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REPERTORY OF APPELLATE BODY REPORTS

Review of Implementation of DSB Rulings, Article 21.5 of the DSU


ON THIS PAGE:

Article 21.5 of the DSU — General
Article 21.5 of the DSU — “measures taken to comply”
Article 21.5 of the DSU — “new claims”
Article 21.5 of the DSU — Effect of DSB rulings in the original dispute. See also Status of Panel and Appellate Body Reports (S.8)
Article 21.5 of the DSU — “these dispute settlement procedures”
Article 21.5 of the DSU — Prejudice
Article 21.5 of the DSU — Post suspension of concessions


R.4.0 Article 21.5 of the DSU — General     back to top

R.4.0.1 US — Softwood Lumber IV (Article 21.5 — Canada), paras. 70-72
(WT/DS257/AB/RW)

 

Article 21.5 is one paragraph within an Article entitled “Surveillance of Implementation of Recommendations and Rulings”. As a whole, Article 21 deals with events subsequent to the DSB’s adoption of recommendations and rulings in a particular dispute. The various paragraphs of Article 21 make clear that following such recommendations and rulings, further relevant developments and disagreements are to be dealt with through the reporting and surveillance modalities set out therein, and in such a way as to achieve “prompt resolution”. Article 21 obliges an implementing Member to keep the DSB apprised of its intentions (paragraph 3) and ongoing efforts (paragraph 6) regarding implementation. At the same time, Article 21 sets out a number of mechanisms to ensure collective oversight of that Member’s implementation. With respect to the determination of the reasonable period of time, these are found in Article 21.3, and with respect to measures taken to comply, they are found in Article 21.5. Thus, within Article 21 as a whole, the declarations of the implementing Member form an integral part of the surveillance of implementation, but they do not stand alone. Rather, they are complemented by, and subject to, multilateral review within the World Trade Organization (the “WTO”).

 

Turning to the role played by Article 21.5 within the broader framework of the DSU, we note that there are key differences between proceedings under Article 21.5 of the DSU and “regular” panel proceedings. First, the composition of an Article 21.5 panel is, in principle, already determined — wherever possible, it is the original panel. These individuals will be familiar with the contours of the dispute, and the experience gained from the original proceedings should enable them to deal more efficiently with matters arising in an Article 21.5 proceeding “against the background of the original proceedings”. Secondly, the time-frames are shorter. … Thirdly, there are some limits on the claims that can be raised in Article 21.5 proceedings. Yet, these limits should not allow circumvention by Members by allowing them to comply through one measure, while, at the same time, negating compliance through another.

 

Taken together, these observations underscore the balance that Article 21.5 strikes between competing considerations. On the one hand, it seeks to promote the prompt resolution of disputes, to avoid a complaining Member having to initiate dispute settlement proceedings afresh when an original measure found to be inconsistent has not been brought into conformity with the recommendations and rulings of the DSB, and to make efficient use of the original panel and its relevant experience. On the other hand, the applicable time-limits are shorter than those in original proceedings, and there are limitations on the types of claims that may be raised in Article 21.5 proceedings. This confirms that the scope of Article 21.5 proceedings logically must be narrower than the scope of original dispute settlement proceedings. This balance should be borne in mind in interpreting Article 21.5 and, in particular, in determining the measures that may be evaluated in proceedings pursuant to that provision.

 

R.4.0.2 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), para. 151
(WT/DS268/AB/RW)

 

… we recall that the aim of Article 21.5 of the DSU is to promote the prompt compliance with DSB recommendations and rulings and the consistency of “measures taken to comply” with the covered agreements by making it unnecessary for a complainant to begin new proceedings and by making efficient use of the original panellists and their relevant experience. These considerations support the Panel’s finding that the volume analysis was properly before it. Requiring Argentina to initiate new WTO proceedings against the United States in order to challenge the USDOC’s finding on import volumes would entail a significant delay. Moreover, it would be difficult to reconcile this with the objective that Article 21.5 panels “examine fully the ‘consistency with a covered agreement of the measures taken to comply’, as required by [that provision]”. Finally, it seems difficult to conceive how the two factual bases could each be examined by separate panels (one of which is operating pursuant to Article 21.5), considering that both factual premises together support the USDOC’s likelihood-of-dumping determination.

 

R.4.0.3 US — Upland Cotton (Article 21.5 — Brazil), para. 201
(WT/DS267/AB/RW)

 

As in original dispute settlement proceedings, the “matter” in proceedings brought pursuant to Article 21.5 of the DSU consists of two elements: the specific measures at issue and the legal basis of the complaint (that is, the claims). Thus, in order to determine whether Brazil’s claims relating to the revised GSM 102 programme concerning pig meat and poultry meat are properly within the scope of these Article 21.5 proceedings, we must first identify the “measure taken to comply” by the United States. We must then determine whether there are any limitations on the claims that may be raised by Brazil with respect to that measure in these Article 21.5 proceedings.

 

R.4.0.4 US — Upland Cotton (Article 21.5 — Brazil), para. 212
(WT/DS267/AB/RW)

 

Finally, we note that “the aim of Article 21.5 of the DSU is to promote the prompt compliance with DSB recommendations and rulings and the consistency of ‘measures taken to comply’ with the covered agreements by making it unnecessary for a complainant to begin new proceedings and by making efficient use of the original panelists and their relevant experience”. Moreover, having an Article 21.5 panel examine Brazil’s claims against export credit guarantees provided under the revised GSM102 programme to upland cotton and certain other products, while a new panel examines Brazil’s claims against export credit guarantees provided under the same programme to pig meat and poultry meat, would not be the most efficient use of WTO dispute settlement procedures.

 

R.4.0.5 US — Continued Suspension / Canada — Continued Suspension, paras. 356-357
(WT/DS320/AB/R, WT/DS321/AB/R)

 

The European Communities further submits that it “appears that the United States and Canada as ‘defending parties’ would not be obliged to participate” in Article 21.5 panel proceedings initiated by the European Communities. In support of this argument, the European Communities referred to the fact that in EC — Bananas III (Article 21.5 — EC), one of the original complainants (the United States) refused to participate in the Article 21.5 panel proceedings that the original respondent (the European Communities) had initiated. …

 

We note that the panel in EC — Bananas III (Article 21.5 — EC) did not find that it was precluded from examining the European Communities’ claims because the European Communities had been the respondent in the original proceedings. Moreover, the exceptional circumstances in EC — Bananas III (Article 21.5 — EC), including the particular request made by the European Communities in those proceedings, could explain the lack of participation of certain original complainants and that panel’s decision not to make a ruling on the consistency of the European Communities’ first implementing measure. In EC — Bananas III (Article 21.5 — EC), an Article 21.5 panel was established at the request of one of the original complainants, Ecuador, in which the European Communities’ first implementing measure was found to be inconsistent with the WTO agreements. There was also an ongoing arbitration pursuant to Article 22.6 of the DSU between the European Communities and the United States. That dispute, on its unusual facts, does not lead to the conclusion that an Article 21.5 panel would be precluded from making an objective assessment of the matter referred to it by the original respondent.

 

R.4.0.6 US — Zeroing (EC) (Article 21.5 — EC), para. 299
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

Thus, the reasonable period of time allows a Member sufficient time to bring itself into conformity with its WTO obligations without being required to provide compensation or being subject to the suspension of concessions or other obligations. Given that the responding WTO Member is required to bring the measure found to be inconsistent into conformity with the relevant covered agreement within the reasonable period of time (where immediate compliance is impracticable), a failure to comply fully with, or an omission in the implementation of, the DSB’s recommendations and rulings cannot be found before the end of the reasonable period of time. When a reasonable period of time for implementation has been determined, Article 21.3 of the DSU implies that the obligation to comply with the recommendations and rulings of the DSB has to be fulfilled by the end of the reasonable period of time at the latest, and that the WTO-inconsistency has to cease by the end of the reasonable period of time with prospective effect. Thus, in this dispute, with respect to the “as applied” findings of the panel and/or the Appellate Body in the original proceedings, the United States was required to ensure that the use of the “zeroing” methodology in the 31 cases at issue in the original proceedings ceased by the end of the reasonable period of time.

 

R.4.0.7 US — Zeroing (EC) (Article 21.5 — EC), paras. 382-384
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

Finally, we consider the Panel’s findings with respect to the third subcategory of sunset determinations, which includes Case 19.We recall that, in Case 19, both the USDOC and the USITC had made their respective final likelihood-of-dumping and likelihood-of-injury determinations by the time the Panel was established. However, the USDOC issued a continuation order on 12 October 2007, after the Panel was established on 25 September 2007.

 

We recall that, in Chile — Price Band System, the Appellate Body found that a panel could examine amendments to a measure that post-dated its establishment, provided they did not change the essence of the measure at issue. In the present case, we observe that, even if the continuation order post-dated the establishment of the Panel, it was issued only a few days after this date and does not change the essence of the determinations under this sunset review. We consider that the continuation order is relevant in judging compliance by the United States with the recommendations and rulings of the DSB. We also observe that, at the time the Panel was established, both determinations required by Article 11.3 of the Anti-Dumping Agreement in a sunset review had been made and, therefore, considering that both determinations were affirmative, the sunset review would result in a continuation order by operation of law in the United States’ anti-dumping system.

 

We are of the view that the Panel should have considered that this sunset review resulted in a continuation order in its evaluation of whether it affected compliance by the United States with the recommendations and rulings of the DSB in this particular sunset review. Thus, we disagree with the Panel that the fact that the proceedings had not been formally concluded in Case 19 prevented it from considering the effects of the sunset review on the implementation of the DSB’s recommendations and rulings by the United States.

 

R.4.0.8 US — Zeroing (Japan) (Article 21.5 — Japan), para. 158
(WT/DS322/AB/RW)

 

Accordingly, the mandate of an Article 21.5 panel is to determine whether a WTO Member has implemented the DSB’s recommendations and rulings fully and in a timely manner. An Article 21.5 panel is not called upon to modify the reasonable period of time agreed or determined under Article 21.3. A WTO Member will not have met its obligation to implement the DSB’s recommendations and rulings if measures taken to comply are inconsistent with the covered agreements or if there is an omission in implementation. Moreover, Article 21.3 requires that the obligation to implement fully the DSB’s recommendations and rulings be fulfilled by the end of the reasonable period of time at the latest and, consequently, the WTO-inconsistent conduct must cease at the latest by that time.

 

R.4.0.9 US — Zeroing (Japan) (Article 21.5 — Japan), para. 160
(WT/DS322/AB/RW)

 

… Irrespective of the date on which the imports entered the territory of the implementing Member, the WTO-inconsistencies must cease by the end of the reasonable period of time. There will not be full compliance where the implementing Member fails to take action to rectify the WTO-inconsistent aspects of a measure that remains in force after the end of the reasonable period of time. Likewise, actions taken by the implementing Member after the end of the reasonable period of time must be WTO-consistent, even if those actions are in respect of imports that entered the Member’s territory before the end of the reasonable period of time. Therefore, we agree with the Panel’s statement that, “[i]f a measure found to be WTO-inconsistent is to be applied after the expiry of the RPT, that measure must have been brought ‘into conformity’, irrespective of the date of entry of the imports covered by that measure”. Indeed, any conduct of the implementing Member that was found to be WTO-inconsistent by the DSB must cease by the end of the reasonable period of time. Otherwise, that Member would continue to act in a WTO-inconsistent manner after the end of the reasonable period of time, contrary to Articles 3.7, 19.1, 21.1, 21.3, and 21.5 of the DSU.

 

R.4.0.10 US — Zeroing (Japan) (Article 21.5 — Japan), paras. 166-167, 169
(WT/DS322/AB/RW)

 

… under both retrospective and prospective anti-dumping systems, entries made prior to the expiration of the reasonable period of time also may be affected by compliance obligations. As a consequence, we disagree with the United States that disregarding the date of entry of the merchandise for purposes of determining compliance would result in retrospective anti-dumping systems being treated less favourably than prospective anti-dumping systems.

 

An additional concern raised by the United States is that failing to determine compliance by reference to the date of entry would amount to retroactive relief, which, in the United States’ view, is “at odds with the prospective nature of compliance under the WTO dispute settlement system”. The United States considers that such an approach results in retroactive relief because it concerns entries that occurred prior to the expiry of the reasonable period of time. As we explained earlier, the DSU requires cessation of all WTO-inconsistent conduct either immediately upon adoption of the DSB’s recommendations and rulings or no later than upon expiration of the reasonable period of time, regardless of the date of importation. There is no “retroactive relief” involved when a WTO Member’s conduct is examined as of the end of the reasonable period of time, which is the proper reference point. …

 

 

Therefore, we disagree with the United States’ argument that “the determinative fact for establishing whether a Member has complied with the DSB’s recommendations and rulings is the date merchandise enters that Member’s territory”. We find, instead, that the DSU requires cessation of all WTO-inconsistent conduct immediately upon the adoption of the DSB’s recommendations and rulings or no later than upon expiration of the reasonable period of time. Consequently, in the case of periodic reviews of anti-dumping duty orders, the obligation to comply covers actions or omissions subsequent to the reasonable period of time, even if they relate to imports that entered the territory of a WTO Member at an earlier date.

 

R.4.0.11 US — Zeroing (Japan) (Article 21.5 — Japan), para. 178
(WT/DS322/AB/RW)

 

… Moreover, the very text of Article 21.3 indicates that the “reasonable period of time” is an exception to immediate compliance, thus implying that further delays would not be justified, whatever the circumstances. …

 

R.4.0.12 US — Zeroing (Japan) (Article 21.5 — Japan), paras. 181-184
(WT/DS322/AB/RW)

 

… The premise underlying the United States’ argument is that, if the liquidation actions do not mechanically derive from the challenged reviews, then such actions would be outside the scope of the United States’ compliance obligations. We do not read the Appellate Body’s statements in US — Zeroing (EC) (Article 21.5 — EC) as suggesting that, if the liquidation actions do not mechanically derive from the challenged reviews, then such actions would be outside the scope of the implementing Member’s compliance obligations. Nor do we consider that such an a contrario approach is warranted. The emphasis in that case was on the fact that actions that somehow automatically derived from previous periodic reviews affected by zeroing would also be in breach if taken after the end of the reasonable period of time. Liquidation that occurs after the reasonable period of time due to court proceedings, and does not derive mechanically from the periodic review, but is somehow autonomous — as the United States claims is the case in the current proceedings — would also be impermissible if the use of zeroing had not been rectified. Hence, we do not see why such actions — be they “mechanically derived” or not from the challenged periodic reviews — would be exempted from the United States’ obligation to comply with the DSB’s recommendations and rulings by the end of the reasonable period of time.

