Document Title Important Points

Annex 2: Marrakesh
Agreement: General
Provisions
Prompt settlement of situations
Before bringing a case, a member shall exercise judgment as to whether action under these procedures would be fruitful
Aim of dispute settlement: Secure a positive solution to a dispute. First objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these
are found to be inconsistent with the provisions of any of the covered agreements
In cases where there is an infringement of the obligations assumed under an agreement, it would always constitute a prima facie case of nullication and there is normally a presumption that
such breach has an adverse impact on other members
Seek authoritative interpretation of the provisions under the covered agreement under the WTO or a covered agreement under a Plurilateral Trade Agreement
Procedures must be done in good faith
Annex 2: Marrakesh
Agreement:
Consultations
Adequate opportunity for consultation
Consultations shall be condential
If consultations fail to settle a dispute within 60 days after the date of receipt of the request for consultation, the complaining party may request the establishment of a panel
In cases of urgency concerning those perishable goods, the parties shall make an effort to accelerate the proceedings to the greatest extent possible
Annex 2: Marrakesh
Agreement: Good
ofces, conciliation,
mediation
Procedures undertaken voluntarily if the parties to the dispute agree
Condential
May be requested at any time by a party to a dispute
Annex 2: Marrakesh
Agreement:
Establishment of
Panels
Written Request from complaining party
Panel established at the latest at the DSB meeting following that which the request rst appears, unless if at the meeting, the DSB decides not to establish a panel
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
Annex 2: Marrakesh
Agreement: Terms of
Reference of Panels
"To examine, in the light of the relevant provisions in (name of the 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 ndings as will assist the DSB in making the recommendations or in giving the rulings provided for in that/those agreement(s)."
address the relevant provisions in any covered agreement or agreements cited by the parties to the dispute.
annex 2: Marrakesh
Agreement:
Composition of Panels
Well-qualied 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 Member or of a
contracting party to GATT 1947 or as a representative to the Council or Committee of any covered agreement or its predecessor agreement, or in the Secretariat, taught or published on
international trade law or policy, or served as a senior trade policy ofcial of a Member.
Ensure independence of the members
Panels shall be composed of three panelists unless the parties to the dispute agree, within 10 days from the establishment of the panel, to a panel composed of ve panelists. Members shall
be informed promptly of the composition of the panel.
serve in their individual capacities and not as government representatives, nor
as representatives of any organization
Annex 2: Marrakesh
Agreement: Multiple
Complainants
Establishment of a single panel
Annex 2: Marrakesh
Agreement: Third
Parties
Substantial Interest, any member, upon notice to the DSB
Annex 2: Marrakesh
Agreement: Function
of the Panels
The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements.
Accordingly, a 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 ndings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should
consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
Annex 2: Marrakesh
Agreement: Panel
Procedures
Ensure high-quality panel reports
Provide sufcient time for the parties to prepare their submissions
Where one or more of the parties is a developing country Member, the panel's report shall explicitly indicate the form in which account has been taken of relevant provisions on differential and
more-favourable treatment for developing country Members that form part of the covered agreements which have been raised by the developing country Member in the course of the dispute
settlement procedures.
Annex 2: Marrakesh
Agreement: Right to
Seek information
Each panel has the right to seek information and technical advice from any individual or member however, it shall inform the authorities of that member
Panels may seek information from any relevant source and may consult experts to obtain their opinion on certain aspects of the matter
They may also seek information concerning a scientic or other technical matter raised by a party to a dispute ---> expert review group
Annex 2: Marrakesh
Agreement:Condentia
lity
Panel reports shall be drafted without the presence of the parties to the dispute in the light of the information provided and statements made
Opinions expressed by the panels shall be anonymous
Annex 2: Marrakesh
Agreement: Interim
Review Stage
Following the consideration of rebuttal submission and oral arguments, panel shall issue descriptive sections of its draft report to the parties to the dispute
Annex 2: Marrakesh
Agreement: Adoption
of Panel Reports
Objections to the panel report shall be submitted in writing
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
Annex 2: Marrakesh
Agreement: Appellate
Review
Appellate body must be established, composed of 7 persons three of whom shall serve on any one case.
Shall serve on rotation
Only parties to the dispute and not third parties have the right to appeal the Panel report
Procedures:
Working procedures shall be drawn up by the appellate body in consultation with the chairman of the DSB
Condential
Opinions expressed must be anonymous
Adoption of Appellate Body Panel Reports
unconditionally accepted by the parties without prejudice to the right of Members to express their views on an Appellate Body Report
Annex 2: Marrakesh
Agreement:
Communications with
the Panel or Appellate
Body
No ex parte communications on matters under consideration
Condential bla bla
Annex 2: Marrakesh
Agreement: Panel and
Appellate Body
Recommendations
Suggest ways in which the Member concerned may implement the recommendation
Panel and Appellate Body cannot add to or diminish the rights and obligations in the covered agreements
Annex 2: Marrakesh
Agreement: Time
Frame for DSB
Decisions
When not appealed, shall not exceed 9 months or 12 months where the report is appealed
Annex 2: Marrakesh
Agreement:
Surveillance of
Implementation of
Recommendation and
Rulings
Prompt compliance
Particular attention shall be paid to matters affecting the interests of developing country members
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
Annex 2: Marrakesh
Agreement:
Compensation and
Suspension of
Concessions
Temporary measures available in the event that the recommendations and rulings are not implemented within a reasonable period of time. However, neither compensation nor the suspension of
concessions or other obligations is preferred to full implementation of a recommendation to bring a measure into conformity with the covered agreements.
Compensation is voluntary and, if granted, shall be consistent with the covered agreements.
If the Member concerned fails to bring the measure found to be inconsistent with a covered agreement into compliance therewith or otherwise comply with the recommendations and
rulings within the reasonable period of time determined pursuant to paragraph 3 of Article 21, such Member shall, if so requested, and no later than the expiry of the reasonable period
of time, enter into negotiations with any party having invoked the dispute settlement procedures, with a view to developing mutually acceptable compensation.
