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IV. Article 4 back to top
A. Text of Article 4
Article 4: Consultations
1. Members affirm their
resolve to strengthen and improve the
effectiveness of the consultation procedures employed by Members.
2. Each Member undertakes to accord sympathetic consideration to and
afford adequate opportunity for consultation regarding any
representations made by another Member concerning measures affecting the
operation of any covered agreement taken within the territory of the
former.(3)
(footnote original) 3 Where the provisions of any other covered
agreement concerning measures taken by regional or local governments or
authorities within the territory of a Member contain provisions
different from the provisions of this paragraph, the provisions of such
other covered agreement shall prevail.
3. If a request for consultations is made pursuant to a covered
agreement, the Member to which the request is made shall, unless
otherwise mutually agreed, reply to the request within 10 days after the
date of its receipt and shall enter into consultations in good faith
within a period of no more than 30 days after the date of receipt of the
request, with a view to reaching a mutually satisfactory solution. If
the Member does not respond within 10 days after the date of receipt of
the request, or does not enter into consultations within a period of no
more than 30 days, or a period otherwise mutually agreed, after the date
of receipt of the request, then the Member that requested the holding of
consultations may proceed directly to request the establishment of a
panel.
4. All such requests for consultations shall be notified to the DSB
and the relevant Councils and Committees by the Member which requests
consultations. Any request for consultations shall be submitted in
writing and shall give the reasons for the request, including
identification of the measures at issue and an indication of the legal
basis for the complaint.
5. In the course of consultations in accordance with the provisions
of a covered agreement, before resorting to further action under this
Understanding, Members should attempt to obtain satisfactory adjustment
of the matter.
6. Consultations shall be confidential, and without prejudice to the
rights of any Member in any further proceedings.
7. If the consultations fail to settle a dispute within 60 days after
the date of receipt of the request for consultations, the complaining
party may request the establishment of a panel. The complaining party
may request a panel during the 60-day period if the consulting parties
jointly consider that consultations have failed to settle the dispute.
8. In cases of urgency, including those which concern perishable
goods, Members shall enter into consultations within a period of no more
than 10 days after the date of receipt of the request. If the
consultations have failed to settle the dispute within a period of 20
days after the date of receipt of the request, the complaining party may
request the establishment of a panel.
9. In cases of urgency, including those which concern perishable
goods, the parties to the dispute, panels and the Appellate Body shall
make every effort to accelerate the proceedings to the greatest extent
possible.
10. During consultations Members should give special attention to the
particular problems and interests of developing country Members.
11. Whenever a Member other than the consulting Members considers
that it has a substantial trade interest in consultations being held
pursuant to paragraph 1 of Article XXII of GATT
1994, paragraph 1 of
Article XXII of GATS, or the corresponding provisions in other covered
agreements,(4) such Member may notify the consulting Members and the DSB,
within 10 days after the date of the circulation of the request for
consultations under said Article, of its desire to be joined in the
consultations. Such Member shall be joined in the consultations,
provided that the Member to which the request for consultations was
addressed agrees that the claim of substantial interest is well-founded.
In that event they shall so inform the DSB. If the request to be joined
in the consultations is not accepted, the applicant Member shall be free
to request consultations under paragraph 1 of Article XXII or
paragraph
1 of Article XXIII of GATT 1994, paragraph 1 of Article XXII or
paragraph 1 of Article XXIII of GATS, or the corresponding provisions in
other covered agreements.
(footnote original)
4 The corresponding consultation provisions in
the covered agreements are listed hereunder:
Agreement on Agriculture, Article
19; Agreement on the Application of
Sanitary and Phytosanitary Measures, paragraph 1 of Article 11;
Agreement on Textiles and Clothing, paragraph 4 of Article 8; Agreement
on Technical Barriers to Trade, paragraph 1 of Article 14; Agreement on
Trade-Related Investment Measures, Article 8; Agreement
on Implementation of Article VI of GATT 1994, paragraph 2 of Article 17;
Agreement on Implementation of Article VII of GATT 1994, paragraph 2 of
Article 19; Agreement on Preshipment Inspection, Article
7; Agreement on
Rules of Origin, Article 7; Agreement on Import Licensing Procedures,
Article 6; Agreement on Subsidies and Countervailing Measures, Article
30; Agreement on Safeguards, Article
14; Agreement on Trade-Related
Aspects of Intellectual Property Rights, Article 64.1; and any
corresponding consultation provisions in Plurilateral Trade Agreements
as determined by the competent bodies of each Agreement and as notified
to the DSB.
B. Interpretation and Application of Article 4
1. General
(a) Importance of consultations
110. The Panel on
Brazil — Desiccated Coconut considered the
importance of consultations in the dispute settlement process and
indicated that the Members’ duty to consult is absolute and cannot be
subject to the prior imposition of any terms and conditions by a Member:
“The Philippines’ request concerns a matter which this Panel
views with the utmost seriousness. Compliance with the fundamental
obligation of WTO Members to enter into consultations where a request is
made under the DSU is vital to the operation of the dispute settlement
system. Article 4.2 of the DSU provides that ‘Each Member undertakes
to accord sympathetic consideration to and afford adequate opportunity
for consultation regarding any representations made by another Member
concerning measures affecting the operation of any covered agreement
taken within the territory of the former’. Moreover, pursuant to
Article 4.6 of the DSU, consultations are ‘without prejudice to the
rights of any Member in any further proceedings’. In our view, these
provisions make clear that Members’ duty to consult is absolute, and
is not susceptible to the prior imposition of any terms and conditions
by a Member.”(148)
111. In
Mexico — Corn Syrup (Article 21.5 — US), the Appellate
Body stressed the importance of consultations:
“We note that Mexico emphasizes the importance of consultations
within the GATT and WTO dispute settlement systems. We agree with Mexico
on the importance of consultations. Through consultations, parties
exchange information, assess the strengths and weaknesses of their
respective cases, narrow the scope of the differences between them and,
in many cases, reach a mutually agreed solution in accordance with the
explicit preference expressed in Article 3.7 of the
DSU. Moreover, even
where no such agreed solution is reached, consultations provide the
parties an opportunity to define and delimit the scope of the dispute
between them. Clearly, consultations afford many benefits to complaining
and responding parties, as well as to third parties and to the dispute
settlement system as a whole.