 

… We note that a WTO Member “bears responsibility for acts of all its departments of government, including its judiciary”. This is supported by Article 18.4 of the Anti-Dumping Agreement, Article XVI:4 of the WTO Agreement, and Article 27 of the Vienna Convention. The judiciary is a state organ and even if an act or omission derives from a WTO Member’s judiciary, it is nevertheless still attributable to that WTO Member. Thus, the United States cannot seek to avoid the obligation to comply with the DSB’s recommendations and rulings within the reasonable period of time, by relying on the timing of liquidation being “controlled by the independent judiciary”. …

 

… In any event, defining the act of collection of anti-dumping duties as “ministerial” does not shield it from being subject to the disciplines of Article VI of the GATT 1994 and the Anti-Dumping Agreement, in particular, Article 9, which is entitled “Imposition and Collection of Anti-Dumping Duties”. Irrespective of whether an act is defined as “ministerial” or otherwise under United States law, and irrespective of any discretion that the authority issuing such instructions or taking such action may have, the United States, as a Member of the WTO, is responsible for those acts in accordance with the covered agreements and international law.

 

… regardless of whether court proceedings are initiated by private parties, it is the court that decides whether or not to grant an injunction and private parties do not control the timing or content of the court’s decisions. Thus, we are not persuaded that the initiation by private parties of domestic judicial proceedings is relevant for determining the scope of the United States’ compliance obligations in this case.

 

R.4.0.13 US — Zeroing (Japan) (Article 21.5 — Japan), paras. 186-187
(WT/DS322/AB/RW)

 

… Thus, exempting measures subject to domestic judicial proceedings from the obligation to comply with the DSB’s recommendations and rulings by the end of the reasonable period of time could potentially have considerable implications for the effectiveness of WTO dispute settlement in areas beyond anti-dumping.

 

Therefore, the fact that collection of anti-dumping duties is delayed as a result of domestic judicial proceedings does not provide a valid justification for the failure to comply with the DSB’s recommendations and rulings by the end of the reasonable period of time.

 
R.4.1 Article 21.5 of the DSU — “measures taken to comply”     back to top

R.4.1.1 Canada — Aircraft (Article 21.5 — Brazil), para. 36
(WT/DS70/AB/RW)

 

Proceedings under Article 21.5 do not concern just any measure of a Member of the WTO; rather, Article 21.5 proceedings are limited to those “measures taken to comply with the recommendations and rulings” of the DSB. In our view, the phrase “measures taken to comply” refers to measures which have been, or which should be, adopted by a Member to bring about compliance with the recommendations and rulings of the DSB. In principle, a measure which has been “taken to comply with the recommendations and rulings” of the DSB will not be the same measure as the measure which was the subject of the original dispute, so that, in principle, there would be two separate and distinct measures: the original measure which gave rise to the recommendations and rulings of the DSB, and the “measures taken to comply” which are — or should be — adopted to implement those recommendations and rulings. In these Article 21.5 proceedings, the measure at issue is a new measure, the revised TPC programme, which became effective on 18 November 1999 and which Canada presents as a “measure taken to comply with the recommendations and rulings” of the DSB.

 

R.4.1.2 Canada — Aircraft (Article 21.5 — Brazil), para. 38
(WT/DS70/AB/RW)

 

We add also that the examination of “measures taken to comply” is based on the relevant facts proved, by the complainant, to the Article 21.5 panel, during the panel proceedings. Therefore, the “minimum implementation standard” that the Article 21.5 Panel expressed and which, it said, was “effectively” agreed between the parties, should be viewed with caution. The Article 21.5 Panel said that Canada’s implementation should “ ‘ensure’ that future TPC assistance to the Canadian regional aircraft industry will not be de facto contingent on export performance” (emphasis added). The use in this standard of the words “ensure” and “future”, if taken too literally, might be read to mean that the Panel was seeking a strict guarantee or absolute assurance as to the future application of the revised TPC programme. A standard which, if so read, would, however, be very difficult, if not impossible, to satisfy since no one can predict how unknown administrators would apply, in the unknowable future, even the most conscientiously crafted compliance measure.

 

R.4.1.3 EC — Bed Linen (Article 21.5 — India), para. 78
(WT/DS141/AB/RW)

 

… As in original dispute settlement proceedings, the “matter” in Article 21.5 proceedings consists of two elements: the specific measures at issue and the legal basis of the complaint (that is, the claims). If a claim challenges a measure which is not a “measure taken to comply”, that claim cannot properly be raised in Article 21.5 proceedings. We agree with the Panel that it is, ultimately, for an Article 21.5 panel — and not for the complainant or the respondent — to determine which of the measures listed in the request for its establishment are “measures taken to comply”. …

 

R.4.1.4 EC — Bed Linen (Article 21.5 — India), para. 79
(WT/DS141/AB/RW)

 

… We explained there that the mandate of Article 21.5 panels is to examine either the “existence” of “measures taken to comply” or, more frequently, the “consistency with a covered agreement” of implementing measures. This implies that an Article 21.5 panel is not confined to examining the “measures taken to comply” from the perspective of the claims, arguments, and factual circumstances relating to the measure that was the subject of the original proceedings. Moreover, the relevant facts bearing upon the “measure taken to comply” may be different from the facts relevant to the measure at issue in the original proceedings. It is to be expected, therefore, that the claims, arguments, and factual circumstances relating to the “measure taken to comply” will not, necessarily, be the same as those relating to the measure in the original dispute. Indeed, a complainant in Article 21.5 proceedings may well raise new claims, arguments, and factual circumstances different from those raised in the original proceedings, because a “measure taken to comply” may be inconsistent with WTO obligations in ways different from the original measure. In our view, therefore, an Article 21.5 panel could not properly carry out its mandate to assess whether a “measure taken to comply” is fully consistent with WTO obligations if it were precluded from examining claims additional to, and different from, the claims raised in the original proceedings.

 

R.4.1.5 US — Softwood Lumber IV (Article 21.5 — Canada), para. 64
(WT/DS257/AB/RW)

 

The first sentence of Article 21.5… identifies the types of disputes (“disagreement as to the existence or consistency with a covered agreement of measures”) covered by that provision, and the procedures that are to be employed (“these dispute settlement procedures”) in resolving them. With respect to the subject matter of Article 21.5 proceedings, “the ‘matter’ in Article 21.5 proceedings consists of two elements: the specific measures at issue and the legal basis of the complaint (that is, the claims)”. …

 

R.4.1.6 US — Softwood Lumber IV (Article 21.5 — Canada), para. 65
(WT/DS257/AB/RW)

 

The words of Article 21.5 themselves delimit a particular category of measures that fall within the scope of proceedings conducted pursuant to that provision …

 

R.4.1.7 US — Softwood Lumber IV (Article 21.5 — Canada), para. 66
(WT/DS257/AB/RW)

 

In examining the meaning of “measures taken to comply” in Article 21.5, we begin with the word “taken”. There is a wide range of dictionary meanings of the word “taken”, which is the past participle of the verb “take”. The meanings of “take” include, for example, “[b]ring into a specified position or relation”; “[s]elect or use for a particular purpose”. The preposition “to” is “[u]sed in verbs … in the sense of ‘motion, direction, or addition to’, or as the mark of the infinitive.” As the United States points out, the word “comply” is defined as “accommodate oneself to (a person, circumstances, customs, etc.) … Act in accordance with or with a request, command, etc.” The French and, in particular, Spanish versions of this phrase (“mesures prises pour se conformer” and “medidas destinadas a cumplir”, respectively) also imply that relevant measures are associated with the objective of complying. On its face, therefore, the phrase “measures taken to comply” seems to refer to measures taken in the direction of, or for the purpose of achieving, compliance.

 

R.4.1.8 US — Softwood Lumber IV (Article 21.5 — Canada), para. 67
(WT/DS257/AB/RW)

 

… In order to make an assessment of the “existence or consistency” of “measures taken to comply”, it seems to us that a panel must be able to assess measures taken to comply in their full context, including how such measures are introduced into, and how they function within, the particular system of the implementing Member. The word “existence” suggests that measures falling within the scope of Article 21.5 encompass not only positive acts, but also omissions. It also suggests that, as part of its assessment of whether a measure taken to comply exists, a panel may need to take account of facts and circumstances that impact or affect such existence. The word “consistency” implies that panels acting pursuant to Article 21.5 must objectively assess whether new measures are, in fact, consistent with relevant obligations under the covered agreements. … The fact that Article 21.5 mandates a panel to assess “existence” and “consistency” tends to weigh against an interpretation of Article 21.5 that would confine the scope of a panel’s jurisdiction to measures that move in the direction of, or have the objective of achieving, compliance. These words also suggest that an examination of the effects of a measure may also be relevant to the determination of whether it constitutes, or forms part of, a “measure taken to comply”.

 

R.4.1.9 US — Softwood Lumber IV (Article 21.5 — Canada), paras. 68-69
(WT/DS257/AB/RW)

 

A further feature of the first sentence of Article 21.5 is the express link between the “measures taken to comply” and the recommendations and rulings of the DSB. Accordingly, determining the scope of “measures taken to comply” in any given case must also involve examination of the recommendations and rulings contained in the original report(s) adopted by the DSB. Because such recommendations and rulings are directed at the measures found to be inconsistent in the original proceedings, such an examination necessarily involves consideration of those original measures. Lastly, the end of the first sentence of Article 21.5 indicates that where there is disagreement regarding measures taken to comply, there should be recourse to the original panel “wherever possible”, thus expressing a preference for dealing with these “disagreements” before the original panel that made the original recommendations and rulings in the dispute, rather than starting over again in new proceedings before a new panel.

 

… [in] the first sentence of Article 21.5, we note first that the phrase “measures taken to comply” does place some limits on the scope of proceedings under that provision — an issue that is not disputed. At the same time, in order to fulfil its mandate under Article 21.5, a panel must be able to take full account of the factual and legal background against which relevant measures are taken, so as to determine the existence, or consistency with the covered agreements, of measures taken to comply.

 

R.4.1.10 US — Softwood Lumber IV (Article 21.5 — Canada), para. 73
(WT/DS257/AB/RW)

 

A number of previous proceedings have raised the issue of what measures fall within the scope of jurisdiction of a panel acting pursuant to Article 21.5. Panels and the Appellate Body alike have found that what is a “measure taken to comply” in a given case is not determined exclusively by the implementing Member. A Member’s designation of a measure as one taken “to comply”, or not, is relevant to this inquiry, but it cannot be conclusive. Conversely, nor is it up to the complaining Member alone to determine what constitutes the measure taken to comply. It is rather for the Panel itself to determine the ambit of its jurisdiction.

 

R.4.1.11 US — Softwood Lumber IV (Article 21.5 — Canada), para. 74
(WT/DS257/AB/RW)

 

To be sure, characterizing an act by a Member as a measure taken to comply when that Member maintains otherwise is not something that should be done lightly by a panel. Yet, a panel, in examining the factual and legal circumstances within which the implementing Member takes action, may properly reach just such a finding in some cases. We regard the cases of Australia — Salmon (Article 21.5 — Canada) and Australia — Automotive Leather II (Article 21.5 — US) as useful illustrations of when such a finding is appropriate. …

 

R.4.1.12 US — Softwood Lumber IV (Article 21.5 — Canada), para. 77
(WT/DS257/AB/RW)

 

… our interpretation of Article 21.5 of the DSU confirms that a panel’s mandate under Article 21.5 of the DSU is not necessarily limited to an examination of an implementing Member’s measure declared to be “taken to comply”. Such a declaration will always be relevant, but there are additional criteria, identified above, that should be applied by a panel to determine whether or not it may also examine other measures. Some measures with a particularly close relationship to the declared “measure taken to comply”, and to the recommendations and rulings of the DSB, may also be susceptible to review by a panel acting under Article 21.5. Determining whether this is the case requires a panel to scrutinize these relationships, which may, depending on the particular facts, call for an examination of the timing, nature, and effects of the various measures. This also requires an Article 21.5 panel to examine the factual and legal background against which a declared “measure taken to comply” is adopted. Only then is a panel in a position to take a view as to whether there are sufficiently close links for it to characterize such an other measure as one “taken to comply” and, consequently, to assess its consistency with the covered agreements in an Article 21.5 proceeding.

 

R.4.1.13 US — Softwood Lumber IV (Article 21.5 — Canada), para. 79
(WT/DS257/AB/RW)

 

… it is clear from the previous panel reports the Panel cited, and from the language it used (“clearly connected” and “inextricably linked”), that the Panel employed a nexus-based test similar to the ones articulated in Australia — Automotive Leather II (Article 21.5 — US) and Australia — Salmon (Article 21.5 — Canada) to determine whether the First Assessment Review fell within the scope of its jurisdiction. We see no error in the Panel’s adoption of such a standard, which accords with our own interpretation of Article 21.5. …

 

R.4.1.14 US — Softwood Lumber IV (Article 21.5 — Canada), para. 81
(WT/DS257/AB/RW)

 

… We understand the Panel … to have found that a specific component of the First Assessment Review — rather than the First Assessment Review in its entirety — fell within the scope of its jurisdiction under Article 21.5. Indeed, the Panel itself expressly so stated, albeit in a footnote …

 

R.4.1.15 US — Softwood Lumber IV (Article 21.5 — Canada), para. 82
(WT/DS257/AB/RW)

 

… the United States emphasizes the separate nature of original countervailing duty investigations and duty assessment proceedings, and cites, inter alia, its domestic law in this regard. Although such references may be useful, the Appellate Body has already observed that municipal law classifications are not determinative of issues raised in WTO dispute settlement proceedings. We also note the argument of the United States that the SCM Agreement recognizes that original countervailing duty investigations are proceedings distinct from duty assessment reviews. This does not, in our view, answer the question of whether the Panel was entitled, in these proceedings under Article 21.5 of the DSU, to examine the pass-through analysis conducted by the USDOC in the First Assessment Review.