If no satisfactory compensation has been agreed within 20 days after the date of expiry of the reasonable period of time, any party having invoked the dispute settlement procedures
may request authorization from the DSB to suspend the application to the Member concerned of concessions or other obligations under the covered agreements.
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
European
Communities -
Regime for the
Importation, Sale and
Distribution of
Bananas
US requests authorization from the DSB to suspend the application to the EC and member States of tariff concessions and related obligations under the GATT, covering trade in the amount of US
$520million
MAy 8, 1996, DSB established a panel at the request of Ecuador, Guatemala, Honduras, Mexico and US to examine the EC banana regime. Both panel and appellate body found that EC banana
was in violation of GATT and GATS
The resulting DSB recommendations and ruling include the recommendations that the EC will bring the measures found to be inconsistent with the GATT and GATS into conformity with its
obligations under those agreements. They set the the reasonable period of time for compliance is until Jan 1 1999
On July 20, 1998, EC approved amendments in the banana regime and were published in the EC Ofcial Journal
Regulations 1637 and 2362 became effective on 1 January 1999.
These regulations perpetuate discriminatory aspects of the EC banana regime that were identied in the DSBs recommendations and rulings as inconsistent with WTO agreements.
Therefore, these amendments fail to bring the ECs banana regime into conformity with the ECs WTO obligations within the reasonable period of time, as required by the DSB
recommendations and rulings, thus perpetuating the nullication or impairment of benets accruing to the United States, directly and indirectly, under the GATT and the GATS , that was found
by the panel and the Appellate Body in this dispute. The United States thus is entitled to redress under Article 22 of the DSU
US RECOURSE TO ARTICLE 22.2
Article 22.1 of the DSU provides that full implementation of the recommendations and rulings of the DSB is the preferred conclusion to a dispute. In the event that implementation is not achieved
within the reasonable period of time, the parties may attempt to negotiate mutually acceptable compensation, if requested by the prevailing party or the prevailing party may request DSB to
suspend the application of concessions and obligations to the party that has failed to implement the DSB recommendation and rulings
ECs failure to bring its regime for importation, sale and distribution in accordance with the recommendations and rulings, results in a loss in US exports of 520M including lost US exports of
goods and services used in the production of Latin American bananas
In considering what concessions to suspend the US applied the procedures and principles set forth in Art. 22.3 of the DSU.
By virtue of Art. 22.4:
The level of the suspension of concessions or other obligations authorized by the DSB shall be equivalent to the level of the nullication or impairment.
The level of suspension proposed is equivalent on an annual basis to the nullication or impairment of benets accruing to the US resulting from ECs failure to comply. There will be increased
duties that would apply to products that are both (1) classied in the subheadings of the Harmonized Tariff Schedules of US (2) product of Austria, Belgium, Luxembourg, Finland, France,
Federal Republic of Germany, Greece, Ireland, Italy, Spain, Sweden and UK
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
EUROPEAN
COMMUNITIES -
REGIME FOR THE
IMPORTATION, SALE
AND DISTRIBUTION
OF BANANAS
- RECOURSE TO
ARBITRATION BY
THE EUROPEAN
COMMUNITIES
UNDER ARTICLE
22.6 OF THE DSU
Article 22.6 of the DSU:
When the situation described in paragraph 2 occurs, the DSB, upon request, shall grant authorization to suspend concessions or other obligations within 30 days of the expiry of the
reasonable period of time unless the DSB decides by consensus to reject the request. However, if the Member concerned objects to the level of suspension proposed, or claims that the
principles and procedures set forth in paragraph 3 have not been followed where a complaining party has requested authorization to suspend concessions or other obligations pursuant
to paragraph 3(b) or (c), the matter shall be referred to arbitration. Such arbitration shall be carried out by the original panel, if members are available, or by an arbitrator15 appointed by
the Director-General and shall be completed within 60 days after the date of expiry of the reasonable period of time. Concessions or other obligations shall not be suspended during the
course of the arbitration.
On 8 November 1999, Ecuador requested authorization by the DSB to suspend concessions or other obligations under the TRIPS Agreement, the GATS and GATT 1994 in an amount of US
$450 million. Ecuador intends to apply the suspension of concessions or other obligations, if authorized by the DSB, against 13 of the EC member States
EC on the other hand requested for arbitration pursuant to the above-cited. EC contends that the amount of suspension of concessions or other obligations imposed by Ecuador is excessive
since it has suffered by far less nullication or impairment than alleged and that Ecuador has not followed the principles and procedures set forth in Article 22.3 of the DSU in suspending
concessions or other obligations across sectors and agreements
Jurisdiction of Arbitrators:
(Must determine if level of suspension is equivalent to level of nullication or impairment, but if par. 3 is invoked, panel shall examine that claim)
Article 6 and 7 of DSU:
"The arbitrator[s] acting pursuant to paragraph 6 shall not examine the nature of the concessions or other obligations to be suspended but shall determine whether the level of such
suspension is equivalent to the level of nullication or impairment. ... However, if the matter referred to arbitration includes a claim that the principles and procedures set forth in
paragraph 3 have not been followed, the arbitrator[s] shall examine that claim. In the event that the arbitrator[s] determine that those principles and procedures have not been followed,
the complaining party shall apply them consistent with paragraph 3. ..."
If the panel is to nd that the proposed amount of 450M is excessive/not equivalent, it would have to estimate the level of suspension to be equivalent to the nullication or impairment suffered by
Ecuador
Matters of Procedure:
I. Ecuadors Request under Art. 22.2 and its document on the methodology used for calculating the level of nullication and impairment
EC contends that Ecuadors request and the methodology submitted were not detailed enough. On Jan 19, 2000, the Arbitrators communicated a letter to the parties substantially providing that
the request of EC to render inadmissible the documents submitted by Ecuador is discarded since to rule on the admissibility of evidence at this stage is premature.