The practice of GATT contracting parties in regularly holding
consultations is testimony to the important role of consultations in
dispute settlement. Article 4.1 of the DSU recognizes this practice and
further provides that:
‘Members affirm their resolve to strengthen and improve the
effectiveness of the consultation procedures employed by Members.’
(emphasis added)
A number of panel and Appellate Body reports have recognized the
value of consultations within the dispute settlement process.(149)…”(150)
(b) Consultations as a prerequisite for panel proceedings
112.
The Appellate Body on Brazil — Aircraft observed that “Articles
4 and 6 of the DSU, as well as paragraphs
1 to 4 of Article 4 of the SCM Agreement, set forth a process by which a complaining party must request
consultations, and consultations must be held, before a matter may be
referred to the DSB for the establishment of a panel.”(151)
113. In
US — Certain EC Products, the Appellate Body, further to
referring to its Report on Brazil — Aircraft (see paragraph 112
above), found that an action which had not been subject to consultations
because such action had not taken place at the time, was “not a
measure at issue in this dispute and does not fall within the Panel’s
terms of reference”.(152)
114. The Appellate Body on
Mexico — Corn Syrup (Article 21.5 — US), however, stressed the existence, further to
Article 4.3, of certain
limitations on consultations being a prerequisite to panel proceedings:
“[A]s a general matter, consultations are a prerequisite to panel
proceedings. However, this general proposition is subject to certain
limitations …
Article 4.3 of the DSU relates the responding party’s conduct
towards consultations to the complaining party’s right to request the
establishment of a panel. When the responding party does not respond to
a request for consultations, or declines to enter into consultations,
the complaining party may dispense with consultations and proceed to
request the establishment of a panel. In such a case, the responding
party, by its own conduct, relinquishes the potential benefits that
could be derived from those consultations.”(153)
115.
The Appellate Body on Mexico — Corn Syrup (Article 21.5 — US) also referred to
Article 4.7 when explaining the limitations on
consultations being a prerequisite to panel proceedings:
“Article 4.7 also relates the conduct of the responding party
concerning consultations to the complaining party’s right to request
the establishment of a panel. This provision states that the responding
party may agree with the complaining party to forgo the potential
benefits that continued pursuit of consultations might bring. Thus,
Article 4.7 contemplates that a panel may be validly established
notwithstanding the shortened period for consultations, as long as the
parties agree. Article 4.7 does not, however, specify any particular
form that the agreement between the parties must take.”(154)
116.
Finally, the Appellate Body on Mexico — Corn Syrup (Article
21.5 — US) referred to Article 6.2 in support of its reasoning:
“In addition, …, pursuant to Article 6.2 of the
DSU, one of the
requirements for requests for establishment of a panel is that such
requests must ‘indicate whether consultations were held’. The phrase
‘whether consultations were held’ shows that this requirement in
Article 6.2 may be satisfied by an express statement that no
consultations were held. In other words, Article 6.2 also envisages the
possibility that a panel may be validly established without being
preceded by consultations.”(155)
117.
The Appellate Body on Mexico — Corn Syrup (Article 21.5 — US) thus concluded that, since the
DSU recognizes situations where the
absence of consultations does not deprive the panel of its authority,
such absence is not a defect which, by its very nature, would deprive a
panel of its authority. More importantly, the Appellate Body considered
that the lack of consultations is not a defect a panel must examine even
if both parties to the dispute remain silent thereon:
“Thus, the DSU explicitly recognizes circumstances where the
absence of consultations would not deprive the panel of its authority to
consider the matter referred to it by the DSB. In our view, it follows
that where the responding party does not object, explicitly and in a
timely manner, to the failure of the complaining party to request or
engage in consultations, the responding party may be deemed to have
consented to the lack of consultations and, thereby, to have
relinquished whatever right to consult it may have had.
As a result, we find that the lack of prior consultations is not a
defect that, by its very nature, deprives a panel of its authority to
deal with and dispose of a matter, and that, accordingly, such a defect
is not one which a panel must examine even if both parties to the
dispute remain silent thereon. We recall that, in this case, Mexico
neither pursued the potential benefits of consultations nor objected
that the United States had deprived it of such benefits.”(156)
(c) Disclosure of information during consultations
118. In
India — Patents (US), the United States argued that if
India had disclosed, during consultations, the existence of certain
administrative instructions, the United States would have included in
its request for establishment of a Panel a claim under Article 63 of the
TRIPS Agreement. With respect to disclosure of information during
consultations, the Appellate Body noted that:
“All parties engaged in dispute settlement under the DSU must be
fully forthcoming from the very beginning both as to the claims involved
in a dispute and as to the facts relating to those claims. Claims must
be stated clearly. Facts must be disclosed freely. This must be so in
consultations as well as in the more formal setting of panel
proceedings. In fact, the demands of due process that are implicit in
the DSU make this especially necessary during consultations. For the
claims that are made and the facts that are established during
consultations do much to shape the substance and the scope of subsequent
panel proceedings. If, in the aftermath of consultations, any party
believes that all the pertinent facts relating to a claim are, for any
reason, not before the panel, then that party should ask the panel in
that case to engage in additional fact-finding.”(157)
(d) Adequacy of consultations
119.
