RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/176 
19 October 2004 
 (04-4408) 
Dispute Settlement Body 
27 September 2004  
 
  
MINUTES OF MEETING 
 
Held in the Centre William Rappard
 
on 27 September 2004  
 
Chairperson:  Ms Amina Mohamed (Kenya) 
 
 Subjects discussed
: Page  
1. Surveillance of implementation of recommendations adopted by the DSB.........................2  
(a) United States – Anti-Dumping Act of 1916:  Status report by the United States ......................2  
(b) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by 
the United States ............................................................................................................. ...........3  
(c) United States – Anti-dumping measures on certain hot-rolled steel products from 
Japan:  Status report by  the United States...................................................................................4  
(d) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report 
by the Unite d States ........................................................................................................... .........4  
2. United States – Final dumping determin ation on softwood lumber from Canada.............9  
(a) Implementation of the recommendations of the DSB.................................................................9  
3. Korea – Anti-dumping duties on imports of certain paper from Indonesia......................10  
(a) Request for the establishment of a panel by Indonesia ............................................................10  
4. United States – Countervailing measures concerning certain products from the 
European Communities..........................................................................................................1 1 
(a) Recourse to Article 21.5 of the DSU by the European Communities:  Request for the 
establishment of  a panel ...................................................................................................... .....11  
5. Canada – Measures relating to exports of wheat and treatment of imported 
grain .......................................................................................................................... ...............13  
(a) Report of the Appellate Body and Report of the Panel.............................................................13  
6. Proposed nominations for the indicative list of governmental and  
non-governmental panelists ...................................................................................................15  
 WT/DSB/M/176 
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1. Surveillance of implementation of recommendations adopted by the DSB 
(a) United States – Anti-Dumping Act of 1916:   Status report by the United States 
(WT/DS136/14/Add.30 – WT/DS162/17/Add.30) 
 (b) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.23) 
 (c) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.23) 
 
(d) United States – Continued Dumping and Subsid y Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.8 – WT/DS234/24/Add.8) 
 1. The Chairperson
 recalled that Article 21.6 of the DSU required that "unless the DSB decides 
otherwise, the issue of implementation of the re commendations or rulings shall be placed on the 
agenda of the DSB meeting after six months follo wing the date of establishment of the reasonable 
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is 
resolved".  She proposed that the four sub-items  to which she had just referred be considered 
separately. 
(a) United States – Anti-Dumping Act of 1916:  Status report by the United States 
(WT/DS136/14/Add.30 – WT/DS162/17/Add.30) 
2. The Chairperson  drew attention to document WT/DS136/14/Add.30 – WT/DS162/17/Add.30 
which contained the status report by the United St ates on progress in the implementation of the DSB's 
recommendations in the case concerning the US Anti-Dumping Act of 1916. 
3. The representative of the United States  said that her country had provided an additional status 
report in these disputes on 16 September 2004, in accord ance with Article 21.6 of the DSU.  As noted 
in the report, legislation repealing the 1916 Act was pending in both the US Senate and US House of 
Representatives.  On 29 January 2004, HR 1073, whic h would repeal the 1916 Act, had been reported 
favorably out of the Committee on the Judiciar y of the US House of Representatives.  On 
30 June 2004, Ambassador Zoellick had written a letter to the leadership of the US House of 
Representatives urging the passage of repeal legislation "at the earliest opportunity".  The US administration would continue to work with Congr ess to achieve further progress in resolving these 
disputes with the EC and Japan. 
4. The representative of the European Communities
 said that the Reports of the Panel and the 
Appellate Body with regard to the US 1916 Anti-Du mping Act had been adopted four years ago.  
During those four years, the United States had not shown any serious efforts to comply with the 
DSB's ruling and recommendations.  Again, the most recent status report could be summarized in two 
words:  "no progress".  This outright failure by the United States to respect its obligation to implement 
the DSB's ruling had set a dangerous precedent which was damaging to all Members, including the United States.  The EC called on the US admini stration to convey to Congress the urgency of 
complying with the WTO decision and to report to the DSB at its next meeting on the steps undertaken to ensure compliance without further delay.  It would be a very worrying signal of lack of commitment to the WTO system, if the US Congress were to finish its work without repealing the 
1916 Anti-Dumping Act.  The EC wished to recall that it might adopt, anytime, a specific anti-
dumping legislation applicable to US products pursuan t to its right to suspend the application to the 
United States of its obligations under th e GATT 1994 and the Anti-Dumping Agreement. 
5. The representative of Japan
 noted that, as of 28 September 2004, four years had lapsed since 
the adoption by the DSB of the recommendations and rulings in these cases.  Th e fact that the United  WT/DSB/M/176 
 Page 3 
 
 
States had not been able to secure the implementa tion of the DSB's recommendations and rulings for 
such a long period of time was no doubt a source of  extreme concern to Japan since its companies 
suffered from the consequences of the US inability to  respect its obligations.  Any prolongation of 
such situation would only tarnish the credibility of  the WTO dispute settlement mechanism.  The US 
status report contained hardly anyt hing new.  Nevertheless, Japan noted with keen interest the steps 
taken by the United States and hoped that they would lead to tangible results.  These steps were the 
US administration's explicit support of the legisla tion repealing the 1916 Act in the 2004 "Report to 
the Leaders on the United States – Japan Regulatory Reform and Competition Policy"  and a letter of 
Ambassador Zoellick to the leadership of the US H ouse of Representatives.  In order to honour these 
efforts on the part of the US government, Japan urge d the US administration to re-double its efforts 
vis-à-vis  the US Congress, so that these positive signs w ould lead to positive results by prompting the 
necessary legislative action during the second session of the 108th Congress.  As had been noted previously, not all of legislations pending in the US legislature would have proper retroactive effects, 
despite Japan's persistent call to do so.  As previ ously mentioned, in May 2004, the Federal District 
Court had passed its judgment upholding the orde r imposing on a Japanese company a payment of 
damages amounting to US$30 million.  It was regrettabl e that the United States had, thus far, failed to 
take any positive steps to prevent these incidents from recurring, despite Japan's persistent call for 
actions in order not to aggravate the nullificati on and impairment.  Once again, Japan urged the 
United States to secure the implementation by wa y of repealing the 1916 Act with proper retroactive 
effect.  Japan further requested the United States to provide more specific reports on any further 
developments regarding the status of all the bills repealing the 1916 Act.  Should the United States 
fail to implement the DSB's recommendations and ruli ngs, Japan had no other option than to proceed 
to reactivation of the arbitration under Article 22 of  the DSU, and to exercise its right to suspend 
concessions or other obligations. 
6. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(b) United States – Section 211 Omnibus Appropria tions Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.23) 
7. The Chairperson  drew attention to document WT/D S176/11/Add.23 which contained the 
status report by the United States on progress in th e implementation of the DSB's recommendations in 
the case concerning US Section 211 Om nibus Appropriations Act of 1998. 
8. The representative of the United States  said that her country had provided a status report in 
this dispute on 16 September 2004, in accordance w ith Article 21.6 of the DSU.  As noted in the 
report, legislation amending or repealing Section 211 was pending in the US Senate and the US House 
of Representatives, and the Senate had held hear ings on this legislation in July.  The US 
administration would continue to work with the US Congress concerning appropriate statutory 
measures that would resolve this matter. 
9. The representative of the European Communities  said that the United States had been a strong 
sponsor of international rules guaranteeing effectiv e and non-discriminatory protection of intellectual 
property rights in each country.  The enactment of the "United States – Cuba Trademark Protection 
Act" was the opportunity for the United States to show  commitment to this objective.  This legislation 
would provide enhanced and effective protection of  intellectual property rights both in Cuba and in 
the United States.  In this framework, it would repe al Section 211, a legislation driven by special 
interests, and resolve this case to the benefit of a ll.  The EC expected that the US administration 
would support the "United States – Cuba Trademark Pr otection Act" as an appropriate solution to this 
dispute. 
10. The representative of Cuba  said that her delegation wished to reiterate the points concerning 
Section 211 of the Omnibus Appropria tions Act of 1998 as contained in Cuba's statement made at the WT/DSB/M/176 
Page 4  
 
