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World Trade

Organization

 WT/DS126/R
25 May 1999
(99-1888)
Original: English


Australia - Subsidies Provided to Producers and
Exporters of Automotive Leather

VI. Preliminary Issues and Requests for Preliminary Rulings: B. Establishment of the Panel

B. Establishment of the Panel

6.15 Australia asks the Panel to make an immediate ruling that the Panel was established inconsistently with the DSU and, therefore, the Panel should terminate these Panel proceedings. According to Australia, the DSU does not provide for the Panel to be established in the circumstances that prevailed. In particular, Australia argues that: the United States did not have the right to have a second panel established at the DSB meeting on 22 June 1998; the DSB did not have the right under the DSU to establish such a panel against the wishes of Australia and this was inconsistent with the DSU; accordingly, the Panel was not properly established; and consequently, the Panel should terminate its work immediately.

6.16 Australia notes that the United States asked the DSB to establish a panel on 9 January 1998 (WT/DS106/2), and that Australia did not oppose the right of the United States to have the DSB establish a panel, and this was done on 22 January 1998. That panel has never been composed, but it was established. That panel of the same title is in respect of the same matter, i.e. the claims that the “grants and loan” to Howe: “appear to violate the obligations of the government of Australia under Article 3 of the SCM Agreement … may constitute subsidies 'contingent, ..., in fact, upon export performance' within the meaning of Article 3.1(a) and footnote 4 of the SCM Agreement." These are the same in the first and second substantial paragraphs of WT/DS106/1 and the second substantial paragraph of WT/DS126/1. The matter in both WT/DS106/1 and WT/DS126/1 consisted of the same specific measures (“grants and loan”) and the same claims about those measures. Accordingly, each of the requests was about the same matter to be eventually referred to the DSB. The resulting requests for establishment of a panel, WT/DS106/2 and WT/DS126/2, were again about exactly the same matter.

6.17 Australia states that, in WT/DS126/2, the United States also asked that its earlier request for a panel in WT/DS106/2 be withdrawn.[15] At the DSB meeting on 22 June 1998, the United States representative said that it had terminated that panel.[16] The request for the establishment of a panel in WT/DS106/2 was not outstanding. The panel had been established on 22 January 1998 and, while it had not been composed, was still in existence. Either party could have had that panel composed at any time. The United States did not state any provision of the DSU under which it was seeking to terminate that panel or have it terminated by the DSB. The DSB did not terminate that Panel.[17] The Chair at the meeting of the DSB of 22 June 1998 said that the arguments regarding the establishment of the Panel could be raised before the Panel itself.[18]

6.18 According to Australia, there is no provision under the DSU that allows one party unilaterally to terminate a panel once it has been established. The DSU allows the process to be terminated by mutual agreement by way of Article 12.7 of the DSU. Article 12.12 of the DSU allows the complaining party to ask a panel to suspend its work. The panel is not obliged to do so, but if it does, then after the expiry of 12 months (arguably 6 months for cases under the expedited procedures of Article4 of the SCM Agreement) the authority for establishment of the panel would lapse.[19] The complainant cannot demand the suspension, but it can seek it.

6.19 Australia asserts that if the complainant had the right under the DSU to terminate a panel unilaterally, then it would be clear from the text of the DSU that it had that right. However, the text of the DSU does not give it such a right. Indeed, it does not even have the right to require the suspension of the Panel's proceedings. One obvious reason for this is that while the terms of reference for the complaint and the timing of the complaint are very much in the hands of the complainant, some balance is given to the proceedings once the panel has been established. If the complainant could unilaterally terminate or suspend, and hence terminate a panel after the designated period, then it could, for example, do this if it did not like the Interim Report. That would allow it to avoid an adverse judgement and, if it desired, start again with a new panel virtually immediately. This sort of game-playing is not envisaged under the DSU. A Member has the right to a panel but it must then live with what it has sought and obtained from the DSB.