In EC — Bananas III, the Panel indicated that the function of
the panels as regards consultations is only to ascertain whether
consultations, when required, were held:
“Consultations are … a matter reserved for the parties. The DSB
is not involved; no panel is involved; and the consultations are held in
the absence of the Secretariat. While a mutually agreed solution is to
be preferred, in some cases it is not possible for parties to agree upon
one. In those cases, it is our view that the function of a panel is only
to ascertain that the consultations, if required, were in fact held.”(158)
120.
In Korea — Alcoholic Beverages, Korea argued before the Panel
that the complaining parties violated Articles
3.3, 3.7 and 4.5 of the
DSU by not engaging in consultations in good faith to reach a mutually
agreed solution. Korea maintained that there had been no meaningful
exchange of facts because the complainants treated the consultations as
one-sided question and answer sessions. Korea asserted that such an
approach frustrated any reasonable chance for a settlement and
considered the non-observance of specific provisions of the DSU as a “violation
of the tenets of the WTO dispute settlement system”. The Panel, in
reference to the Panel on EC — Bananas III (see paragraph 119
above),
confirmed that the panel does not have a mandate to investigate the
adequacy of the consultation process that took place between the
parties:
“In our view, the WTO jurisprudence so far has not recognized any
concept of ‘adequacy’ of consultations. The only requirement under
the DSU is that consultations were in fact held, or were at least
requested, and that a period of sixty days has elapsed from the time
consultations were requested to the time a request for a panel was made.
What takes place in those consultations is not the concern of a panel.
The point was put clearly by the Panel in Bananas III, …
…
We do not wish to imply that we consider consultations unimportant.
Quite the contrary, consultations are a critical and integral part of
the DSU. But, we have no mandate to investigate the adequacy of the
consultation process that took place between the parties and we decline
to do so in the present case.”(159)
121. The Panel on
Turkey — Textiles confirmed this approach and
expressly referred to the panel reports in EC — Bananas III and
Korea — Alcoholic Beverages referenced in paragraphs 119–120
above:
“[W]e note that in EC — Bananas III the panel concluded that the
private nature of the bilateral consultations means that panels are
normally not in a position to evaluate how the consultations process
functions, but could only determine whether consultations, if required,
did in fact take place.(160) In this case, the parties never consulted, as
Turkey declined to do so without the presence of the European
Communities.
…
We concur with [the finding of the Panel on Korea
— Alcoholic Beverages]. We note also that our terms of reference (our mandate) are
determined, not with reference to the request for consultations, or the
content of the consultations, but only with reference to the request for
the establishment of a panel.(161) Consultations are a crucial and
integral part of the DSU and are intended to facilitate a mutually
satisfactory settlement of the dispute, consistent with Article 3.7 of
the DSU. However, the only function we have as a panel in relation to
Turkey’s procedural concerns is to ascertain whether consultations
were properly requested, in terms of the DSU, that the complainant was
ready to consult with the defendant and that the 60 day period has
lapsed before the establishment of a panel was requested by the
complainant. We consider that India complied with these procedural
requirements and therefore we find it necessary to reject Turkey’s
claim.”(162)
(e) Result of the consultations
122. In
EC — Bananas III, the Panel dismissed the European
Communities argument that consultations must produce an adequate
explanation of a complainant’s case:
“As to the EC argument that consultations must lead to an adequate
explanation of the Complainants’ case, we cannot agree. Consultations
are the first step in the dispute settlement process. While one function
of the consultations may be to clarify what the case is about, there is
nothing in the DSU that provides that a complainant cannot request a
panel unless its case is adequately explained in the consultations. The
fulfilment of such a requirement would be difficult, if not impossible,
for a complainant to demonstrate if a respondent chose to claim a lack
of understanding of the case, a result which would undermine the
automatic nature of panel establishment under the DSU. The only
prerequisite for requesting a panel is that the consultations have ‘fail[ed]
to settle a dispute within 60 days of receipt of the request for
consultations …’.(163) Ultimately, the function of providing notice to
a respondent of a complainant’s claims and arguments is served by the
request for establishment of a panel and by the complainant’s
submissions to that panel.”(164)
(f) Challenging a request for consultations
123.
For the requirement of good faith when challenging procedural
deficiencies, see paragraph 105 above.
124. With respect to challenging measures not listed on the request
for consultations, see paragraphs 128–132
below.
2. Article 4.1
125. See paragraph 111
above.
3. Article 4.3
126. See paragraph 114
above.
4. Article 4.4
(a) Notification of requests for consultations
127.