 

R.4.1.16 US — Softwood Lumber IV (Article 21.5 — Canada), para. 87
(WT/DS257/AB/RW)

 

… We do not … understand the Panel to have found, as the United States argues, that every measure that has “some connection” with and that “could have an impact on” or could “possibly undermine” a measure taken to comply may be scrutinized in proceedings under Article 21.5 of the DSU. Indeed, such an approach would be too sweeping.

 

R.4.1.17 US — Softwood Lumber IV (Article 21.5 — Canada), para. 93
(WT/DS257/AB/RW)

 

In upholding the Panel’s finding with respect to the scope of Article 21.5, we wish to make clear that the Panel’s approach is not, in our view, so “broad [as] to render the jurisdictional limits of Article 21.5 nearly meaningless”, as the United States contends. In particular, the Panel’s reasoning — which we have upheld — should not be read to mean that every assessment review will necessarily fall within the jurisdiction of an Article 21.5 panel.

 

R.4.1.18 US — FSC (Article 21.5 — EC II), para. 60
(WT/DS108/AB/RW2)

 

We note that the purpose of Article 21.5 is to resolve a disagreement between the parties “as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings” of the DSB. Thus, an Article 21.5 panel may be called upon to examine either the “existence” of “measures taken to comply” with DSB recommendations and rulings, or, when such measures exist, the “consistency” of those measures with the covered agreements, or a combination of both, in situations where the measures taken to comply, through omissions or otherwise, may achieve only partial compliance.

 

R.4.1.19 US — FSC (Article 21.5 — EC II), para. 61
(WT/DS108/AB/RW2)

 

It is important to note that the text of Article 21.5 expressly links the “measures taken to comply” with the recommendations and rulings of the DSB. Therefore, the “specific measures at issue” to be identified in Article 21.5 proceedings are measures that have a bearing on compliance with the recommendations and rulings of the DSB. This, in our view, indicates that the requirements of Article 6.2 of the DSU, as they apply to an Article 21.5 panel request, must be assessed in the light of the recommendations and rulings of the DSB in the original panel proceedings that dealt with the same dispute.

 

R.4.1.20 US — FSC (Article 21.5 — EC II), para. 62 and footnote 119
(WT/DS108/AB/RW2)

 

Hence, in order to identify the “specific measures at issue” and to provide “a brief summary of the legal basis of the complaint” in a panel request under Article 21.5, the complaining party must identify, at a minimum, the following elements in its panel request. First, the complaining party must cite the recommendations and rulings that the DSB made in the original dispute as well as in any preceding Article 21.5 proceedings, which, according to the complaining party, have not yet been complied with. Secondly, the complaining party must either identify, with sufficient detail, the measures allegedly taken to comply with those recommendations and rulings, as well as any omissions or deficiencies therein, or state that no such measures have been taken by the implementing Member. Thirdly, the complaining party must provide a legal basis for its complaint, by specifying how the measures taken, or not taken, fail to remove the WTO-inconsistencies found in the previous proceedings, or whether they have brought about new WTO-inconsistencies. We note that this latter issue is not before us in this case.119

 

R.4.1.21 US — FSC (Article 21.5 — EC II), para. 93
(WT/DS108/AB/RW2)

 

… The task of an Article 21.5 panel is to determine whether “measures taken to comply” implement the “recommendations and rulings” adopted by the DSB in the original proceedings. In doing so, an Article 21.5 panel may examine either the “existence” of measures taken to comply with DSB recommendations and rulings, or, when such measures exist, the “consistency” of those measures with the covered agreements, or a combination of both in situations where the measures taken to comply, through omissions or other deficiencies, may achieve only partial compliance. As we noted earlier, the text of Article 21.5 expressly links the “measures taken to comply” and the recommendations and rulings of the DSB. The determination of whether “measures taken to comply” challenged by the complaining party implement fully, or only in part, the DSB recommendations and rulings requires a panel to examine all of the previous DSB recommendations and rulings and the entire range of measures covered by them. Hence, in compliance proceedings, an Article 21.5 panel may have to examine whether the “measures taken to comply” implement fully, or only partially, the recommendations and rulings adopted by the DSB.

 

R.4.1.22 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), paras. 141-143, 146
(WT/DS268/AB/RW)

 

… the USDOC’s affirmative determination of likelihood of dumping in the Section 129 Determination is premised on two factual bases: (i) the finding of likely past dumping during the period of review; and (ii) the finding that import volumes declined after the imposition of the anti-dumping duty order, which was made in the original sunset determination and is incorporated into the Section 129 Determination. It is undisputed that the USDOC did not conduct a new analysis of the volume of imports for purposes of the Section 129 Determination. It is also undisputed that no changes were made by the USDOC to the analysis it had conducted in the original sunset review; rather, that analysis is incorporated by reference without modification. Furthermore, it is undisputed that Argentina challenged the USDOC’s volume analysis in the original panel proceedings and the original panel did not make a finding regarding the WTO-consistency of that analysis. …

 

… the first sentence of Article 21.5 establishes an “express link between the ‘measures taken to comply’ and the recommendations and rulings of the DSB” and, therefore, “determining the scope of ‘measures taken to comply’ in any given case must also involve examination of the recommendations and rulings contained in the original report(s) adopted by the DSB”. Accordingly, to determine the scope of the “measure taken to comply” in this case, we look first to the recommendations and rulings of the DSB in the original proceedings and to what they required of the United States. We then examine the specific steps taken by the United States to bring into conformity the measure found to be inconsistent in the original proceedings.

 

The original panel concluded that “the USDOC’s likelihood determination in the instant sunset review was inconsistent with Article 11.3 of the Anti-Dumping Agreement”. It is evident from this language that the original panel’s finding of WTO-inconsistency is addressed to the USDOC’s likelihood-of-dumping determination. Therefore, to comply with the original panel’s finding, as adopted by the DSB, the United States had to bring its determination of likelihood of dumping into conformity with Article 11.3 of the Anti-Dumping Agreement. How it chose to do so was, in principle, a matter for the United States to decide. … The original panel’s conclusion concerning the USDOC’s likelihood-of-dumping determination should not be confused with the particular reason that provided the basis for that conclusion.

 

 

The USDOC’s reasoning in the Section 129 Determination indicates that the two factual premises operated together to support the determination of likelihood of dumping. … Because the likelihood-of-dumping determination in the Section 129 Determination is premised on both bases, which together support the affirmative likelihood determination, we consider that the USDOC’s finding that the volume of imports declined after imposition of the anti-dumping duty order is an integral part of the “measure taken to comply” in this case. …

 

R.4.1.23 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), para. 147
(WT/DS268/AB/RW)

 

… If a measure that is formally separate from, but closely linked to, a declared “measure taken to comply” can fall within the scope of an Article 21.5 proceeding, this would suggest a fortiori that, when both factual bases are relied upon for a likelihood-of-dumping determination, they can be considered by an Article 21.5 panel when assessing the consistency of that determination with Article 11.3.

 

R.4.1.24 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), para. 148
(WT/DS268/AB/RW)

 

… We see significant differences between the facts before the Appellate Body in EC — Bed Linen (Article 21.5 — India) and those of this appeal. In EC — Bed Linen (Article 21.5 — India), the issue concerned the investigating authority’s examination of the “other known factors” that could be injuring the domestic industry at the same time as the dumped imports, and the non-attribution of that injury, which were considered to be separable components of the “measure taken to comply” in that case. In the present case, the USDOC’s finding on import volumes is merely one factual basis underlying a single inquiry: the likelihood-of-dumping determination. Moreover, the likelihood-of-dumping determination is supported by the finding on import volumes operating together with the finding of dumping during the period of review (1995-2000). In these circumstances, we consider that the USDOC’s finding on import volumes is an integral part of the likelihood-of-dumping determination. …

 

R.4.1.25 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), paras. 160, 167-168, 172-173
(WT/DS268/AB/RW)

 

The issue raised on appeal is whether, under Articles 11.3 and 11.4 of the Anti-Dumping Agreement, an investigating authority that makes a re-determination of likelihood of dumping, for the purpose of implementing the recommendations and rulings of the DSB, is precluded from developing a new evidentiary basis pertaining to the original sunset period.

 

 

… we do not consider that Articles 11.3 and 11.4 address the specific question of whether an investigating authority can develop a new evidentiary basis when implementing DSB recommendations and rulings.

 

Neither do Articles 11.3 and 11.4 provide a basis for drawing a distinction between allowing an investigating authority to clarify information, or provide further explanations, on the one hand, and to develop a new factual basis, on the other hand. …

 

 

We note that Argentina considers that the Panel failed to fulfil properly its duties under Article 11 of the DSU by “subordinat[ing] the actual treaty text of Articles 11.3 and 11.4, and the disposition of Argentina’s claims under these provisions, to broader, ‘systemic’ considerations of the WTO dispute settlement system”. We have found that Articles 11.3 and 11.4 do not address specifically whether an investigating authority may collect additional facts relating to the initial review period when making a re-determination of likelihood of dumping. Therefore, the Panel did not subordinate the text of these provisions to broader systemic considerations of the WTO dispute settlement system when it found that the USDOC could develop a new evidentiary basis.

 

… We note that the requirement inArticle19.1,first sentence, to “bring the measure into conformity” does not indicate that the choice of means of implementation is confined to withdrawal of the measure that was found to be WTO-inconsistent. Article 19.1, second sentence, confers authority on panels and the Appellate Body to suggest “ways in which the Member concerned could implement the recommendations”, which implies that several “ways” of implementation may be possible. The obligation under Article 21.3 that the Member concerned “inform the DSB of its intentions in respect of implementation” also suggests that alternative means of implementation may exist and that the choice belongs, in principle, to the Member. This implies that an investigating authority would not seem to be precluded from gathering additional facts relating to the review period in order to implement the recommendations and rulings of the DSB regarding an original sunset review determination. Finally, in this regard, we note the Appellate Body’s statement in US — Anti-Dumping Measures on Oil Country Tubular Goods, that the temporal limitation in Article 11.3 of the Anti-Dumping Agreement “does not affect the other provisions of the DSU governing the implementation of the recommendations and rulings of the DSB, including, inter alia, the means of implementation and the reasonable period of time accorded to the implementing Member for implementation”. We believe also that the provisions of the DSU should not be read as altering the disciplines of Articles 11.3 and 11.4.

 

R.4.1.26 US — Upland Cotton (Article 21.5 — Brazil), paras. 202-203
(WT/DS267/AB/RW)

 

… While the DSB’s recommendations and rulings are a relevant starting point for identifying the “measures taken to comply” in an Article 21.5 proceeding, they are not dispositive as to the scope of such measures. Where alternative means of implementation are available, a WTO Member enjoys some discretion in deciding what measures to take to comply with the DSB’s recommendations and rulings. A WTO Member may choose to take measures that are broader than strictly required to comply with the DSB’s recommendations and rulings. The identification of the “measure taken to comply” is determined by reference to what a Member has actually done, and not to what a Member might have done, to ensure compliance with the DSB’s recommendations and rulings. Therefore, when the measures actually “taken” by the implementing Member are broader than the DSB’s recommendations and rulings, we do not see why the scope of the DSB’s recommendations and rulings should necessarily limit the scope of the “measures taken to comply” for purposes of the Article 21.5 proceedings.

 

… Following the adoption of the DSB’s recommendations and rulings, the United States revised the fee structure of the GSM 102 programme. … In the Panel’s view, “that the [revised GSM 102] programme applies to all products in the same manner does not alter the fact that the application of the programme to an individual product constitutes a ‘measure’ ”. The Panel’s finding does not take due account of the programme-wide nature of the changes made by the United States. The changes to the fee structure were taken in relation to the GSM 102 programme in its totality. The changes made to the GSM 102 programme apply equally to all eligible commodities and the terms and conditions of the programme are the same for guarantees issued with respect to all eligible commodities. Treating the revised GSM 102 programme in an integrated manner is consistent with the Appellate Body’s statement in US — Shrimp (Article 21.5 — Malaysia) that “the task of a panel in a matter referred to it by the DSB for an Article 21.5 proceeding is to consider that new measure in its totality”.

 

R.4.1.27 US — Upland Cotton (Article 21.5 — Brazil), para. 204
(WT/DS267/AB/RW)

 

This conclusion is also supported by the United States’ own description of its implementation efforts. … The United States maintains that these are merely press statements and have no legal relevance. We agree that these statements, on their own, are not dispositive. The statements, however, indicate that the United States itself considered that the revisions made to the GSM 102 programme were adopted with the objective of complying with the DSB’s recommendations and rulings in the original dispute.

 

R.4.1.28 US — Upland Cotton (Article 21.5 — Brazil), paras. 205-207
(WT/DS267/AB/RW)

 

… The Appellate Body’s reasoning in US — Softwood Lumber IV (Article 21.5 — Canada) is not applicable in this dispute. The dispute in US — Softwood Lumber IV (Article 21.5 — Canada) concerned the identification of closely connected measures so as to avoid circumvention. In this case, we must determine whether a single programme may be permissibly atomized.

 

… The Appellate Body has stated that, where alternative means of achieving compliance are possible, the choice of means “belongs, in principle, to the implementing Member”. Because it is for the implementing Member to choose among alternative means of implementation, WTO dispute settlement cannot be said to provide incentives or disincentives for a WTO Member to take broader or narrower action as part of its implementation efforts. In other words, the WTO dispute settlement system is neutral in terms of the breadth of the actions to be adopted by the implementing Member, provided the changes are sufficient to bring that Member into compliance with its WTO obligations.

 

… Following the original proceedings, the United States was given a “reasonable period of time” to implement the DSB’s recommendations and rulings. The United States could have excluded pig meat and poultry meat from the revised GSM 102 programme. However, the United States revised the GSM 102 fee structure on a programme-wide basis, thereby changing the terms and conditions for all guarantees issued under the programme, including export credit guarantees for pig meat and poultry meat. Under these circumstances, we do not consider that the unavailability of a new “reasonable period of time” gives rise to the “systemic concerns” alleged by the United States. Moreover, it is a characteristic of Article 21.5 proceedings that no reasonable period of time for implementation is available if the new measure taken to comply with the DSB’s recommendations and rulings is found to be WTO inconsistent.