6.20 Accordingly, Australia contends, any attempt by the United States unilaterally to terminate the panel established pursuant to WT/DS106/2 was inconsistent with the DSU. A number of Members raised questions about the process at the DSB on 22 June 1998. Nonetheless, a panel was purportedly established on the same matter despite the objections of Australia, without the United States or any other participant providing any legal reasoning for having the rights of a Member overridden in this way. By way of clarification, Australia points out that it is not arguing that it might not be possible to have a second, or any number of, panels established on the same matter by mutual consent of the parties. However, the issue here is what right a complainant has under the DSU to have more than one panel established on the same matter where there is no consensus. There was no consensus at the meeting when this Panel was established.[20] The process of negative consensus under the DSU is a radical change in the way issues are handled under the WTO, when compared to the GATT, and only applies to the strictly limited situations set out explicitly in the DSU.

6.21 With respect to the issue of whether the DSB must, or indeed has the authority to, terminate a panel at the request of the complainant, Australia sees nothing in the DSU to allow the DSB to terminate a panel, whether by consensus or no. Certainly any action where negative consensus applied would have to be explicit in the DSU: there is nothing in the DSU that provides for this. It is difficult to read even an implied authority to terminate a Panel even where consensus exists. Indeed, where there is consensus, the parties can terminate the panel proceedings by way of Article 12.7 of the DSU at any time where all parties to the dispute wish to do so. All that is required is agreement, which is required for a consensus decision by the DSB in any case.

6.22 With respect to the issue of whether a Member has the right to have a second panel established (in particular through a negative consensus decision) on the same matter, while the other panel is still in existence, Australia asserts that the DSU does not confer any such right. All that the DSU gives is the right to have one panel established on a matter provided that the correct procedures are followed. There is nothing to say that a Member can have any number of panels established on the same matter, which it can use at any time that it wishes.

6.23 Australia observes that the DSU has explicit provisions covering multiple complaints by more than one Member (Article 9 of the DSU) and the right of a third party to take a case of its own (Article 10.3 of the DSU), but that it does not provide for multiple panels by the same Member on the same matter. This was implicitly recognized by the United States when it sought in WT/DS126/2 and at the DSB meeting on 22 June 1998 unilaterally to terminate the existing panel (established pursuant to WT/DS106/2). Australia questions why, the United States sought to terminate the first panel in WT/DS126/2 at the DSB meeting on 22 June 1998 if it considered that it had the right to a second panel while the first one existed. On the one hand, if the United States had simply decided that it did not wish to pursue the panel established on 22 January 1998 (WT/DS106) and it considered that it could unilaterally terminate that Panel, why did it not do so before seeking consultations under WT/DS126/1 on 4 May 1998? Indeed, the United States never sought even to get Australia's agreement to terminate that Panel.

6.24 According to Australia, the object and purpose of the DSU, including relevant special or additional rules and procedures such as Article 4 of the SCM Agreement, are to provide for the settlement of disputes on a matter. The DSU provides for the right to the automatic establishment of a panel to examine the matter subject to the required procedures having been met. The object and purpose of the text are to provide for panel examination. Once that has been provided for, there is no basis for the establishment of further panels to examine precisely the same matter while the existing panel still exists. Under Article 8.7 of the DSU and Article 4.12 of the SCM Agreement, the United States could at any time from 2 February 1998 have asked the Director-General to determine the composition of the panel by 9 February 1998 or any later date. This was 84 days before the United States sought further consultations under WT/DS126/1 and 133 days before it asked the DSB to establish a new panel on 22 June 1998.

6.25 Australia contends that the United States itself chose not to pursue the composition of the panel established on 22 January 1998, and that the United States cannot now use the fact that the panel had not been composed as the basis for seeking a new Panel. To give a Member the automatic right to have any number of panels on precisely the same matter, including under the expedited procedures of Article4 of the SCM Agreement, is nowhere provided for under the DSU and so the establishment of a panel in such circumstances is inconsistent with the DSU.