The standards set forth in Art. 6.2 are also relevant in suspension proceedings:
a. In writing
b. Indicate whether consultations were held
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
c. Identify specic measures at issue
d. Provide a brief summary of the legal basis of the complaint sufcient to present the problem clearly
The minimum requirements attached to a request for suspension must include:
1. Specic level of suspension, level equivalent to the nullication and impairment caused by the WTO-inconsistent measure
2. Request must specify the agreement and sectors under which the concessions and other obligations will be suspended
As to the rst min reqt: Ecuadors request set a specic amount of 450M. In methodology submitted, Ecuador indicated the direct and indirect harm and macro-economic repercussions for its
economy. It argued that the total economic impact of the EC banana regime shall be taken into account by the Arbitrators in applying a multiplier when calculating the level of nullication and
impairment suffered by Ecuador.
Arbitration panel provided that the level of suspension claimed by Ecuador is the relevant one and denes the amount of requested suspension for purposes of the arbitration
proceeding
As to the second min reqt:
Under the GATS, it species the service subsector of "wholesale trade services (CPC 622)". Under the TRIPS Agreement, Ecuador requests suspension, pursuant to Article 22.3(c), of Article 14
on "Protection of performers, producers of phonograms (sound recordings) and broadcasting organizations" in Section 1 (Copyright and related rights), Section 3 (Geographical indications) and
Section 4 (Industrial designs).
Arbitration panel determine that these requests by Ecuador under the GATS and TRIPS fulll the min requirement to specify the agreements and sectors with respect to which it
requests authorization
HOWEVER, Ecuador, in its last statement notes in addition that it reserves the right to suspend tariff concession or other tariff obligations granted in the framework of GATT in the event that
these may be applied in a practicable and effective manner
Arbitration panel determined that the specicity standards maintain that the terms of reference in this proceeding shall only cover those requests for authorization of suspension with respect to
those specic sectors under the GATS and TRIPS that were unconditionally listed in its request
II. Burden of Proof in Arbitration Proceedings
A party claiming that a Member has acted inconsistently with WTO rules bears the burden of proving that inconsistency.
However, we also share the view that some evidence may be in the sole possession of the party suffering nullication or impairment. This explains why we requested Ecuador to submit a
methodology document in this case.
In this respect, we wish to remark that the concept of an "arbitration" has an important adversarial component in the sense that Arbitrators weigh and decide the matter on the basis of the
evidence and arguments presented by each party and rebutted by the other party. We note that the later in a proceeding one party submits relevant evidence, the more difcult it becomes for the
other party to address and rebut this evidence. In this sense, the submission of an informative methodology document is not only in the EC's interest, but also in Ecuador's own interest because it
enables Ecuador to rebut the EC's response to that document already in its second submission, while the EC's response to information contained in Ecuador's rst submission cannot be rebutted
by Ecuador before the oral statement at the meeting of the Arbitrators with the parties.
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
EC - Bananas III:
Request for
Consultations by
Ecuador,
Guatemala,
Honduras, Mexico
and the United States
Communication sent ot DSB in accordance with Article 4.4 of the DSU
All such requests for consultations shall be notied to the DSB and the relevant Councils and Committees by the Member which requests consultations. Any request for consultations
shall be submitted in writing and shall give the reasons for the request, including identication of the measures at issue and an indication of the legal basis for the complaint.
Regarding the EC regime for the importation, sale and distribution of bananas established by Regulation 404/93 (OJ L 47 of 25 February 1993, p. 1), and the subsequent EC legislation,
regulations and administrative measures, including those reecting the provisions of the Framework Agreement on bananas, which implement, supplement and amend that regime.
Parties pointed out the specic rules which are inconsistent with EC obligations:
(1)Articles I, II, III, X, XI and XIII of the General Agreement on Tariffs and Trade 1994;
(2)Articles 1 and 3 of the Agreement on Import Licensing Procedures;
(3)The Agreement on Agriculture;
(4)Articles II, IV, XVI and XVII of the General Agreement on Trade in Services; and,
(5)Articles 2 and 5 of the Agreement on Trade-Related Investment Measures.
These measures also produce distorsions which appear to nullify or impair benets accruing to Ecuador, Guatemala, Honduras, Mexico and the United States, directly or
indirectly under the cited agreements, and to impede the objectives of the GATT 1994 and the other cited Agreements.
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
Appellate Body
Report, European
Communities - Trade
Description of
Sardines
EC appeals from certain issues of law and legal interpretations in the Panel Report: EC - Trade Description of Sardines
Measure at issue is Council Regulation (EEC) 2136/89 (the "EC#Regulation"), which was adopted by the Council of the European Communities on 21 June 1989 and became applicable on
1#January#1990.#
The EC#Regulation sets forth common marketing standards for preserved sardines.
Article#2 of the EC#Regulation provides that:
Only products meeting the following requirements may be marketed as preserved sardines and under the trade description referred to in Article#7:
they must be covered by CN codes 1604 13 10 and ex
1604 20 50;
they must be prepared exclusively from sh of the species "Sardina pilchardus Walbaum" (which is found mainly around the coasts of Eastern North Atlantic, Mediterranean Sea
and Black Sea
they must be pre-packaged with any appropriate covering medium in a hermetically sealed container;
they must be sterilized by appropriate treatment.
Meanwhile, CODEX Standards provides for the types of sh species used for preserved sardines/sardine-type products:
Sardina pilchardus
Sardinops melanostictus, S. neopilchardus, S. ocellatus,
S. sagax[,] S. caeruleus
Sardinella aurita, S. brasiliensis, S. maderensis, S. longiceps, S.#gibbosa
Clupea harengus
Sprattus sprattus
Hyperlophus vittatus
Nematalosa vlaminghi
Etrumeus teres
Ethmidium maculatum
Engraulis anchoita, E. mordax, E. ringens
Opisthonema oglinum.
Section 6 of CODEX Stand 94 provides that the name of the product shall be Sardines - That is to be reserved exclusively for sardines pilchardus or X Sardines of a country, a
geographic area, the species or common name must be in accordance with the aw of that country and in a manner not to mislead the consumer
Peru exports products prepared from Sardinops sagax sagax one of the species covered by the CODEX Stan 94.