 

R.4.1.29 US — Upland Cotton (Article 21.5 — Brazil), paras. 233-234
(WT/DS267/AB/RW)

 

… The Panel in these Article 21.5 proceedings concluded that the original panel’s findings were addressed to the payments, and not to the programmes themselves. …

 

We have some difficulty accepting the notion that a subsidy programme and the payments provided under that programme can be assessed separately. While the payments may cause adverse effects, the amount of the payments, beneficiaries, and the terms and conditions of eligibility will be provided in the subsidy programme or legislation authorizing those payments. However, because Brazil has made it clear that its appeal is conditional upon our reversal of the Panel’s findings concerning the payments, we begin our analysis by considering the United States’ claim that the Panel erred in finding that marketing loan and counter-cyclical payments made after 21 September 2005 are properly within the scope of these Article 21.5 proceedings.

 

R.4.1.30 US — Upland Cotton (Article 21.5 — Brazil), paras. 228, 237-238, 246, 248-249
(WT/DS267/AB/RW)

 

… Therefore, the United States asserts, the “marketing loan and counter-cyclical payments made after September 21, 2005 [the end of the six-month period referred to in Article 7.9 of the SCM Agreement for removal of the adverse effects of the subsidy or withdrawal of the subsidy] were not subject to the DSB’s recommendations and rulings” and “the payments made after September 21, 2005 were not in any way [United States] measures taken to comply with other recommendations and rulings of the DSB”.

 

 

… in the case of recurring annual payments, the obligation in Article 7.8 would extend to payments “maintained” by the respondent Member beyond the time period examined by the panel for purposes of determining the existence of serious prejudice, as long as those payments continue to have adverse effects. Otherwise, the adverse effects of subsequent payments would simply replace the adverse effects that the implementing Member was under an obligation to remove. Such a reading of Article 7.8 would not give meaning and effect to the term “maintain”, which is distinct from the term “grant”, and has also been included in that Article. Indeed, it would render the term “maintain” redundant. In addition, it would fail to give meaning and effect to the obligation to “take appropriate steps to remove the adverse effects” in Article 7.8, and to the requirement under Article 21.5 to “comply” with the DSB’s recommendations and rulings, including the requirement to take the remedial action foreseen in Article 7.8 as a consequence of a finding of adverse effects.

 

Our interpretation of Article 7.8 is consistent with the context provided by Article 4.7 of the SCM Agreement, which applies in cases involving prohibited subsidies. … a Member would not comply with the obligation in Article 7.8 to withdraw the subsidy if it leaves an actionable subsidy in place, either entirely or partially, or replaces that subsidy with another actionable subsidy. … the option of removing the adverse effects cannot be read as allowing a Member to continue to cause adverse effects by maintaining the subsidies that were found to have resulted in adverse effects. As observed earlier, if the contrary proposition were accepted, the adverse effects of subsequent subsidies, especially in the case of recurrent subsidies, would simply replace the adverse effects that the implementing Member was required to remove, making the obligation in Article 7.8 to “take appropriate steps to remove the adverse effects” meaningless.

 

 

The approach advocated by the United States would not only compromise the effectiveness of the provisions on actionable subsidies in the SCM Agreement, it is also difficult to reconcile with the objectives of the DSU. … Requiring a WTO Member to initiate new proceedings to challenge the same type of recurrent subsidies that were found to result in adverse effects, simply because the subsidies were provided subsequent to the original proceedings, does not promote “prompt settlement” nor “prompt compliance”. Moreover, the issue before us is one of admissibility. Even if the claim is allowed to proceed in an Article 21.5 proceeding, the complaining Member would still have to establish the existence of adverse effects that allegedly result from the subsidies at issue.

 

 

Accordingly, we agree with the Panel that, “to the extent marketing loan payments and counter-cyclical payments made by the United States after 21 September 2005 are provided under the same conditions and criteria as the marketing loan payments and counter-cyclical payments subject to the original panel’s finding of ‘present’ serious prejudice, they are subject to the obligation of the United States under Article 7.8 of the SCM Agreement to take appropriate steps to remove the adverse effects of the subsidy”. We further agree that, as a consequence, Brazil’s claim that the United States failed to comply with its obligations under Article 7.8 with respect to those payments was properly within the scope of the Article 21.5 proceedings, because the “claim pertains to a disagreement between the parties as to the ‘existence or consistency with a covered agreement of measures taken to comply’ with the recommendations and rulings of the DSB”. More precisely, the claim relates to whether the measure taken by the United States achieves full compliance with the DSB’s recommendations and rulings as informed by the obligation of the United States under Article 7.8 of the SCM Agreement.

 

For these reasons, we uphold the Panel’s finding, in paragraph 9.81 of the Panel Report, that Brazil’s claims against marketing loan and counter-cyclical payments made by the United States after 21 September 2005 are properly within the scope of these Article 21.5 proceedings.

 

R.4.1.31 US — Continued Suspension / Canada — Continued Suspension, para. 400
(WT/DS320/AB/R, WT/DS321/AB/R)

 

The European Communities disagrees with the United States’ argument that statements made at DSB meetings have no legal effect in themselves, arguing, instead, that “those statements can be used as evidence of a particular position, view or determination taken by a Member”. The European Communities refers to the Appellate Body’s observation in US — Upland Cotton (Article 21.5 — Brazil) that certain statements in a United States Government press release indicated that it was taking a measure to comply with the DSB’s recommendations and rulings. The European Communities’ reliance on the Appellate Body’s findings in US — Upland Cotton (Article 21.5 — Brazil) is misplaced. In that dispute, the Appellate Body did not rely on the press release of the United States Government in making a finding on the scope of the “measure taken to comply”, but only referred to the statements of the United States’ officials as providing confirmation of its earlier conclusion, reached on the basis of an examination of the measure itself and the DSB’s recommendations and rulings in the original dispute. In contrast, the Panel in this dispute based its finding that the United States and Canada made a determination of violation directly on the statements they made at the DSB.

 

R.4.1.32 EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), para. 245
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1, WT/DS27/AB/RW/USA/Corr.1)

 

… The Appellate Body has emphasized that the reasoning in US — Softwood Lumber IV (Article 21.5 — Canada) concerned the identification of closely connected measures so as to avoid circumvention. Therefore, if the measure at issue is found to constitute in itself a measure taken to comply, it will not be necessary to establish a “particularly close relationship” of the measure at issue to the declared measure taken to comply in order to subject the measure at issue to the scope of Article 21.5. Our analysis must thus begin with the question whether the measure at issue in this case was in itself a measure taken to comply. In the event that the measure at issue is found not to be in itself a measure taken to comply, our analysis will turn to the question whether a “particularly close relationship” exists between the measure at issue and the declared measure taken to comply, which would warrant subjecting the measure at issue to the scope of Article 21.5 of the DSU.

 

R.4.1.33 EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), paras. 254-255
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1, WT/DS27/AB/RW/USA/Corr.1)

 

… we do not see why it should be relevant that the original recommendations and rulings of the DSB did not expressly suggest that the European Communities bring itself into compliance specifically through the introduction of a tariff-only regime. We see no basis in the DSU for requiring that a measure must be “necessary” to address a specific finding of inconsistency in order for that measure to be introduced; nor does the European Communities identify any textual basis for this in the DSU. WTO Members enjoy some discretion in choosing how to implement DSB recommendations and rulings. In that vein, the chapeau of Article 21.3 of the DSU provides that “the Member concerned shall inform the DSB of its intentions in respect of implementation of the recommendations and rulings of the DSB”. In US — Upland Cotton (Article 21.5 — Brazil), the Appellate Body stated:

 

Where alternative means of implementation are available, a WTO Member enjoys some discretion in deciding what measures to take to comply with the DSB’s recommendations and rulings.

 

The Appellate Body addressed the link between the “measure taken to comply” and the original recommendations and rulings of the DSB in US — Softwood Lumber IV (Article 21.5 — Canada), US — FSC (Article 21.5 — EC II), and Chile — Price Band System (Article 21.5 — Argentina). The Appellate Body did not find that a link between a measure taken to comply and the original DSB recommendations and rulings exists only when the measure is “necessary” to address a specific finding of inconsistency. We therefore reject this argument of the European Communities.

 

R.4.1.34 US — Zeroing (EC) (Article 21.5 — EC), paras. 205-207
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

A panel’s determination of whether a particular measure falls within the scope of Article 21.5 proceedings is an objective inquiry and must necessarily involve an examination of any measure designated as one “taken to comply”, and of the recommendations and rulings of the DSB, in the light of the particular factual and legal background in which they are adopted. In determining the scope of its jurisdiction, the compliance panel may also be called upon to determine whether no measure taken to comply exists, as the word “existence” in Article 21.5 suggests “that measures falling within the scope of Article 21.5 encompass not only positive acts, but also omissions”. Therefore, if measures to comply with the DSB’s recommendations and rulings were not taken, that omission will also fall within the scope of the compliance proceedings.

 

Where a compliance panel determines that measures taken to comply do exist, it should then seek to determine whether such measures fully implement the recommendations and rulings of the DSB. Pursuant to Article 19.1 of the DSU, these recommendations and rulings require the Member concerned to bring the measures found to be inconsistent with a covered agreement into conformity with that agreement. Therefore, the compliance panel should seek to determine whether the measures taken to comply achieve full or partial compliance “in situations where the measures taken to comply, through omissions or otherwise, may achieve only partial compliance”. Article 21.5 also requires the compliance panel to examine, in the light of the claims raised, whether the measures taken to comply are consistent with the relevant covered agreement, as the word “consistency” in Article 21.5 “implies that panels acting pursuant to Article 21.5 must objectively assess whether new measures are, in fact, consistent with relevant obligations under the covered agreements”.

 

Furthermore, a party seeking recourse to Article 21.5 of the DSU may request the compliance panel to examine measures that the implementing Member maintains are not measures “taken to comply”. In that event, the compliance panel should seek to determine whether such distinct measures are particularly closely connected to the measures the implementing Member asserts are “taken to comply”, and to the recommendations and rulings of the DSB, so as to fall within the purview of the compliance panel. Determining whether this is the case may call for an examination of the timing, nature, and effects of the various measures. Once a compliance panel determines that such closely connected measures fall within its terms of reference, Article 21.5 directs it to examine these measures for consistency with the relevant provisions of the covered agreements in the light of the claims raised.

 

R.4.1.35 US — Zeroing (EC) (Article 21.5 — EC), paras. 223-226, 229
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

… in the Appellate Body’s interpretation, “[t]he fact that Article 21.5 mandates a panel to assess ‘existence’ and ‘consistency’ tends to weigh against an interpretation of Article 21.5 that would confine the scope of a panel’s jurisdiction to measures that move in the direction of, or have the objective of achieving, compliance.” For this reason, measures with a “particularly close relationship” with the declared measures “taken to comply”, and to the recommendations and rulings of the DSB, may also fall within the scope of a panel proceeding under Article 21.5 of the DSU, even though such measures are not, strictly speaking, measures taken with the purpose of achieving compliance with those recommendations and rulings.

 

In this respect, we agree with the European Communities and the United States that the timing of a measure cannot be determinative of whether it bears a sufficiently close nexus with a Member’s implementation of the recommendations and rulings of the DSB so as to fall within the scope of an Article 21.5 proceeding. Since compliance with the recommendations and rulings of DSB can be achieved before the recommendations and rulings of the DSB are adopted, a compliance panel may have to review events pre-dating the adoption of those recommendations and rulings in order to resolve a disagreement as to the “existence” or “consistency with a covered agreement” of such measures. …

 

We consider that the timing of a measure remains a relevant factor in determining whether they are sufficiently closely connected to a Member’s implementation of the recommendations and rulings of the DSB. Indeed, the fact that a measure is adopted simultaneously with, shortly before, or shortly after specific actions introduced by Members with a view to implementing the recommendations and rulings of the DSB may provide support for a finding that those measures are closely connected. Conversely, there might be situations where the fact that the alleged “closely connected” measure was taken a considerable time before the adoption of the recommendations and rulings of the DSB will be sufficient to sever the connection between that measure and a Member’s implementation obligations.

 

In our view, the Panel’s formalistic reliance on the date of issuance of the subsequent reviews in ascertaining whether these reviews had a close nexus with the recommendations and rulings of the DSB was in error. The relevant inquiry was not whether the subsequent reviews were taken with the intention to comply with the recommendations and rulings of the DSB; rather, in our view, the relevant inquiry was whether the subsequent reviews, despite the fact that they were issued before the adoption of the recommendations and rulings of the DSB, still bore a sufficiently close nexus, in terms of nature, effects, and timing, with those recommendations and rulings, and with the declared measures “taken to comply”, so as to fall within the scope of Article 21.5 proceedings.

 

 

As we have noted earlier, in determining whether measures that are ostensibly not “taken to comply” with the recommendations and rulings of the DSB have a particularly close connection to the declared measure “taken to comply”, and to the recommendations and rulings of the DSB, a panel is required to scrutinize the links, in terms of nature, effects, and timing, between those measures, the declared measures “taken to comply”, and the recommendations and rulings of the DSB. Only then is a panel in a position to determine whether there are sufficiently close links for it to characterize such other measures as “taken to comply” and, consequently, to assess their consistency with the covered agreements. …

 

R.4.1.36 US — Zeroing (EC) (Article 21.5 — EC), para. 256
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

In our view, the United States misinterprets the findings of the Appellate Body in US — Softwood Lumber IV (Article 21.5 — Canada) as requiring that the “closely connected” measures actually undermine the compliance otherwise achieved by the implementing Member. We consider that, at the time of the jurisdictional inquiry into its terms of reference, a panel might not be in a position to determine whether this is the case, because it will not be possible to determine whether the “connected” measures potentially undermine compliance without determining first whether the declared measures “taken to comply” fully achieved compliance with the recommendations and rulings of the DSB … administrative review determinations issued after the end of the reasonable period of time covering entries made prior to that date are relevant for assessing compliance with the DSB’s recommendations and rulings … To find otherwise would limit compliance proceeding to examining whether closely connected measures affect compliance achieved by the declared measures “taken to comply”; situations where a Member has taken measures achieving only partial compliance, or has omitted to take measures, would be excluded from scrutiny. As we have found earlier, the scope of Article 21.5 proceedings is not limited in such a way. …

 

R.4.1.37 US — Zeroing (EC) (Article 21.5 — EC), para. 282
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

… In resolving a disagreement as to the “existence” or “consistency with the covered agreements” of measures taken to comply within the meaning of Article 21.5 of the DSU, panels acting under that provision are required to determine whether measures taken to comply exist, and whether such measures achieve full compliance with the recommendations and rulings of the DSB. As the Appellate Body noted in US — Softwood Lumber IV (Article 21.5 — Canada), “[t]he word ‘existence’ suggests that measures falling within the scope of Article 21.5 encompass not only positive acts, but also omissions.” Therefore, “an Article 21.5 panel may be called upon to examine either the ‘existence’ of ‘measures taken to comply’ with DSB recommendations and rulings, or, when such measures exist, the ‘consistency’ of those measures with the covered agreements, or a combination of both, in situations where the measures taken to comply, through omissions or otherwise, may achieve only partial compliance”.