6.26 Australia questions, in the alternative, what the situation would have been if the United States' action in seeking to terminate the panel on 22 June 1998 were indeed consistent with the DSU. While Australia considers that this was not the case, even if it were true, the United States would still not have had the right to the immediate establishment of a new panel. The right to a panel depends critically upon the correct procedures having been followed. Given the continuing existence of the panel established on 22 January 1998 (WT/DS106), the United States did not have the right under the DSU to start the procedures leading to the automatic establishment of a new panel. It is clear from Article 5.3 of the DSU that the purpose of the consultations is to reach a mutually satisfactory solution. Article 4.3 of the SCM Agreement says that "[t]he purpose of the consultations shall be to clarify the facts of the situation and to arrive at a mutually agreed solution." Where such consultations are about precisely the same matter for which a panel exists, it would be absurd to have separate consultations to seek a mutually satisfactory solution. That would not be consistent with the object and purpose of the text. Articles 11 and 12 of the DSU make it clear that it is envisaged that the panel process provides for obtaining a mutually satisfactory solution. Given that, it would be incoherent for the DSU to provide at the same time for a Member to have a new round of consultations under Article 4 of the DSU or Article 4 of the SCM Agreement in order to seek such a solution. Accordingly, the right to the consultation process under Article 4 of the DSU and Article 4 of the SCM Agreement does not exist while a panel on the same matter exists. Therefore, the United States would have been unable to satisfy the requirements under the DSU and Article 4 of the SCM Agreement necessary to obtain the right to have a panel established.

6.27 The United States asserts that the Panel should confirm that it was properly established and that it can and will consider the merits of the case presented to it by the United States. The DSU contains no bar to a second consultation request concerning the same measures. The DSU also contains no bar to the establishment of a second panel concerning the same measures. The Panel may not invent a bar to these proceedings where the negotiators of the DSU provided none; as provided in Article 3.2 of the DSU, panel recommendations and rulings "cannot add to or diminish the rights and obligations provided in the covered agreements."

6.28 The United States maintains that the facts detailed in its complaint have shown the following. The United States made a first request for consultations on this matter which did not include a statement of available evidence as required by Article 4.2 of the SCM Agreement. This request was legally inadequate to satisfy the requirements of Article 4.2. After realizing that this was the case, the United States then took the only action available to it to cure this essential defect; that is, the United States submitted a second request for consultations which identified the nature and extent of the available evidence establishing that the subsidies in question were prohibited export subsidies. The second consultation request was submitted because there is no procedure for amending a prior consultation request. With this second request, the United States commenced pursuit of a new dispute settlement complaint.

6.29 According to the United States, the Appellate Body recently endorsed that a complainant may pursue a second dispute settlement complaint on the same matter in Guatemala – Antidumping Investigation Regarding Portland Cement from Mexico[21] ("Guatemala – Cement"). In that case, the United States asserts, the Appellate Body found that the panel erred in considering the dispute because Mexico had failed to identify a specific anti-dumping measure in its panel request. In reversing the panel, the Appellate Body noted that nothing in its findings precluded Mexico from pursuing another procedurally proper dispute settlement complaint on the same matter. The United States observes that the panel considering the complaint by the European Community in India – Patents[22] has also addressed the issue of multiple dispute proceedings. In that dispute, India argued that the EC complaint should be concluded because that complaint could have been brought at the same time as the prior complaint by the United States on the same matter. The United States maintains that India argued, as Australia does here, for compulsory joinder of all claims in the first panel proceeding initiated. That panel rejected India's claim, as this Panel should reject Australia's. That panel noted that the rights of Member include "the freedom to determine whether and when to pursue a complaint under the DSU."[23]

6.30 The United States contends that, based uponGuatemala – Cement[24], Australia cannot dispute that the United States could have pursued another dispute settlement complaint on this matter if a panel had been composed based upon the first request for consultations and had later found that the proceedings should be terminated because the consultation request was inadequate. The Appellate Body made clear in Guatemala – Cement that no matter what the procedural defect may be in a Member's complaint, that Member does not thereby lose the right to bring a complaint. The Panel should reject any argument that the United States should lose any right to challenge the subsidies provided by Australia. Australia's objection to the convening of this Panel therefore only amounts to an objection to the sequence in which the same events would take place. The sequence argued by Australia -- a ruling by the first panel, rejection of the United States' complaint and a new complaint --involves a considerable waste of time and resources of the WTO and of the parties.