Sardina pilchardus belongs to the genus Sardina while sardina sagax belongs to the genus Sardinops
Peru argues that the EC regulation is inconsistent with Articles#2.4, 2.2 and#2.1 of the #Agreement on Technical Barriers to Trade (the "TBT#Agreement#") and Article#III:4 of the #General
Agreement on Tariffs and Trade 1994 (the "GATT#1994").
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
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As to procedure. European Communities notied the DSB of its intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel,
pursuant to Article16.4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes(the "DSU"), and led a Notice of Appeal with the Appellate Body pursuant
to Rule#20 of the #Working Procedures for Appellate Review (the "Working Procedures"). On 27#June#2002, we received a communication from Peru requesting a Preliminary Ruling pursuant to
Rule#16(1) of the #Working Procedures. Peru requested that we exclude from the appeal four of the nine points raised in the European Communities' Notice of Appeal, because these points
allegedly did not meet the requirements of Rule#20(2)(d) of the #Working Procedures.
Article 16.4:
Within 60 days after the date of circulation of a panel report to the Members, the report shall be adopted at a DSB meeting unless a party to the dispute formally noties the DSB of
its decision to appeal or the DSB decides by consensus not to adopt the report. If a party has notied its decision to appeal, the report by the panel shall not be considered for
adoption by the DSB until after completion of the appeal. This adoption procedure is without prejudice to the right of Members to express their views on a panel report.
The Panel invited EC and the third parties to submit, by July 2, 2002, written comments on the issues raised by Peru in its Request for a Preliminary Ruling
On 28#June#2002, the European Communities sent letters to the Chairman of the DSB and to the Appellate Body, indicating its intention to withdraw the Notice of Appeal of 25 June 2002,
pursuant to Rule#30 of the #Working Procedures,# conditionally on the right to le a new Notice of Appeal. The European Communities led a new Notice of Appeal on the same day.
Peru submitted a letter, dated 2#July#2002, in which it challenged the right of the European Communities to withdraw conditionally the Notice of Appeal of 25#June 2002, and to le a second
Notice of Appeal on 28 June 2002.
On 4 July 2002, the body informed the participants and third parties that it was their intention to conduct the appellate proceedings in conformity with the Working Schedule drawn up further to the
Notice of Appeal of 28 June 2002, without prejudice to the right of the participants and the third participants to present in their submissions arguments relating to the matters raised in Peru's letter
dated 2#July#2002.
The European Communities led an appellant's submission on 8#July#2002.# Peru led an appellee's submission on 23 July 2002.# Ecuador led a third participant's submission on 22#July#2002.#
Canada, Chile, the United States, and Venezuela led third participant's submissions on 23#July#2002.#
Colombia on July 23, 2002, sent a letter indicating that although it would not le a third party submission, it would like to attend the proceedings in which case the body informed the participant of
its allowance to Colombia to attend the oral hearings as a passive observer and notify the body it the parties have any objection
An amicus curae also expressed its intention to participate, to which Peru objected. The body later on informed the parties that they would have the opportunity to address the issues relating to
the amicus curiae briefs during the oral hearing but without prejudice to their legal status or to any action that the body might take in connection with the briefs
Arguments of the Parties with respect to procedure:
EC:
They assert that, in conditionally withdrawing its inital Notice of Appeal, and then ling a new one, it proceeded in conformity with the DSU, Working procedures and previous practice
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
The issues listed in the New Notice of Appeal and the Old one are identical, and the only difference is that the new one included additional information on the issues being appealed whic was
provided in response to Perus request
EC asserts that it is absolutely clear that Perus rights have not been harmed in any way by the ling of the new notice of appeal
Peru:
Questions the admissibility of the New Notice of Appeal. According to Peru, a notice of appeal cannot be withdrawn and resubmitted in revised form without the consent of the appellee. It notes
that there is nothing in the #Working Procedures# that establishes the right to commence an appeal twice.
Peru asserts that, although Rule 30 of the Working Procedures# makes clear that an appeal can be withdrawn at any timewhich the European Communities did through its communication of 28
June 2002nothing in that Rule permits the appellant to attach conditions to the withdrawal. Peru submits that if an appellant withdraws its appeal subject to conditions, the appeal must
therefore be deemed withdrawn, irrespective of whether or not the conditions are met.
WAS THE NEW NOTICE OF APPEAL INADMISSIBLE?
Appellate Body ndings:
We set out earlier in this Report# the sequence of events relevant to the ling by the European Communities of a Notice of Appeal on 25 June 2002, the withdrawal of that Notice three days later,
and the ling of a replacement Notice of Appeal on 28 June 2002. Before commencing our analysis of the admissibility of the Notice of Appeal of 28#June#2002, we note rst that Peru does not
request that we rule in this Report on#Peru's Request for a Preliminary Ruling, submitted on 27#June 2002, regarding the sufciency of paragraphs (d), (f), (g), and (h) of the European
Communities' Notice of Appeal dated 25 June 2002.# Peru states in its appellee's submission that "[t]he Division presumably considers the original Notice of Appeal to be withdrawn"#, and Peru
does not address further the question of the insufciency of the original Notice of Appeal.
The European Communities submits that "the preliminary objections raised by Peru on the adequacy of the Notice of Appeal led by the [European Communities] on 25 June 2002 is a matter that
is now moot and settled."# In the light of these submissions, we need not, and, therefore, we do not decide the issues raised in the Request for a Preliminary Ruling led by Peru regarding the
sufciency of the Notice of Appeal led on 25#June#2002.
Rule#30(1) of the #Working Procedures for Appellate Review (the "Working Procedures"), which governs the withdrawal of an appeal, provides:
At any time during an appeal, the appellant may withdraw its appeal by notifying the Appellate Body, which shall forthwith notify the DSB.
This rule accords to the appellant a broad right to withdraw an appeal at any time
This right appears, on its face, to be unfettered: an appellant is not subject to any deadline by which to withdraw its appeal; an appellant need not provide any reason for the
withdrawal; and an appellant need not provide any notice thereof to other participants in an appeal. More signicantly for this appeal, there is nothing in the Rule prohibiting the
attachment of conditions to a withdrawal.