At its meeting on 19 July 1995, the DSB, with regard to the
notification requirement contained in Article 4:4 of the
DSU, agreed
that delegations would send one single text of their notifications to
the Secretariat (Council Division), simply specifying in that text the
other relevant Councils or Committees to which they wished the
notification to be addressed. The Secretariat would then distribute it
to the specified relevant bodies.(165)
(b) Absence or addition of “claims” and/or “measures” in the
request for consultations
128. The Panel on
Brazil — Aircraft considered Brazil’s
objections to the Panel’s consideration of certain measures included
in the panel request which were based on the fact that they were enacted
or implemented after the last consultations between the parties and, as
a result, could not have been the subject of consultations. The Panel
indicated that it was not governed by prior consultations:
“We recall that our terms of reference are based upon Canada’s
request for establishment of a panel, and not upon Canada’s request
for consultations. These terms of reference were established by the DSB
pursuant to Article 7.1 of the DSU and establish the parameters for our
work.(166) Nothing in the text of the DSU or
Article 4 of the SCM
Agreement provides that the scope of a panel’s work is governed by the
scope of prior consultations. Nor do we consider that we should seek to
somehow imply such a requirement into the WTO Agreement. One purpose of
consultations, as set forth in Article 4.3 of the SCM
Agreement, is to
‘clarify the facts of the situation’,(167) and it can be expected that
information obtained during the course of consultations may enable the
complainant to focus the scope of the matter with respect to which it
seeks establishment of a panel. Thus, to limit the scope of the panel
proceedings to the identical matter with respect to which consultations
were held could undermine the effectiveness of the panel process.”(168)
129. This view was confirmed by the Appellate Body in
Brazil
— Aircraft which indicated that it “[did] not believe, …, that
Articles 4 and 6 of the DSU, or
paragraphs 1 to 4 of Article 4
of the SCM Agreement, require a precise and exact identity between the specific
measures that were the subject of consultations and the specific
measures identified in the request for the establishment of a panel”.(169)
130. The Panel on
EC — Bed Linen considered that the absence in the
request for establishment of a panel of a subject discussed during
consultations simply indicated that a Member did not wish to pursue the
matter further:
“In the absence of any reference in the request for establishment
to the treaty Article alleged to have been violated, the question of
possible prejudice as a result of failure to state a claim with
sufficient clarity simply does not arise. Moreover, we are of the view
that the argument that there was no prejudice to the European
Communities because Article 6 of the AD Agreement was mentioned in the
request for consultations, and may even have been discussed during the
consultations is, in this case, irrelevant. Consultations are part of
the process of clarifying the matter in dispute between the parties. It
is perfectly understandable, and indeed desirable, that issues discussed
during consultations do not subsequently become claims in dispute. Thus,
the absence of a subject that was discussed in the consultations from
the request for establishment indicates that the complaining Member does
not intend to pursue that matter further. Whether inadvertent or not, as
a result of the omission of Article 6 from the request for establishment
the defending Member, the European Communities, and third countries had
no notice that India intended to pursue claims under Article 6 of the AD
Agreement in this case, and were entitled to rely on the conclusion that
it would not do so. Consequently, India would be estopped in any event
from raising such claims.”(170)
131.
The Panel on Canada — Aircraft indicated (when considering
Article 4.2 of the SCM Agreement) that the matter consulted on and the
matter identified in the panel request will not necessarily be
identical:
“In our view, a panel’s terms of reference would only fail to be
determinative of a panel’s jurisdiction if, in light of Article 4.1-4.4 of the SCM Agreement applied together with(171)
Article 4.2-4.7 of the
DSU, the complaining party’s request for establishment were
found to cover a ‘dispute’ that had not been the subject of a
request for consultations. Article 4.4 of the SCM Agreement permits a
Member to refer a ‘matter’ to the DSB if ‘no mutually agreed
solution’ is reached during consultations. In our view, this provision
complements Article 4.7 of the DSU, which allows a Member to refer a ‘matter’
to the DSB if ‘consultations fail to settle a dispute’. Read
together, these provisions prevent a Member from requesting the
establishment of a panel with regard to a ‘dispute’ on which no
consultations were requested. In our view, this approach seeks to
preserve due process while also recognising that the ‘matter’ on
which consultations are requested will not necessarily be identical to
the ‘matter’ identified in the request for establishment of a panel.
The two ‘matters’ may not be identical because, as noted by the
Appellate Body in India — Patents, ‘the claims that are made and the
facts that are established during consultations do much to shape the
substance and the scope of subsequent panel proceedings’.(172)”(173)
132.
See excerpt from the Panel report on Canada — Aircraft
contained in Article 4.4 of the
SCM Agreement
discussion in the Chapter
on the SCM Agreement, Section IV.B.4(a).
(c) Effect of the extension of the duration of identified measures
after consultations
133.
The Panel on Chile — Price Band System addressed the issue of
whether or not the extension of the duration of identified measures
after consultations affected compliance with Article 4.4 of the
DSU.
