII(B), X and XIII of the GPA Agreement.
The EC also contends that the measure also nullifies benefits accruing to it under the GPA, as well as
impeding the attainment of the objectives of the GPA, including that of maintaining balance of rights
and obligations.
(20)(b) UNITED STATES - MEASURE AFFECTING GOVERNMENT PROCUREMENT, complaint
by the European Communities (WT/DS95/1). This request, dated 18 July 1977, raises the same issues
as in the EC request in DS88 above.
(21) UNITED STATES - ANTI-DUMPING DUTIES ON IMPORTS OF COLOUR TELEVISION
RECEIVERS FROM KOREA, complaint by Korea (WT/DS89/1). This request, dated 10 July 1997, is
in respect of the imposition of anti-dumping duties by the US on imports of colour television receivers
(CTVs) from Korea. Korea contends that the US has for the past twelve years maintained an
anti-dumping order for Samsung's CTVs despite the absence of dumping and the cessation of exports
from Korea, without examining the necessity of continuing to impose such duties. Korea contends that
the US actions violate Articles VI.1 and VI.6(a) of GATT 1994, and Articles 1, 2, 3.1, 3.2, 3.6, 4.1, 5.4,
5.8, 5.10, 11.1 and 11.2 of the Anti-Dumping Agreement. On 6 November 1997, Korea requested the
establishment of a panel. On 5 January 1998, Korea informed the DSB that it was withdrawing its
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request for a panel but reserving its right to reintroduce the request.
(22)(a) INDIA - QUANTITATIVE RESTRICTIONS ON IMPORTS OF AGRICULTURAL,
TEXTILE AND INDUSTRIAL PRODUCTS complaint by Australia (WT/DS91/1). This request, dated
16 July 1997, raises the same issues in respect of India's quantitative restrictions on imports of
agricultural, textile and industrial products as in the request by the US above.
(22)(b)
INDIA - QUANTITATIVE RESTRICTIONS ON IMPORTS OF AGRICULTURAL,
TEXTILE AND INDUSTRIAL PRODUCTS, complaint by Canada (WT/DS92/1). This request, dated
16 July 1997, raises the same issues in respect of India's quantitative restrictions on imports of
agricultural, textile and industrial products as in the requests by the US (DS90) and Australia (DS91).
(22)(c) INDIA - QUANTITATIVE RESTRICTIONS ON IMPORTS OF AGRICULTURAL,
TEXTILE AND INDUSTRIAL PRODUCTS, complaint by New Zealand (WT/DS93/1). This request,
dated 16 July 1997, raises the same issues in respect of India's quantitative restrictions on imports of
agricultural, textile and industrial products as in the requests by the US (DS90), Australia (DS91) and
Canada (DS92). However, New Zealand makes an additional claim for nullification and impairment of
benefits accruing to it under GATT 1994.
(22)(d)
INDIA - QUANTITATIVE RESTRICTIONS ON IMPORTS OF AGRICULTURAL,
TEXTILE AND INDUSTRIAL PRODUCTS, complaint by Switzerland (WT/DS94/1). This request,
dated 18 July 1997, raises the same issues in respect of India's quantitative restrictions on imports of
agricultural, textile and industrial products as in the requests by the US (DS90), Australia (DS91),
Canada (DS92), and New Zealand (DS93). However, Switzerland does not invoke the Agreement on
Agriculture.
(22)(e) INDIA - QUANTITATIVE RESTRICTIONS ON IMPORTS OF AGRICULTURAL,
TEXTILE AND INDUSTRIAL PRODUCTS, complaint by the European Communities (WT/DS96/1).
This request, dated 21 July 1997, raises the same issues in respect of India's quantitative restrictions on
imports of agricultural, textile and industrial products as in the requests by the US (DS90), Australia
(DS91), Canada (DS92), New Zealand (DS93), and Switzerland (DS94). In addition, the EC is also
alleging violations of Articles 2, 3 and 5 of the SPS Agreement.
(23) UNITED STATES - COUNTERVAILING DUTY INVESTIGATION OF IMPORTS OF
SALMON FROM CHILE, complaint by Chile (WT/DS97/1). This request, dated 5 August 1997, is in
respect of a countervailing duty investigation initiated by the US Department of Commerce against
imports of salmon from Chile. Chile contends that the decision to initiate an investigation was taken in
the absence of sufficient evidence of injury, in violation of Article 11.2 and 11.3. Chile also contends a
violation of Article 11.4, in relation to the representative status of producers of salmon fillets.
