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ON THIS PAGE:
> India — Patents (US), para. 94
> Brazil — Aircraft, para. 132
> US — FSC, para. 165
> US — Certain EC Products, para. 70
> Mexico — Corn Syrup (Article 21.5 — US), para. 54
> Mexico — Corn Syrup (Article 21.5 — US), paras. 58-59
> Mexico — Corn Syrup (Article 21.5 — US), para. 61
> Mexico — Corn Syrup (Article 21.5 — US), para. 62
> Mexico — Corn Syrup (Article 21.5 — US), para. 63
> Mexico — Corn Syrup (Article 21.5 — US), para. 64
> US — Upland Cotton, para. 260
> US — Upland Cotton, para. 261
> US — Upland Cotton, para. 262
> US — Upland Cotton, para. 263
> US — Upland Cotton, para. 264
> US — Upland Cotton, paras. 286-287
> US — Upland Cotton, para. 291
> US — Upland Cotton, para. 293
> US — Gambling, paras. 120-123
> US — Countervailing Duty Investigation on DRAMS, paras. 99-100
> Mexico — Anti-Dumping Measures on Rice, para. 136
> Mexico — Anti-Dumping Measures on Rice, para. 138
> Mexico — Anti-Dumping Measures on Rice,
paras. 139-140
> US — Zeroing (Japan),
paras. 94-95
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C.7.1 India — Patents (US),
para. 94 back to top
(WT/DS50/AB/R)
All parties engaged in dispute settlement under the DSU must be fully
forthcoming from the very beginning both as to the claims involved in a
dispute and as to the facts relating to those claims. Claims must be
stated clearly. Facts must be disclosed freely. This must be so in
consultations as well as in the more formal setting of panel
proceedings. In fact, the demands of due process that are implicit in
the DSU make this especially necessary during consultations. For the
claims that are made and the facts that are established during
consultations do much to shape the substance and the scope of subsequent
panel proceedings. If, in the aftermath of consultations, any party
believes that all the pertinent facts relating to a claim are, for any
reason, not before the panel, then that party should ask the panel in
that case to engage in additional fact-finding. But this additional
fact-finding cannot alter the claims that are before the panel — because it cannot alter the panel’s terms of reference. And, in the
absence of the inclusion of a claim in the terms of reference, a panel
must neither be expected nor permitted to modify rules in the DSU.
C.7.2 Brazil — Aircraft,
para. 132 back to top
(WT/DS46/AB/R)
We do not believe, however, that Articles 4 and 6 of the DSU, or
paragraphs 1 to 4 of Article 4 of the SCM Agreement, require a precise
and exact identity between the specific measures that were the
subject of consultations and the specific measures identified in the
request for the establishment of a panel. As stated by the Panel, “[o]ne
purpose of consultations, as set forth in Article 4.3 of the SCM
Agreement, is to ‘clarify the facts of the situation’, and it can be
expected that information obtained during the course of consultations
may enable the complainant to focus the scope of the matter with respect
to which it seeks establishment of a panel.” We are confident that the
specific measures at issue in this case are the Brazilian export
subsidies for regional aircraft under PROEX. Consultations were held by
the parties on these subsidies, and it is these same subsidies that were
referred to the DSB for the establishment of a panel. …
C.7.3 US — FSC, para. 165 back to top
(WT/DS108/AB/R)
As we have said, a year passed between submission of the request for
consultations by the European Communities and the first mention of this
objection by the United States — despite the fact that the United States had numerous
opportunities during that time to raise its objection. It seems to us
that, by engaging in consultations on three separate occasions, and not
even raising its objections in the two DSB meetings at which the request
for establishment of a panel was on the agenda, the United States acted
as if it had accepted the establishment of the Panel in this dispute, as
well as the consultations preceding such establishment. In these
circumstances, the United States cannot now, in our view, assert that
the European Communities’ claims under Article 3 of the SCM
Agreement should have been dismissed and that the Panel’s findings
on these issues should be reversed. Accordingly, we decline the United
States’ appeal from the Panel’s refusal to dismiss the European
Communities’ claim under Article 3 of the SCM Agreement due to
the European Communities’ alleged failure to comply with Article 4.2
of that Agreement. Thus, we do not find it necessary to rule on whether
the European Communities’ request for consultations includes a “statement
of available evidence” that satisfies the requirements of Article 4.2
of the SCM Agreement.