Chile argued that none of the safeguard measures challenged by Argentina
in the dispute fell within the Panel’s jurisdiction. According to
Chile, the provisional and definitive safeguard measures concerned were
no longer in effect on the date of Argentina’s request for
establishment of the panel. The Panel responded (on an issue not
subsequently appealed) as follows:
“Chile raises two different objections regarding the Panel’s
jurisdiction with respect to the definitive safeguard measures and the
extension of their duration: first, the definitive safeguard measures
had ‘expired before the request for establishment was made’; second,
the ‘extension measures’ were not formally included in the request
for consultations. We cannot accept either of those objections, for one
and the same reason. Both of Chile’s objections are based on the
proposition that the extension of the period of application results in a
measure distinct from the definitive safeguard measure. We disagree with
this proposition. In our view, Article 7 of the Agreement on Safeguards
makes it clear that what is at issue is not an extension ‘of the
safeguard measure’, but, rather, an extension ‘of the period of
application of the safeguard measure’ or of ‘the duration of the
safeguard measure’. Article 7 is entitled ‘Duration and Review
of
Safeguard Measures’. Article 7.1
provides …:
This language is sufficiently clear for us as to conclude that the
‘extensions’ are not distinct measures, but merely continuations in
time of the definitive safeguard measures. As a result, we consider that
the definitive safeguard measures were not terminated before the request
for establishment, but, rather, that their duration was simply extended
at that time. Thus, we need not further consider Chile’s argument that
we lack the authority to make findings in respect of the definitive
measures on the grounds that they have expired.(174) For the same reason,
we also consider the fact that the extension was not mentioned in the
request for consultations irrelevant for the determination of our
jurisdiction: pursuant to Article 4.4 of the DSU, Argentina had to, and
did, identify the definitive safeguard measures in its request for
consultations. The fact that the duration of the identified measures was
extended by Chile after the request for consultations cannot affect
Argentina’s compliance with Article 4.4 of the
DSU.(175)
We note, moreover, that the ‘extension’ did not in any way amend
the content of the safeguard measures and that there were, in fact,
exchanges between Argentina and Chile during the period of consultations
regarding the ‘extension’. Chile must therefore have been fully
informed about Argentina’s intention to challenge the safeguard
measures, as extended in time. Thus, even if the ‘extension’ were to
be considered a separate measure, quod non, Chile’s due process rights
would not have been impinged upon.(176)”(177)
(d) Relationship between request for consultations and request for
the establishment of a panel
134.
See paragraphs 128–131 above and the excerpt from the report
of the Appellate Body referenced in paragraph 144 below.
5. Article 4.6
(a) “consultations shall be confidential”
(i) Information acquired during consultations
In the same proceedings
135.
In Korea — Alcoholic Beverages, Korea argued before the Panel
that the complainants breached the confidentiality requirement of
Article 4.6 of the DSU by making reference, in their submissions, to
information supplied by Korea during consultations. The Panel, in a
finding not reviewed by the Appellate Body, held that while
confidentiality in consultations between parties to a dispute was “essential”,
it also found that “parties do not thereby breach any confidentiality
by disclosing in those proceedings information acquired during the
consultations”:
“We note that Article 4.6 of the DSU requires confidentiality in
the consultations between parties to a dispute. This is essential if the
parties are to be free to engage in meaningful consultations. However,
it is our view that this confidentiality extends only as far as
requiring the parties to the consultations not to disclose any
information obtained in the consultations to any parties that were not
involved in those consultations. We are mindful of the fact that the
panel proceedings between the parties remain confidential, and parties
do not thereby breach any confidentiality by disclosing in those
proceedings information acquired during the consultations. Indeed, in
our view, the very essence of consultations is to enable the parties to
gather correct and relevant information, for purposes of assisting them
in arriving at a mutually agreed solution, or failing which, to assist
them in presenting accurate information to the panel. It would seriously
hamper the dispute settlement process if the information acquired during
consultations could not subsequently be used by any party in the ensuing
proceedings. We find therefore, that there has been no breach of
confidentiality by the complainants in this case in respect of
information that they became aware of during the consultations with
Korea on this matter.”(178)
136.
The Panel on EC — Bed Linen also referred to the finding of
the Panel on Korea — Alcoholic Beverages referenced in paragraph 135
above. In that case, India presented transcripts of the consultation
sessions held with the European Communities, so as to demonstrate the
“bad faith” of the European Communities during consultations.
Although the Panel concluded that the material submitted by India was
not related to any specific legal claim and, as a result, was not
relevant to the case, the Panel decided that it would not a priori
exclude this evidence. Inter alia, the Panel recalled the findings of
the Panel on Korea — Alcoholic Beverages that information obtained in
consultations may be presented during subsequent panel proceedings. (179)
Information obtained in different proceedings
137.
In Australia — Automotive Leather II, Australia, the defending
party, demanded that information which the United States, the
complaining party, had obtained during consultations preceding a
previous panel requested by the United States (a panel which had been
established, but never composed and, as a result, never became active)
be declared inadmissible in the second proceeding. The Panel, further to
referring to the findings of the Panel on Korea — Alcoholic Beverages
(see paragraph 135 above), considered as follows:
“Given that, in this case, the parties and the dispute are the
same, no panel was actually composed or considered the dispute in the
first-requested proceeding, and there are no third parties involved in
either proceeding who might have learned information in the course of
consultations, we cannot see any reason to exclude the United States
Exhibit 2 from our consideration, merely because it was developed in the
course of the consultations held pursuant to the first request.(180)
Australia has failed to specify what other, if any, facts might have
been derived by the United States from the earlier consultations, and so
there is no basis for us to exclude any such facts.”(181)
Offers of settlement made during consultations
138.
In US — Underwear, Costa Rica had submitted to the Panel
certain information relating to settlement offers made by the United
States during the consultations. The Panel decided not to base its
findings on such information. See paragraph 137 above.
(ii) Relevance of third party participation in confidentiality of
information from consultations
139.