(24) KOREA - DEFINITIVE SAFEGUARD MEASURE ON IMPORTS OF CERTAIN DAIRY
PRODUCTS, complaint by the European Communities (WT/DS98/1). This request, dated 12 August
1997, is in respect of a definitive safeguard measure imposed by Korea on imports of certain dairy
products. The EC contends that under the provisions of different governmental measures, Korea has
imposed a safeguard measure in the form of an import quota on imports of certain dairy products. The
EC considers that this measure is in violation of Articles 2, 4, 5 and 12 of the Agreement on Safeguard
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Measures, as well as a violation of Article XIX of GATT 1994. On 9 January 1998, The EC requested
the establishment of a panel.
(25) UNITED STATES - MEASURES AFFECTING IMPORTS OF POULTRY PRODUCTS
(WT/DS100/1). This request, dated 18 August 1997, is in respect of a ban on imports of poultry and
poultry products from the EC by the US Department of Agriculture's Food Safety Inspection Service,
and any related measures. The EC contends that although the ban is allegedly on grounds of product
safety, the ban does not indicate the grounds upon which EC poultry products have suddenly become
ineligible for entry into the US market. The EC considers that the ban is inconsistent with Articles I,
III, X and XI of GATT 1994, Articles 2, 3, 4, 5, 8 and Annex C of the SPS Agreement, or Article 2 and
5 of the TBT Agreement.
(26) MEXICO - ANTI-DUMPING INVESTIGATION OF HIGH-FRUCTOSE CORN SYRUP
(HFCS) FROM THE UNITED STATES, complaint by the United States (WT/DS101/1). This request,
dated 4 September 1997, is in respect of an anti-dumping investigation of high-fructose corn syrup
(HFCS) from the United States conducted by Mexico, resulting in a preliminary determination of
dumping and injury in an investigation of 25 June 1997, and the consequent imposition of provisional
measures on imports of HCFS from the United States. The US alleges violations of Articles 5.5, 6.1.3,
6.2, 6.4 and 6.5 of the Anti-Dumping Agreement.
(27) CANADA - MEASURES AFFECTING THE IMPORTATION OF MILK AND THE
EXPORTATION OF DAIRY PRODUCTS (WT/DS103/1), complaint by the United States. This
request, dated 8 October 1997, is in respect of export subsidies allegedly granted by Canada on dairy
products and the administration by Canada of the tariff-rate quota on milk. The US contends that these
export subsidies by Canada distort markets for dairy products and adversely affect US sales of dairy
products. The US alleges violations of Article II of GATT 1994, Articles 8 and 10 of the Agreement on
Agriculture, Article 3 of the Subsidies Agreement, and Articles 1 and 3 of the Import Licensing
Agreement. On 2 February 1998, India requested the establishment of a panel.
(28) EUROPEAN COMMUNITIES - MEASURES AFFECTING THE EXPORTATION OF
PROCESSED CHEESE (WT/DS104/1), complaint by the United States. This request, dated 8 October
1997, is in respect of export subsidies allegedly granted by the EC on processed cheese without regard
to the export subsidy reduction commitments of the EC. The US contends that these measures by the
EC distort markets for dairy products and adversely affect US sales of dairy products. The US alleges
violations of Article II of GATT 1994, Articles 8, 9, 10 and 11 of the Agreement on Agriculture, and
Article 3 of the Subsidies Agreement.
(29) EUROPEAN COMMUNITIES - REGIME FOR THE IMPORTATION, SALE AND
DISTRIBUTION OF BANANAS (WT/DS105/1), complaint by Panama. This request, dated 24
October 197, is in respect of the EC's regime for the importation, sale and distribution of bananas as
established through Regulation 404/93, as well as any subsequent legislation, regulations or
administrative measures adopted by the EC, including those reflecting the Framework Agreement on
Bananas. Panama does not specify provisions which the EC regime violates. This is the same regime
that was the subject of a successful challenge by the US, Ecuador, Guatemala, Honduras, and Mexico
(DS27).