C.7.4 US — Certain EC Products, para. 70
back to top
(WT/DS165/AB/R)
… in our Report in Brazil — Export Financing Programme for
Aircraft, we stated that:
Articles 4 and 6 of the DSU … set
forth a process by which a complaining party must request consultations,
and consultations must be held, before a matter may be referred to the
DSB for the establishment of a panel.
The European Communities’
request for consultations of 4 March 1999 did not, of course, refer to
the action taken by the United States on 19 April 1999, because that
action had not yet been taken at the time. At the oral hearing in this
appeal, in response to questioning by the Division, the European
Communities acknowledged that the 19 April action, as such, was
not formally the subject of the consultations held on 21 April
1999. We, therefore, consider that the 19 April action is also, for that
reason, not a measure at issue in this dispute and does not fall within
the Panel’s terms of reference.
C.7.5 Mexico — Corn Syrup (Article 21.5 — US), para. 54
back to top
(WT/DS132/AB/RW)
… We agree with Mexico on the importance of consultations.
Through consultations, parties exchange information, assess the
strengths and weaknesses of their respective cases, narrow the scope of
the differences between them and, in many cases, reach a mutually agreed
solution in accordance with the explicit preference expressed in Article
3.7 of the DSU. Moreover, even where no such agreed solution is reached,
consultations provide the parties an opportunity to define and delimit
the scope of the dispute between them. Clearly, consultations afford
many benefits to complaining and responding parties, as well as to third
parties and to the dispute settlement system as a whole.
C.7.6 Mexico — Corn Syrup (Article 21.5 — US), paras. 58-59
back to top
(WT/DS132/AB/RW)
… as a general matter, consultations are a prerequisite to panel
proceedings. However, this general proposition is subject to certain
limitations. …
Article 4.3 of the DSU relates the responding party’s conduct
towards consultations to the complaining party’s right to request the
establishment of a panel. When the responding party does not respond to
a request for consultations, or declines to enter into consultations,
the complaining party may dispense with consultations and proceed to
request the establishment of a panel. In such a case, the responding
party, by its own conduct, relinquishes the potential benefits that
could be derived from those consultations.
C.7.7 Mexico — Corn Syrup (Article 21.5 — US), para. 61
back to top
(WT/DS132/AB/RW)
Article 4.7 also relates the conduct of the responding party
concerning consultations to the complaining party’s right to request
the establishment of a panel. This provision states that the responding
party may agree with the complaining party to forgo the potential
benefits that continued pursuit of consultations might bring. Thus,
Article 4.7 contemplates that a panel may be validly established
notwithstanding the shortened period for consultations, as long as the
parties agree. Article 4.7 does not, however, specify any particular
form that the agreement between the parties must take.
C.7.8 Mexico — Corn Syrup (Article 21.5 — US), para. 62
back to top
(WT/DS132/AB/RW)
In addition, … [the requirement in Article 6.2 of the DSU to
indicate] whether consultations were held … may be satisfied
by an express statement that no consultations were held. In other
words, Article 6.2 also envisages the possibility that a panel may be
validly established without being preceded by consultations.
C.7.9 Mexico — Corn Syrup (Article 21.5 — US), para. 63
back to top
(WT/DS132/AB/RW)
Thus, the DSU explicitly recognizes circumstances where the absence
of consultations would not deprive the panel of its authority to
consider the matter referred to it by the DSB. In our view, it follows
that where the responding party does not object, explicitly and in a
timely manner, to the failure of the complaining party to request or
engage in consultations, the responding party may be deemed to have
consented to the lack of consultations and, thereby, to have
relinquished whatever right to consult it may have had.
