DS: United States — Import Measures on Certain Products from the European Communities

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.


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Summary of the dispute to date

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Complaint by the European Communities.

On 4 March 1999, the EC requested consultations with the US in respect of the US decision, effective as of 3 March 1999, to withhold liquidation on imports from the EC of a series of products together valued at over $500 million on an annual basis, and to impose a contingent liability for 100% duties on each individual importation of affected products. On 2 March 1999, the arbitrators charged with determining the level of suspension of concessions, requested by the United States in response to the failure by the EC to implement the recommendations of the DSB in respect of the ECís banana regime (WT/DS27), had asked for additional data from the parties and informed the parties that they were unable to issue their report within the 60-day period envisaged by the DSU. The EC contends that the measure made effective by the US as of 3 March 1999 deprives EC imports into the United States, of the products in question, of the right to a duty not in excess of the rate bound in the US Schedule. The EC further contended that, by requiring the deposit of a bond to cover the contingent liability for 100% duties, US Customs effectively impose 100% duties on each individual importation. The EC alleged violations of Articles 3, 21, 22 and 23 of the DSU, and Articles I, II, VIII and XI of GATT 1994. The EC also alleged nullification and impairment of benefits under GATT 1994, as well as the impediment of the objectives of the DSU and GATT 1994. The EC had requested urgent consultations pursuant to Article 4.8 of the DSU.

On 11 May 1999, the EC requested the establishment of a panel. At its meeting on 26 May 1999, the DSB deferred the establishment of a panel.


Panel and Appellate Body proceedings

Further to a second request to establish a panel by the EC, the DSB established a panel at its meeting on 16 June 1999. Dominica, Ecuador, India, Jamaica, Japan and St. Lucia reserved their third party rights. On 29 September 1999, the EC requested the Director-General to determine the composition of the Panel. On 8 October 1999, the Panel was composed. The report of the panel was circulated to Members on 17 July 2000. The panel found that:

  • the US measure of 3 March 1999 was seeking to redress a WTO violation and was thus covered by Article 23.1 of the DSU;
  • by putting into place that measure prior to the time authorized by the DSB, the US made a unilateral determination that the revised EC bananas regime in respect of its bananas import, sales and distribution regime violated WTO rules, contrary to Articles 23.2(a) and 21.5, first sentence, of the DSU. In doing so, the United States did not abide by the DSU and thus also violated Article 23.1 together with Article 23.2(a) and 21.5 of the DSU;
  • the increased bonding requirements of the measure of 3 March 1999 as such led to violations of Articles II:1(a) and II:1(b), first sentence (one panelist dissented, considering that those requirements rather violated Article XI:1 of the GATT 1994);
  • the increased interest charges, costs and fees resulting from the 3 March Measure violated Article II:1(b), last sentence;
  • the measure in question also violated Article I of the GATT 1994;
  • in light of these conclusions, the measure of 3 March 1999 constituted a suspension of concessions or other obligations within the meaning of Articles 3.7, 22.6 and 23.2(c) of the DSU imposed without DSB authorization and during the ongoing Article 22.6 arbitration process; and
  • in suspending concessions in those circumstances, the US did not abide by the DSU and thus violated Article 23.1 together with Articles 3.7, 22.6 and 23.2(c) of the DSU.

On 12 September 2000, the EC notified its intention to appeal certain issues of law and legal interpretations developed by the panel. The report of the Appellate Body was circulated on 11 December 2000. The Appellate Body:

  • concluded that the Panel erred by stating that the WTO-consistency of a measure taken by a Member to comply with recommendations and rulings of the DSB can be determined by arbitrators appointed under Article 22.6 of the DSU, and, thus, concluded that the Panelís statements on this issue have no legal effect.
  • concluded that the Panel erred by stating that ď[o]nce a Member imposes DSB authorised suspensions of concessions or obligations, that Memberís measure is WTO compatible (it was explicitly authorised by the DSB)Ē, and, thus, concluded that this statement has no legal effect.
  • reversed the Panelís findings that the increased bonding requirements are inconsistent with Articles II:1(a) and II:2(b), first sentence, of the GATT 1994, and
  • reversed the Panelís finding that, by adopting the 3 March Measure, the US acted inconsistently with Article 23.2(a) of the DSU.

As it upheld the Panelís finding that the 3 March Measure, the measure at issue in this dispute, is no longer in existence, the Appellate Body did not make any recommendation to the DSB pursuant to Article 19.1 of the DSU.

At its meeting of 10 January 2001, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.


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