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(30) PAKISTAN - EXPORT MEASURES AFFECTING HIDES AND SKINS (WT/DS107/1),
complaint by the European Communities. This request, dated 7 November 1997, is in respect of a
Notification enacted by the Ministry of Commerce of Pakistan prohibiting the export of, inter alia,
hides and skins and wet blue leather made from cow hides and cow calf hides. The EC contends that
this measure limits access of EC industries to competitive sourcing of raw and semi-finished materials.
(31) UNITED STATES - TAX TREATMENT FOR "FOREIGN SALES CORPORATIONS"
(WT/DS108/1), complaint by the European Communities. This request, dated 18 November 1997, is in
respect of Sections 921-927 of the US Internal Revenue Code and related measures, establishing
special tax treatment for "Foreign Sales Corporations" (FSC). The EC contends that these provisions
are inconsistent with US obligations under Articles III:4 and XVI of GATT 1994, and Articles 3.1(a)
and (b) of the Subsidies Agreement.
(32)(a) CHILE - TAXES ON ALCOHOLIC BEVERAGES, complaint by the United States
(WT/DS109/1). This request, dated 11 December 1997, is in respect of Chile's internal taxes on
alcoholic beverages, which allegedly impose a higher tax on imported spirits than on pisco, a locally
brewed spirit. The US contends that this differential treatment of imported spirits violates Article III:2
of GATT 1994. Taxes on these beverages are the subject of a complaint by the EC (DS87), in respect
of which a panel has already been established.
(32)(b) CHILE - TAXES ON ALCOHOLIC BEVERAGES, complaint by the European Communities
(WT/DS110/1). This request, dated 15 December 1997, is in respect of Chile's internal tax regime for
alcoholic beverages complained of by the EC (DS87) and by the US (DS109). In essence, this new
request by the EC takes issue with the modification to the law on taxation on alcoholic beverages
passed by Chile to address the concerns of the EC in DS87. The EC contends that the modified law still
violates Article III:2 of GATT 1994.
(33) UNITED STATES - TARIFF RATE QUOTA FOR IMPORTS OF GROUNDNUTS, complaint
by Argentina (WT/DS111/1). This request, dated 19 December 1997, is in respect of the alleged
commercial detriment to Argentina resulting from a restrictive interpretation by the US of the tariff rate
quota negotiated by the two countries during the Uruguay Round, regarding the importation of
groundnuts. Argentina alleges violations of Articles II, X and XII of GATT 1994, Articles 1, 4 and 15
of the Agreement on Agriculture, Article 2 of the Agreement on Rules of Origin, and Article 1 of the
Import Licensing Agreement. Nullification and impairment of benefits is also alleged.
(34) PERU - COUNTERVAILING DUTY INVESTIGATION AGAINST IMPORTS OF BUSES
FROM BRAZIL, complaint by Brazil (WT/DS112/1). This request, dated 23 December 1997, is in
respect of a countervailing duty investigation being carried out by Peru at the request of Carroceria
Morillas S.A., against imports of buses from Brazil. Brazil contends that the procedures followed by
the Peruvian authorities to initiate this investigation are inconsistent with Articles 11 and 13.1 of the
Subsidies Agreement.
(35) CANADA - MEASURES AFFECTING DAIRY PRODUCTS, COMPLAINT BY NEW
ZEALAND (WT/DS113/1). This request, dated 29 December 1997, is in respect of an alleged dairy
export subsidy scheme commonly referred to as the "special milk classes" scheme. New Zealand
contends that the Canadian "special milk classes" scheme is inconsistent with Articles 3, 8, 9 and 10 of
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the Agreement on Agriculture.
(36) CANADA - PATENT PROTECTION OF PHARMACEUTICAL PRODUCTS, complaint by
the European Communities (WT/DS114/1). This request, dated 19 December 1997, is in respect of the
alleged lack of protection of inventions by Canada in the area of pharmaceuticals under the relevant
provisions of the Canadian implementing legislation (in particular the Patent Act). The EC contends
that Canada's legislation is not compatible with its obligations under the TRIPS Agreement, because it
does not provide for the full protection of patented pharmaceutical inventions for the entire duration of
the term of protection envisaged by Articles 27.1, 28 and 33 of the TRIPS Agreement.