 

R.4.1.38 US — Zeroing (EC) (Article 21.5 — EC), paras. 301-302
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

The task of a panel under Article 21.5 of the DSU is to examine the questions of the existence or consistency with the covered agreements of measures taken to comply with the recommendations and rulings of the DSB. This examination will cover the instruments or actions that the responding Member has identified as measures “taken to comply”. However, other closely connected measures or omissions in compliance by the responding Member fall within the scope of compliance proceedings and will be examined by the compliance panel in order to determine whether such actions or omissions undermine or negate the compliance achieved by the declared measures “taken to comply”, or establish inexistent or insufficient compliance.

 

Thus, it appears to us that the starting point of an analysis of whether the responding Member has fulfilled its implementation obligations should be the recommendations and rulings of the DSB, with which that Member must comply. …

 
R.4.2 Article 21.5 of the DSU — “new claims”     back to top

R.4.2.1 Canada — Aircraft (Article 21.5 — Brazil), paras. 40-41
(WT/DS70/AB/RW)

 

We have already noted that these proceedings, under Article 21.5 of the DSU, concern the “consistency” of the revised TPC programme with Article 3.1(a) of the SCM Agreement. Therefore, we disagree with the Article 21.5 Panel that the scope of these Article 21.5 dispute settlement proceedings is limited to “the issue of whether or not Canada has implemented the DSB recommendation”. … It follows then that the task of the Article 21.5 Panel in this case is, in fact, to determine whether the new measure — the revised TPC programme — is consistent with Article 3.1(a) of the SCM Agreement.

 

Accordingly, in carrying out its review under Article 21.5 of the DSU, a panel is not confined to examining the “measures taken to comply” from the perspective of the claims, arguments and factual circumstances that related to the measure that was the subject of the original proceedings. Although these may have some relevance in proceedings under Article 21.5 of the DSU, Article 21.5 proceedings involve, in principle, not the original measure, but rather a new and different measure which was not before the original panel. In addition, the relevant facts bearing upon the “measure taken to comply” may be different from the relevant facts relating to the measure at issue in the original proceedings. It is natural, therefore, that the claims, arguments and factual circumstances which are pertinent to the “measure taken to comply” will not, necessarily, be the same as those which were pertinent in the original dispute. Indeed, the utility of the review envisaged under Article 21.5 of the DSU would be seriously undermined if a panel were restricted to examining the new measure from the perspective of the claims, arguments and factual circumstances that related to the original measure, because an Article 21.5 panel would then be unable to examine fully the “consistency with a covered agreement of the measures taken to comply”, as required by Article 21.5 of the DSU.

 

R.4.2.2 US — Shrimp (Article 21.5 — Malaysia), paras. 86-88
(WT/DS58/AB/RW)

 

As we ruled in our Report in Canada — Aircraft (21.5), panel proceedings pursuant to Article 21.5 of the DSU involve, in principle, not the original measure, but a new and different measure that was not before the original panel. Therefore, “in carrying out its review under Article 21.5 of the DSU, a panel is not confined to examining the ‘measure taken to comply’ from the perspective of the claims, arguments and factual circumstances that related to the measure that was the subject of the original proceedings”.

 

When the issue concerns the consistency of a new measure “taken to comply”, the task of a panel in a matter referred to it by the DSB for an Article 21.5 proceeding is to consider that new measure in its totality. The fulfilment of this task requires that a panel consider both the measure itself and the measure’s application. As the title of Article 21 makes clear, the task of panels under Article 21.5 forms part of the process of the “Surveillance of Implementation of the Recommendations and Rulings” of the DSB. Toward that end, the task of a panel under Article 21.5 is to examine the “consistency with a covered agreement of measures taken to comply with the recommendations and rulings” of the DSB. That task is circumscribed by the specific claims made by the complainant when the matter is referred by the DSB for an Article 21.5 proceeding. It is not part of the task of a panel under Article 21.5 to address a claim that has not been made.

 

Malaysia relies in this appeal on our ruling in Canada — Aircraft (21.5). We understand Malaysia to argue, based in part on our ruling in Canada — Aircraft (21.5), that the Panel in this case had a duty to review the totality of the United States measure, and to assess it for its consistency with the relevant provisions of the GATT 1994. That is indeed a panel’s task under Article 21.5 of the DSU. Yet, as we have said, it is not part of a panel’s task to go beyond the particular claims that have been made with respect to the consistency of a new measure with a covered agreement when a matter is referred to it by the DSB for an Article 21.5 proceeding. Thus, it would not have been appropriate in this case for the Panel to address a claim that was not made by Malaysia when requesting that this matter be referred by the DSB for an Article 21.5 proceeding.

 

R.4.2.3 EC — Bed Linen (Article 21.5 — India), paras. 80, 87
(WT/DS141/AB/RW)

 

This appeal, however, raises an issue different from the issue that was before us in Canada — Aircraft (Article 21.5 — Brazil). Here, India did not raise a new claim before the Article 21.5 Panel; rather, India reasserted in the Article 21.5 proceedings the same claim that it had raised before the original panel in respect of a component of the implementation measure which was the same as in the original measure. …

 

 

We conclude, therefore, that, in these Article 21.5 proceedings, India has raised the same claim under Article 3.5 relating to “other factors” as it did in the original proceedings. In doing so, India seeks to challenge an aspect of the original measure which has not changed, and which the European Communities did not have to change, in order to comply with the DSB recommendations and rulings to make that measure consistent with the European Communities’ WTO obligations.

 

R.4.2.4 EC — Bed Linen (Article 21.5 — India), paras. 88-89
(WT/DS141/AB/RW)

 

… We agree with the Panel that the Canada — Aircraft (Article 21.5 — Brazil) dispute involved a new claim challenging a new component of the measure taken to comply which was not part of the original measure. The situation in Canada — Aircraft (Article 21.5 — Brazil) was thus different from the situation in this appeal.

 

… In other words, the US FSC (Article 21.5 — EC) dispute involved a new claim challenging a changed component of the measure taken to comply, while this dispute, by contrast, concerns the same claim against an unchanged component of the implementation measure that was part of the original measure and that was not found to be inconsistent with WTO obligations. Therefore, the situation in US FSC (Article 21.5 — EC) was different from the situation in this appeal.

 

R.4.2.5 US — Upland Cotton (Article 21.5 — Brazil), paras. 208-211
(WT/DS267/AB/RW)

 

… we must now determine whether there is any limitation on the scope of the claims that can be raised by Brazil in these Article 21.5 proceedings.

 

The United States draws our attention to EC — Bed Linen (Article 21.5 — India), where the Appellate Body found that India could not reassert in the Article 21.5 proceedings a claim that it had asserted in the original proceedings. The United States considers it “highly instructive” that in both EC — Bed Linen (Article 21.5 — India) and in the present dispute there are no DSB recommendations and rulings that must be implemented with respect to the part of the measure that the complaining party alleged to be within the scope of the Article 21.5 proceedings. According to the United States, “[t]o allow Brazil’s claims here would essentially give Brazil another chance, this time before the compliance panel, to argue against GSM 102 guarantees with respect to exports of pig meat and poultry meat.”

 

We agree with the United States that the scope of claims that may be raised in an Article 21.5 proceeding is not unbounded. As the Appellate Body found in EC — Bed Linen (Article 21.5 — India), a complainant who had failed to make out a prima facie case in the original proceedings regarding an element of the measure that remained unchanged since the original proceedings may not re-litigate the same claim with respect to the unchanged element of the measure in the Article 21.5 proceedings. Similarly, a complainant may not reassert the same claim against an unchanged aspect of the measure that had been found to be WTO-consistent in the original proceedings. Because adopted panel and Appellate Body reports must be accepted by the parties to a dispute, allowing a party in an Article 21.5 proceeding to re-argue a claim that has been decided in adopted reports would indeed provide an unfair “second chance” to that party. The situation before us is different. Brazil’s claims against export credit guarantees provided under the original GSM 102 programme to pig meat and poultry meat were not resolved on the merits in the original proceedings, because the Appellate Body was unable to complete the analysis as a result of there being insufficient factual findings or undisputed facts on the record. Thus, allowing Brazil’s claims in this case would not raise the due process concerns identified by the United States. Brazil is not unfairly getting a “second chance” to make a case that it failed to make out in the original proceedings such that the finality of the DSB’s recommendations and rulings would be compromised. There is an additional distinction between the facts before the Appellate Body in EC — Bed Linen (Article 21.5 — India) and the facts before us in this case. In EC — Bed Linen (Article 21.5 — India), India challenged an unchanged aspect of the European Communities’ measure. In the present case, the revised GSM 102 programme is a new measure.

 

We do not suggest that Brazil could raise just any claim in these Article 21.5 proceedings, without limitation, against the revised GSM 102 programme. A complaining Member ordinarily would not be allowed to raise claims in an Article 21.5 proceeding that it could have pursued in the original proceedings, but did not. Brazil has referred to Canada — Aircraft (Article 21.5 — Brazil) as support for the proposition that, because the “measure taken to comply” is a new measure, a complaining Member may raise new claims against that measure in the Article 21.5 proceedings. The Appellate Body’s statement in Canada — Aircraft (Article 21.5 — Brazil) refers to the situation in which the responding Member is seeking to circumvent its compliance obligations by replacing the WTO inconsistent measure with a new measure that is also WTO-inconsistent, albeit with a provision not at issue in the original proceedings. This is not the situation in this dispute.

 

R.4.2.6 US — Upland Cotton (Article 21.5 — Brazil), para. 212
(WT/DS267/AB/RW)

 

… Moreover, having an Article 21.5 panel examine Brazil’s claims against export credit guarantees provided under the revised GSM 102 programme to upland cotton and certain other products, while a new panel examines Brazil’s claims against export credit guarantees provided under the same programme to pig meat and poultry meat, would not be the most efficient use of WTO dispute settlement procedures.

 

R.4.2.7 US — Zeroing (EC) (Article 21.5 — EC), para. 427
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

While claims in Article 21.5 proceedings cannot be used to re-open issues that were decided on substance in the original proceedings, the unconditional acceptance of the recommendations and rulings of the DSB by the parties to a dispute does not preclude raising new claims against measures taken to comply that incorporate unchanged aspects of original measures that could have been made, but were not made, in the original proceedings. We do not see how allowing such claims in Article 21.5 proceedings would “jeopardize the principles of fundamental fairness and due process”, or how it would unfairly provide a “second chance” to the complaining Member, provided these new claims relate to a measure “taken to comply” and do not re-argue claims that were decided in the original proceedings.

 

R.4.2.8 US — Zeroing (EC) (Article 21.5 — EC), paras. 432-433
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

Thus, if we read the Appellate Body’s statement in US — Upland Cotton (Article 21.5 —Brazil) together with its statement in Canada —Aircraft (Article 21.5 —Brazil), it excludes, in principle, (“ordinarily”) from Article 21.5 proceedings new claims that could have been pursued in the original proceedings, but not new claims against a measure taken to comply — that is, in principle, a new and different measure. This is so even where such a measure taken to comply incorporates components of the original measure that are unchanged, but are not separable from other aspects of the measure taken to comply.

 

We recall that the Panel found that “the scope of Article 21.5 of the DSU is not so broad as to allow a complaining party to make claims that it could have made, but did not make, in the original proceeding, with respect to aspects of the original measure at issue that were incorporated, but remained unchanged, in the measure taken to comply”. We disagree with this finding by the Panel, insofar as it precludes new claims against inseparable aspects of a measure taken to comply, which are unchanged from the original measure. We, therefore, find that the Panel erred in finding, in paragraph 8.244 of the Panel Report, that the European Communities could not properly raise claims with respect to the alleged error in the calculation of TKAST’s dumping margin in these Article 21.5 proceedings because it could have raised them in the original proceedings but failed to do so.

 
R.4.3 Article 21.5 of the DSU — Effect of DSB rulings in the original dispute.
See also Status of Panel and Appellate Body Reports (S.8)     back to top

R.4.3.1 US — Shrimp (Article 21.5 — Malaysia), paras. 89, 96-97
(WT/DS58/AB/RW)

 

With respect to a claim that has been made when a matter is referred by the DSB for an Article 21.5 proceeding, Malaysia seems to suggest as well that a panel must re-examine, for WTO-consistency, even those aspects of a new measure that were part of a previous measure that was the subject of a dispute, and were found by the Appellate Body to be WTO-consistent in that dispute, and that remain unchanged as part of the new measure.

 

 

As we see it, then, the Panel properly examined Section 609 as part of its examination of the totality of the new measure, correctly found that Section 609 had not been changed since the original proceedings, and rightly concluded that our ruling in United States — Shrimp with respect to the consistency of Section 609, therefore, still stands.

 

We wish to recall that panel proceedings under Article 21.5 of the DSU are, as the title of Article 21 states, part of the process of the “Surveillance of Implementation of Recommendations and Rulings” of the DSB. This includes Appellate Body Reports. To be sure, the right of WTO Members to have recourse to the DSU, including under Article 21.5, must be respected. Even so, it must also be kept in mind that Article 17.14 of the DSU provides not only that Reports of the Appellate Body “shall be” adopted by the DSB, by consensus, but also that such Reports “shall be … unconditionally accepted by the parties to the dispute ”. Thus, Appellate Body Reports that are adopted by the DSB are, as Article 17.14 provides, “… unconditionally accepted by the parties to the dispute”, and, therefore, must be treated by the parties to a particular dispute as a final resolution to that dispute. In this regard, we recall, too, that Article 3.3 of the DSU states that the “prompt settlement” of disputes “is essential to the effective functioning of the WTO”.

