Australia and WTO Dispute Settlement

US/Canada - Continued Suspension of Obligations in the EC Hormones Dispute

United States - Continued Suspension of Obligations in the EC - Hormones Dispute (WT/DS320)

Canada - Continued Suspension of Obligations in the EC - Hormones Dispute (WT/DS321)

Questions by the European Communities to the Third Parties after the First Substantive Meeting

Geneva 19 September 2005

I. TO ALL THIRD PARTIES

1. Does the principle of good faith apply to dispute settlement proceedings?

2. Do you consider the EC' compliance measure as a sort of "scam measure" which risks to create an "endless loop of litigation"?

3. Do you consider that the right to apply the suspension of concessions pursuant to a DSB authorization is temporary and conditional?

4. Do you consider that the right to suspend obligations pursuant to a DSB authorisation which is based on a multilateral finding of inconsistency of a measure remains unaffected by any compliance measure even though this compliance measure has never been challenged and therefore not found to be WTO-inconsistent? If yes, does it mean that sanctions may go on forever even in cases where there is full compliance but the new measure has not been challenged?

5. What would be the justification for continuing the suspension of concessions despite the implementing Member's claim that it has complied with the DSB recommendations and rulings? Would it be the alleged continuation of the violation or the DSB authorization?

6. Is it possible for an implementing Member to self-initiate an Article 21.5 proceeding against its compliance measure in the light of Article 6 DSU, which refers to the "complaining party" and the "legal basis of a complaint"? If yes, what would be the "measure at issue" and what would the implementing Member complain about?

II. QUESTIONS TO BRAZIL

7. Do you agree with Canada that the DSB authorization in the dispute Brazil - Aircraft (WT/DS46) is still in force despite the fact that the second Article 21.5 Panel rejected Canada's claims against your implementing measures? If yes, does this authorization give Canada a continuing right to suspend concessions and related obligations against Brazil?

8. Could Brazil please explain how a DSB authorization to impose sanctions can be revoked by a DSB determination of compliance? What would be the textual basis for such a revocation in the DSU and what decision-making mechanism would apply to such revocation by the DSB?

9. In paragraph 6 of your submission, you seem to say that unilateral determinations of inconsistency are permitted until the implementing member has proven full compliance. How do you reconcile this with article 23 DSU?

III. QUESTIONS TO CHINA

10. In paragraph 42 of your submission, you say "the longer the time period in which the United States took no action under Article 21.5 of the DSU, the greater the firmness or immutability the United States makes of the determination". Do you agree that in the circumstances of this specific case the United States and Canada have made a determination of inconsistency in the sense of Article 23, given that roughly one and a half years have passed after the adoption of the EC's compliance measure until the establishment of the panels in these disputes?

IV. QUESTIONS TO TAIWAN

11. In paragraphs 5 to 7, you suggest that Article 23 applies only to "normal" situations whereas Article 22.8 situations are not normal. What is the textual basis for this? What is a "normal" situation?

V. QUESTIONS TO NEW ZEALAND

12. You say in paragraph 2.10 of your submission that the EC's entire case rests upon the presumption of compliance. In footnote 7, you acknowledge that the EC has raised the presumption of good faith only in the context of its claim under article 23.1 in conjunction with 22.8. You then state "in New Zealand's view however, this assumption pervades the whole of the EC's case". Could you explain how this assumption applies, with regards to the EC's claim under Articles 23.1, 23.2(a) in conjunction with Article 21.5 of the DSU?

13. Where is the textual basis in the DSU or elsewhere in the WTO Agreement or in public international law for New Zealand's assertion that in a non-compliance situation a Member is denied the benefit of the presumption of good faith?

14. In your Written submission your argue that "Article 23 does not impose an obligation on the United States and Canada to cease the application of suspension of concessions or to take a compliance review case where it does not accept that the measure has been removed" (para. 2.16). Would New Zealand agree that such a refusal to accept that the non-compliance has been removed equals a determination of inconsistency of the compliance measure? If yes, how do you square this with the prohibition under Article 23 not to make a unilateral finding of inconsistency of another Member's measure? Or do you consider that Article 23 is not relevant for other reasons?

15. Before the adoption of the new Directive 2003/74/EC the European Communities asked New Zealand to provide any relevant information about a risk assessment for hormones in beef. New Zealand did not reply to that request. Could New Zealand please explain why?