However, the working procedure shall not be interpreted in a way that could undermine the effectiveness of DSU. Thw Working procedures must be read in connection with the DSU
provisions
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
While it is true that nothing in the text of Rule#30(1) explicitly permits an appellant to exercise its right subject to conditions, it is also true that nothing in the same text prohibits an appellant from
doing so. As we have just explained, in our view, the right to withdraw a notice of appeal under Rule#30(1) is broad, subject only to the limitations we have described. Therefore, we see no
reason to interpret Rule 30 as granting a right to withdraw an appeal only if that withdrawal is unconditional.
Rather, the correct interpretation, in our view, is that Rule 30(1) permits conditional withdrawals, unless the condition imposed undermines the "fair, prompt and effective resolution of
trade disputes", or unless the Member attaching the condition is not "engag[ing] in [dispute settlement] procedures in good faith in an effort to resolve the dispute." Therefore, it is
necessary to examine any such conditions attached to withdrawals on a case-by-case basis to determine whether, in fact, the particular condition in a particular case in any way obstructs the
dispute settlement process, or in some way diminishes the rights of the appellee or other participants in the appeal.
BY WITHDRAWING THE NOTICE OF APPEAL, DID THE EC UNDERMINED THE FAIR, PROMT AND EFFECTIVE RESOLUTION OF TRADE DISPUTES?
In our view, attaching the condition to the withdrawal was not unreasonable under the circumstances. The conditioning by the European Communities of its withdrawal of the Notice of Appeal of
25#June 2002 on the right to le a replacement Notice of Appeal arose as a response to the Request for a Preliminary Ruling led by Peru. Although Peru contests the European Communities'
contention that no prejudice was suffered by Peruarguing that Peru was "forced to address a completely novel procedural issue and waste time on that issue that [Peru] could have used for
better purposes"#we are not persuaded that the European Communities' response in any way obstructed the process or diminished Peru's rights. Indeed, it may well have had the opposite
effect. Although the European Communities states that it thought Peru's Request for a Preliminary Ruling "to be without merit"#, the European Communities sought to remedy the difculty
perceived by Peru, and not to delay the proceedings further by contesting the allegations of insufciency.
Moreover, the European Communities responded in a timely manner, providing the additional information in a replacement Notice of Appeal the day following receipt of Peru's objections to the
Notice of Appeal of 25#June 2002, and only three days after ling the original Notice of Appeal. The replacement Notice was provided well before any submissions were led
IS EC CONSIDERED TO HAVE APPEALED TWICE?
The conditional withdrawal of the Notice of Appeal of 25#June#2002 was appropriate and effective, and that, therefore, the ling of a replacement Notice on 28#June#2002 did not constitute a
second appeal. Moreover, we agree with the European Communities that the replacement Notice of Appeal contains no additional grounds of appeal, and that it merely added information to the
paragraphs in the initial Notice that Peru considered decient.
"an appellee is, of course, always entitled to its full measure of due process."
In the circumstances of this case, we believe that Peru has been accorded the full measure of its due process rights, because the withdrawal of the original Notice and the ling of a replacement
Notice were carried out in response to objections raised by Peru, the replacement Notice was led in a timely manner and early in the process, and the replacement Notice contained no new or
modied grounds of appeal. Also, Peru has not demonstrated that it suffered prejudice as a result. Moreover, Peru was given an adequate opportunity to address its concerns about the
European Communities' actions during the course of the appeal.
INTERNATIONAL ECONOMIC LAW- Dispute Settlement Provisions, Journals and Cases
Document Title Important Points
Appellate Body
Report, EC Measures
Concerning Meat and
Meat Products
(Hormones)
EC, US and Canada appeal from certain issues of law and legal interpretations in the Panel Reports, EC Measures Concerning Meat and Meat Products (Hormones)
The two panel reports are similar but are not identical in every respect. The Panel dealt with a complaint against the EC relating to an EC prohibition of imports of meat and meat products derived
from cattle to which either the natural hormones had been administered for growth promotion purpose.
The Panel circulated its reports to the members of the WTO. the US Panel Report and the Canada Panel Report reached the same conclusions in paragraph 9.1 that the EC has acted
inconsistently with the requirements contained in Article 5.1 of the Phytosanitary measures, that the measures resulted to discrimination and the measures are not based on existing international
standards. Both Panels requests the EC to bring its measures in dispute into conformity with its obligations under the Agreement on the Application of Sanitary and Phytosanitary
Measures
On 24 September 1997, the European Communities notied the DSB of its decision to appeal certain issues of law covered in the Panel Reports and certain legal interpretations developed by the
Panel, pursuant to paragraph 4 of Article 16 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), and led two notices of appeal8 with the
Appellate Body pursuant to Rule 20 of the Working Procedures for Appellate Review (the "Working Procedures").
Pursuant to Rule 21 of the Working Procedures, the European Communities led an appellant's submission on 6 October 1997. On 9 October 1997, the United States and Canada led
appellants' submissions pursuant to Rule 23(1) of the Working Procedures. On 20 October 1997, the United States and Canada each led an appellee's submission pursuant to Rule 22 of the
Working Procedures and the European Communities led its own appellee's submission pursuant to Rule 23(3) of the Working Procedures. On the same day, Australia, New Zealand and Norway
led separate third participants' submissions in accordance with Rule 24 of the Working Procedures.
Procedural Arguments:
EC:
The European Communities objects to the Panel's view that it need consider the EC's procedural objections only where the European Communities could make a"precise claim"of prejudice. The
Panel should have asked itself whether its procedural decisions were consistent with the DSU, not whether the European Communities could make a precise claim of prejudice. It is
asserted by the European Communities that the Panel committed a legal procedural error in refusing to accept the scientic assessments of the European Communities, declining to set up an
expert review group, and proceeding to decide itself a scientic matter on which the Panel had no expertise. The Panel's decision to receive a range of opinions from individual experts40
deprived the European Communities of the procedural guarantees provided for expert review groups in the DSU. By following this procedure, the Panel put itself in a position to choose freely
between different scientic opinions.