 

R.4.3.2 Mexico — Corn Syrup (Article 21.5 — US), para. 79
(WT/DS132/AB/RW)

 

With respect to the first element, we note that the original panel report, regarding the initial measure (SECOFI’s original determination), has been adopted and that these Article 21.5 proceedings concern a subsequent measure (SECOFI’s redetermination). We also note that Mexico did not appeal the original panel’s report, and that Articles 3.2 and 3.3 of the DSU reflect the importance to the multilateral trading system of security, predictability and the prompt settlement of disputes. We see no basis for us to examine the original panel’s treatment of the alleged restraint agreement.

 

R.4.3.3 Mexico — Corn Syrup (Article 21.5 — US), para. 121
(WT/DS132/AB/RW)

 

The Panel was charged, under Article 21.5 of the DSU, with assessing the claims made by the United States with respect to the consistency of the redetermination with Mexico’s obligations under the Anti-Dumping Agreement. In proceeding under Article 21.5 of the DSU, the Panel conducted its work against the background of the original proceedings, and with full cognizance of the reasons provided by the original panel. The original determination and original panel proceedings, as well as the redetermination and the panel proceedings under Article 21.5, form part of a continuum of events. We consider that the Panel Report cannot be read in isolation from those events.

 

R.4.3.4 EC — Bed Linen (Article 21.5 — India), paras. 92-93
(WT/DS141/AB/RW)

 

The issue raised in this appeal is similar to the issue we resolved in US — Shrimp (Article 21.5 — Malaysia). In this appeal, however, the original panel’s finding on India’s claim under Article 3.5 relating to “other factors” was not appealed in the original dispute. Accordingly, the finding of the original panel relating to that claim was adopted by the DSB as part of a panel report, and, therefore, Article 17.14, which deals with the adoption of Appellate Body Reports, does not dispose of the issue before us.

 

All the same, in our view, an unappealed finding included in a panel report that is adopted by the DSB must be treated as a final resolution to a dispute between the parties in respect of the particular claim and the specific component of a measure that is the subject of that claim. This conclusion is supported by Articles 16.4 and 19.1, paragraphs 1 and 3 of Article 21, and Article 22.1 of the DSU. Where a panel concludes that a measure is inconsistent with a covered agreement, that panel shall recommend, according to Article 19.1, that the Member concerned bring that measure into conformity with that agreement. A panel report, including the recommendations contained therein, shall be adopted by the DSB within the time period specified in Article 16.4 — unless appealed. Members are to comply with recommendations and rulings adopted by the DSB promptly, or within a reasonable period of time, in accordance with paragraphs 1 and 3 of Article 21 of the DSU. A Member that does not comply with the recommendations and rulings adopted by the DSB within these time periods must face the consequences set out in Article 22.1, relating to compensation and suspension of concessions. Thus, a reading of Articles 16.4 and 19.1, paragraphs 1 and 3 of Article 21, and Article 22.1, taken together, makes it abundantly clear that a panel finding which is not appealed, and which is included in a panel report adopted by the DSB, must be accepted by the parties as a final resolution to the dispute between them, in the same way and with the same finality as a finding included in an Appellate Body Report adopted by the DSB — with respect to the particular claim and the specific component of the measure that is the subject of the claim. …

 

R.4.3.5 EC — Bed Linen (Article 21.5 — India), para. 96
(WT/DS141/AB/RW)

 

We consider next whether the fact that the Panel dismissed India’s claim because India had not established a prima facie case has any relevance for our decision on the effect of the adoption by the DSB of a finding of a panel report that was not appealed. … Here, however, the original panel ruled that India had failed to present a prima facie case in respect of its claim under Article 3.5 relating to “other factors”. In our view, the effect, for the parties, of findings adopted by the DSB as part of a panel report is the same, regardless of whether a panel found that the complainant failed to establish a prima facie case that the measure is inconsistent with WTO obligations, that the Panel found that the measure is fully consistent with WTO obligations, or that the Panel found that the measure is not consistent with WTO obligations. …

 

R.4.3.6 EC — Bed Linen (Article 21.5 — India), paras. 98-99
(WT/DS141/AB/RW)

 

… It would be incompatible with the function and purpose of the WTO dispute settlement system if a claim could be reasserted in Article 21.5 proceedings after the original panel or the Appellate Body has made a finding that the challenged aspect of the original measure is not inconsistent with WTO obligations, and that report has been adopted by the DSB. At some point, disputes must be viewed as definitely settled by the WTO dispute settlement system.

 

In the light of the foregoing, we conclude that the original panel’s finding on India’s claim under Article 3.5 relating to “other factors” provides a “final resolution” to the dispute in this respect between the parties, because it was not appealed, and forms part of a panel report adopted by the DSB. …

 

R.4.3.7 US — FSC (Article 21.5 — EC II), para. 82
(WT/DS108/AB/RW2)

 

It is clear from the text of Article 4.7 that, when a panel finds a measure at issue to be a prohibited subsidy, the panel is required to make a recommendation with two components: (i) that the subsidy be withdrawn “without delay”; and (ii) that the time period within which the subsidy must be withdrawn be specified by the Panel. When such a recommendation is adopted by the DSB, it must be, by virtue of Article 17.14 of the DSU, “unconditionally accepted by the parties to the dispute”, and it thus becomes effective and binding on the parties. Pursuant to Article 4.10 of the SCM Agreement, if compliance with an Article 4.7 recommendation is not achieved within the time period specified, the DSB may authorize the imposition of appropriate countermeasures upon the subsidizing Member.

 

R.4.3.8 US — FSC (Article 21.5 — EC II), para. 84
(WT/DS108/AB/RW2)

 

… if, in an Article 21.5 proceeding, a panel finds that the measure taken to comply with the Article 4.7 recommendation made in the original proceedings does not achieve full withdrawal of the prohibited subsidy — either because it leaves the entirety or part of the original prohibited subsidy in place, or because it replaces that subsidy with another subsidy prohibited under the SCM Agreement — the implementing Member continues to be under the obligation to achieve full withdrawal of the subsidy. The obligation to comply with an Article 4.7 recommendation remains in effect, even if several proceedings under Article 21.5 become necessary, until the prohibited subsidy is fully withdrawn.

 

R.4.3.9 US — FSC (Article 21.5 — EC II), para. 85
(WT/DS108/AB/RW2)

 

These second Article 21.5 proceedings before us concern a situation where the measure taken to comply with the DSB recommendations from the original and first Article 21.5 proceedings — the Jobs Act — has in large part withdrawn the prohibited subsidies. However, to the extent that the Jobs Act, by virtue of its transition and grandfathering provisions, does not fully withdraw the ETI subsidies found in the previous proceedings to be prohibited under the SCM Agreement, it was sufficient for the second Article 21.5 Panel to conclude that the original Article 4.7 recommendation adopted by the DSB has not been complied with entirely and remains in effect for the part that has not been implemented.

 

R.4.3.10 US — FSC (Article 21.5 — EC II), para. 86
(WT/DS108/AB/RW2)

 

Even if, arguendo, an Article 21.5 panel made a new Article 4.7 recommendation to withdraw the prohibited subsidy “without delay”, it would presumably also “specify … the time period within which the measure must be withdrawn”. If this were to result in an extension of the time period set for withdrawal of the subsidy found to be prohibited in the original proceedings, compliance proceedings could have the effect of extending implementation periods through new Article 4.7 recommendations in successive Article 21.5 proceedings. This could lead to a potentially “never-ending cycle” of dispute settlement proceedings and inordinate delays in the implementation of recommendations and rulings of the DSB.

 

R.4.3.11 US — FSC (Article 21.5 — EC II), para. 89
(WT/DS108/AB/RW2)

 

In our view, whether the first Article 21.5 panel made or could make a new Article 4.7 recommendation is not dispositive of the question whether the original Article 4.7 recommendation continues to be in effect until full compliance is achieved. Like the Panel, we see “no material significance in the purported lack of an explicit ‘new’ … recommendation under Article 4.7 of the SCM Agreement in the first [Article 21.5] compliance proceeding”.

 

R.4.3.12 US — Softwood Lumber VI (Article 21.5 — Canada), paras. 102-103 and footnote 155
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

Article 21.5 of the DSU identifies the task of a panel operating pursuant to that provision as resolving disagreements “as to the existence or consistency with a covered agreement of a measure taken to comply with the recommendations and rulings” of the DSB. This task cannot be done in abstraction from the measure that was subject of the original proceedings. The measure taken to comply in this case is the Section 129 Determination. Although it is distinct from the original determination, the Section 129 Determination incorporates by reference many parts of the analysis in the original determination, and retains and relies on much of the evidence collected in the original investigation. … Furthermore, Canada’s claims under Articles 3.5 and 3.7 of the Anti-Dumping Agreement and Articles 15.5 and 15.7 of the SCM Agreement required the Panel to review, inter alia, how the investigating authority treated the totality of the factors and evidence considered, including the new elements. This involved review of the USITC’s analysis of how those factors and the various pieces of evidence interacted. In these circumstances, we do not see why the Panel would be bound by the findings of the original panel.

 

This does not mean that a panel operating under Article 21.5 of the DSU should not take account of the reasoning of an investigating authority in an original determination, or of the reasoning of the original panel. Article 21.5 proceedings do not occur in isolation but are part of a “continuum of events”. This is a consequence of the mandate of an Article 21.5 panel, namely, to examine whether recommendations and rulings from the original dispute have been implemented consistently with the covered agreements. When an investigating authority making a redetermination provides different explanations of, or draws different inferences from, specific pieces of evidence that were also before it in the original investigation, this may be relevant to the assessment of whether its reasoning is adequate and based on positive evidence. Such deviations from prior reasoning may raise questions about the objectivity of the authority’s assessment of the evidence or the credibility of its explanations. Similarly, doubts could arise about the objective nature of an Article 21.5 panel’s assessment if, on a specific issue, that panel were to deviate from the reasoning in the original panel report in the absence of any change in the underlying evidence in the record and explanations given by the investigating authority in a redetermination.155 These concerns are not, however, based on the binding effect of the adopted findings of the original panel.

 

R.4.3.13 US — Softwood Lumber VI (Article 21.5 — Canada), para. 126
(WT/DS277/AB/RW, WT/DS277/AB/RW/Corr.1)

 

As discussed above, an investigating authority making a redetermination is not bound to give the same explanations of, or draw the same inferences from, specific pieces of evidence as it did in its original determination. Nevertheless, a marked departure from the explanations given in the original determination may, when the evidence is essentially the same and no explanation is given for that departure, undermine the extent to which the explanations in the redetermination can be viewed as “reasoned and adequate”. The Panel, however, simply did not examine the question of the extent to which the same evidence that was before the USITC in the original determination was the basis for different explanations in the Section 129 Determination.

 

R.4.3.14 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), para. 148
(WT/DS268/AB/RW)

 

… In addition, we note that EC — Bed Linen (Article 21.5 — India) concerned a claim for which the complainant was found not to have made out a prima facie case in the original proceedings. This is not what occurred in the original proceedings in the present case. The participants have characterized the original panel’s approach as an exercise of judicial economy. We do not express a view on whether this is a proper characterization of the approach taken by the original panel. In any event, even if the original panel’s approach should properly be characterized as judicial economy, it would still mean that the central rationale of the Appellate Body in EC — Bed Linen (Article 21.5 — India) would not be applicable. The Appellate Body explained that the issue raised in that case differed “from a situation where a panel, on its own initiative, exercises ‘judicial economy’ by not ruling on the substance of a claim”.

 

R.4.3.15 Chile — Price Band System (Article 21.5 — Argentina), paras. 134-136
(WT/DS207/AB/RW)

 

We first recall that, in WTO dispute settlement, as in most legal systems and international tribunals, the burden of proof rests on the party that asserts the affirmative of a claim or defence. A complaining party will satisfy its burden when it establishes a prima facie case by putting forward adequate legal arguments and evidence. The nature and scope of arguments and evidence required “will necessarily vary from measure to measure, provision to provision, and case to case”. When a claim is brought against a WTO Member’s legislation or regulation, a panel may, in some circumstances, consider that the text of the relevant legal instrument is sufficiently clear to establish the scope and meaning of the law. However, in other cases, a panel may consider that additional evidence is necessary to do so. Once the complaining party has established a prima facie case, it is then for the responding party to rebut it.

 

A panel errs when it sustains a claim for which the complaining party has failed to make out a prima facie case. Nevertheless, a panel does not commit legal error merely by omitting to specify which party bears the burden of proof in respect of each claim or defence. Moreover, a panel is not obliged, in every instance, to make an explicit finding that a complaining party has met its burden to establish a prima facie case in respect of each element of a particular claim, or that the responding party has effectively rebutted a prima facie case. Thus, a panel is not required to make an explicit ruling that a complaining party has established a prima facie case of inconsistency before examining the responding party’s defence and evidence. At the same time, the mere articulation by a panel of the correct rules as to the burden of proof is not sufficient if the panel does not, in fact, properly allocate that burden in the case before it.

 

Neither Chile nor Argentina suggests that the general rules on burden of proof, which imply that a responding party’s measure will be treated as WTO-consistent unless proven otherwise, do not apply in proceedings under Article 21.5 of the DSU. We observe, in this regard, that Article 21.5 proceedings do not occur in isolation from the original proceedings, but that both proceedings form part of a continuum of events. The text of Article 21.5 expressly links the “measures taken to comply” with the recommendations and rulings of the DSB concerning the original measure. A panel’s examination of a measure taken to comply cannot, therefore, be undertaken in abstraction from the findings by the original panel and the Appellate Body adopted by the DSB. Such findings identify the WTO-inconsistency with respect to the original measure, and a panel’s examination of a measure taken to comply must be conducted with due cognizance of this background. Thus, the adopted findings from the original proceedings may well figure prominently in proceedings under Article 21.5, especially where the measure taken to comply is alleged to be inconsistent with WTO law in ways similar to the original measure. In our view, these considerations may influence the way in which the complaining party presents its case, and they may also be relevant to the manner in which an Article 21.5 panel determines whether that party has discharged its burden of proof and established a prima facie case.