31 August 2004 DSB meeting.  That statement was en tirely valid and pertinent since the situation of 
non-compliance of the United States remained uncha nged.  Cuba was deeply concerned to see how 
the United States had breached and continued to breach  its commitments with re gard to the settlement 
of this dispute as well as of other disputes.  She noted that now retaliatory measures in the form of 
suspension of concessions could even be imposed on certain US products due to US non-compliance 
with the DSB's recommendations in the case on "U nited States – Continued Dumping and Subsidy 
Offset Act of 2000".  Such actions, once again, undermined and impaired not only the credibility of 
the United States as a WTO Member, but also the credibility of the WTO itself.  On a number of 
occasions, the United States had stated that bills  were awaiting approval in Congress that would 
allegedly provide a solution to this dispute.  In re ality these had been empty words since, as yet – even 
though more than half of the time period for implementation had passed – no settlement had been 
reached.  Her delegation hoped that the United States  had made good use of the time that had passed 
and that it would finally opt for the only solution that could justify the loss of so much time;  i.e. the repeal of Section 211.  Cuba reminded the Un ited States, once again, that it had time until 
December 2004 to complete implementation. 
11. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(c) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.23) 
12. The Chairperson  drew attention to document WT/D S184/15/Add.23 which contained the 
status report by the United States on progress in th e implementation of the DSB's recommendations in 
the case concerning US anti-dumping measures on certain hot-rolled steel products from Japan. 
13. The representative of the United States  said that her country had provided a status report in 
this dispute on 16 September 2004, in accordance with Article 21.6 of the DSU.  The US administration would continue to work with th e US Congress with respect to the recommendations 
and rulings of the DSB that had not been  already addressed by the US authorities by 
23 November 2002. 
14. The representative of Japan
 said that the United States had failed to implement the DSB's 
recommendations and rulings in this proceeding, despite the fact that it had been granted a plenty of 
time since the reasonable period of time for implemen tation had been extended more than twice.  It 
was of serious concern to Japan that not even a bill to amend the relevant US anti-dumping statutes 
had been introduced to the US Congress for consid eration and passage.  As Japan had repeatedly 
stated, such a prolonged non-implementation, let al one inaction, seriously undermined the credibility 
of the WTO dispute settlement system.  At the DSB meeting on 31 August, it had been agreed that the 
reasonable period of time in this proceeding be ex tended until 31 July 2005.  In the hope that the 
United States would respect its commitment, Japan strongly urged the United States to take necessary 
legislative steps without delay, so as to bring about a definitive solution to this dispute.  Japan wished 
to remind the United States of its right to the rec ourse provided under the DSU, if the United States 
fell short of fully-fledged implementati on during this extended period of time. 
15. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(d) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.8 – WT/DS234/24/Add.8) 
16. The Chairperson  drew attention to document WT/D S217/16/Add.8 – WT/DS234/24/Add.8 
which contained the status report by the United St ates on progress in the implementation of the DSB's 
recommendations in the case concerning the US Conti nued Dumping and Subsidy Offset Act of 2000.  WT/DSB/M/176 
 Page 5 
 
 
17. The representative of the United States  said that her country had provided a status report on 
16 September 2004, in accordance with Article 21. 6 of the DSU.  As noted in the report, on 
19 June 2003, legislation to bring the Continue d Dumping and Subsidy Offset Act (CDSOA) into 
conformity with the US WTO obligations had b een introduced in the US Senate (S. 1299).  On 
10 March 2004, legislation repealing the CDSO A had been introduced in the US House of 
Representatives (H.R. 3933).  In addition, on 2 Februa ry 2004, the US administration had, once again, 
proposed repeal of the CDSOA, in its budget proposal  for fiscal year 2005.  The US administration 
would continue to work with Congress to achieve further progress in resolving these disputes with the 
complaining parties. 
18. The representative of the European Communities  said that in August 2004, the WTO 
Arbitrators had recognized that the United States nullif ied or impaired the benefits of the other WTO 
Members by maintaining the CDSOA.  First, th e EC wished to thank the Arbitrators and the 
Secretariat for their time and efforts they had devoted  to this complex arbitration.  Although the EC 
regretted that the Arbitrators had rejected the approach for the determination of the level of 
nullification or impairment, which had been suggest ed by the requesting parties, and had instead 
decided to rely on the "trade effects" of the measu re, the EC welcomed the fact that the Arbitrators 
had recognized the existence of a direct adverse e ffect on trade amounting to 72 per cent of the level 
of disbursements.  There was no cast-iron definition of nullification or impairment.  The Arbitrators 
themselves had recognized that the nullification or impairment and the suspension of concessions or 
obligations were complex and disput ed notions.  It was still the EC's conviction that the first benefit 
granted by the WTO was the maintenance of a prope r balance of rights and obligations.  By breaching 
WTO rules, the CDSOA upset that balance and nullifie d or impaired this core benefit of the WTO.  
To "put a value" on that nullification, one could rely on the disbursements made to the US industry in so far as they were the most direct and immediat e economic measures of the CDSOA.  Nevertheless, 
the EC was satisfied that the Arbitrators had rej ected the US assertion that the CDSOA did not cause 
any adverse effect.  The EC also welcomed other aspects of the WTO arbitration award which were 
most valuable for the effectiveness of dispute settleme nt.  First, even if the Arbitrators based their 
decision on the trade effects of the CDSOA, they had expressly rejected the US position that "nullification or impairment is to be limited in all instances to the direct trade loss resulting from the 
violation".  This appeared to be a welcome conf irmation of the Arbitration award in the 1916 Anti-
Dumping Act dispute, which was the first to accept that benefits under the GATT and the WTO 
Agreements on Trade in Goods were not limited to trade benefits, but that the "economic effects" 
should be taken into account. 
19. Second, the award also confirmed that the level  of suspension did not need to be established 
once and for all.  With a measure like the CDSOA, the level of nullification or impairment might indeed vary over time.  As a result of the awar d, the EC and seven other WTO Members might now 
seek and obtain the DSB's authorization to suspend the application of tariff concessions or other 
obligations to the United States.  The EC had always  considered that the suspension of concessions or 
obligations was a solution of last resort.  The EC sincerely hoped that this decision would help focus 
minds to resolve this dispute without the need to impose retaliatory measures.  But, if compliance was 
not achieved within a short period of time, the EC would exercise  its rights.  He noted that, the United 
States had had 11 months to comply with the DSB' s ruling and nine months had passed since the 
expiry of the implementation deadline.  Yet, no si gnificant steps had been taken and again this month 
the US status report had failed to show any progr ess in implementation.  The EC called on the US 
administration to convey to the US Congress the importance for the US credibility in the WTO of respecting the rights of other Members without further delay. 
20. The representative of Canada
 said that his country, once again, noted the status report of the 
United States and its continued failure to comply with its WTO obligations in regards to the Byrd 
Amendment.  On 31 August, WTO Arbitrators had ruled favourably on the level of retaliation 
afforded to Canada and seven other WTO Members ag ainst the United States for its failure to repeal 
the Byrd Amendment.  Despite the WTO rulings, calls  from the international community to repeal the WT/DSB/M/176 
Page 6  
 