6.31 In the view of the United States, the course of action taken by it did not in any way prejudice Australia. Furthermore, contrary to Australia's suggestion, this course of action does not invite game-playing. The United States is not suggesting that a complainant may unilaterally terminate panel proceedings at any time. In fact, this Panel need not address that question. The only issue before this Panel is whether a complainant may, before the panel has been composed, withdraw the panel request and request consultations on the same matter in order to pursue a new dispute settlement complaint. The United States asserts that the answer must be "yes". To find otherwise would lead to the absurd result that a complainant wishing to amend its consultation request after the establishment of the panel but before its composition must nonetheless proceed through the entire panel process, only to have to start over. To find otherwise would also force Members and a panel to proceed with a dispute that they know in advance will be fruitless.

6.32 The United States notes that Australia has also argued that the United States should have been forced to move forward with panel composition, rather than take action to cure the defects in its earlier consultation request and move forward anew. The United States notes that the panel examining the complaint of the European Community inIndia – Patents[25] has counselled that the rights of parties include the freedom to move forward with panel composition at whatever pace the parties desire. There have been a number of instances in the GATT/WTO in which parties have reached mutually satisfactory solutions during the panel composition process. One recent example is the dispute brought by eight WTO Members, including both the United States and Australia, against agricultural subsidies of Hungary, in which a mutually satisfactory solution was negotiated during the panel composition process. Had the parties been forced to compose the panel, or lose their right to pursue the dispute, it is possible that there would have been no settlement in that dispute.

6.33 The United States further notes the Australian argument that the right to consultations under Article 4 of the DSU does not exist while a panel on the same matter exists; that the right to establishment of a panel under Article 6.2 is dependent on the proper procedural steps having been completed; and that Australia's objection at the DSB meeting of 22 June 1998 therefore had the effect of blocking the establishment of this Panel. The United States rejects all of these propositions. Nothing in the DSU limits the right of a Member to request consultations at any time. Indeed, the provisions of Article 4.1 of the SCM Agreement provide that consultations may be requested "whenever a Member has reason to believe that a prohibited subsidy is being granted or maintained by another Member." (emphasis supplied by the United States) Australia's argument would place the Panel in the position of rewriting the DSU to insert new rights and obligations not provided by the drafters. Moreover, Australia's argument would open the door to procedural blockage in a wide range of disputes.

6.34 The United States appreciates the points that Australia makes concerning the supposed danger of harassment. However, this Panel is not an appropriate forum to address these issues. An alternative forum exists to address these systemic concerns -- the ongoing review of the DSU now taking place in the DSB. This Panel has the duty to make an objective assessment of the facts, and is required to base its findings on the language of the DSU. It cannot make a ruling divorced from the explicit language of the DSU to address a systemic concern.[26]

6.35 Australia points out that it did not object to the immediate establishment of the panel on 22 January 1998. However, Australia considers that it has an obligation to pursue the issue of the status of this Panel partly because of the real systemic implications. If panels were allowed to be established in this way, it would set an unfortunate precedent for the future . Australia deems that it has a right to an immediate ruling on this issue. It goes to the heart of fairness about whether the Panel should proceed or terminate the proceedings.

6.36 Australia maintains that negative consensus is an important step forward by the GATT/WTO system in guaranteeing that a Member can have a matter subject to examination by a panel, and guaranteeing that the outcome of the Panel (subject to the Appellate Body Report) will be adopted. It has proved itself to be a key to a more rigorous method of dispute settlement. However, Australia is strongly of the view that its use is strictly limited to those issues set out in the DSU. This goes to the heart of the legitimacy of the new dispute settlement system. It is fundamentally unfair not only to the other Member concerned but also to the Chair of the DSB, who as the real decision-maker under negative consensus, can be placed in an invidious position.

6.37 Australia states that at the DSB meeting of 22 June1998, the Chair of the DSB said that Australia could raise this with the Panel.[ 27] That is what Australia has done. It is clear from the Minutes of that meeting that the Chair left this issue to be resolved in at least the first instance by the Panel, rather than letting it run to the Appellate Body. Australia argues that the claims and measures were the same in both WT/DS106/1 and WT/DS126/1, i.e. the same for both panels. Indeed, the United States admits as much when it refers to “the earlier panel request regarding the same subsidies".