(37) BRAZIL - MEASURES AFFECTING PAYMENT TERMS FOR IMPORTS, complaint by the
European Communities (WT/DS116/1). This request, dated 9 January 1997, is in respect of measures
affecting payment terms for imports allegedly introduced by the Central Bank of Brazil. The EC
contends that these measures violate Articles 3 and 5 of the Agreement on Import Licensing
Procedures.
(38) CANADA - MEASURES AFFECTING FILM DISTRIBUTION SERVICES, COMPLAINT
BY THE EUROPEAN COMMUNITIES (DS117/1). This request, dated 20 January 1998, is in respect
of Canada's alleged measures affecting film distribution services, including the 1987 Policy Decision
on film distribution and its application to European companies. The EC contends that these measures
violate Articles II and III of GATS.
(39) UNITED STATES - HARBOUR MAINTENANCE TAX, COMPLAINT BY THE
EUROPEAN COMMUNITIES (WT/DS118/1). This request, dated 6 February 1998, concerns the US
Harbour Maintenance Tax (HMT), allegedly introduced by legislation in the US. The EC contends that
the HMT violates Articles I, II, III, VIII and X of GATT 1994, as well as the Understanding on the
Interpretation of Article II:1(B) of GATT 1994.
6.
Settled Cases or Inactive Panels
(1)
MALAYSIA - PROHIBITION OF IMPORTS OF POLYETHYLENE AND
POLYPROPYLENE, complaint by Singapore (WT/DS1). This, the first dispute under the WTO's
dispute settlement procedures, was settled on 19 July 1995, with Singapore's withdrawal of the panel
request.
(2)
KOREA - MEASURES CONCERNING THE SHELF-LIFE OF PRODUCTS, complaint by
the United States (WT/DS5). This request dated 3 May 1995, was in respect of requirements imposed
by Korea on imports from the US which had the effect of restricting imports. The US alleged violations
of Articles III and XI of GATT, Articles 2 and 5 of the SPS Agreement, Article 2 of the TBT
Agreement, and Article 4 of the Agreement on Agriculture. The parties notified a mutually acceptable
solution to this dispute on 31 July 1995.
(3)
UNITED STATES - IMPOSITION OF IMPORT DUTIES ON AUTOMOBILES FROM
JAPAN UNDER SECTIONS 301 AND 304 OF THE TRADE ACT OF 1974, complaint by Japan
(WT/DS6). On 19áJuly 1995, the parties notified settlement of this dispute. Japan had alleged that the
import surcharges violated GATT Articles I and II.
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(4)
JAPAN - MEASURES AFFECTING THE PURCHASE OF TELECOMMUNICATIONS
EQUIPMENT, complaint by the European Communities (WT/DS15). This request for consultations,
dated 18 August 1995, claims that a 1994 agreement reached between the United States and Japan
concerning telecommunications equipment is inconsistent with GATT Articles I:1, III:4 and XVII:1(c),
and nullifies or impairs benefits accruing to the EC. The United States has joined in the consultations.
Although there has been no official notification, the case appears to have been settled bilaterally.
(5)(a) EUROPEAN COMMUNITIES - DUTIES ON IMPORTS OF CEREALS, complaint by Canada
(WT/DS9). Canada requested consultations with the EC on 10 July 1995 concerning EC regulations
implementing some of the EC's Uruguay Round concessions on agriculture, specifically, regulations
which impose a duty on wheat imports based on reference prices rather than transaction values, with
the result that the duty-paid import price for Canadian wheat will be greater than the effective
intervention price increased by 55% whenever the transaction value is greater than the representative
price. A panel was established at the DSB meeting on 11 October 1995, but no panelists have been
selected.
(5)(b) EUROPEAN COMMUNITIES - DUTIES ON IMPORTS OF GRAINS, complaint by the
United States (WT/DS13). This request for consultations, dated 19áJuly 1995, has potentially broader
product coverage than the case brought by Canada (WT/DS9, item 7(5)(a) below) but otherwise
concerns much the same issues. On 28 September 1995, the US requested the establishment of a panel
to be considered at the meeting of the DSB on 11 October 1995, but the EC objected to it. The US
again requested the establishment of a panel to be considered at the meeting of the DSB on 3 December
1996, but later dropped the request at the meeting. On 13 February 1997 the US made a renewed
request for the establishment of a panel. At the DSB meeting on 20 March 1997, the US withdrew its
request for a panel in this matter. On 26 March 1997, the US made a fresh request for the establishment
of a panel. On 30 April 1997, the US informed the Secretariat that it was withdrawing its request for a
panel in view of the fact that the EC had adopted regulations implementing an agreement reached on
this matter.