Byrd Amendment and the conclusions of the Congr essional Budget Office report on the matter, the 
United States continued to violate its WTO obligati on by not repealing the measure.  Canada would 
continue to take the necessary steps to protect a nd defend its interests.  Canada again called upon the 
United States to end this dispute and repeal the Byrd Amendment. 
21. The representative of Chile
 said that the United States had, for the fifth time, provided the 
DSB with a status report that showed no sign of any move towards compliance with the DSB's 
recommendations in this dispute.  Furthermore, Chile  noted with concern that certain members of the 
US Congress had chosen to ignore the WTO rulings and were encouraging the US administration to continue, through other channels, a practice that had already been declared illegal.  Chile called, once 
again, on the US administration to step up its contacts with the US Congress so that the CDSOA could 
be repealed at the earliest possible opportunity in the few weeks of legislative work that had been left, 
before all the bills, including those ment ioned in the report, were to expire. 
22. At the present meeting, Chile also wished to comment on the recently circulated Arbitrator's 
decision, which, despite claims made by the United States, had determined that the Byrd Amendment 
nullified or impaired Chile's benefits.  The d ecision had thus upheld Chile's right to suspend 
concessions or other obligations in an amount very cl ose to the one originally requested by Chile.  His 
country wished to thank the Arbitrators and the S ecretariat for the Report, and to highlight several 
points, both because of their importance in this particular case and because they had set a precedent 
for future disputes.  First, the Report had reaffi rmed that violation of a WTO obligation did not 
necessarily cause injury and that analysis of the eff ects of such a violation or inconsistency was not 
the responsibility of the Panel or the Appellate Bo dy, but of the Arbitrator.  Second, although the 
Arbitrator had not agreed 100 per cent with Chile's stance, in substance the arbitrator had accepted the 
parameters proposed by Chile, namely that disbur sements or "offset payments" constituted a proper 
and objective basis for establishing the trade effect s of the Byrd Amendment, and also that these 
effects must be calculated on the basis of the duties on products originating in each country and not in 
relation to exports from other WTO Members.  Third, the Report stated that the level of injury could 
change over time, which meant that so too could trade sanctions, as long as equivalence between the 
one and the other was maintained.  Finally, the Ar bitrator had affirmed that "inducing compliance" 
was not the only purpose of suspending concessions.  Ch ile agreed with that assertion, since, if the 
opposite were true, to emphasize compliance could e ndanger the governing principle that there must 
be equivalence between the sanction applied and the injury caused by the measure.  Chile hoped that 
the decision would serve as an incentive for the US  Congress to approve the repeal of the Byrd 
Amendment without delay, thereby obviating the n eed for Chile to assert the right that had been 
reconfirmed by the Arbitrators' decision issued on 31 August 2004. 
23. The representative of Brazil
 said that his country welcomed the Arbitration award, which had 
clearly reaffirmed the illegality of the Byrd Amendmen t and its disbursements.  It had thus given the 
right to Brazil to suspend concessions or other obligations vis-à-vis  the United States in an amount of 
up to 72 per cent of the disbursements made unde r the CDSOA and related to anti-dumping and 
countervailing duties paid on imports from Brazil.  It should be noted that, if the Arbitrators had found 
that 72 per cent of the disbursements caused nullif ication of impairment, a 100 per cent of all 
disbursements had been found by the Appellate Body  to be incompatible with the Agreements and 
continued, therefore, to be 100 per cent illegal.  Thus, the United States continued to be under the 
obligation, if it was to respect the multilateral rules,  to adjust or repeal the illegal measure.  The 
CDSOA had been described as a "double hit" intended to provide an additional,  and clearly illegal, 
remedy to dumping and subsidy.  It had been designe d in order to assist US companies at the expense 
of its foreign competitors.  The Byrd Amendment di storted the conditions of competitiveness in favor 
of US companies and stimulated the proliferation of  investigations in the trade remedies area, since 
the companies were enticed not only by the protec tion given by anti-dumping or countervailing duties, 
but also by the monetary reward they became en titled to.  This had already been demonstrated in 
several instances, and presently in anti-dumping investigations against the importation of shrimp originating in several countries, as extensiv ely reported in the international media.  WT/DSB/M/176 
 Page 7 
 