6.38 According to Australia, the purpose of Article 6 of the DSU is to ensure that a Member can have a panel established to examine a matter, subject to the requirements of Article 4 of the DSU, and, in this case, Article 4 of the SCM Agreement. There is nothing to suggest that this provides for the use of negative consensus for the establishment of multiple panels by the same complainant against the same respondent. Australia is not discussing here whether or not two panels might be able to be established by mutual consent. Rather, Australia is focusing on the situation where consensus does not exist. Australia is arguing that the use of negative consensus must be jealously guarded. It must only be used in the narrow circumstances where it is explicitly provided for under the DSU.

6.39 Australia contends that the United States never asked Australia whether it was willing to have the panel under WT/DS106 abandoned and to allow the United States to start again. Australia was never asked whether it would agree to a new panel. Australia's systemic concern is that Australia was overridden at the DSB meeting on 22 June 1998 by the use of negative consensus when, in its view, the United States was not entitled as a right to a second panel. Regardless of Australia’s view, a number of Members had concerns about the legal basis of the approach of the United States. If the United States considered that it had the right to a panel, why then did it not explain why it had that right at the meeting.

6.40 In Australia's view, the text needs to be read in the context of its object and purpose. Where a Member has a complaint about a matter, i.e. a claim about a measure, it has the right to ask for consultations on that matter with the view to resolving it. If those consultations are unsuccessful, that Member has the right to have a panel established by the DSB to examine that matter. This right can be exercised through negative consensus. It then has the right to have the matter examined by the panel and either Member has the right to have the panel’s report (possibly modified by the Appellate Body) adopted.

6.41 Australia asserts that when a Member has a panel established on a matter, it has decided that the consultation process had been unsuccessful. Australia queries why it would then be entitled to another round of consultations under Article 4 of the DSU on the same matter. Clearly, while a panel is in existence there is no basis for calling for consultations under Article 4 of the DSU. There is no impediment to discussions while a panel is in existence. Indeed, Article 12.7 of the DSU clearly envisages the prospect of a mutually satisfactory solution right up to the time of the submission of the final report of the panel. This is consistent with Article 3.7 of the DSU that a mutually acceptable solution is the preferred outcome of the process. The United States had no need to invoke Article 4 of the DSU again on 4 May1998 in order to hold consultations with Australia. Australia considers that the United States did not have the right under Article 4 of the DSU to invoke consultations on a matter for which a panel was still in existence.

6.42 Australia observes that the United States could have asked the Director-General to compose the panel established on 22 January 1998 at any time that it wanted to from 2 February 1998. On 4 May 1998 if it wished to have a panel composed, it could have had one by 8 May 1998. Even on the basis of a 120 day period, the panel would have been concluded by 7 September 1998. Australia notes that the United States claimed at the DSB meeting to have the right unilaterally to terminate the panel established on 22 January 1998. The United States said: “we confirm that the United States has decided to terminate any action in pursuance of the DSB's decision following our request to establish a panel.”[29] According to Australia, this was at odds with WT/DS126/2, where it said in the final paragraph that: “[t]he United States also asks that, at the next meeting of the Dispute Settlement Body, our earlier request for a panel, dated 9 January 1998, circulated as WT/DS106/2, regarding the same subsidies identified in the present request, be withdrawn.” There was no outstanding request for a panel. The panel had been established nearly 5 months before.

6.43 Australia submits that it is unclear whether the United States considered that it wanted the DSB to terminate the first panel or whether it considered that it could do it unilaterally. Perhaps it thought both were true. What is clear, Australia continues, is that the United States thought that it needed to terminate the panel. Otherwise, it would not have sought to do so. The Chair of the DSB considered that the United States could not terminate the Panel unilaterally, since the minutes of that meeting of the DSB say: “The Chairman said that technically as from now two panels existed on this matter.”[30] Clearly in the context of establishing this Panel, the Chair agreed implicitly that at least the first panel could not be terminated through negative consensus. There is, of course, nothing in the DSU that suggests that negative consensus applies to termination of panels. Indeed, Australia questions, why should there be? Negative consensus was introduced to ensure that a complainant could have its day in court and that neither party could block the adoption of a panel report. Negative consensus is to be used on only the rarest of occasions. There would have been no reason to have negative consensus to terminate a panel. The DSU already provides explicitly for termination by agreement between the parties under Article 12.7. In addition, there is nothing in the DSU that says that a panel, once established, has some lower status in terms of the respondent’s rights before it is composed. To the contrary, both parties have the same rights, for example, to ask the Director-General to compose the panel.