The European Communities contends that the selection of scientic experts by the Panel violated Articles 11, 13.2 and Appendix 4 of the DSU as well as Article 13.2 of the SPS Agreement. The
European Communities objects to the selection of two experts on the grounds that one of them was a national of a party or third party and had links with the pharmaceutical industry, while the
other was a member of the Codex/JECFA group that had produced the report on the use of hormones in animal growth promotion and was the "rapporteur" of this study. Further, according to the
European Communities, these two experts lacked expertise in the eld.
The European Communities also alleges that the Panel erred in refusing to request that Canada and the United States provide the studies on which their authorities had based their
decisions to authorize the use of MGA for growth promotion. In the view of the European Communities, the Panel had a duty to carry out an objective assessment of the facts, and
declining to request the complainants to produce the evidence on which they based their own domestic decisions is not compatible with this duty. Moreover, Article 18.2 of the DSU provides
safeguards for the protection of condential information. Thus, the allegedly condential nature of the information on MGA should have been no obstacle to its production and use in the
proceeding.
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The European Communities also asserts that the Panel based the main part of its reasoning concerning Article 5.5 of the SPS Agreement on a claim that the complainants had not made, i.e. that
there was a difference of treatment between articially-added, or exogenous, natural and synthetic hormones when used for growth promotion purposes and the naturally-present endogenous
hormones in untreated meat and other foods (such as milk, cabbage, broccoli or eggs). In the view of the European Communities, not only is this "claim" wrong in law and in fact, but the Panel
also violated the DSU in relying on it especially since the United States expressly protested against the Panel's use of such a "claim". The European Communities asserts that panels are not
entitled to make ndings going beyond what has been requested by the parties.
The European Communities submits further that the Panel took a number of decisions granting "extended third party rights" to Canada and the United States -- and not to other third parties -- that
are not justied by Article 9.3, and are contrary to Articles 7.1, 7.2, 18.2 and 10.3 of the DSU as well as the terms of reference of the Panel. These decisions were: rst, to give access to all of the
information submitted in the United States' proceeding to Canada; second, to give access to all the information submitted in the Canadian proceeding to the United States; third, to hold a joint
meeting with the scientic experts; and fourth, to invite the United States to observe and make a statement at the second substantive meeting in the proceeding initiated by Canada.
US:
The United States submits that, to sustain a claim that a panel's handling of procedural issues was inconsistent with the DSU, a party to a dispute must have raised objections in a timely manner
during the panel proceeding, if feasible. In the view of the United States, any other response to procedural objections will weaken the authority of panels and destabilize the dispute settlement
system. It would also be fundamentally unfair to permit a party to wait and see what the outcome of a panel proceeding is and make its procedural objections only when it is too late for the panel
to address them. The United States urges that the objections raised by the European Communities should be rejected to the extent that they were not rst made to the Panel.
the United States observes that during the panel proceeding, the European Communities did not object to the participation of two experts who are not only nationals of the Member States of the
European Union, but are also employed by institutions of such Member States.
Turning to the issue of whether a procedural objection should be based on a "precise claim" of prejudice, the United States believes that while a Panel clearly has the duty of following the relevant
rules of the DSU and the covered agreements, a party seeking the reversal or a modication of a procedural ruling should assume the responsibility of providing concrete reasons and legal
arguments justifying its objection.
FINDINGS:
Selection and Use of Experts:
`The Panel decided to request the opinion of experts on certain scientic and other technical matters raised by the parties to the dispute, and rather than establishing an experts review group, the
Panel considered it more useful to leave open the possibility of receiving a range of opinions from the experts in their individual capacity
Both Article 11.2 of the SPS Agreement and Article 13 of the DSU enable panels to seek information and advice as they deem appropriate in a particular case. Article 11.2 of the SPS Agreement
states:
In a dispute under this Agreement involving scientic or technical issues, a panel should seek advice from experts chosen by the panel in consultation with the parties to the dispute. To
this end, the panel may, when it deems it appropriate, establish an advisory technical experts group. (underlining added)
Article 13 of the DSU provides, in relevant part:
1. Each panel shall have the right to seek information and technical advice from any individual or body which it deems appropriate ...
2. Panels may seek information from any relevant source and may consult experts to obtain their opinion on certain aspects of the matter. With respect to a factual issue concerning a
scientic or other technical matter raised by a party to the dispute, a panel may request an advisory report in writing from an experts review group ...
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We nd that in disputes involving scientic or technical issues, neither Article 11.2 of the SPS Agreement, nor Article 13 of the DSU prevents panels from consulting with individual experts.
Moreover, it is uncontested that the experts have been selected in accordance with procedures on which alltheparticipantshavepreviouslyagreed.135
Itissimilarlyuncontestedthat,amongtheexpertsconsulted by the Panel, there are nationals from each of the parties to the dispute. The rules and procedures set forth in Appendix 4 of the DSU
apply in situations in which expert review groups have been established. However, this is not the situation in this particular case. Consequently, once the panel has decided to request the opinion
of individual scientic experts, there is no legal obstacle to the panel drawing up, in consultation with the parties to the dispute, ad hoc rules for those particular proceedings.
Additional Third Party Rights to US and Canada
Article 9.3 of the DSU reads as follows:
If more than one panel is established to examine the complaints related to the same matter, to the greatest extent possible the same persons shall serve as panelists on each of the
separate panels and the timetable for the panel process in such disputes shall be harmonized.
First, both proceedings dealt with the same matter. Second, all the parties to both disputes agreed that the same panelists would serve on both proceedings. Third, although the proceeding
initiated by Canada started several months after the proceeding started by the United States, the Panel managed to nish the Panel Reports at the same time. Fourth, given the fact that the same
panelists were conducting two proceedings dealing with the same matter, neither Canada nor the United States were ordinary third parties in each other's complaint.