 
24. With regard to the substance of the award, Braz il noticed that the Arbitrators, while refraining 
from applying the concept of "inducing compliance"  because it was "not expressly referred to in any 
part of the DSU", had decided to apply the "trade effect" standard, which was equally nowhere to be 
found in the Agreements.  Brazil also recalled that in previous arbitrations, in which it had been 
involved, the same "trade effect" approach, request ed by Brazil, had not been accepted.  However, 
like other requesting parties, Brazil appreciated th at the Arbitrators had disagreed with the United 
States that "nullification and impairment is to be limited in all instances to  the direct trade loss 
resulting from the violation" (para. 3.70).  Brazil also appreciated the finding that the present case 
justified a variable level of nullification or impa irment and, consequently, a variable level of 
suspension of concessions and other obligations.  Since the amount of disbursements was likely to 
increase in the coming years, as the Arbitrators them selves had recognized (para. 4.25), these yearly 
adjustments might serve to induce compliance on th e part of the United States.  One could only 
imagine that, if this was a preoccupation, a level of  nullification or impairment of 100 per cent of the 
disbursements would have also served this pur pose.  Brazil recognized, however, that this case 
involved difficult concepts and demanded refined reas oning.  Brazil was thankful to the Arbitrators 
and to the Secretariat for their dedi cation and effort put into this task .  However, it wished to highlight 
one procedural issue of this arbitration that raised  systemic concerns.  The organizational meeting had 
taken place on 13 February 2004 and the issuance of the award had been scheduled for 2 June.  The 
award had been finally released on 31 August, more th an six months after the organizational meeting, 
a situation which was probably unique.  Even con ceding that Article 22.6 of the DSU and its deadline 
for arbitrations was not so reasonably crafted, one  could at least expect "some" adherence by the 
Arbitrators to the deadlines specifi ed in the rules.  The underlying assumption in that Article seemed 
to be that Arbitrators should adopt methodologies that  fit into the time-frame;  after all, the time-frame 
for arbitration was a negotiated disposition of the DSU and, thus, it would serve as a clear indicator of 
how complex the methodology should be.  If real life and real cases changed that assumption and, for example, economic models were to be used more of ten as an analytical tool, Members should also act 
accordingly and give an appropriate response to this novel situation.  Otherwise, future arbitrations 
would tend to be longer and longer, and their results , not always satisfactory.  Finally, Brazil expected 
the United States to meet its multilateral obligations  with other WTO Members and adjust or repeal 
the Byrd Amendment without delay.  Given the numbe r of countries that were being affected by that 
illegal measure and that could still be in the future , WTO Members, and not only the complainants in 
this dispute, should be concerned about the US lack of implementation. 
25. The representative of Hong Kong, China
 said that Hong Kong, China maintained keen 
interests in this case due to systemic implications.  It had joined as a third party at the panel stage and 
as a third participant at the appella te stage.  While Hong Kong, China noted that the US status report 
indicated some efforts to implement the DSB's r ecommendations, such efforts had proved to be highly 
insufficient.  Hong Kong, China regretted that no co ncrete progress had been made to-date.  Now that 
the Arbitrator had granted authorization to the comp laining parties to retalia te, this delegation still 
believed that suspension of concessions and other obligations was a temporary, second-best option to 
induce compliance.  Hong Kong, China urged the Unite d States to take prompt action to bring its 
legislation into conformity with its WTO obligations without delay. 
26. The representative of Korea  said that his country had taken note of the US status report.  
Korea was, once again, disappointed to find in the US  status report that there had been no progress in 
the implementation.  One notable development sin ce the previous DSB meeting was the Arbitration 
award which had found that the CDSO A and its disbursements were se riously harming trade interests 
of other Members and had opened the way for susp ension of concessions.  Korea welcomed the award 
issued in August and appreciated the Arbitrators' and the Secretariat's hard work to help resolve this 
dispute.  At the same time, Korea shared the regr et of other requesting parties expressed at the present 
meeting concerning some findings and conclusions of the Arbitrators, such as rejecting the requesting 
parties' valid argument that the nullification and impairment should be considered in terms of the 
balance of rights and obligations of Members rather than by resorting to the traditional trade effects 
test, and thereby underestimating the level of nullifi cation and impairment.  Now that the Arbitrators' WT/DSB/M/176 
Page 8  
 
award was in place, Korea was in a position to seek  the DSB's authorization to suspend concessions 
up to the level of nullification and impairment spec ified in the award.  Korea strongly hoped that the 
United States would promptly implement the DSB's ru lings, so that retaliation would be unnecessary.  
If compliance was not forthcoming, Korea would c onsider all options available to it, including a 
possibility of exercising its rights under Article 22.7 of the DSU. 
27. The representative of Japan
 said that his country wished to join the other complaining parties 
in expressing appreciation for the work of the Arb itrators and the Secretariat during the proceedings 
of this case.  The Arbitrators had made it clear that  the continued failure by any Member to comply 
with the DSB's recommendations and rulings must ha ve real consequences – in the form of retaliation 
– to be sustained by that Member.  The Arbitrator s had also rejected the US claim that, since the 
CDSOA had been found illegal as such, application of  the CDSOA, i.e. the actual offset payments, 
were outside the terms of referenc e and should not be considered by the Arbitrators.  The Arbitrators 
had correctly concluded that "a va riable level of nullification or impairment and, consequently, a 
variable level of suspension" would be justified.  However, Japan had serious reservations about some 
of the legal analysis and approaches adopted by the Arbitrators.  At the present meeting, his 
delegation wished to focus on a few points, without prejudice to its rights to express further views on 
the Arbitrators' decision. 
28. First, the Arbitrators had misunderstood the requesting parties' arguments concerning the 
concepts of nullification or impairment of benefits  and had claimed that they confused a violation 
with its result, i.e. nullification or impairment, or  rights with benefits.  This was not the case since 
they had argued that the notions of nullification or impairment as well as benefits were broad and 
inclusive, and should not be interpreted exclusively in  terms of the trade effects.  As stated by the EC, 
the notion "benefits" was a legitimate expectation th at all Members would abide by their obligation so 
that a proper balance between the rights and ob ligations under the covered agreements was 
maintained, as provided for in Article XVI:4 of  the WTO Agreement.  Any illegal measure had 
"adverse impacts" on, or upset, this very balance of  rights and obligations found to be violated under 
the WTO Agreement.  Accordingly, the nature of  the illegal measure at issue and the rights and 
obligations violated by such measure should be the essential basis and must be  carefully examined to 
determine the level of nullifica tion or impairment of the benefits in each individual case. 
29. The only basis on which the Arbitrators had decided to apply the trade effect approach to this 
case was that such an approach "h as been regularly applied in othe r Article 22.6 arbitrations and 
seems to be generally accepted by Members as a correct  application of Article 22 of the DSU", even 
though the Arbitrator had recognized that there was no textual basis for this approach and previous 
arbitration decisions "are not binding precedents".  While Japan noted the Arbitrator's view that the 
reasoning and findings in the previ ous Article 22.6 arbitration decisi ons should be taken into account, 
as appropriate, they should not be accepted in a whol esale manner.  It must be borne in mind that each 
case had its own distinctive feature in terms of circum stances involved, nature of measures at issue, 
rights and obligations violated.  While the Arbitrator s had agreed that analysis of the effects of the 
illegal measures should not be confined to "direct trade effect" or "trade loss" and "the broader 
concept of economic impact" could be warranted depending on the nature of measures at hand, the 
Arbitrators seemed to conclude that, since the CD SOA offset payments "operate … as subsidies that 
may generate import substitution pr oduction", the nullification or impairment in the present case 
could be discerned in terms of the trade effect or trade loss (para. 3.41).  It must be emphasized, 
however, that the CDSOA had been found illegal no t because it worked as subsidies, but because it 
constituted "specific action against dumping/subsi dy" not allowed under the covered agreements.  
Again, in Japan's view, the level of nullification or im pairment of benefits or the extent of the adverse 
impact of the violating measure on the proper ba lance of rights and obligations under the covered 
agreements must be determined on a case-by-case basis by the quantifiable result of the illegal 
measure, in light of the nature of the measure, ri ghts and obligations violated and the DSB's findings.  
The Arbitrators in this case had admitted that "the broader concept of economic effect was more appropriate", since the application of the Act "did no t automatically restrict trade".  Nevertheless, the  WT/DSB/M/176 
 Page 9 
 