6.44 In relation to the statement by the United States that there is no bar in the DSU against a second panel, Australia points out that this does not address the issue whether the United States had the right to use negative consensus for the establishment of this Panel. Australia believes that the examples provided by the United States are not relevant to this case. This is a situation where the consultations were with the same Member but under a different dispute proceeding.

6.45 With respect to the references by the United States to Guatemala - Cementan[31] , Australia agrees that Mexico’s right to another panel in that dispute was endorsed by the Appellate Body. However, Australia points out, there are key differences in this case. The first is that the measure and hence, the matter in Guatemala - Cement was different from what was before that panel and what might be before a second panel. The other key difference was to do with the timing of Mexico’s right to start again. Australia does not disagree with the right of a Member to a second panel. The difference of opinion between the United States and Australia is over when the right arises. Guatemala - Cement is now a completed panel. The January 1998 panel on automotive leather is not.

6.46 Responding to the United States' position that the sequence argued by Australia -- a ruling by the first panel, rejection of the United States' complaint, and the filing of a new complaint -- involves a waste of time and resources, Australia submits that the issue is that a complaining party has an obligation to meet the requirements of the DSU and the SCM Agreement in order to avoid wasting time. Australia does not accept that any Member who has not met those obligations can start again during a proceeding. The DSU does not provide for this. The discipline is on complaining parties to get it right at the time of request. Regarding the reference by the United States to the complaints by the European Community and the United States in India – Patents[32], Australia submits that the issue in this case is fundamentally different. The panels dealing with India’s measures were requested by different Members and not, as in this case, by the same Member.

C. "Disclosure" Obligations under Article 4 of the SCM Agreement

6.47 Australia asks the Panel to rule that, in its request for consultations (WT/DS126/1), the United States failed to meet its disclosure obligations under Article 4 of the SCM Agreement and therefore, the Panel should terminate the proceedings, or rule immediately that the United States has not demonstrated its claims. Australia views this as an important systemic issue, going beyond the circumstances of this particular case.

6.48 Australia notes that Article 4.2 of the SCM Agreement requires that: “A request for consultations under paragraph 1 shall include a statement of available evidence with regard to the existence and nature of the subsidy in question.” (emphasis supplied by Australia) According to Australia, the reference to “evidence with regard to the existence and nature of the subsidy” in Article4.2 includes not only facts but also argumentation why such facts would lead the complainant to consider that the measure in question was in breach of Article 3 of the SCM Agreement. Australia cites the United States' request for consultations (WT/DS126/1)[33] and asserts that the United States' request says little more than that the United States has evidence without saying what it is. It made no attempt to set out what facts it would use to support its case. The United States exhibits were only received by the Australian Mission in Geneva on 16November 1998.

6.49 According to Australia, the description of evidence given in WT/DS126/1 does not meet any reasonable standard of disclosure as called for in Article 4 of the SCM Agreement, and accordingly, WT/DS126/1 does not satisfy the requirements of Article 4.2 of the SCM Agreement. In Australia's view, the expedited procedures provided for under Article 4 of the SCM Agreement mean that, in a dispute under this Article, the complainant is limited by the evidence that it puts forward in the request for consultations. This is clear from Article 4.2 of the SCM Agreement on consultation and underlined by the draft Rules of Procedures for the PGE.[34] Rule9 of those draft procedures calls for simultaneous submissions. Under the WTO dispute settlement system, the obligation is on the complainant to make its case, i.e. “the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence”.[35] Accordingly, under expedited procedures such as those provided for in Article 4 of the SCM Agreement, it is necessary that the complainant set out all its facts and arguments prior to the establishment of the panel. Thus, Australia argues, the United States is limited to using that evidence and those arguments explicitly set out in WT/DS126/1.