Panel reasoned that:
Prior to our meeting with scientic experts, we decided to hold that meeting jointly for both this Panel, requested by Canada, and the parallel panel requested by the United States. This
decision stemmed from the similarities of the two cases (the same EC measures are at issue and both cases are dealt with by the same panel members), our decision to use the same
scientic experts in both cases and the fact that we had already decided to invite Canada and the United States to participate in the meeting with scientic experts in each of the two
cases. In addition, we considered that, from a practical perspective, there was a need to avoid repetition of arguments and/or questions at our meetings with the scientic experts. The
European Communities objected to this decision arguing that one joint meeting with experts, instead of two separate meetings, was likely to affect its procedural rights of defence.
Where it made precise claims of prejudice to its rights of defence, we took corrective action.
Clearly, it would be an uneconomical use of time and resources to force the Panel to hold two successive but separate meetings gathering the same group of experts twice, expressing their views
twice regarding the same scientic and technical matters related to the same contested EC measures
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Appellate Body
Report, United States
- Investigation of the
International Trade
Commission in
Softwood Lumber
from Canada,
Recourse to Art. 21.5
of the DSU by
Canada
Canada appeals certain issues of law and legal interpretations developed in the Panel Report, United States Investigation of the International Trade Commission in Softwood Lumber from
Canada, Recourse to Article 21.5 of the DSU by Canada (the "Panel Report"). The Panel was established to consider Canada's complaint regarding the consistency with the Agreement on
Implementation of Article#VI of the General Agreement on Tariffs and Trade 1994 (the #"Anti-Dumping Agreement")# and the Agreement on Subsidies and Countervailing Measures (the #
"SCM#Agreement")# of a measure taken by the United States to comply with the recommendations and rulings of the Dispute Settlement Body (the "DSB") in the US Softwood Lumber VI#
proceedings.
The original panel report was not appealed and was adopted by the DSB on 26 April 2004. On 1 October 2004, Canada and the United States jointly informed the DSB that they had mutually
agreed that the reasonable period of time to implement the recommendations and rulings of the DSB would be nine months, ending on 26 January 2005
The Panel Report was circulated to the Members of the World Trade Organization (the#"WTO") on 15 November 2005. The Panel found that:
... the determination of the USITC in the section 129 proceeding investigation is not inconsistent with the asserted provisions of:
Article 3.5 of the [Anti-Dumping] Agreement,
Article 3.7 of the [Anti-Dumping] Agreement,
Article 15.5 of the SCM Agreement, and
Article 15.7 of the SCM Agreement.
The Panel therefore considered that:
the United States has implemented the decision of the [original panel], and the DSB, to bring its measure into conformity with its obligations under the [Anti-Dumping] and SCM
Agreements.
The Panel concluded:
Having found that the United States did not act inconsistently with its obligations under the asserted WTO Agreements, we consider that no recommendation under Article 19.1 of the
DSU is necessary, and we make none.
On 13 January 2006, Canada notied the DSB, pursuant to Article#16.4 of the DSU, of its intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations
developed by the Panel and led a Notice of Appeal pursuant to Rule#20 of the Working Procedures for Appellate Review# (the "Working Procedures"). On 20 January 2006, Canada led an
appellant's submission. On 7 February 2006, the United States led an appellee's submission. On the same day, the European Communities led a third participant's submission, and China
notied the Appellate Body Secretariat that it intended to appear at the oral hearing and make an oral statement.
On 18 January 2006, the Director of the Appellate Body Secretariat received a letter from the United States requesting to change the date scheduled for the oral hearing in this appeal
23#February#2006on the grounds that "lead counsel for the United States [was] not available on that date, due to a long-established prior commitment." Neither Canada nor the third
participants objected to the United States' request. By letter dated 26#January#2006, the Division informed the participants and the third participants that it had decided to change the date of the
oral hearing to 24#February#2006.
In its third participant's submission, the European Communities requested the Division hearing this appeal to allow the third participants additional time to make their presentations at the oral
hearing. The European Communities based this request on "the particularly complex context of this dispute and the importance of factual issues" and the need for the European Communities to
have time to reect on the United States' appellee's submission. The participants and third participants were given an opportunity to comment on this request and were then informed, by letter
dated 21 February 2006, that the Division had decided to allow 10 minutes to the third participants to deliver their oral presentations.
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PROCEDURAL ARGUMENTS:
Canada:
Canada asserts that the Panel failed to comply with its duties under Article 11 of the DSU to make an objective assessment of the matter before it in examining the USITC's Section 129
Determination
...Accordingly, a 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 ndings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered
agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution.
objective assesment of the matter before it
According to Canada, the Panel failed to undertake an objective assessment of whether the USITC's Section 129 Determination was consistent with the legal requirements of Article#3.7 of the
Anti-Dumping Agreement#and Article 15.7 of the SCM Agreement. Rather than engage in an interpretation of the specic obligations imposed by these provisions and an examination of whether
the USITC's conclusions conformed to them, the Panel erred "by reducing each issue to whether the USITC's conclusions were 'not unreasonable' or 'could not' have been [reached] by an
'objective and unbiased' investigating authority." In so doing, the Panel failed to apply the law to the facts, and thus failed to examine whether the USITC's conclusions were in conformity with
Article#3.7 and Article#15.7.
Canada asserts that the Panel took no interpretation of its own because it did not conduct "a critical and active analysis" of the USITC's conclusions and explanations. Instead, the Panel simply
"repeated over and over again its mantra that [the] USITC conclusions were 'not unreasonable'
US:
The United States emphasizes that, notwithstanding Canada's focus on Article 11 of the DSU, the applicable standard of review is found in #both# Article 11 of the DSU and Article 17.6 of the Anti-
Dumping Agreement, as the original panel properly recognized. Canada's appeal, however, seeks to downplay the importance of Article 17.6, as well as the point that "a panel [may not]
substitute its judgment for that of the investigating authorities, even though the [p]anel might have arrived at a different determination were it considering the record evidence for itself
Objective assessment of the matter before it
The United States argues that the Panel's assessment of the USITC's Section 129 Determination was entirely consistent with Article 11 of the DSU. Contrary to Canada's assertions, the Panel
not only set forth the parties' arguments, but also addressed each of these arguments as part of its assessment of whether the Section 129 Determination was consistent with the covered
agreements.