C.7.10 Mexico — Corn Syrup (Article 21.5 — US), para. 64
(WT/DS132/AB/RW)
back to top
As a result, we find that the lack of prior consultations is not a
defect that, by its very nature, deprives a panel of its authority to
deal with and dispose of a matter, and that, accordingly, such a defect
is not one which a panel must examine even if both parties to the
dispute remain silent thereon. …
C.7.11 US — Upland Cotton, para. 260
back to top
(WT/DS267/AB/R)
It is clear from Article 4.2 that, although a requested Member is
under an obligation to engage in “consultation” on “any”
representations made by another Member, such representations must
pertain to “measures affecting the operation of any covered agreement”.
…
C.7.12 US — Upland Cotton, para. 261
back to top
(WT/DS267/AB/R)
We agree with the Panel that the word “affecting” refers
primarily to “the way in which [measures] relate to a covered
agreement”. As the Appellate Body stated in EC — Bananas III,
“[t]he ordinary meaning of the word ‘affecting’ implies a measure
that has ‘an effect on’ ” something else. At the same time, we
also concur with the United States that the ordinary meaning of the word
“affecting” suggests a temporal connotation. As the United States
submits, the present tense of the phrase “affecting the operation of
any covered agreement” denotes that the effects of such measures must
relate to the present impact of those measures on the operation of a
covered agreement. It is not sufficient that a Member alleges that
challenged measures affected the operation of a covered agreement in the
past; the representations of the Member requesting consultations must
indicate that the effects are occurring in the present.
C.7.13 US — Upland Cotton, para. 262
back to top
(WT/DS267/AB/R)
Whether or not a measure is still in force is not dispositive of
whether that measure is currently affecting the operation of any covered
agreement. Therefore, we disagree with the United States’ argument
that measures whose legislative basis has expired are incapable of
affecting the operation of a covered agreement in the present and that,
accordingly, expired measures cannot be the subject of
consultations under the DSU. In our view, the question of whether
measures whose legislative basis has expired affect the operation of a
covered agreement currently is an issue that must be resolved on the
facts of each case. The outcome of such an analysis cannot be prejudged
by excluding it from consultations and dispute settlement proceedings
altogether.
C.7.14 US — Upland Cotton, para. 263
back to top
(WT/DS267/AB/R)
We consider that requesting Members should enjoy a degree of
discretion to identify, in their request for consultations under Article
4.2, matters relating to the covered agreements for discussion in
consultations. As the Appellate Body observed in Mexico — Corn
Syrup (Article 21.5 — US), consultations present an opportunity
for clarifying factual and legal issues, and for narrowing the scope of
a dispute, and for resolving differences between WTO Members. We do not
think it would advance the purpose of consultations if Article 4.2 were
interpreted as excluding a priori measures whose legislative
basis may have expired, but whose effects are alleged to be impairing
the benefits accruing to the requesting Member under a covered
agreement. Nor, indeed, do we find textual support in the provision
itself for doing so. Thus, we do not read Article 4.2 of the DSU as
precluding a Member from making representations on measures whose
legislative basis has expired, where that Member has reason to believe
that such measures are still “affecting” the operation of a covered
agreement.
C.7.15 US — Upland Cotton, para. 264
back to top
(WT/DS267/AB/R)
We find contextual support for this interpretation in Article 3.3 of
the DSU, which underscores the importance of the “prompt settlement”
of certain situations that, in the absence of settlement, could
undermine the effective functioning of the WTO and the maintenance of a
proper balance between the rights and obligations of Members. We note,
first, that Article 3.3 focuses not upon “existing” measures, or
measures that are “currently in force” but, rather, upon “measures
taken” by a Member, which includes measures taken in the past. We also
observe that Article 3.3 envisages that disputes arise when a Member “considers”
that benefits accruing to it are being impaired by measures taken by
another Member. By using the word “considers”, Article 3.3 focuses
on the perception or understanding of an aggrieved Member. This does not
exclude the possibility that a Member requesting consultations may have
reason to believe that a measure is still impairing benefits even though
its legislative basis has expired.