 
Arbitrators had failed to address Japan's argument s that the disbursement under the CDSOA was a 
direct economic consequence or result of the CDSOA. 
30. Second, Japan had concerns about the Arbitrat ors' reliance on an economic model as a means 
of calculating the level of nullification or impairme nt in disposing the cases like this one.  Japan 
wished to reserve the rights to express its views on this point in the future DSB meetings.  Now the 
award had been issued and all the parties i nvolved in this proceeding were bound by it.  The 
requesting parties might exercise their retaliatory ri ghts at any time as they deemed appropriate, in 
accordance with the award and requirements of the relevant WTO rules.  Japan strongly urged the 
United States to take the Arbitrators' decision seri ously and to act immediately to repeal the CDSOA. 
31. The representative of India  said that his country had listene d carefully to the status report 
provided by the United States at the present meeting a nd noted with deep regret that, as in the past 
few DSB meetings, no progress had been reported.  In the meantime, the Arbitrators had given an 
award under the Article 22.6 arbitration.  India wished  to thank the Arbitrators and the Secretariat for 
their time and effort devoted to this arbitration.   It was regretted that the Arbitrators had not 
completely adopted the approach offered by th e requesting parties to determine the level of 
nullification and impairment even though under the sp ecific circumstances that was the most logical 
approach.  Their reliance on the trade effects of the CDSOA not only appeared unwarranted in the 
circumstances for the reasons it had already b een mentioned in India's arguments during the 
arbitration proceedings, it would also make such proceedings very complicated, in particular for 
developing countries, thereby affecting their rights u nder the DSU.  Nevertheless, the Arbitrator had 
at least determined that direct adverse effect on trade equivalent to 72 per cent of the level of 
disbursements constituted the level of nullificatio n and impairment.  India believed that future 
Arbitrators would recognize that the Arbitrators in this case had rejected the US position that 
nullification or impairment had to be limited in all instances to the direct trade loss resulting from the violation.  As a result of the award, India might  now request the DSB to grant authorization to 
suspend concessions or other obliga tions.  India would urge the United States to repeal the CDSOA 
without further delay, as compliance remained India's preferred option. 
32. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
2. United States – Final dumping determin ation on softwood lumber from Canada 
(a) Implementation of the recommendations of the DSB 
33. The Chairperson  recalled that, in accordance with th e DSU provisions, the DSB was required 
to keep under surveillance the implementation of r ecommendations and rulings of the DSB in order to 
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 of 
the DSU provided that the Member concerned shall in form the DSB, within 30 days after the date of 
adoption of the panel or Appellate Body report, of its intentions in respect of implementation of the 
recommendations and rulings of the DSB.  She re called that at its meeting on 31 August 2004, the 
DSB had adopted the Appellate Body Report in the case on:  "United States – Final Dumping 
Determination on Softwood Lumber  from Canada" and the Panel Re port on the same matter, as 
modified by the Appellate Body Report.  She then invited the United States to  inform the DSB of its 
intentions in respect of implementation of the DSB's recommendations. 
34. The representative of the United States  said that her country intended to implement the DSB's 
recommendations and rulings in a manner that respect ed the US WTO obligations, and it had begun to 
evaluate options for doing so.  The United States would need a reasonable period of time in which to 
implement.  The United States stood ready to consul t with Canada regarding a reasonable period of 
time to implement. WT/DSB/M/176 
Page 10  
 
35. The representative of Canada
 said that, at its meeting of 31 August 2004, the DSB had 
adopted the Reports of the Panel and the Appellate  Body in the case on:  "United States – Final 
Dumping Determination on Softwood Lumber from Cana da".  In its Report, the Appellate Body had 
found that the United States had acted inconsiste ntly with Article 2.4.2 of the Anti-Dumping 
Agreement in determining the existence of marg ins of dumping on the basis of its "zeroing" 
methodology.  Consequently, the DSB had recommended  that the United States bring its measure into 
conformity with its obligations under the Anti-Dump ing Agreement.  Canada was pleased that the 
United States had indicated that it intended to im plement the DSB's rulings and recommendations.  It 
was Canada's objective to reach an agreement with  the United States on a reasonable period of time 
and Canada looked forward to discussing the specifics of the US intentions in the very near future. 
36. The representative of the European Communities  said that the EC wished to call again on the 
United States to carefully consider the wider implicati ons of this important ruli ng.  Even if the Panel's 
and Appellate Body's findings onl y pertained to the measure agains t softwood lumber, there was no 
doubt that the US practice of zeroing was fundame ntally WTO-inconsistent.  The United States 
should do as the EC had done after the ruling on th e EC's measures in the "Bed Linen" case and 
should abolish the practice of "zeroing" as soon as possible. 
37. The DSB took note  of the statements, and of the information provided by the United States 
regarding its intentions in respect of implemen tation of the DSB's recommendations in this case. 
3. Korea – Anti-dumping duties on imports of certain paper from Indonesia 
(a) Request for the establishment of a panel by Indonesia (WT/DS312/2) 
38. The Chairperson  recalled that the DSB had consider ed this matter at its meeting on 
31 August 2004 and had agreed to revert to it.  She drew attention to the communication from 
Indonesia contained in document WT/DS312/2. 
39. The representative of Indonesia  said that at the 31 August 2004 DSB meeting, Indonesia had 
made its first request for the establishment of a panel to examine definitive anti-dumping duties 
imposed by Korea on imports of business informat ion paper and uncoated wood-free printing paper 
from Indonesia.  At that meeting, Korea had opposed Indonesia's panel request.  Since then, Indonesia 
and Korea had not reached a mutually agreeable so lution to this dispute.  Accordingly, Indonesia 
requested the DSB to establish a panel to examine th e matter as set out in document WT/DS312/2.  In 
Indonesia's view, the imposition of definitive anti-dumping duties was inconsistent with Korea's obligations under Article VI of GATT 1994 a nd several provisions of the Agreement on 
Implementation of Article VI of GATT 1994.  Furt hermore, such imposition frustrated the efforts 
taken by Indonesia to promote its exports at a crucia l stage in the economic development of Indonesia.  
Korea had imposed these anti-dumping duties in Nove mber of 2003. Indonesi a's paper exports to 
Korea had been severely affected since that time.   Therefore, it was particularly important for 
Indonesia that the Panel had completed its task within the six month time-frame envisaged in 
Article 12.8 of the DSU.  In order to facilitate the Panel's work, Indonesia would furnish its first 
submission to the Panel at the earli est possible time.  Indon esia looked forward to a prompt resolution 
of this matter. 
40. The representative of Korea
 said that his country recognized  that, given the fact that 
Indonesia's panel request was on the agenda for th e second time, a panel would be established at the 
present meeting, in accordance with Article 6.1 of the DSU. Korea still found it inappropriate and 
premature for Indonesia to pursue this case by requesting a panel, but did not wish to reiterate its 
detailed statement made at the previous DSB meeti ng.  Korea believed that its anti-dumping measures 
on certain papers from Indonesia were fully compat ible with the WTO rules and would vigorously 
make its case in the course of the Panel's proceedings.  WT/DSB/M/176 
 Page 11 
 