The United States observes that the role of a panel reviewing a determination by an investigating authority is distinct from the role of an investigating authority making a determination.
The investigating authority is responsible for establishing the facts, evaluating the facts, and drawing conclusions in the light of its evaluation. In reviewing an investigating authority's
determination, the role of a WTO panel is not to nd the facts, weigh the evidence, or substitute its judgement for that of the investigation authority; such an approach would constitute a de novo
review. Instead, the role of a WTO panel is to apply the applicable standard of review in assessing whether the investigating authority has established and evaluated the facts consistently with
the obligations under the covered agreements. The United States additionally notes that the role of the Appellate Body is also distinct from the role of a panel. According to the United States, the
Appellate Body's role with respect to a panel is not to second-guess the panel's appreciation of the evidence, but, rather, to assess whether the panel has made an objective assessment of the
matter before it.
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Findings:
Duties of the Panel:
It is well established that a panel must neither conduct a de novo review nor simply defer to the conclusions of the national authority. A panel's examination of those conclusions must be critical
and searching, and be based on the information contained in the record and the explanations given by the authority in its published report. A panel must examine whether, in the light of the
evidence on the record, the conclusions reached by the investigating authority are reasoned and adequate. What is "adequate" will inevitably depend on the facts and circumstances of the case
and the particular claims made, but several general lines of inquiry are likely to be relevant. The panel's scrutiny should test whether the reasoning of the authority is coherent and internally
consistent. The panel must undertake an in-depth examination of whether the explanations given disclose how the investigating authority treated the facts and evidence in the record and
whether there was positive evidence before it to support the inferences made and conclusions reached by it. The panel must examine whether the explanations provided demonstrate that the
investigating authority took proper account of the complexities of the data before it, and that it explained why it rejected or discounted alternative explanations and interpretations of the record
evidence. A panel must be open to the possibility that the explanations given by the authority are not reasoned or adequate in the light of other plausible alternative explanations, and must take
care not to assume itself the role of initial trier of facts, nor to be passive by "simply accept[ing] the conclusions of the competent authorities".
In one case, the Appellate Body observed that, even where the investigating authority draws its conclusion from the #totality# of the evidence, it will often be appropriate, or necessary, for a
panel "to examine the sufciency of the evidence supporting an investigating authority's conclusion ... by looking at each individual piece of evidence". In addition to such review of
how the investigating authority treated individual pieces of evidence, the Appellate Body underlined that a panel must also, with due regard to the approach taken by that authority, examine how
the totality of the evidence supports the overall conclusion reached. In this connection, the Appellate Body emphasized that panels have "the obligation to consider, in the context of the totality of
the evidence, how the interaction of certain pieces of evidence may justify certain inferences that could not have been justied by a review of the individual pieces of evidence in isolation.
Article 3.1 of the #Anti-Dumping Agreement and Article 15.1 of the #SCM#Agreement# are "overarching provision[s]" that reinforce elements of Article 11 of the DSU by imposing certain
"fundamental" obligations, in particular, that determinations of injury, including threat of injury, be based on positive evidence and an objective examination of the specic factors set out in
these provisions. Article 3.7 of the Anti-Dumping Agreement and Article 15.7 of the SCM Agreement combine positive requirementsthat such a determination "be based on facts"
and show how a "clearly foreseen and imminent" change in circumstances would lead to further dumped/subsidized imports causing injury in the near futurewith an express
prohibition of a determination based "merely on allegation, conjecture or remote possibility". These provisions enjoin a panel to scrutinize carefully the inferences and explanations of the
investigating authority in order to ensure that any projections or assumptions made by it, as to likely future occurrences, are adequately explained and supported by positive evidence on the
record. A panel should also keep in mind that Article 3.8 of the Anti-Dumping Agreement and Article 15.8 of the #SCM Agreement# exhort Members to exercise "special care" when considering
and deciding to apply anti-dumping and countervailing measures in cases of threat of injury.
Finally, we observe that it is in the nature of anti-dumping and countervailing duty investigations that an investigating authority will gather a variety of information and data from different sources,
and that these may suggest different trends and outcomes. The investigating authority will inevitably be called upon to reconcile this divergent information and data. However, the
evidentiary path that led to the inferences and overall conclusions of the investigating authority must be clearly discernible in the reasoning and explanations found in its report.
When those inferences and conclusions are challenged, it is the task of a panel to assess whether the explanations provided by the authority are "reasoned and adequate" by
testing the relationship between the evidence on which the authority relied in drawing specic inferences, and the coherence of its reasoning. In particular, the panel must also
examine whether the investigating authority's reasoning takes sufcient account of conicting evidence and responds to competing plausible explanations of that evidence. This task may also
require a panel to consider whether, in analyzing the record before it, the investigating authority evaluated all of the relevant evidence in an objective and unbiased manner, so as to reach its
ndings "without favoring the interests of any interested party, or group of interested parties, in the investigation."
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In sum, a panel charged with reviewing the factual basis for a threat of injury determination must determine whether the investigating authority has provided "a reasoned and adequate
explanation" of:
how individual pieces of evidence can be reasonably relied on in support of particular inferences, and how the evidence in the record supports its factual ndings;
how the facts in the record, rather than allegation, conjecture, or remote possibility, support and provide a basis for the overall threat of injury determination;
how its projections and assumptions show a high degree of likelihood that the anticipated injury will materialize in the near future; and
how it examined alternative explanations and interpretations of the evidence and why it chose to reject or discount such alternatives in coming to its conclusions.
Moreover, the injunction that panels should not substitute their own conclusions for those of the competent authorities does #not# mean that all a panel needs to do in order to comply with its
duties when reviewing a determination is to consider whether the investigating authority's ndings or conclusions appear to be "reasonable" or "plausible" in the abstract. To the contrary, a
panel can assess whether an authority's explanation for its determination is reasoned and adequate only if the panel critically examines that explanation in the light of the facts
and the alternative explanations that were before that authority.
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