(5)(c) EUROPEAN COMMUNITIES - DUTIES ON IMPORTS OF RICE, complaint by Thailand
(WT/DS17). This request for consultations, dated 3 October 1995, covers more or less the same
grounds as Canadian (WT/DS9) and the US (WT/DS13) complaints over the EC duties on grains
((5)(a) and 5(3) above). In addition, Thailand seems to have alleged that the EC has violated the
most-favoured-nation requirement under GATT Article I in their preferential treatment of basmati rice
from India and Pakistan. See also the Uruguayan complaint (WT/DS25, (5)(c) below).
(5)(c) EUROPEAN COMMUNITIES - IMPLEMENTATION OF THE URUGUAY ROUND
COMMITMENTS CONCERNING RICE, complaint by Uruguay (WT/DS25). This request for
consultations, dated 18 December 1995, seems similar to the claim by Thailand (WT/DS17, (5)(b)
above).
(6)
VENEZUELA - ANTI-DUMPING INVESTIGATION IN RESPECT OF IMPORTS OF
CERTAIN OIL COUNTRY TUBULAR GOODS (OCTG), complaint by Mexico (WT/DS23), dated 5
December 1995. By a letter dated 6 May 1997, Mexico informed the Secretariat that Venezuela had
terminated the anti-dumping investigation in this matter.
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(7)
KOREA - MEASURES CONCERNING BOTTLED WATER, complaint by Canada
(WT/DS20). In this request, dated 8 November 1995, Canada claimed that Korean regulations on the
shelf-life and physical treatment (disinfection) of bottled water were inconsistent with GATT Articles
III and XI, SPS Articles 2 and 5 and TBT Article 2. At the DSB meeting on 24 April 1996, the parties
to the dispute announced that they reached a settlement.
(8)
UNITED STATES - MEASURES AFFECTING IMPORTS OF WOMEN'S AND GIRLS'
WOOL COATS, complaint by India (WT/DS32). In a communication dated 14 March 1996, India
requested the establishment of a panel, claiming that the transitional safeguard measures on these
textile products by the United States were inconsistent with ATC Articles 2, 6 and 8. A panel was
established in the DSB meeting on 17 April 1996. However, on 25 April 1996, India requested
"termination of further action in pursuance of the decision taken by the DSB on 17 April 1996 to
establish a panel" in light of the US removal of the safeguard measures on these products, which came
into effect from 24 April 1996.
(9)
EUROPEAN COMMUNITIES - TRADE DESCRIPTION OF SCALLOPS, complaints by
Canada (WT/DS7), Peru (WT/DS12) and Chile (WT/DS14). The complaint concerns a French
Government Order laying down the official name and trade description of scallops. Complainants
claim that this Order will reduce competitiveness on the French market as their product will no longer
be able to be sold as "Coquille Saint-Jacques" although there is no difference between their scallops
and French scallops in terms of colour, size, texture, appearance and use, i.e. it is claimed they are "like
products". Violations of GATT Articles I and III and TBT Article 2 are alleged. A panel was
established at the request of Canada on 19áJuly 1995. A joint panel was established on 11 October
1995 at the request of Peru and Chile on the same subject. The two panels have concluded their
substantive work, but they suspended the proceedings pursuant to Article 12.12 of the DSU in May
1996 in view of the consultations held among the parties concerned toward a mutually agreed solution.
The parties notified a mutually agreed solution to the DSB on 5 July 1996. Brief panel reports noting
the settlement were circulated to Members on 5 August 1996 in accordance with the provisions of
Article 12.7 of the DSU.