6.50 Australia also points out that the timing of some of the exhibits raises serious systemic questions. The complainant is required to provide a statement of available evidence at the time of the request for consultations. An important systemic issue is how much of that evidence can be developed after the request for consultations, or after the establishment, or even composition, of the Panel, under Article 4 of the SCM Agreement, but not provided to the respondent until the time of the first written submission to the Panel. Some of the United States exhibits are dated well after the request for consultations in WT/DS126/1. For example, some are dated after the request for the establishment of the Panel, while some are even dated after the composition of the Panel. Other exhibits are not even dated and some are essentially without provenance.

6.51 In the view of Australia, apart from the requirements of Article 4 of the SCM Agreement, any expedited procedures make the receipt of new material virtually impossible to consider in a timely manner. This problem can be compounded when new material is in non-electronic form. This emphasizes that any exhibits should have been provided at the time consultations were requested, whereas not even a list of these exhibits was provided by the United States before they were delivered in conjunction with its first written submission to the Panel.

6.52 Australia asserts that the United States' first submission had some 315 pages of non-electronic exhibits, and that the paucity of information in WT/DS126/1 and the appearance of alleged facts and arguments not covered in WT/DS126/1 raise a serious systemic issue. The object and purpose of expedited procedures are to deal with a measure that is causing such injury that it needs to have a quick resolution under the DSU. The aim of abbreviated procedures is not to place respondents in a disadvantageous position or to allow extended manoeuvring by the complainant. This places the obligation on any Member having recourse to Article 4 of the SCM Agreement to provide the respondent with the facts and arguments in advance, indeed at the time of requesting consultations. To allow a complainant to come forward with facts and arguments at the time of its first submission is inconsistent with Article 4 of the SCM Agreement. While, in this particular case, the time frame was extended by mutual agreement to beyond 90 days, the dispute remains under Article 4 of the SCM Agreement and such an extension does not affect the rights and obligations of the parties. Indeed, if the argument were to be made that this is some special case because of the extension of the time frame, the point would remain that the United States originally asked for consultations on this matter on 10 November 1997 and the communication referred to in WT/DS126/1 was dated 4 May 1998. If this was a genuine case for different procedures, then presumably the United States had made its case before then and could have provided Australia with the information at that time. Moreover, subsequently it was the United States that determined the precise date for its first submission through calling for the Director-General to compose the Panel. Presumably, it did that only after it had finalized its first submission, though at least two of its exhibits are dated later than that. While it would not have met the requirements of Article 4 of the SCM Agreement, the United States could have, even at that time, provided Australia with at least the facts that it intended to put forward.

6.53 The United States contends that the Panel should reject Australia's request. The plain language of Article 4.2 does not require that the consultation request include "argumentation". Nor does the rule require that a list of exhibits be included. Article 4.2 simply states that a statement of available evidence with regard to the existence and nature of the subsidy shall be included.

6.54 The United States submits that, as is now well-established, the provisions of the WTO Agreement must be interpreted in accordance with Article 31 of the Vienna Convention on the Law of Treaties[36] ( the "Vienna Convention"), paragraph 1 of which provides: "A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose." The ordinary meaning of the term "evidence" is as follows: "The available facts, circumstances, etc. supporting or otherwise a belief, proposition, etc., or indicating whether or not a thing is true or valid."[37]

6.55 According to the United States, Australia has confused the requirements of the consultation request with the parameters for the first submission by a complaining party. The Working Procedures in Appendix 3 of the DSU provide in paragraph 4 that: "Before the first substantive meeting of the panel with the parties, the parties to the dispute shall transmit to the panel written submissions in which they present the facts of the case and their arguments." (emphasis supplied by the United States) There is no requirement in the DSU or the SCM Agreement that the complainant provide a statement of the facts and argument prior to the first submission. To impose such a requirement would render the first submission by the complainant pointless.