The Panel on Mexico — Corn Syrup considered, inter alia, the
effect of third party participation when referring to consultations and
concluded that “the requirement to maintain the confidentiality of
consultations is not violated by the inclusion of information obtained
during consultations in the written submission of a party provided to a
third party in the subsequent panel proceeding even if that third party
did not participate in the consultations”:
“[I]t would seriously hamper the dispute settlement process if a
party could not use information obtained in the consultations in
subsequent panel proceedings merely because a third party which did not
participate in the consultations chooses to participate in the panel
proceedings.(182) As Mexico points out, third party participation in the
panel proceedings cannot be vetoed by the parties to the proceeding. In
our view, it would be anomalous if the decision of a Member to
participate in a panel proceeding as a third party when it did not, or
could not, participate as a third party in the underlying consultations
had the effect of limiting the evidence that could be relied upon in the
panel proceeding by precluding the introduction of information obtained
during the consultations. Third parties are subject to the same
requirement to maintain the confidentiality of panel proceedings as are
parties. We therefore conclude that the requirement to maintain the
confidentiality of consultations is not violated by the inclusion of
information obtained during consultations in the written submission of a
party provided to a third party in the subsequent panel proceeding even
if that third party did not participate in the consultations.”(183)
(b) “consultations shall be … without prejudice to the rights of
any Member”
140.
In US — Underwear, Costa Rica had submitted to the Panel
certain information relating to settlement offers made by the United
States during the consultations. The Panel considered that “the
wording of Article 4.6 of the DSU makes it clear that offers made in the
context of consultations are, in case a mutually agreed solution is not
reached, of no legal consequence to the later stages of dispute
settlement, as far as the rights of the parties to the dispute are
concerned”. Accordingly, the Panel decided to disregard such
information.(184)
6. Article 4.7
141.
See paragraph 115 above.
7. Article 4.9
142.
In Canada — Patent Term, the United States submitted a request
for expedited consideration of the dispute under Article 4.9 of the
DSU
on the grounds that the premature expiration of patents during the
dispute settlement procedure caused irreparable harm to the patent
owners. It referred to the alleged simplicity of the issues in dispute,
the absence of third parties and other circumstances. The Panel
indicated that due to other demands on its members’ time, it could not
accelerate the timetable prior to the first substantive meeting; however
the Panel stated that it undertook to make every effort to issue its
report as soon as possible after the second substantive meeting. (185)
8. Article 4.11
143.
The Appellate Body on EC — Bananas III touched on Article 4.11
in its finding that no “legal interest” is required for a Member to
bring a case under the DSU. See paragraph 158
below.
C. Relationship with other Articles
1. Article 6
144.
In response to Brazil’s argument that a panel request must
include only measures that were either identified in the request for
consultations or raised subsequently during the consultations, the
Appellate Body in Brazil — Aircraft stated:
“We do not believe, however, that Articles 4 and
6 of the DSU, or paragraphs
1 to 4 of Article 4 of the SCM Agreement, require a precise
and exact identity between the specific measures that were the subject
of consultations and the specific measures identified in the request for
the establishment of a panel. As stated by the Panel, ‘[o]ne purpose
of consultations, as set forth in Article 4.3 of the SCM
Agreement, is
to “clarify the facts of the situation”, and it can be expected that
information obtained during the course of consultations may enable the
complainant to focus the scope of the matter with respect to which it
seeks establishment of a panel.’”(186)
145.
See also paragraph 116 above.
D. Relationship with other WTO Agreements
1. Article 8.10 of the ATC
146.
The Panel on US — Wool Shirts and Blouses discussed the role
of panels under the DSU and the role of the TMB under the ATC. With
respect to consultations, the Panel stated:
“We note also that, according to Article 8.10 of the
ATC, when the
TMB process has been completed, a Member which remains unsatisfied with
the TMB recommendations can request the establishment of a panel without
having to request consultations under Article 4 of the
DSU. This is to
say that the TMB process can replace the consultation phase in the
dispute settlement process under the DSU and is distinct from the formal
adjudication process by panels.”(187)
2. Article 17 of the Anti-Dumping Agreement
147.
See the excerpts from the reports of the panels and Appellate
Body referenced in the Chapter on the Anti-Dumping Agreement, Section
XVII.B.
3. Article 4.2 of the SCM Agreement
148.
See paragraph 112 above.
149.
As regards the difference between Article 4.4 of the
DSU and
Article 4.2 of the SCM Agreement, see the excerpt from the Report of the
Appellate Body in US — FSC referenced at Section IV.B.1(a) of the
Chapter on the SCM Agreement.
V. Article 5
back to top
A. Text of Article 5
Article 5: Good Offices, Conciliation and Mediation
1. Good offices, conciliation and mediation are procedures that are
undertaken voluntarily if the parties to the dispute so agree.
2. Proceedings involving good offices, conciliation and mediation,
and in particular positions taken by the parties to the dispute during
these proceedings, shall be confidential, and without prejudice to the
rights of either party in any further proceedings under these
procedures.
3. Good offices, conciliation or mediation may be requested at any
time by any party to a dispute. They may begin at any time and be
terminated at any time. Once procedures for good offices, conciliation
or mediation are terminated, a complaining party may then proceed with a
request for the establishment of a panel.
4. When good offices, conciliation or mediation are entered into
within 60 days after the date of receipt of a request for consultations,
the complaining party must allow a period of 60 days after the date of
receipt of the request for consultations before requesting the
establishment of a panel. The complaining party may request the
establishment of a panel during the 60-day period if the parties to the
dispute jointly consider that the good offices, conciliation or
mediation process has failed to settle the dispute.
5. If the parties to a dispute agree, procedures for good offices,
conciliation or mediation may continue while the panel process proceeds.
6.
The Director-General may, acting in an ex officio capacity, offer
good offices, conciliation or mediation with a view to assisting Members
to settle a dispute.
B. Interpretation and Application of Article 5
1. WTO Director-General’s offer of assistance
150.
