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.
See also:
> One-page summary of key findings of this dispute
> The basics: how disputes are settled in WTO
> Computer based training on dispute settlement
> Text of the Dispute Settlement Understanding
|
Current status back to top
Key facts back to top
Summary of the dispute to date back to top
The summary below was up-to-date at
See also: One-page summary of key findings of this dispute
Consultations
Complaint by the European Communities.
On 4 March 1999, the EC requested consultations with
the US in respect of the US decision, effective as of 3 March 1999, to
withhold liquidation on imports from the EC of a series of products
together valued at over $500 million on an annual basis, and to impose a
contingent liability for 100% duties on each individual importation of
affected products. On 2 March 1999, the arbitrators charged with
determining the level of suspension of concessions, requested by the
United States in response to the failure by the EC to implement the
recommendations of the DSB in respect of the EC’s banana regime (WT/DS27),
had asked for additional data from the parties and informed the parties
that they were unable to issue their report within the 60-day period
envisaged by the DSU. The EC contends that the measure made effective by
the US as of 3 March 1999 deprives EC imports into the United States, of
the products in question, of the right to a duty not in excess of the rate
bound in the US Schedule. The EC further contended that, by requiring the
deposit of a bond to cover the contingent liability for 100% duties, US
Customs effectively impose 100% duties on each individual importation. The
EC alleged violations of Articles 3, 21, 22 and 23 of the DSU, and
Articles I, II, VIII and XI of GATT 1994. The EC also alleged
nullification and impairment of benefits under GATT 1994, as well as the
impediment of the objectives of the DSU and GATT 1994. The EC had
requested urgent consultations pursuant to Article 4.8 of the DSU.
On 11 May 1999, the EC requested the establishment of a
panel. At its meeting on 26 May 1999, the DSB deferred the establishment
of a panel.
Panel and Appellate Body proceedings
Further to a second request to establish a panel by the EC,
the DSB established a panel at its meeting on 16 June 1999. Dominica,
Ecuador, India, Jamaica, Japan and St. Lucia reserved their third party
rights. On 29 September 1999, the EC requested the Director-General to
determine the composition of the Panel. On 8 October 1999, the Panel was
composed. The report of the panel was circulated to Members on 17 July
2000. The panel found that:
- the US measure of 3 March 1999 was seeking to redress a
WTO violation and was thus covered by Article 23.1 of the DSU;
- by putting into place that measure prior to the time
authorized by the DSB, the US made a unilateral determination that the
revised EC bananas regime in respect of its bananas import, sales and
distribution regime violated WTO rules, contrary to Articles 23.2(a) and
21.5, first sentence, of the DSU. In doing so, the United States did not
abide by the DSU and thus also violated Article 23.1 together with Article
23.2(a) and 21.5 of the DSU;
- the increased bonding requirements of the measure of 3
March 1999 as such led to violations of Articles II:1(a) and II:1(b),
first sentence (one panelist dissented, considering that those
requirements rather violated Article XI:1 of the GATT 1994);
- the increased interest charges, costs and fees
resulting from the 3 March Measure violated Article II:1(b), last
sentence;
- the measure in question also violated Article I of the
GATT 1994;
- in light of these conclusions, the measure of 3 March
1999 constituted a suspension of concessions or other obligations within
the meaning of Articles 3.7, 22.6 and 23.2(c) of the DSU imposed without
DSB authorization and during the ongoing Article 22.6 arbitration process;
and
- in suspending concessions in those circumstances, the
US did not abide by the DSU and thus violated Article 23.1 together with
Articles 3.7, 22.6 and 23.2(c) of the DSU.
On 12 September 2000, the EC notified its intention to
appeal certain issues of law and legal interpretations developed by the
panel. The report of the Appellate Body was circulated on 11 December
2000. The Appellate Body:
- concluded that the Panel erred by stating that the WTO-consistency
of a measure taken by a Member to comply with recommendations and rulings
of the DSB can be determined by arbitrators appointed under Article 22.6
of the DSU, and, thus, concluded that the Panel’s statements on this issue
have no legal effect.
- concluded that the Panel erred by stating that “[o]nce
a Member imposes DSB authorised suspensions of concessions or obligations,
that Member’s measure is WTO compatible (it was explicitly authorised by
the DSB)”, and, thus, concluded that this statement has no legal
effect.
- reversed the Panel’s findings that the increased
bonding requirements are inconsistent with Articles II:1(a) and II:2(b),
first sentence, of the GATT 1994, and
- reversed the Panel’s finding that, by adopting the 3
March Measure, the US acted inconsistently with Article 23.2(a) of the DSU.
As it upheld the Panel’s finding that the 3 March
Measure, the measure at issue in this dispute, is no longer in existence,
the Appellate Body did not make any recommendation to the DSB pursuant to
Article 19.1 of the DSU.
At its meeting of 10 January 2001, the DSB adopted the Appellate Body
report and the Panel report, as modified by the Appellate Body report. |
> Problems viewing this page?
Please contact webmaster@wto.org giving details of the operating system and web browser you are using. |
