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DISPUTE SETTLEMENT: DISPUTE DS321

Canada — Continued Suspension of Obligations in the EC — Hormones Dispute

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.

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Summary up-to-date at

Panel Reports currently under appeal

Complaint by the European Communities.

On 8 November 2004, the European Communities filed a request for consultations with Canada asserting that Canada should have removed its retaliatory measures since the EC has removed the measures found to be WTO-inconsistent in the EC — Hormones case.

The issues which the EC intends to raise in the consultations include, but are not limited to:

• the failure by Canada to remove the retaliatory measures despite the EC’s removal of the WTO-inconsistent measures:
   
• the unilateral determinations by Canada that the new EC legislation is a continued WTO violation; and
   
• the failure of Canada to follow DSU Article 21.5 dispute settlement procedures to adjudicate the matter.

The EC considers that the continued use by Canada of retaliatory measures in this case, in the current circumstances, are violations of Articles I and II of GATT 1994, and Articles 21.5, 22.8, 23.1 and 23.2 (a) and (c) of the DSU.

On 19 November 2004, Australia, Mexico and the United States requested to join the consultations. On 14 December 2004, Canada informed the DSB that it had accepted the request of the United States to join the consultations.

On 13 January 2005, the European Communities requested the establishment of a panel. At its meeting on 25 January 2005, the DSB deferred the establishment of a panel. At its meeting on 17 February 2005, the DSB established a panel. Australia, Canada, China, Mexico and Chinese Taipei reserved their third party rights. On 23 February 2005, Norway reserved its third party rights. On 25 February 2005, Brazil reserved its third party rights. On 28 February 2005, India and New Zealand reserved their third party rights. On 27 May 2005, the European Communities requested the Director General to compose the panel. On 6 June 2005, the Director-General composed the panel. The first substantive meeting of the Panel with the parties took place on 12-15 September 2005, which was open for observation by the public.

On 20 January 2006, the Chairman of the Panel informed the DSB that due to the complexity of the dispute, and the administrative and procedural matters involved, the panel would not be able to complete its work in six months.  Based on the current assessment of the process, the panel expects to issue its final report to the parties in the course of October 2006.

On 23 January 2007, the Chairman of the Panel informed the DSB that it had expected to issue its final report to the parties in the course of October 2006. However, due to the complexity of the scientific issues involved and due to the difficulties in scheduling the second open hearing of the Panel with the parties and experts consulted by the Panel, it was not possible to meet that time line. The Panel estimated that it would issue its final report to the parties in the course of June 2007. On 22 June 2007, the Chairman of the Panel informed the DSB that the preparation of the Panel Report was taking longer than expected and that it expected to issue its final report to the parties in the course of October 2007.

On 31 March 2008, the Panel report was circulated to Members. The Panel concluded that, with respect to the claims of the European Communities concerning the violation of Article 23.2(a) read together with Articles 21.5 and 23.1 of the DSU, Canada made the following procedural violations:

1. by seeking, through the measure at issue — that is the suspension of concessions or other obligations subsequent to the notification of the EC implementing measure (Directive 2003/74/EC) — the redress of a violation of obligations under a covered agreement without having recourse to, and abiding by, the rules and procedures of the DSU, Canada has breached Article 23.1 of the DSU;
     
2. by making a determination within the meaning of Article 23.2(a) of the DSU to the effect that a violation had occurred without having recourse to dispute settlement in accordance with rules and procedures of the DSU, Canada has breached Article 23.2(a) of the DSU.

In addition, having addressed the claims raised by the European Communities concerning Article 23.1 read together with Articles 22.8 and 3.7 of the DSU, the Panel concluded that:

1. to the extent that the measure found to be inconsistent with the SPS Agreement in the EC - Hormones dispute (WT/DS48) has not been removed by the European Communities, Canada has not breached Article 22.8 of the DSU;
     
2. to the extent that Article 22.8 has not been breached, the European Communities has not established a violation of Articles 23.1 and 3.7 of the DSU  as a result of a breach of Article 22.8.

In the light of these conclusions, the Panel recommended that the DSB request Canada to bring its measure into conformity with its obligations under the DSU. The Panel further suggested that, in order to implement its findings under Article 23 and in order to ensure the prompt settlement of this dispute, Canada should have recourse to the rules and procedures of the DSU without delay.

On 29 May 2008, the European Communities notified its decision to request the Appellate Body to review certain issues of law covered in the Panel report and certain legal interpretations developed by the Panel.

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