 
41. The DSB took note  of the statements and agreed  to establish a panel in accordance with the 
provisions of Article 6 of the DSU w ith standard terms of reference. 
42. The representatives of China , the European Communities  and the United States  reserved their 
third-party rights to participate in the Panel's proceedings. 
4. United States – Countervailing measures co ncerning certain products from the 
European Communities 
(a) Recourse to Article 21.5 of the DSU by th e European Communities:  Request for the 
establishment of a panel (WT/DS212/15) 
43. The Chairperson  drew attention to the communication from the European Communities 
contained in document WT/DS212/15. 
44. The representative of th e European Communities  said that since all Members were aware of 
the background of this case, there was no need to en ter into details at the present meeting.  He only 
wished to underline that this cas e concerned the issue of proper implementation by the United States 
of its commitments following the DSB's rulings and recommendations of 8 January 2003.  Contrary to 
the assurances it had offered to the DSB at its meet ing on 27 January 2003 a nd the time it had at its 
disposal, the United States had failed to proceed to  proper implementation particularly on the three 
measures cited in the EC's panel request.  Despite the EC's repeated efforts to arrive at a satisfactory 
solution, no result had been reached.  The US practices in the particular cases cited in its panel request 
remained in violation of the WTO rules and th e US commitments following the relevant DSB's 
rulings and recommendations.  In fact and as far as  these three cases cited in the panel request, the 
United States had failed either to examine prope rly the existence, continuation or likelihood of 
recurrence of subsidization or to examine at all th e nature of the privati zations involved and their 
impact on the continuation of the alleged subsidiza tion.  In conclusion, the United States had not 
properly implemented the DSB's recommendations.  C onsultations had failed to resolve the matter.  
Under these circumstances, the EC had no other opti on than to request a compliance panel, with the 
hope that its decision would resolve this long-standing dispute once and for all. 
45. The representative of the United States  said that her country regretted the EC's decision to 
request the establishment of a panel, because th e United States had fully implemented the DSB's 
recommendations and rulings in this dispute.  The DSB had found that the US Department of 
Commerce's application of its privatization me thodology in 12 different countervailing duty 
determinations was inconsistent with the US WTO obligations.  The United States had issued revised 
determinations in all 12 cases.  Significantly,  the EC was challenging only three of those 
determinations.  All three determin ations involved sunset reviews.  In a sunset review, authorities 
were called upon to determine whether the termin ation of a definitive countervailing duty would 
likely lead to a continuation or recurrence of subsidi zation.  In two of the sunset reviews in question, 
privatization was not even a factor in the determin ations, which had been based on the existence of 
post-privatization subsidies.  In fact, the De partment of Commerce had assumed that all pre-
privatization subsidies had been extinguished.  In the third sunset determination, the facts 
demonstrated clearly that aspects of the privatization transaction in question had not been conducted on an arm's length basis or at fair market value.  The Department of Commerce had, therefore, properly concluded – consistent with the DSB's fi ndings – that the privatization transaction had not 
extinguished the subsidies in ques tion with respect to these aspects.  In su m, the United States 
intended to vigorously defend th e challenged determinations. 
46. The representative of Brazil
 said that his delegation wished to make a statement regarding the 
US implementation of the Panel's and the Appellate Body's Report in the case on "United States – 
Countervailing Measures Concerning Certain Products  from the EC".  As a third party in the 
proceeding and as a target of US countervailing duty actions where privatization was a central issue, WT/DSB/M/176 
Page 12  
 
Brazil was monitoring US implementation of this A ppellate Body Report very closely.  Brazil also 
intended to follow very closely the new implementati on panel requested by the EC.  In the original 
case, the most important conclusion of the Appellate Body was that there existed a rebuttable presumption under the SCM Agreement that a privatiza tion at arm's length and for fair market value 
would extinguish the benefit of any past subsidy.  The effect of such privatization shifted the burden 
to the administering authority in a countervailing duty  investigation to offer proof that a benefit still 
continued beyond privatization.  Absent that proof, an arm's length sale at fair market value was 
sufficient to compel a conclusion that the benef it was extinguished and countervailing duties should 
be terminated.
1 
47. In terms of recommendations, the United States had been requested to bring its practices – 
practices that seldom, if ever, examined whethe r a benefit continued after privatization – into 
conformity with the WTO Agreement.2  In June 2003, the US Department of Commerce had 
published a Notice of Final Modification of Agency Pr actice in an effort to bring its privatization 
methodology into conformity with the Unite d States' obligations under the Agreement.3   Under the 
Department's new formulation, the "baseline presumption" was that non-recurring subsidies could 
benefit the recipient over a period of time normally corresponding to the average useful life of the 
recipient's assets.  However, this presumption might be rebutted by demonstrating that a privatization 
occurred in which the government sold its ownership of all or substantially all of a company or its 
assets, retaining no control of the company or its  assets, and that the sale was an arm's-length 
transaction for fair market value.4  Along with evidence of comp arable "benchmark" sales, the 
Department had indicated it would consider a non-e xhaustive list of so-called "profit maximization" 
factors in rendering a decision on whether a privatiza tion was for fair market value.  The Department 
had also indicated that it would explore other "mar ket distortion" factors that might render an arm's 
length, fair market value privatization ineffec tive in extinguishing benefit from past subsidies.5  As a 
result of the application of its new practice, the De partment had found that out the 12 countervailing 
duty cases under analysis, in nine cases an arm's length,  fair market value privatization extinguished 
any benefit from past subsidies.  In spite of this , Brazil still harbored some concern, however, over the 
seemingly precarious results of some of these cases under the new practice.  Indeed, despite 
overwhelming evidence of the market-oriented, profit- driven nature of the transactions investigated, 
the Department had captured what Brazil believed we re minor, if not trivial, circumstances to find 
problems.  For example, in some of the Italian privatization cases, the Department had cited the "perception" of one of the bidders that the process placed importance on the presence of Italian 
bidders.  Despite all the other favor able aspects of the process, this presented the Department with a 
"mixed picture."
6  Overall, one was left to conclude that the outcomes in certain of the cases were far 
from certain.  Brazil hoped the Department's approach  did not reflect an overzealous reading of the 
Appellate Body's report and remained approp riately skeptical. Brazil further believed US 
implementation would be be tter gauged in future cases, when the scrutiny of the Members was not so 
intense as in the 12 cases that were the subj ect of the dispute settlement proceedings. 
48. There was another issue that needed to be addressed and concerned the three other cases in 
which the Department had failed to examine the priv atization transaction.  These cases were sunset 
reviews and involved multiple parties from each count ry, or other types of subsidies.  Based on the 
                                                      