 

R.4.3.16 Chile — Price Band System (Article 21.5 — Argentina), paras. 233-236
(WT/DS207/AB/RW)

 

Chile also claims that the Panel acted inconsistently with Article 11 of the DSU in refusing to re-assess certain aspects of the original price band system that, according to Chile, both the original panel and the Appellate Body misunderstood, and in relying on this “factual error” in its analysis of the measure at issue. Chile argues that the original panel and Appellate Body mistakenly believed that, under the original measure, the c.i.f. band thresholds were compared to an f.o.b. reference price in order to determine applicable specific duties and rebates. …

 

In examining this aspect of Chile’s appeal, we first note that Chile did not raise this alleged misunderstanding concerning the operation of the original measure either to the original panel at the interim review stage, or during the appeal in the original proceedings. Moreover, Chile itself appeared to state, in response to a question posed by the original panel, that the reference prices determined on an f.o.b. basis were not subject to any adjustment. …

 

… In addition, the Panel expressly stated that its findings and conclusions regarding the measure at issue did not depend on whether, under the original price band system, the reference price was converted to a c.i.f. basis. In other words, even assuming arguendo that this aspect of the operation of the original price band system was misunderstood in the original proceedings, this misunderstanding would not have affected the Panel’s findings with respect to the measure at issue, and, therefore, even its correction would not have assisted Chile in these proceedings.

 

We also recall that, in Mexico — Corn Syrup (Article 21.5 — US), the Appellate Body declined to “revisit the original panel report” because that report had “been adopted and … these Article 21.5 proceedings concern a subsequent measure”. In this regard, the Appellate Body referred to Articles 3.2 and 3.3 of the DSU and the importance of security, predictability, and the prompt settlement of disputes. Moreover, we are mindful that adopted panel and Appellate Body reports must be accepted by the parties to a dispute. These same considerations must also be taken into account in this appeal, and they confirm our view that the Panel did not, in this case, fail to comply with its duties under Article 11 of the DSU in declining to correct the alleged misunderstanding concerning the original price band system.

 

R.4.3.17 US — Stainless Steel (Mexico), para. 158 and footnote 309
(WT/DS344/AB/R)

 

It is well settled that Appellate Body reports are not binding, except with respect to resolving the particular dispute between the parties. This, however, does not mean that subsequent panels are free to disregard the legal interpretations and the ratio decidendi contained in previous Appellate Body reports that have been adopted by the DSB.309

 

R.4.3.18 US — Upland Cotton (Article 21.5 — Brazil), para. 210
(WT/DS267/AB/RW)

 

… Because adopted panel and Appellate Body reports must be accepted by the parties to a dispute, allowing a party in an Article 21.5 proceeding to re-argue a claim that has been decided in adopted reports would indeed provide an unfair “second chance” to that party. …

 

R.4.3.19 US — Upland Cotton (Article 21.5 — Brazil), para. 386
(WT/DS267/AB/RW)

 

The United States claims that, in its finding of significant price suppression, the Panel relied excessively on the findings in the original panel and Appellate Body reports. As the Panel recognized, the Appellate Body has stated that proceedings under Article 21.5 of the DSU do not occur in isolation, but are part of a “continuum of events”, and “doubts could arise about the objective nature of an Article 21.5 panel’s assessment if, on a specific issue, that panel were to deviate from the reasoning in the original panel report in the absence of any change in the underlying evidence in the record”. Thus, in this case, it was appropriate for the Panel to have relied on the findings from the original proceedings unless “any change in the underlying evidence in the record” would have justified departing from them. …

 

R.4.3.20 US — Upland Cotton (Article 21.5 — Brazil), para. 422
(WT/DS267/AB/RW)

 

In US — Softwood Lumber VI (Article 21.5 — Canada), the Appellate Body noted that “doubts could arise about the objective nature of an Article 21.5 panel’s assessment if, on a specific issue, that panel were to deviate from the reasoning in the original panel report in the absence of any change in the underlying evidence in the record”. The only relevant difference between the situation before the Panel and the original proceedings in this dispute is the length of the review period considered to establish whether significant price suppression exists: six years in the original proceedings (MY 1997-2002) as opposed to five years in the Article 21.5 proceedings (MY 2002-2006). In our view, this difference does not justify a departure from the costs and revenues methodology used by the original panel, or from the medium to long-term analysis contemplated in the original panel report, considering also that compliance measures subject to Article 21.5 proceedings by their very nature will be in force for a shorter period of time. Moreover, the marketing loan and counter-cyclical programmes remained unchanged since the original proceedings. Therefore, considering that relevant circumstances in the current proceedings have not changed since the original proceedings, it was proper for the Panel not to have deviated from the approach of the panel and the Appellate Body in the original proceedings, which relied on total costs of production, and did not to take into account off-farm income when comparing production cost with revenues.

 

R.4.3.21 US — Zeroing (EC) (Article 21.5 — EC), paras. 304-305
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

… Due to its prospective nature, compliance is not confined by the limited duration of the original measures at issue, especially when a subsequent measure replaces or supersedes the measure at issue in the original proceedings.

 

Under the DSU, compliance has to be accomplished at the latest from the end of the reasonable period of time with prospective effect. In the instant case, we do not see how such prospective compliance could be achieved and assessed in an Article 21.5 proceeding if such analysis were constrained by the limited duration of the 16 administrative reviews at issue in the original proceedings, given that, in principle, entries covered by these 16 administrative reviews will have been liquidated before the end of the reasonable period of time, and cash deposit rates established in those reviews will have been superseded by the results of subsequent administrative reviews concluded before the expiry of the reasonable period of time.

 

R.4.3.22 US — Zeroing (EC) (Article 21.5 — EC), paras. 306-307
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

Given the scope of the recommendations and rulings of the DSB, in order to achieve compliance, the United States had to cease using zeroing in the assessment of duties with respect to Cases 16 through 31 by the end of the reasonable period of time. Having said that, we consider that these compliance obligations are not limited to the cessation of zeroing in the calculation of assessment rates; rather, by implication, these obligations also extend to connected and consequent measures that are simply “mechanically” derived from the results of an assessment review and applied in the ordinary course of the imposition of anti-dumping duties.

 

In particular, the United States fails to achieve compliance if it assessed final duty liability and applied cash deposits on the basis of zeroing after the end of the reasonable period of time. Given that, in the United States, final duty liability is assessed and cash deposit rates are set in administrative reviews, administrative review determinations that are issued after the end of the reasonable period of time must not reflect zeroing. The United States would not comply with the recommendations and rulings of the DSB if the administrative review determinations issued after the end of the reasonable period of time were based on zeroing or, in the event that no administrative review is requested, if the duties were assessed, after the end of the reasonable period of time, on the basis of cash deposit rates that were calculated with zeroing. …

 

R.4.3.23 US — Zeroing (EC) (Article 21.5 — EC), paras. 308-309
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

A subsequent administrative review determination issued after the end of the reasonable period of time falls within the scope of the implementation obligations of the United States, even though, in that review, duty liability has been assessed for entries that occurred before the end of the reasonable period of time. The United States considers that no failure to comply can be found in relation to such an administrative review determination because, under the DSU, implementation does not have retroactive reach. The United States reasons that the anti-dumping duty liability attaches to the entry, and arises at the time of importation. For the United States, the implementation obligations would apply retroactively if it were required to assess anti-dumping duty liability in the light of the legal regime in place at the end of the reasonable period of time (which would incorporate the prohibition of using zeroing in the assessment of duties), as opposed to the legal regime in effect at the time of importation, when the anti-dumping duty liability arose.

 

We disagree with the United States. We observe, first, that an administrative review determination issued after the end of the reasonable period of time in which duty liability has been assessed for entries that occurred before that date also has an impact on entries taking place after the end of the reasonable period of time, because this determination sets going-forward cash deposit rates that apply to future entries. Under the United States’ approach, prospective implementation would imply that cash deposit rates on entries after the end of the reasonable period of time do not reflect zeroing. Moreover, because compliance with the recommendations and rulings of the DSB implies cessation of zeroing in the assessment of final duty liability, and in the measures that, in the ordinary course of the imposition of antidumping duties, derive mechanically from the assessment of duties, whether the implementation is prospective or retroactive should not be determined by reference to the date when liability arises, but rather by reference to the time when final dumping duty liabilities are assessed or when measures that result mechanically from the assessment of duties occur. We consider that the obligation to cease using zeroing in the assessment of anti-dumping duty liability at the latest as of the end of the reasonable period of time “is eminently prospective in nature”. By contrast, the approach based on the date of entry advocated by the United States would allow a WTO Member operating a retrospective duty assessment system to resort to a methodology for assessing duty liability that has been found WTO-inconsistent beyond the end of the reasonable period of time. Thus, the implementing Member would be able to extend the reasonable period of time and delay compliance depending on when it chooses to undertake final duty assessment. Such a result would deprive of meaning the notion of “reasonable period of time” in which a Member shall comply, as provided for in Article 21.3 of the DSU, and be contrary to the implementation mechanism of the DSU.

 

R.4.3.24 US — Zeroing (EC) (Article 21.5 — EC), para. 311
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

… We consider that measures that, in the ordinary course of the imposition of anti-dumping duties, derive mechanically from the assessment of duties would establish a failure to comply with the recommendations and rulings of the DSB to the extent that they are based on zeroing and that they are applied after the end of the reasonable period of time. Accordingly, we reverse the Panel’s interpretation, in paragraph 8.199 of the Panel Report, that the United States’ obligation to implement the recommendations and rulings of the DSB does not extend to the actual collection and liquidation of duties, and to the issuance of assessment or liquidation instructions, when these actions result from administrative review determinations made before the end of the reasonable period of time.

 

R.4.3.25 US — Zeroing (EC) (Article 21.5 — EC), para. 380
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

As we have noted above, these are compliance proceedings and the issue before the Panel was whether the United States had failed to comply; that is, the Panel was called on to establish whether the USDOC’s determinations in these sunset reviews had any impact on compliance by the United States. We consider that the USDOC’s affirmative final likelihood-of-dumping determinations in these sunset reviews did not ultimately undermine compliance by the United States with the recommendations and rulings of the DSB, considering that the anti-dumping duty orders were revoked at the end of the sunset reviews with an effective date of 7 March 2007. We consider this to be the case even assuming that the European Communities had demonstrated that these likelihood-of-dumping determinations relied on margins of dumping calculated using zeroing. We wish to underline that we are not determining whether or not the USDOC’s final likelihood-of-dumping determinations in these sunset reviews were in compliance with the recommendations and rulings of the DSB after the end of the reasonable period of time. However, we consider that these determinations do not ultimately undermine compliance by the United States, considering that the sunset reviews resulted in revocation orders and that these revocation orders became effective on a date prior to the end of the reasonable period of time.

 

R.4.3.26 US — Zeroing (EC) (Article 21.5 — EC), para. 424
(WT/DS294/AB/RW, WT/DS294/AB/RW/Corr.1)

 

We disagree with the notion that a Member may be entitled to assume in Article 21.5 proceedings that an aspect of a measure that was not challenged in the original proceedings is consistent with that Member’s obligations under the covered agreements. In US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), the Appellate Body held that, “[o]n the basis of the original panel’s conclusions [regarding the likelihood-of-dumping determination], the USDOC could not assume that its findings regarding the alleged decline in the volume of imports were WTO-consistent”, as these concerned a different aspect of the original measure. If certain claims against aspects of a measure were not decided on the merits in the original proceedings, they are not covered by the recommendations and rulings of the DSB and, therefore, a Member should not be entitled to assume that those aspects of the measure are consistent with the covered agreements.

 
R.4.4 Article 21.5 of the DSU — “these dispute settlement procedures”     back to top

R.4.4.1 US — FSC (Article 21.5 — EC II), para. 59 and footnote 116
(WT/DS108/AB/RW2)

 

The Appellate Body has, to date, not been called upon to determine the precise scope of the phrase “these dispute settlement procedures” in Article 21.5 and how it relates to Article 6.2 of the DSU.116 We do not consider it necessary, for purposes of resolving the present dispute, to determine the precise scope of this phrase. However, we are of the view that the phrase “these dispute settlement procedures” does encompass Article 6.2 of the DSU, and that Article 6.2 is generally applicable to panel requests under Article 21.5. At the same time, given that Article 21.5 deals with compliance proceedings, Article 6.2 needs to be interpreted in the light of Article 21.5. In other words, the requirements of Article 6.2, as they apply to an original panel request, need to be adapted to a panel request under Article 21.5.

 

R.4.4.2 US — Continued Suspension / Canada — Continued Suspension, para. 336
(WT/DS320/AB/R, WT/DS321/AB/R)

 

The opening clause of Article 21.5 specifies the types of disputes that fall within the scope of this provision, that is, those involving a disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings of the DSB. The word “shall” in Article 21.5 indicates that such disagreements must be resolved through recourse to “these dispute settlement procedures”. Read together with the second sentence of Article 21.5, “these dispute settlement procedures” do not refer generally to all proceedings under the DSU, but specifically to the panel proceedings envisaged in Article 21.5, in which the original panellists are preferred for the composition of the panel and in which the time frame of the proceedings is shortened. In other words, Article 21.5 dictates that panel proceedings pursuant to this provision are the procedures that must be followed for adjudicating the cause of action as framed in its opening clause.