C.7.16 US — Upland Cotton, paras. 286-287
back to top
(WT/DS267/AB/R)
In reviewing the Panel’s analysis, we are faced with the question
whether the scope of the consultations is determined by the written
request for consultations or by what actually happens in the
consultations. …
We believe that the Panel should have limited its analysis to the
request for consultations because we are inclined to agree with the
panel in Korea — Alcoholic Beverages, which stated that “[t]he
only requirement under the DSU is that consultations were in fact held
… [w]hat takes place in those consultations is not the concern of a
panel”. Examining what took place in the consultations would seem
contrary to Article 4.6 of the DSU, which provides that “[c]onsultations
shall be confidential, and without prejudice to the rights of any Member in
any further proceedings.” Moreover, it would seem at odds with the
requirements in Article 4.4 of the DSU that the request for
consultations be made in writing and that it be notified to the DSB. In
addition, there is no public record of what actually transpires during
consultations and parties will often disagree about what, precisely, was
discussed. Ultimately, however, it is not necessary for us to inquire
into this part of the Panel’s analysis because the Panel also found
“that export credit guarantee measures relating to all eligible
agricultural commodities were included in Brazil’s request for
consultations, based on its reading of the text of the request itself”.
…
C.7.17 US — Upland Cotton, para. 291
back to top
(WT/DS267/AB/R)
We have examined carefully Brazil’s request for consultations and
we find that it provides a sufficient basis for the Panel to have
concluded that the request included export credit guarantees to eligible
agricultural commodities including, but not limited to, upland cotton.
…
C.7.18 US — Upland Cotton, para. 293
back to top
(WT/DS267/AB/R)
We emphasize that consultations are but the first step in the WTO
dispute settlement process. They are intended to “provide the parties
an opportunity to define and delimit the scope of the dispute between
them”. We also note that Article 4.2 of the DSU calls on a WTO Member
that receives a request for consultations to “accord sympathetic
consideration to and afford adequate opportunity for consultation
regarding any representations made by another Member”. As long as the
complaining party does not expand the scope of the dispute, we hesitate
to impose too rigid a standard for the “precise and exact identity”
between the scope of consultations and the request for the establishment
of a panel, as this would substitute the request for consultations for
the panel request. According to Article 7 of the DSU, it is the request
for the establishment of a panel that governs its terms of reference,
unless the parties agree otherwise.
C.7.19 US — Gambling, paras. 120-123
back to top
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
The question before us, therefore, is whether an alleged “total
prohibition” on the cross-border supply of gambling and betting
services constitutes a measure that may be challenged under the GATS.
The DSU provides for the “prompt settlement” of situations where
Members consider that their benefits under the covered agreements “are
being impaired by measures taken by another Member”. Two
elements of this reference to “measures” that may be the subject of
dispute settlement are relevant. First, as the Appellate Body has
stated, a “nexus” must exist between the responding Member and the
“measure”, such that the “measure” — whether an act or
omission — must be “attributable” to that Member. Secondly, the “measure”
must be the source
of the alleged impairment, which is in turn the effect resulting
from the existence or operation of the “measure”.
Similarly [Article 4.2 of the DSU] contemplates that “measures”
themselves will “affect” the operation of a covered agreement.
Finally, we note that this distinction between measures and their
effects is also evident in the scope of application of the GATS, namely,
to “measures by Members affecting trade in services”.
We are therefore of the view that the DSU and the GATS focus on “measures”
as the subject of challenge in WTO dispute settlement. To the extent
that a Member’s complaint centres on the effects of an action taken by
another Member, that complaint must nevertheless be brought as a
challenge to the measure that is the source of the alleged
effects.
C.7.20 US — Countervailing Duty Investigation on DRAMS, paras.
99-100 back to top
(WT/DS296/AB/R)
… Korea’s initial request for consultations did not refer to
the CVD order, which was not in existence at the time the request was
made. In the Addendum to its request for consultations, Korea sought “further
consultations” with regard to the USITC’s final injury determination
and the USDOC’s CVD order. … The United States considers
that this language does not permit a conclusion that the claims asserted
in the initial request for consultations apply also to the CVD order …
We disagree. The Addendum expressly refers to the initial request for
consultations. It is clear that the Addendum was intended to be read
together with the original request for consultations; indeed, that is
the very nature of an addendum. Moreover, we recall that Korea explains
that, under United States law, “the [CVD] order is wholly dependent on
the administrative determinations and is effectively a ministerial
function without discretion”. According to Korea, “it follows that
the legal claims of the underlying determinations are identical to the
legal claims with respect to the [CVD] order”. … In these
circumstances, it should have been apparent that the allegations of
inconsistency, set forth by Korea in the original request for
consultations and in the Addendum in relation to the USDOC’s subsidy
determination and the USITC’s injury determination, applied also to
the CVD order. Nor can it be said that the United States was expected
“to guess which provision(s) applied to the [CVD] order”.