1 United States – Countervailing Measures Concerning Certain Products from the EC, Report of the 
Appellate Body, WT/DS212/AB/R, 9 December 2002, para. 126-127. 
2 Idem  para. 162. 
3 Notice of Final Modification of Agency Practice Under Section 123 of the Uruguay Round 
Agreements Act and Request for Public Comment, 68 Fed. Reg. 37125 (23 June 2003) (hereinafter "Final Rule"). 
4 Final Rule at 37127. 
5 Idem  
6 Issues and Decision Memorandum for the Determination under Section 129 of the Uruguay Round 
Agreements Act: Final Affirmative Countervailing Duty Determ ination: Stainless Steel Pl ate in Coils from Italy, 
23 October 2003.  WT/DSB/M/176 
 Page 13 
 
 
Department's reading of US law and legislative hist ory, the Department had determined that so long 
as a benefit was found likely to continue or recur with  respect to some of the parties or some of the 
programmes, no finding with respect to benefit and the privatization transaction was necessary.7  He 
then quoted from the Appellate Body Report in response:  "In our view, the SCM Agreement, by virtue of Articles 10, 19.4, and 21. 1, also imposes an obligation to conduct such a determination on an 
investigating authority conducting a sunset review .  As we observed earlier, the interplay of GATT 
Article VI:3 and Articles 10, 19.4 and 21.1 of  the SCM Agreement prescribes an obligation 
applicable to original investigations as well as to reviews covered under Article 21 of the SCM 
Agreement to limit countervailing duties to the amo unt and duration of the subsidy found to exist by 
the investigating authority.  Consequently, we see no error in the Panel's finding that, in sunset 
reviews, the investigating authority, before decidi ng to continue to countervail pre-privatization, non-
recurring subsidies, is obliged to examine the cond itions of such privatizations and to determine 
whether the privatized producers received any benef it from the prior subsidization to the state-owned 
producers".
8 
49. It seemed that the United States had not followed the Appellate Body's findings since a 
determination of whether the privatized producers in  these three reviews received any benefit from the 
prior subsidization to the state-owned producers had not been performed.  In this regard, the United 
States had apparently not implemented the Appella te Body's recommendation.  Thus, Brazil had two 
primary concerns, which were apparently shared by the EC.  First, whether the United States was 
implementing its new methodology in a fair mann er or simply using this new methodology to 
perpetuate the problems created by its prior me thodologies, both of which had been found to be 
inconsistent with the SCM Agreement.  Second, whether the United States would implement its new 
methodology in the context of sunset reviews in compliance with its WTO obligations.  Brazil hoped 
these issues would be made clear in the present case. 
50. The DSB took note  of the statements and agreed , pursuant to Article 21.5 of the DSU, to refer 
to the original Panel, if possible, the matter  raised by the European Communities in document 
WT/DS212/15.  The panel would have  standard terms of reference. 
51. The representative of Korea  reserved third-party rights to participate in the Panel's 
proceedings. 
5. Canada – Measures relating to exports of wheat and treatment of imported grain 
(a) Report of the Appellate Body (WT/DS276/AB /R) and Report of the Panel (WT/DS276/R) 
52. The Chairperson  drew attention to the communication from the Appellate Body contained in 
document WT/DS276/17 transmitting the Appellate Body Report on "Canada – Measures Relating to 
Exports of Wheat and Treatment of Imported Grai n", which had been circulated on 30 August 2004 in 
document WT/DS276/AB/R, in accordance with Article  17.5 of the DSU.  In accordance with the 
Decision on Procedures for the Circulation and De restriction of WTO Documents contained in 
document WT/L/452, the Appellate Body Report an d the Panel Report pertaining to this case had 
been circulated as unrestricted documents.  She reca lled that Article 17.14 of the DSU required that:  
"An Appellate Body report shall be adopted by the DSB and uncond itionally accepted by the parties 
to the dispute unless the DSB decide s by consensus not to adopt the Appellate Body report within 
30 days following its circulation to Members.  Th is adoption procedure is without prejudice to the 
right of Members to express their views on an Appellate Body report". 
                                                      
7 Section 129 Determination: Final Results of Full Sunset Review of Cut-to-Length Carbon Steel Plate 
from Germany, 23 October 2003 at 4. 
8 United States – Countervailing Measures Concerning Certain Products from the EC, Report of the 
Appellate Body, para. 149. WT/DSB/M/176 
Page 14  
 