(10) UNITED STATES - TARIFF INCREASES ON PRODUCTS FROM THE EUROPEAN
COMMUNITIES, complaint by the European Communities (WT/DS39). In its request for
consultations, dated 17 April 1996, the EC claimed that the measures taken under the Presidential
Proclamation No. 5759 of 24 December 1987 (retaliation against the "hormones" directive), which
resulted in tariff increases on products from the European Communities, are inconsistent with GATT
Articles I, II and XXIII, as well as DSU Articles 3, 22 and 23. On 19 June 1996, the EC requested the
establishment of a panel. In its request, the EC further claimed that the United States apparently failed
to "ensure the conformity of its laws, regulations and administrative procedures with its obligations"
under the WTO, with respect to the application of Section 301 of the 1974 Trade Act in this case
(WTO Agreement Article XVI:4). The United States withdrew the measure on 15 July 1996, and the
EC decided not to pursue its panel request, reserving its rights to reconvene, if necessary, a further
meeting of the DSB at an early date.
(11) POLAND - IMPORT REGIME FOR AUTOMOBILES, complaint by India (WT/DS19). This
request for consultations, dated 28 September 1995, concerns Poland's preferential treatment of the EC
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in its tariff scheme on automobiles. On 16 July 1996, both parties notified a mutually agreed solution to
the DSB.
(12) PORTUGAL - PATENT PROTECTION UNDER THE INDUSTRIAL PROPERTY ACT,
complaint by the United States (WT/DS37). This request for consultations dated 30 April 1996,
concerned Portugal's term of patent protection under its Industrial Property Act. The US claimed that
the provisions in that Act with respect to existing patents were inconsistent with Portugal's obligations
under the TRIPS Agreement. Violations under Articles 33, 65 and 70 were alleged. On 3 October 1996,
both parties notified a mutually agreed solution to the DSB.
(13) UNITED STATES - ANTI-DUMPING INVESTIGATION REGARDING IMPORTS OF
FRESH OR CHILLED TOMATOES FROM MEXICO, complaint by Mexico (WT/DS49). On 1 July
1996, Mexico requested consultations with the United States regarding the anti-dumping investigation
on fresh and chilled tomatoes imported from Mexico under Article 17.3 of the Anti-dumping
Agreement. Violations of GATT Articles VI and X as well as Articles 2, 3, 5, 6 and 7.1 of the
Anti-dumping Agreement are alleged. Mexico claims this to be a case of urgency, where the expedited
procedures under Articles 4.8 and 4.9 of the DSU are applicable. US Commerce Department official
releases indicate that the case has been settled.
(14) AUSTRALIA - TEXTILES, CLOTHING AND FOOTWEAR IMPORT CREDIT SCHEME,
complaint by the United States (WT/DS57). This request, dated 7 October 1996, concerns a complaint
by the United States against subsidies being granted and maintained by Australia on leather products
under the TCF scheme. A violation of Article 3 of the SCM Agreement is alleged. The US is also
invoking Article 30 of the SCM Agreement to the extent that it incorporates by reference Article
XXIII:1 of GATT 1994. An official release from the USTR in Washington on 25 November 1996
indicates that the case has been settled.
(15)(a) JAPAN - MEASURES CONCERNING SOUND RECORDINGS, complaint by the United
States (WT/DS28). This request, dated 9 February 1996, is the first WTO dispute settlement case
involving the TRIPS Agreement. The United States claims that Japan's copyright regime for the
protection of intellectual property in sound recordings is inconsistent with, inter alia, the TRIPS
Agreement Article 14 (protection of performers, producers of phonograms and broadcasting
organizations). On January 24 1997, both parties informed the DSB that they had reached a mutually
satisfactory solution to the dispute.
(15)(b) JAPAN - MEASURES CONCERNING SOUND RECORDINGS, complaint by the European
Communities (WT/DS42). This request for consultations, dated 24 May 1996, concerns the intellectual
property protection of sound recordings under GATT Article XXII:1. Violations of Articles 14.6 and
70.2 of the TRIPS Agreement are alleged. Earlier, the United States requested consultations with Japan
on the same issue (WT/DS28), in which the EC joined. On 7 November 1997, both parties notified a
mutually agreed solution.