Accordingly, we find that it was reasonable for the Panel to conclude
that the “totality” of the provisions in Korea’s initial request
for consultations and in the Addendum provides, with respect to the
USDOC’s CVD order, a sufficient indication of the legal basis for the
complaint within the meaning of Article 4.4.
C.7.21 Mexico — Anti-Dumping Measures on Rice, para. 136
(WT/DS295/AB/R)
back to top
The Appellate Body has previously explained that the term “legal
basis”, which appears in both Article 4.4 and Article 6.2, refers to
the claims made by the complaining party. It does not follow from the
use of the same term in both provisions, however, that the claims made at the time of the panel
request must be identical to those indicated in the request for
consultations. …
C.7.22 Mexico — Anti-Dumping Measures on Rice, para. 138
(WT/DS295/AB/R)
back to top
… A complaining party may learn of additional information during
consultations —for example, a better understanding of the operation of
a challenged measure — that could warrant revising the list of treaty
provisions with which the measure is alleged to be inconsistent. Such a
revision may lead to a narrowing of the complaint, or to a reformulation
of the complaint that takes into account new information such that
additional provisions of the covered agreements become relevant. The
claims set out in a panel request may thus be expected to be shaped by,
and thereby constitute a natural evolution of, the consultation process.
Reading the DSU, as Mexico does, to limit the legal basis set out in the
panel request to what was indicated in the request for consultations,
would ignore an important rationale behind the requirement to hold
consultations — namely, the exchange of information necessary to
refine the contours of the dispute, which are subsequently set out in
the panel request. In this light, we consider that it is not necessary
that the provisions referred to in the request for consultations be
identical to those set out in the panel request, provided that the “legal
basis” in the panel request may reasonably be said to have evolved
from the “legal basis” that formed the subject of consultations. In
other words, the addition of provisions must not have the effect of
changing the essence of the complaint.
C.7.23 Mexico — Anti-Dumping Measures on Rice, paras. 139-140
(WT/DS295/AB/R)
back to top
… the Panel made no findings of inconsistency
— and indeed,
undertook no analysis at all — with respect to four of the 13 claims
that Mexico alleges on appeal were not properly identified by the United
States in the request for consultations as part of the “legal basis”
of the complaint.
In the absence of any findings of inconsistency by the Panel or an
appeal by the United States on these four claims, we see no need to
decide whether they were sufficiently identified as part of the “legal
basis” for the complaint, because doing so “would not serve ‘to
secure a positive solution’ to this dispute”. At the oral hearing,
Mexico and the United States agreed with this approach. We therefore
decline to examine whether these four claims evolved out of the “legal
basis” indicated in the request for consultations. …
C.7.24 US — Zeroing (Japan), paras. 94-95
back to top
(WT/DS322/AB/R)
We do not agree with the United States’ [assertion that Japan’s
request for consultations did not include a reference to any “zeroing
measure” in the context of W-T or T-T comparisons in original
investigations]. A careful examination of this request indicates that
the use of “zeroing procedures” in the context of all types and
stages of anti-dumping proceedings, and regardless of the comparison
methodology used, was covered by that request.
The language in Japan’s request for consultations should, in our
view, have sufficiently alerted the United States to the fact that Japan
wished to consult on zeroing in the context of all comparison
methodologies, including T-T and W-T comparisons in original
investigations. Put differently, the measure upon which Japan wished to
consult was the United States’ “methodology … for determining
dumping margins … in [original] investigations”. That “zeroing
procedures” may manifest themselves differently when calculating a
margin of dumping under the W-W, T-T, and W-T comparison methodologies
does not necessarily mean that these manifestations of zeroing would
have to be listed in a request for consultations.
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