 
R.4.5 Article 21.5 of the DSU — Prejudice     back to top

R.4.5.1 US — Softwood Lumber IV (Article 21.5 — Canada), para. 89
(WT/DS257/AB/RW)

 

Lastly, we note that the United States refers to the “prejudice” that it suffered by virtue of the fact that the Panel’s failure to grant the request for a preliminary ruling meant that it was forced to defend its actions in an assessment review — an “entirely separate” proceeding, with a “wholly different” administrative record — for the first time under the expedited time-frames of an Article 21.5 proceeding. We observe, in this connection, that the measure at issue in proceedings under Article 21.5 will, in principle, be a different measure than the measure at issue in the original proceedings. Thus, a Member cannot be said to suffer prejudice solely by virtue of the fact that it must defend a new or different measure in Article 21.5 proceedings. Moreover, the arguments made by the United States do not identify any prejudice suffered to the conduct of its defence in these Article 21.5 proceedings. The United States was invited by the Panel to submit arguments in defence of the pass-through analysis in the First Assessment Review as an alternative argument, in the event that the Panel did not grant its request for a preliminary ruling, but it elected not to do so. …

 

R.4.5.2 US — Oil Country Tubular Goods Sunset Reviews (Article 21.5 — Argentina), paras. 149-150
(WT/DS268/AB/RW)

 

The United States also raises several concerns related to the nature of Article 21.5 proceedings … First, the United States submits that … the United States is placed in the position of having “to guess that the panel might have thought there were WTO inconsistencies” with respect to that aspect of the measure. Secondly, the United States points out that a respondent whose measure is found to be WTO-inconsistent for the first time by a compliance panel is not given a “reasonable period of time” to bring itself into conformity, as is the case in original proceedings. …

 

We do not consider that the concerns identified by the United States require that the finding on import volumes be excluded from the scope of these Article 21.5 proceedings. … the USDOC had to bring its likelihood-of-dumping determination into conformity with Article 11.3 by ensuring that it rested on a proper factual basis. On the basis of the original panel’s conclusions, the USDOC could not assume that its findings regarding the alleged decline in the volume of imports were WTO consistent. The United States was given a “reasonable period of time” to bring the USDOC’s likelihood-of-dumping determination into compliance following the adoption by the DSB of the panel and the Appellate Body reports in the original proceedings. Moreover, Argentina’s arguments relating to the finding on import volumes were not raised for the first time in these Article 21.5 proceedings. Instead, the parties have offered arguments and counter-arguments on the issue twice, first in the original proceedings, and then in these Article 21.5 proceedings. Additionally, we do not believe that Argentina is unfairly getting a “second chance”, as would be the case where a panel or the Appellate Body had found the measure to be WTO-consistent in the original proceedings, or that the complainant failed to make out a prima facie case.

 

Review of Countervailing Duty Measures. See SCM Agreement, Article 21 (S.2.29-33)

 
R.4.6 Article 21.5 of the DSU — Post suspension of concessions     back to top

R.4.6.1 US — Continued Suspension / Canada — Continued Suspension, para. 338
(WT/DS320/AB/R, WT/DS321/AB/R)

 

Article 21.5 provides for specific procedures for adjudicating a disagreement as to the consistency with the covered agreements of measures taken by a Member to implement the DSB’s recommendations and rulings. Thus, panel proceedings under Article 21.5 is the proper procedure for resolving the disagreement as to whether Directive 2003/74/EC has achieved substantive compliance and whether, consequently, the resolutive condition in Article 22.8 that requires the termination of the suspension of concessions has been met. Indeed, as the Panel pointed out, “the option naturally coming to mind when it comes to reviewing compliance is the procedure provided under Article 21.5 of the DSU”. The Panel also recognized that it “performed functions similar to that of an Article 21.5 panel” by addressing the consistency with the covered agreements of Directive 2003/74/EC.

 

R.4.6.2 US — Continued Suspension / Canada — Continued Suspension, para. 345
(WT/DS320/AB/R, WT/DS321/AB/R)

 

In sum, we consider that recourse to Article 21.5 panel proceedings is the proper course of action within the procedural structure of the DSU in cases where, as in this dispute, a Member subject to the suspension of concessions has taken an implementing measure and a disagreement arises as to whether “the measure found to be inconsistent with a covered agreement has been removed” within the meaning of Article 22.8. Therefore, we share the European Communities’ view that Article 21.5 panel proceedings are the procedures to be followed where there is disagreement as to whether Directive 2003/74/EC has achieved substantive compliance. …

 

R.4.6.3 US — Continued Suspension / Canada — Continued Suspension, paras. 347-348
(WT/DS320/AB/R, WT/DS321/AB/R)

 

A “disagreement” as to the consistency with the WTO agreements of a measure taken to comply arises from the existence of conflicting views: the original complainant’s view that such a measure is inconsistent with the WTO agreements or brings about only partial compliance, and the original respondent’s view that a measure is consistent with the WTO agreements and brings about full compliance with the DSB’s recommendations and rulings. Article 21.5 does not indicate which party may initiate proceedings under this provision. Rather, the language of the provision is neutral on this matter, and it is open to either party to refer the matter to an Article 21.5 panel to resolve this disagreement. The text of Article 21.5, therefore, leaves open the possibility that either party to the original dispute may initiate the proceedings. Thus, contrary to the European Communities’ argument, the text of Article 21.5 does not preclude an original respondent from initiating proceedings under that provision to obtain confirmation of the consistency with the WTO agreements of its implementing measure.

 

… Thus, initiation of Article 21.5 proceedings by either Member, as soon as possible, to examine the consistency with the covered agreements of Directive 2003/74/EC would contribute to a prompt resolution of the disagreement as to whether the inconsistent measure has been removed and whether the suspension of concessions must be terminated pursuant to Article 22.8.

 

R.4.6.4 US — Continued Suspension / Canada — Continued Suspension, paras. 352-355
(WT/DS320/AB/R, WT/DS321/AB/R)

 

… In the post-suspension stage of a dispute, however, an original respondent would initiate Article 21.5 panel proceedings for a specific reason: to obtain a multilateral confirmation that its implementing measure has achieved substantive compliance, so as to render the continued application of the suspension of concessions unlawful pursuant to Article 22.8. The situation is thus one of those envisaged under Article 3.3, in that the original respondent considers that its benefits under the covered agreement are being impaired by the suspension of concessions maintained by the original complainant, which is denied by the suspending Member. The task of an Article 21.5 panel, established at the request of the original respondent, is to determine whether the implementing measure brings about substantive compliance. There is nothing “abstract” about such a determination; it results in an adjudication with real consequences, including, in particular, whether the application of the suspension of concessions may continue.

 

… We agree that the original respondent that has taken a measure to comply cannot be expected to speculate as to the violations that could possibly be raised against its measure by other Members, and this is not what the original respondent is expected to do if it initiates Article 21.5 panel proceedings. Rather, the original respondent will be able to identify in its panel request the measure it has taken to comply and the specific inconsistencies found in the DSB’s recommendations and rulings in the original proceedings, and claim before the Article 21.5 panel that it has complied with the DSB’s recommendations and rulings by rectifying those inconsistencies. It would then be for the Article 21.5 panel to determine if the measure taken to comply does, in fact, rectify the inconsistencies identified in the DSB’s recommendations and rulings.

 

The original complainant may respond to the allegations of compliance made by the original respondent. If, however, the original complainant considers that the implementing measure is inconsistent with provisions of the WTO agreements not covered in the request for the establishment of a panel by the implementing Member, it may file its own request for the establishment of a panel under Article 21.5 identifying those provisions that it considers should be examined by the Article 21.5 panel. It would be for the Article 21.5 panel to determine if the implementing measure violates the WTO agreements in ways different from the original measure or whether certain claims fall outside the scope of Article 21.5 proceedings. The original complainant would be expected to do so as soon as possible after adoption of an implementation measure or after the filing of the original respondent’s panel request, so that both Article 21.5 panel requests may be referred to the original panel wherever possible, allowing review of all the issues relating to substantive compliance in the same Article 21.5 proceedings.

 

Such an approach is consistent with the requirements of Article 22.8 of the DSU. As noted above, Article 22.8 provides certain resolutive conditions which, if met, render the suspension of concessions without legal basis. The suspending Member and the implementing Member share the responsibility to ensure that the suspension of concessions is applied only insofar as none of the conditions laid down in Article 22.8 are met. Thus, both Members have an obligation to engage in a cooperative manner in WTO dispute settlement to establish whether the suspension of concessions can continue or must be discontinued pursuant to Article 22.8. Irrespective of who initiates the Article 21.5 panel proceedings, a finding of an Article 21.5 panel that the implementing Member has removed the inconsistent measure means that one of the resolutive conditions in Article 22.8 is met. This finding, once adopted by the DSB — the same body that authorized the suspension of concessions — signifies that the inconsistency against which the suspension of concessions was authorized has now been remedied. Thus, by operation of law (ipso jure), the suspension of concessions may no longer be applied.

 

R.4.6.5 US — Continued Suspension / Canada — Continued Suspension, paras. 358-365
(WT/DS320/AB/R, WT/DS321/AB/R)

 

We recognize that it is theoretically possible for the original complainant to refuse to participate in Article 21.5 proceedings initiated by the original respondent. Yet, this is not a feature that may only occur in Article 21.5 proceedings initiated by the original respondent, because the DSU does not provide the means to compel any party to participate in any dispute settlement proceedings. A defending party who refuses to participate in dispute settlement proceedings will lose the opportunity to defend its position and will risk a finding in favour of the complaining party that has established a prima facie case. Similarly, in Article 21.5 panel proceedings initiated by the original respondent, the original complainant who refuses to participate forgoes the opportunity to explain to the Article 21.5 panel why the measure taken to comply fails to rectify the inconsistencies found in the original proceeding and, consequently, why the suspension of concessions remains justified under Article 22.8 despite the measure taken to comply. Absent any rebuttal by the original complainant, the Article 21.5 panel will make its determination on the basis of a prima facie case presented by the original respondent that its implementing measure has brought it into compliance with the DSB’s recommendations and rulings. Therefore, where the original complainant has suspended concessions according to the DSB’s authorization, the original complainant would have a strong incentive to participate lest the authorization to suspend concessions lapses as a result of the adoption by the DSB of the Article 21.5 panel’s finding that the original respondent has brought itself into compliance.

 

Like any other panel, an Article 21.5 panel established in the post-suspension stage, at the request of the original respondent, would be bound to make an objective assessment of the matter. The ultimate issue before such a panel is whether the measure found to be inconsistent with a covered agreement has been removed. We have interpreted “removed” to mean substantive compliance. The question is which party bears the burden of proof in respect of the issues of substantive compliance. Is the burden to be allocated according to a mechanistic rule that it is for the party initiating the proceedings to prove substantive compliance or is it the case that the burden of proof is allocated according to different principles? Much of the reluctance of the parties to secure a definitive determination in respect of Article 22.8 is the apprehension that, upon initiation, a party will attract the full burden of proof.

 

In our view, the allocation of the burden of proof, in the context of Article 22.8, should not be determined simply on the basis of a mechanistic rule that the party who initiates the proceedings bears the burden of proof. As we have indicated, in case of a disagreement, both parties are under an obligation to secure a definitive multilateral determination as to whether the suspension of concessions must be terminated. The burden of proof does not attach to a party simply because such party discharges this obligation. To hold otherwise would create a disincentive to act in a manner which we consider to be obligatory and desirable.

 

The allocation of the burden of proof in the context of claims arising under Article 22.8 is a function of the following considerations. First, what is the nature of the cause of action that is framed under Article 22.8. Second, the practical question as to which party may be expected to be in a position to prove a particular issue. Third, consideration must be given to the requirements of procedural fairness.

 

Since the suspension of concessions is a remedy of last resort imposed after an elaborate multilateral dispute settlement process, in our view, it is appropriate that the Member whose measure has brought about the suspension of concessions should make some showing that it has removed the measure found to be inconsistent by the DSB in the original proceedings, so that normality can be lawfully restored. This requires that the original respondent will have an onus to show that its implementing measure has cured the defects identified in the DSB’s recommendations and rulings. The quantum of proof entailed by this is a clear description of its implementing measure, and an adequate explanation regarding how this measure rectifies the inconsistencies found in the original proceedings, so as to place the Article 21.5 panel in a position to make an objective assessment of the matter and, in the absence of rebuttal, to rule in favour of the original respondent.

 

If the original respondent initiates Article 21.5 proceedings to determine that the first resolutive condition in Article 22.8 has been fulfilled, and, consequently, that the suspension of concessions must end, and the original complainant fails to appear and answer the case, what would the original respondent need to establish to satisfy a panel that the resolutive condition has been fulfilled? The original respondent, in this situation, would be required to place evidence before the Article 21.5 panel sufficient to permit the panel, in carrying out its duty, to make an objective assessment of the matter. The quantum of evidence necessary for this purpose is the burden of proof, described above, that attaches to the original respondent.

 

In respect of all other issues, the burden of proof rests upon the original complainant. Such issues may include a claim that the implementing measure is otherwise inconsistent with the covered agreements or that the implementing measure remains wanting for reasons not traversed by the original respondent in discharging its burden of proof.

 

This allocation of the burden of proof is also consistent with the parties’ shared responsibility to ensure that the suspension of concessions is “temporary”, and that the normal state of affairs, that is, conformity with the covered agreements and absence of the suspension of concessions, is restored as quickly as possible.

 

R.4.6.6 US — Continued Suspension / Canada — Continued Suspension, footnote 828 to para. 403
(WT/DS320/AB/R, WT/DS321/AB/R)

 

Nonetheless, we do not share the view of the United States and Canada that the continued suspension of concessions should be properly characterized as inaction. Upon the authorization to suspend concessions in 1999, the United States and Canada respectively took the measures to impose tariffs on all imports of certain European Communities products at rates substantially exceeding the bound tariff rates and have continuously collected the additional tariffs since then. Thus, the continued suspension of concessions by the United States and Canada is more properly characterized as an ongoing action.

 

119. In this respect, we recall that the Appellate Body stated, in EC — Bed Linen (Article 21.5 — India), that the measure taken to comply may be inconsistent with WTO law “in ways different from” the original measure (Appellate Body Report, EC — Bed Linen (Article 21.5 — India), para. 79). See also Appellate Body Report, Canada — Aircraft (Article 21.5 — Brazil), para. 40.     back to text

155. We would have concerns, for example, if an Article 21.5 panel were to see no problem in a particular inference drawn by an investigating authority in a redetermination in circumstances where the original panel found that such inference lacked proper support and the inference drawn in the redetermination was based on the same evidence and explained in the same way as in the original determination.     back to text

309. We note that the mandate of an Article 21.5 panel includes the task of assessing whether the measures taken to comply with the rulings and recommendations adopted by the DSB in the original proceedings achieve compliance with those rulings. Therefore, panels established under that provision are bound to follow the legal interpretation contained in the original panel and Appellate Body reports that were adopted by the DSB.     back to text

116. In Mexico — Corn Syrup (Article 21.5 — US), the Appellate Body made certain findings assuming, arguendo, that Article 6.2 applied in the context of Article 21.5 proceedings. The Appellate Body did not make a finding whether Article 6.2 actually applied in the context of Article 21.5 proceedings and, if so, to what extent (see Appellate Body Report, Mexico — Corn Syrup (Article 21.5 — US), paras. 52-53 and 67).     back to text


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