6.56 The United States maintains that the Panel must not lose sight of the facts that the provisions of Article 4.2 of the SCM Agreement relate to a request for consultations, not a panel request and not a panel submission. A request for consultations necessarily takes place before the consultations are held, at a time when the complaining party cannot be expected to know everything about the measure in question. Indeed, Article 4.3 of the SCM Agreement provides that one purpose of consultations is to "clarify the facts". The United States recalls that the panel inUnited States – Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway noted, "whereas the greatest degree of precision could be expected in the definition of specific claims in a panel request, the complaining Party could not be expected to define its specific claims with the same degree of precision at the time of its request for consultations." [38] If the evidentiary requirements of Article 4.2 are construed to require a complaining Member to know all about a subsidy at the time of the consultation request, this extreme burden will preclude recourse to Article 3 except by those Members with the largest resources for collection of information. According to the United States, this result was never intended by the drafters.

6.57 The United States argues that, even with regard to a panel request, the Appellate Body has found that it is sufficient "to list the provisions of the specific agreements alleged to have been violated without setting out detailed arguments as to which specific aspects of the measures at issue relate to which specific provisions of those agreements."[39] The Appellate Body has further noted that "there is a significant difference between the claims identified in the request for the establishment of a panel, which establish the panel's terms of reference under Article 7 of the DSU, and the arguments supporting those claims, which are set out and progressively clarified in the first written submissions, the rebuttal submissions and the first and second panel meetings with the parties."[40] A fortiori, there can be no requirement to present legal "arguments" in a consultation request that starts the process of inquiry and dispute resolution under the dispute settlement provisions of the WTO Agreement.

"Continue on to, VI. PRELIMINARY ISSUES AND REQUESTS FOR PRELIMINARY RULINGS:  C. "Disclosure" Obligations under Article 14 of the SCM Agreement  6.58

[15] WT/DS126/2, 11 June 1998, last sentence.

16] WT/DSB/M/46, 6 August 1998, para. 1 on p. 8 and the last paragraph on p. 9.

[17] Ibid., para. 5 on p. 9.

[18] Ibid., para. 2 on p. 10.

[19] DSU, Article 12.12.

[20]Australia refers also to WT/DSB/M/46, 6 August 1998, para. 2 on p. 10.

[21] WT/DS60/AB/R, adopted 25 November 1998.

[22] yes" lang="EN-GB"> WT/DS79/R, adopted 21 October 1998

[23] Ibid., para. 7.15.

[24] WT/DS60/AB/R, adopted 25 November 1998.

[25] WT/DS79/R, adopted 21 October 1998.

[26] In this regard, the United States refers toibid., para. 7.23.

[27] WT/DSB/M/46, 6 August 1998, p. 10.

[28] WT/DS126/3, 19 June 1998.

[29] WT/DSB/M/46, 6 August 1998, p. 9.

[30] Ibid.

[31] WT/DS60/AB/R, adopted 25 November 1998.

[32] WT/DS50/R, WT/DS50/AB/R, adopted 16 January 1998; WT/DS79/R, adopted 21 October 1998.

[33] Australia cites the following paragraph from WT/DS126/1:

"This evidence consists of numerous statements and representations made by the GOA, Howe and Howe's affiliated and/or parent companies that have appeared in the media, official GOA publications and GOA communications with the United States Government. This evidence also consists of financial statements of Howe and its affiliated and/or parent companies; documents relating to the markets for automotive leather and automobiles in Australia; and other relevant information and materials concerning Howe, GOA export subsidy programs and the Australian market for automotive leather and automobiles, including statements of experts on automotive leather and automobiles, and statements of members of the automotive leather and automobiles industries."

[34] G/SCM/W/365/Rev.1, 24 June 1996.

[35] Appellate Body Report, United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India ("United States-Shirts and Blouses"), WT/DS33/AB/R, adopted 23 May 1997, p. 14.

[36] Done at Vienna, 23 May 1969, 1155 U.N.T.S. 221; 8 International Legal Materials 679 (1969).

[37] The Concise Oxford Dictionary, 8th ed., Clarendon Press, p. 405.

[38] ADP/87, adopted 27 April 1994, para. 334.

[39] Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas ("European Communities – Bananas"), WT/DS27/AB/R, adopted 25 September 1997, para. 141.

[40] Ibid.

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