53. The representative of the United States
 said that her country supported adoption of the 
Reports before the DSB at the present meeting.  The United States wished to begin by thanking the 
members of the Appellate Body, the Panel, and th e Secretariat for their hard work throughout the 
course of this dispute.  Turning to the substance of  the Reports, the United States was pleased with the 
Panel's findings that certain aspects of Canada's  grain handling system and its rail revenue cap 
programme were inconsistent with the nationa l treatment provisions of Article III:4 of the 
GATT 1994.  The United States noted that measures that  were both consistent with Canada's national 
treatment obligation and met Canada's stated policy objectives were clearly available. Such measures 
could include ones that were based on the intrinsic ch aracteristics of grain, to ensure proper grading of 
grain.  The United States looked forward to hearing more about Canada's plans in this regard soon.  
And while the United States was also pleased that th e Appellate Body had rejected Canada's appeal 
related to the sequencing of the panel's analysis under Article XV II of the GATT 1994, it regretted the 
Appellate Body's affirmation of the Panel's findings with respect to the US claim under Article XVII.  
Not only was the United States disappointed with the substantive outcome, which narrowly interpreted Article XVII, but it had also found the Panel's and the Appellate Body's analytical 
approach troubling.  In any case, the United St ates believed the Panel's findings regarding the 
practices of the Canadian Wheat Board reflected the need for stronger WTO disciplines on state 
trading enterprises.  In this regard, the United States  was pleased that Members had agreed in July to 
the elimination of government fi nancing, the underwriting of losses, and export subsidies provided to 
or by agricultural state trading enterprises like the Canadian Wheat Board.  The United States was 
also pleased that Members had agreed as well that  the monopolistic powers of such enterprises were 
subject to further negotiation in the Doha negotiatio ns.  The United States looked forward to working 
with other Members through those negotiations to create an effective regime to address the unfair 
practices of state trading enterprises. 
54. Finally, the United States wished to menti on briefly the Appellate Body's findings on the 
question of whether Canada had raised its procedur al objections with regard to the first US panel 
request in this dispute in a timely manner.  It  had been the US understanding that Members should 
raise alleged procedural deficiencies at the earliest opportunity.  In this dispute, Canada could have 
raised its objections during the two DSB meetings where the US panel request had been considered, 
but it had not done so.  The United States noted with interest that the Appellate Body had now 
explicitly determined that a preliminary objection – ra ised for the first time after panel establishment – 
was considered timely.  In sum, while the United States was disappointed with the disposition of its 
claim regarding the wheat trading practices of the Canadian Wheat Board, it was pleased that the 
Panel had found that Canada's grain handling system and its rail reve nue cap were inconsistent with 
national treatment principles and discriminated ag ainst imported grains.  The United States looked 
forward to prompt implementation by Canada of these findings. 
55. The representative of Canada
 said that his country wished to begin by thanking the members 
of the Appellate Body, the Panel and the WTO Secretar iat for the time and effort they had devoted to 
helping Canada and the United States resolve this di spute.  Their work was greatly appreciated, not 
just because this dispute had great importance to Canada, but also because it had afforded an 
opportunity to examine the extent of a Member's  obligations under Artic le XVII of GATT 1994 and 
the inter-play between this Article and the othe r WTO Agreements.  As Canada had indicated 
previously,  this dispute was but one in a long running series of grain-related discussions, studies and 
investigations launched by the United States over th e past decade and a half.  Canada welcomed the 
Appellate Body and the Panel's findings because th ey confirmed what it had maintained all along – 
that the Canadian Wheat Board conducted its business in accordance with WTO rules. 
56. Two of the factual findings by the Panel made this point clear.  First, the Panel found that, 
"[t]he Canadian Wheat Board is controlled by the producers whose grain it markets" (Panel Report, 
para. 6.122).  Second, the Panel had found that "[t]he  fact that the Government of Canada does not 
supervise the Canadian Wheat Board's sales operations  makes it more, rather than less, likely that the 
Canadian Wheat Board will act in the commercial interests of the producers." (Panel Report,  WT/DSB/M/176 
 Page 15 
 
 
para. 6.124).  As such, the Panel had concluded that "because of its governance structure, the 
Canadian Wheat Board has an in centive to maximize returns to  the producers whose product it 
markets" (Panel Report, para. 6.131).  In other wo rds, the Canadian Wheat Board's sales were made 
solely in accordance with commercial considerations. 
57. Both the Appellate Body and the Panel had also  recognized that state trading enterprises were 
subject not only to Article XVII disciplines, but also to many more in the GATT 1994, including the 
anti-dumping, subsidies and agriculture agreements. As the Appellate Body had put it, Article XVII 
was not a "comprehensive code of conduct for state trading enterprises".  Indeed, "the negotiators of 
GATT created a number of complementary requirements to address the different ways in which state trading enterprises could be used by a contracting pa rty to seek to circumvent its obligations under the 
GATT." (AB Report, para. 98).  Taken together, the Panel's findings, and the Appellate Body's 
confirmation of them, validated Canada's long-standing position in the WTO agriculture negotiations 
that new disciplines called for by the United States  and the EC on export state-trading enterprises 
were simply not required. Canada  would continue to defend the ab ility of farmers to choose how to 
market their products.  Canada asked that the DSB adopt these two Reports – WT/DS276/AB/R, dated 
30 August 2004, and WT/DS276/R, dated 6 April 2004. 
58. The representative of China
 said that his country wished to thank the Panel, the Appellate 
Body and the Secretariat for their d iligent work and the high quality of th e Reports in this case.  It was 
China's understanding that this was a very importa nt and difficult case since it was the first major 
dispute concerning rights and obligations of Members in respect of state trading enterprises (STE) under Article XVII of GATT 1994.  In their Reports,  the Panel and the Appellate Body had reached a 
number of conclusions which had confirmed the corre ctness of the understanding and interpretation of 
Article XVII of GATT 1994 put forward by China in  its third-party written submissions and oral 
statements in this dispute.  First, Article  XVII of GATT 1994 permitted Members to establish or 
maintain state trading enterprises or grant exclusive or special privileges to any enterprises, and mere 
utilization of the exclusive or special privileges by such enterprises could not be explained as the 
violation of Article XVII of GATT 1994.  Second, Ar ticle XVII:1(b), 1(b), by defining and clarifying 
the requirement in Article XVII:1(a), was dependent  upon rather than separate and independent from 
Article XVII:I (a).  Third, Article XVII of GA TT 1994 was not a provision imposing comprehensive 
competition-law-type obligations on STEs.  China al so welcomed the clarifications provided by the 
Panel and the Appellate Body on important te rms in Article XVII:1, such as "commercial 
considerations" and "enterprises".  In short, the Panel and the Appellate B ody Reports had provided 
important guidance regarding the interpretation an d application of Article XVII of GATT 1994.  
China welcomed the adoption of the Repor ts by the DSB at the present meeting. 
59. The DSB took note
 of the statements, and adopted  the Appellate Body Report contained in 
WT/DS276/AB/R and the Panel Report contained in  WT/DS276/R, as upheld by the Appellate Body 
Report. 
6. Proposed nominations for the indicative list of governmental and non-governmental 
panelists (WT/DSB/W/266) 
60. The Chairperson  drew attention to document WT/D SB/W/266 which contained additional 
names proposed for inclusion on the indicative list, in accordance with Article 8.4 of the DSU.  She 
proposed that the DSB approve the names contained in document WT/DSB/W/266. 
61. The DSB so agreed . 
 
__________ 
 
 