On 13 July 2001, the WTO Director-General(188) addressed a
communication to the Members expressing his views that “Members should
be afforded every opportunity to settle their disputes through
negotiations whenever possible”. In this communication,(189) the WTO
Director-General noted that Article 5 of the DSU, which provides for the
use of good offices, conciliation and mediation, had not been used and
reminded Members that he was ready and willing to assist them as is
envisaged under the terms of Article 5.6. The communication included a
set of procedures for Members to use to request assistance under Article
5. The communication notes that these procedures are intended “purely
to help Members resolve their differences and do not limit their treaty
rights in any manner”. It also assures Members that these procedures
would not in any way limit the Director-General’s availability to
assist delegations more generally whenever they request his help.
151.
With respect to a mediation outside the DSU but following
procedures similar to those described in this communication, see
paragraphs 152–153 below.
2. Mediation outside the DSU
152.
On 10 October 2002, the WTO Director-General(190) issued a
communication informing the Members that on 4 September 2002, the
Philippines, Thailand and the European Communities had jointly requested
mediation by himself or by a mediator appointed by him with their
agreement. The purpose of the mediation was “to examine the extent to
which the legitimate interests of the Philippines and Thailand are being
unduly impaired as a result of the implementation by the European
Communities of the preferential tariff treatment for canned tuna
originating in ACP states. In the event that the mediator concludes that
undue impairment has in fact occurred, the mediator could consider means
by which this situation may be addressed.”(191)
153.
Although the requesting Members considered that the matter at
issue was not a “dispute” within the terms of the DSU, they agreed
that the mediator could be guided by procedures similar to those
envisaged for mediation under Article 5 of the DSU, as described in a
communication by the Director-General on Article 5 of the
DSU (see
paragraph 150 above). The mediation resulted in an amicable outcome
reached by the parties based on an advisory opinion of the mediator.(192)
Footnotes:
148. Panel Report
on
Brazil — Desiccated Coconut, para. 287.
back to text
149. (footnote original) The important role of consultations in both
the GATT and the WTO dispute settlement systems has repeatedly been
acknowledged, both expressly and implicitly, by panels and by the
Appellate Body. See, for example: Panel Report, Uruguayan Recourse to
Article XXIII, adopted 16 November 1962, BISD 11S/95, para. 10; Panel
Report, United States — Imposition of Anti-Dumping Duties on Imports
of Fresh and Chilled Atlantic Salmon from Norway, adopted 27 April 1994,
BISD 41S/Vol.I/229, para. 333; Panel Report, Brazil — Measures
Affecting Desiccated Coconut, WT/DS22/R, adopted 20 March 1997, as
upheld by the Appellate Body Report, WT/DS22/AB/R, DSR 1997:1, 189,
para. 287; Panel Report, European Communities — Bananas,
WT/DS27/R/ECU, adopted 25 September 1997, as modified by the Appellate
Body Report, WT/DS27/AB/R, DSR 1997:III, 1085, paras. 7.17–7.20;
Panel
Report, Korea — Taxes on Alcoholic Beverages (“Korea — Alcoholic
Beverages”), WT/DS75/R, WT/DS84/R, adopted 17 February 1999, as
modified by the Appellate Body Report, WT/DS75/AB/R,
WT/DS84/AB/R, para.
10.19; Appellate Body Report, Brazil — Aircraft,
supra, footnote 30,
para. 132; Panel Report, Brazil — Aircraft, WT/DS46/R, adopted 20
August 1999, as modified by the Appellate Body Report, WT/DS46/AB/R,
para. 7.10; Panel Report, United States — Safeguard Measures on
Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and
Australia (“United States — Lamb Safeguard”), WT/DS177/R,
WT/DS178/R, adopted 16 May 2001, as modified by the Appellate Body
Report, WT/DS177/AB/R,
WT/DS178/AB/R, para. 5.40. See also the
discussion of the role of consultations in disputes under the Agreement
on Textiles and Clothing in Appellate Body Report, United States
— Restrictions on Imports of Cotton and Man-made Fibre Underwear,
WT/DS24/AB/R, adopted 25 February 1997, DSR 1997:I, 11, at 23–24. back to text
150. Appellate Body Report on Mexico —
Corn Syrup (Article 21.5 — US), paras. 54–56. back to text
151. Appellate Body Report on Brazil —
Aircraft, para. 131.
back to text
152. Appellate Body Report on US — Certain EC
Products, para. 70.
back to text
153. Appellate Body Report on Mexico —
Corn Syrup (Article 21.5 — US), paras. 58–59. back to text
154. Appellate Body Report on Mexico —
Corn Syrup (Article 21.5 — US), para. 61. back to text
155. Appellate Body Report on Mexico —
Corn Syrup (Article 21.5 — US), para. 62. back to text
156. Appellate Body Report on Mexico —
Corn Syrup (Article 21.5 — US), paras. 63–64. back to text
157. Appellate Body Report on India — Patents (US), para. 94.
back to text
158. Panel Report on EC — Bananas III, para. 7.19.
back to text
159. Panel Report on Korea — Alcoholic Beverages, para. 10.19. See
also Panel Report on Turkey — Textiles, para. 9.24. back to text
160. (footnote original) Panel Report on EC
— Bananas III, paras.