(16) PAKISTAN - PATENT PROTECTION FOR PHARMACEUTICAL AND AGRICULTURAL
CHEMICAL PRODUCTS, complaint by the United States (WT/DS36). In its request for consultations
dated 30 April 1996, the United States claimed that the absence in Pakistan of (I) either patent
protection for pharmaceutical and agricultural chemical products or a system to permit the filing of
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applications for patents on these products and (ii) a system to grant exclusive marketing rights in such
products, violates TRIPS Agreement Articles 27, 65 and 70. On 4 July 1996, the United States
requested the establishment of a panel. The DSB considered the request at its meeting on 16 July 1996,
but did not establish a panel due to Pakistan's objection. At the DSB meeting on 25 February 1997,
both parties informed the DSB that they had reached a mutually agreed solution to the dispute and that
the terms of the agreement were being drawn up, and would be communicated to the DSB once
finalized. On 28 February 1997, the terms of the agreement were communicated to the Secretariat.
(17) TURKEY - TAXATION OF FOREIGN FILM REVENUES, complaint by the United States
(WT/DS43). This request for consultations, dated 12 June 1996, concerns Turkey's taxation of
revenues generated from the showing of foreign films. Violation of GATT Article III is alleged. On 9
January 1997, the United States requested the establishment of a panel. At its meeting on 25 February
1997, the DSB established a panel. Canada reserved its third-party rights to the dispute. On 14 July
1997, both parties notified the DSB of a mutually agreed solution.
(18) HUNGARY - EXPORT SUBSIDIES IN RESPECT OF AGRICULTURAL PRODUCTS,
complaint by Argentina, Australia, Canada, New Zealand, Thailand and the United States (WT/DS35).
This request, dated 27 March 1996, claims that Hungary violated the Agreement on Agriculture
(Article 3.3 and Part V) by providing export subsidies in respect of agricultural products not specified
in its Schedule, as well as by providing agricultural export subsidies in excess of its commitment
levels. On 9 January 1997, Argentina, Australia, New Zealand and the United States requested the
establishment of a panel. At its meeting on 25 February 1997 the DSB established a panel. Canada,
Japan, Thailand and Uruguay reserved their third-party rights to the dispute. At the DSB meeting on 30
July 1997, Australia, on behalf of all the complainants, notified the DSB that the parties to the dispute
had reached a mutually agreed solution, which required Hungary to seek a waiver of certain of its WTO
obligations. Pending adoption of the waiver, the complaint was not formally withdrawn.
(19) JAPAN - PROCUREMENT OF A NAVIGATION SATELLITE, complaint by the European
Communities (WT/DS73/1). This request, dated 26 March 1997, is in respect of a procurement tender
published by the Ministry of Transport (MoT) of Japan to purchase a multi-functional satellite for Air
Traffic Management. The EC contends that the specifications in the tender were not neutral but
referred explicitly to US specifications. This meant, the EC contends, that European bidders could
effectively not participate in the tender. The EC alleges inconsistency of this tender with Annex I of
Appendix I of Japan's commitments under the Government Procurement Agreement (GPA). The EC
also alleges violations of Articles VI(3) and XII(2) of the GPA. On 31 July 1997, the EC notified the
Secretariat that a mutually agreed solution had been reached with Japan in this dispute.
(20) KOREA - LAWS, REGULATIONS AND PRACTICES IN THE TELECOMMUNICATIONS
SECTOR, complaint by the European Communities (WT/DS40). This request for consultations, dated
9 May 1996, concerns the laws, regulations and practices in the telecommunications sector. The EC
claims that the procurement practices of the Korean telecommunications sector (Korea Telecom and
Dacom) discriminate against foreign suppliers. The EC also claims that the Korean government has
favoured US suppliers under two bilateral telecommunications agreements between Korea and the US.
Violations of GATT Articles I, III and XVII are alleged. On 22 October 1997, the parties notified the
Secretariat of a mutually agreed solution.
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Summary
Case titles in bold indicate those cases where the panel process has been completed; case titles in italics
indicate those cases where settlement has been notified or is apparent; active panels are capitalized.