7.18–7.19. back to text
161. (footnote original) See for instance the Appellate Body Report
on EC — Bananas III, paras. 139–144; the Appellate Body Report on
Brazil — Measures Affecting Desiccated Coconut, adopted on
20 March
1997, WT/DS22/AB/R (“Brazil — Desiccated Coconut”), page 22; and
the Appellate Body Report on India — Patent, paras. 86–96. back to text
162. Panel Report on Turkey — Textiles, paras. 9.22 and 9.24.
back to text
163. (footnote original) DSU, Article
4.7.
back to text
164. Panel Report on EC — Bananas III (Guatemala and
Honduras),
para. 7.20. back to text
165. WT/DSB/M/6. back to text
166. (footnote original) See, e.g., India
— Patent Protection for
Pharmaceutical and Agricultural Chemical Products, adopted 16
January
1998, WT/DS50/AB/R, para. 92 (“The jurisdiction
of a panel is
established by that Panel’s terms of reference, which are governed by
Article 7 of the DSU”). back to text
167. (footnote original) As the Appellate Body has noted, “the
claims that are made and the facts that are established during
consultations do much to shape the substance and the scope of subsequent
panel proceedings.” India
— Patent Protection for
Pharmaceutical and Agricultural Chemical Products, adopted 16
January
1998, WT/DS50/AB/R,
para. 94. back to text
168. Panel Report on Brazil — Aircraft, para.7.9. See also
US — Steel Plate where the Panel recalled the findings of the Panel and
Appellate Body in Brazil — Aircraft (see Panel Report on US
— Steel Plate, para.7.17) and rejected India’s claim that a “practice” was
not properly before the panel because it had not been identified in the
request for consultations nor actually consulted about. back to text
169. Appellate Body Report on Brazil —
Aircraft, para. 132.
back to text
170. Panel Report on EC — Bed Linen, para. 6.16.
back to text
171. (footnote original) According to the Appellate Body in
Guatemala — Anti-Dumping Investigation Regarding Portland Cement from
Mexico, wherever possible, special or additional rules and procedures
for dispute settlement in Annex 1 of the DSU (such as
Article 4.1 — 4.4 of the
SCM Agreement) should be read so as to complement the
provisions of the DSU (WT/DS60/AB/R, adopted 25 November 1998, paras.
64–66). back to text
172. (footnote original) India
— Patent Protection for
Pharmaceuticals and Agricultural Chemical Products, WT/DS50/AB/R,
adopted 16 January 1998, para. 94. back to text
173. Panel Report on Canada —
Aircraft, para. 9.12.
back to text
174. (footnote original) We note, in any event, our view that panels
do not lack the legal authority to make findings in respect of expired
measures. See paras. 7.112–7.113, supra. back to text
175. (footnote original) Accordingly, we need not decide whether the
failure to identify a measure in a request for consultations would
deprive a panel of the legal authority to make findings in respect of a
measure otherwise within its terms of reference. back to text
176. (footnote original) We note, however, that we are not examining
the consistency of the extension decision with the requirements of
Article 7.2 of the Agreement on Safeguards, as that is not within our
Terms of Reference. back to text
177. Panel Report on Chile — Price Band
System, paras. 7.116–7.120.
back to text
178. Panel Report on Korea — Alcoholic Beverages, para. 10.23.
back to text
179. Panel Report on EC — Bed Linen, paras. 6.32–6.35.
back to text
180. (footnote original) There is nothing to indicate that there
would have been any different answers had the same questions been asked
by the United States during consultations held pursuant to the second
request. We note Australia’s view that there were no consultations
held pursuant to the second request, although there was a meeting
between the parties. Presumably, this view is based on Australia’s
position that the second request for consultations, and the second
request for establishment, like this Panel which flowed from those
requests, were inconsistent with the DSU. back to text
181. Panel Report on Australia — Automotive Leather
II, para. 9.34.
back to text
182. (footnote original) See Korea
— Alcohol Panel Report, para.
10.23 (issue not raised on appeal). In Korea — Alcohol, the Panel
faced the question that is raised by Mexico in this dispute — whether
a party in a panel proceeding may refer to or rely on information it
obtained during the consultations preceding the request for
establishment of a panel. That Panel concluded that “[i]t would
seriously hamper the dispute settlement process if the information
acquired during consultations could not subsequently be used by any
party in the ensuing proceedings”. Id. We note the Panel’s statement
that the confidentiality requirement of Article 12.7 extends only so far
as to require “parties to the consultations not to disclose any
information obtained in the consultations to any parties that were not
involved in those consultations”. Id. However, Korea–Alcohol
involved the same factual circumstances as this dispute with respect to
the involvement of a third party to the Panel proceeding which had not
participated in the consultations. The same “due process”
considerations that underlie the Panel’s decision in Korea– Alcohol
are, in our view, relevant here. back to text
183. Panel Report on Mexico — Corn
Syrup, para. 7.41.
back to text
184. Panel Report on US — Underwear, para. 7.27.
back to text
185.
Panel Report on Canada — Patent
Term, para. 1.5.
back to text
186. Appellate Body Report on Brazil —
Aircraft, para. 132. In this
connection, the Panel on Brazil — Aircraft stated “…to limit the
scope of the panel proceedings to the identical matter with respect to
which consultations were held could undermine the effectiveness of the
panel process”. back to text
187. Panel Report on US — Wool Shirts and
Blouses, para. 7.19.
back to text
188. The WTO Director-General issuing this communication was Mr Mike
Moore. back to text
189. WT/DSB/25. back to text
190. The WTO Director-General issuing this communication was Dr
Supachai Panitchpakdi. back to text
191. WT/GC/66 and WT/GC/66/Add.1. back to text
192. WT/GC/71. back to text
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