Complaints by developed country
Members
(55 matters / 79 requests)
Respondent - developed
Respondent - developing
US, automobiles (DS6)
Japan, alcoholic beverages
(DS8, DS10, DS11)
Japan, telecom (DS15)
AUSTRALIA, SALMON (DS18,
DS21)
EC, Hormones (DS26, DS48)
Japan, sound recordings
(DS28, DS42)
Canada, periodicals (DS31)
Portugal, patent (DS37)
US, CUBA (HELMS-BURTON)
ACT (DS38)
US, hormones retaliation (DS39)
JAPAN, FILM (DS44)
Japan, distribution (DS45)
Australia, leather (DS57)
EC, UK, IRELAND,
COMPUTERS (DS62, DS67,
DS68)
US, urea (DS63)
Japan, pork (DS66)
EC, butter (DS72)
Japan, procurement (DS73)
Japan, agricultural products (DS76)
Belgium, telephone directories
(DS80)
Ireland, copyright (grant of rights)
(DS82)(DS115 EC)
Denmark, intellectual property
(enforcement) (DS83)
US, textiles (DS85)
Sweden, intellectual property
(enforcement) (DS86)
US, government procurement
(DS88, DS95)
US, poultry
Canada, subsidies (milk and
cheese) (DS103)
EC, subsidies (processed cheese)
(DS104)
AUSTRALIA, SUBSIDIES
(AUTO LEATHER) (DS106)
US, foreign sales corporations (tax
treatment)(DS108)
Canada, dairy products (DS113)
Korea, inspection of agricultural
products (DS3, DS41)
Korea, shelf-life (DS5)
Korea, bottled water
Pakistan, patent (DS36)
Korea, telecom (DS40)
Turkey, film tax (DS43)
Brazil, aircraft (DS46)
India, patent (DS50)
Brazil, automobiles (DS51, DS52,
DS65, 81,)
Mexico, customs valuation (DS53)
INDONESIA, AUTOMOBILES
(DS54, DS55, DS59, DS64)
ARGENTINA, TEXTILES (DS56)
Philippines, pork and poultry
(DS74, DS102)
KOREA, ALCOHOLIC
BEVERAGES (DS75, DS84)
ARGENTINA, TEXTILES (DS77)
INDIA, PATENT (DS79)
CHILE, ALCOHOLIC
BEVERAGES (DS87)
India, quantitative restrictions
(DS90, DS91, DS92, DS93, DS94,
DS96)
Korea, safeguard measure (dairy)
(DS98)
Mexico, anti-dumping (corn syrup)
(DS101)
Pakistan, hides, skins and leather
(DS107)
Chile, alcoholic beverages (DS109,
DS110)
Brazil, import payment terms
(DS116)
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Page 86
Canada, patent protection
(pharmaceuticals) (DS114)
Complaints by developing country
Members
(23 matters / 27 requests)
US, gasoline (DS2, DS4)
Poland, automobiles (DS19)
US, underwear (DS24)
US, wool coats (DS32)
US, wool shirts (DS33)
US, tomatoes (DS49)
US, SHRIMP (DS58, DS 61)
EC, POULTRY (DS69)
Canada, aircraft (DS70, DS71)
US, brooms (DS78)
United States anti-dumping duties
(CTVs) (DS89)
US, countervailing measures
(salmon) (DS98)
US, ANTI-DUMPING
(SEMICONDUCTORS) (DS99)
EC, bananas (DS105),
US, tariff rate quota (DS111)
Complaints by both
developed and developing
country Members
(4 matters / 10 requests See
footnote 1)
EC, scallops (DS7, DS12, DS14)
EC, grains (DS9, DS13, DS17,
DS25)
EC, BANANAS (DS16, DS27)
Hungary, export subsidies (DS35)
Malaysia, polyethylene and
polypropylene (DS1)
Brazil, coconut (Philippines)
(DS22)
Venezuela, OCTG (DS23)
Turkey, textiles (DS29, DS34,
DS47)
Brazil, coconut (Sri Lanka) (DS30)
GUATEMALA, CEMENT (DS60)
Peru, countervailing duty
investigation (buses) (DS112)
Total number of distinct matters: 83
Total number of consultation requests: 118 See footnote 2
-----------------------------------------------------------------------Footnote: 1This figure includes three requests made by developed country Members (DS7, DS9 and
DS13). The total number of consultation requests made by developing country Member is 37. On the
basis of distinct matters, the number is 27.
-----------------------------------------------------------------------Footnote: 2 Two requests for the establishment of a panel by India (DS32 and DS33) were not
preceded by requests for consultations under the DSU. Nonetheless, they are included in this figure
since consultations were in fact held pursuant to the Agreement on Textiles and Clothing.