Item 1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

A. UNITED STATES – SECTION 211 OMNIBUS APPROPRIATIONS ACT OF 1998: STATUS REPORT BY THE UNITED STATES (WT/DS176/11/ADD.33)

· The United States provided a status report in this dispute on July 7, 2005, in accordance with Article 21.6 of the DSU.

· As noted in the report, several legislative proposals relating to section 211 that would implement the DSB’s recommendations and rulings in this dispute have been introduced in the current Congress, both in the U.S. Senate and the U.S. House of Representatives.

· The Administration is working with Congress to implement the DSB’s recommendations and rulings. In this connection, we will be discussing a related agenda item later in this meeting.

B. UNITED STATES – ANTI-DUMPING MEASURES ON CERTAIN HOT-ROLLED STEEL PRODUCTS FROM JAPAN: STATUS REPORT BY THE UNITED STATES (WT/DS184/15/ADD.33)

· The United States provided a status report in this dispute on July 7, 2005, in accordance with Article 21.6 of the DSU.

· As of November 23, 2002, the U.S. authorities had addressed the DSB’s recommendations and rulings with respect to the calculation of antidumping margins in the hot-rolled steel antidumping duty investigation at issue in this dispute. Details are provided in the document numbered WT/DS184/15/ADD.3.

· The U.S. Administration continues to support specific legislative amendments that would implement the DSB’s recommendations and rulings with respect to the U.S. antidumping duty statute, and is working with the U.S. Congress to pass these amendments. In this connection, on May 19, 2005, legislation was introduced in the U.S. House of Representatives (H.R. 2473) that would implement the DSB’s recommendations and rulings with respect to the U.S. antidumping duty statute. The U.S. Administration will continue to work with Congress to enact this legislation. As with the previous agenda item concerning Section 211, we will be discussing a related agenda item later in this meeting.

C. UNITED STATES – CONTINUED DUMPING AND SUBSIDY OFFSET ACT OF 2000: STATUS REPORT BY THE UNITED STATES (WT/DS217/16/ADD.18 – WT/DS234/24/ADD.18)

· The United States provided a status report on July 7, 2005, in accordance with Article 21.6 of the DSU.

· As noted there, the U.S. Administration proposed repeal of the CDSOA in its budget proposal for fiscal year 2006. In addition, legislation that would repeal the CDSOA has been introduced in the U.S. House of Representatives.

· The U.S. Administration will continue to work with the Congress to enact legislation, and to confer with the complaining parties in these disputes, in order to reach mutually satisfactory resolutions of these matters.

D. UNITED STATES – SECTION 110(5) OF THE US COPYRIGHT ACT: STATUS REPORT BY THE UNITED STATES (WT/DS160/24/ADD.8)

· The United States provided a status report in this dispute on July 7, 2005, in accordance with Article 21.6 of the DSU.

· As noted in the report, the U.S. Administration is working with the U.S. Congress on this matter.

· The U.S. Administration will continue its consultations with Congress and continue to confer with the European Communities in order to reach a mutually satisfactory resolution of this matter.

Item 1. SURVEILLANCE OF IMPLEMENTATION OF RECOMMENDATIONS ADOPTED BY THE DSB

E. MEXICO – MEASURES AFFECTING TELECOMMUNICATIONS SERVICES: STATUS REPORT BY MEXICO (WT/DS204/9/ADD.7)

· The United States would like to thank Mexico for its status report.

· After filing its written report, Mexico requested a further extension of the RPT until July 29. The United States agreed to the extension. We expect that the relevant documentation will be circulated toMembers soon.

· Turning now to Mexico’s implementation of the rulings and recommendations in this dispute, we understand that the draft regulations for the resale of telecommunications services have been modified significantly since they were released for public comment at the end of April. The United States intends to carefully review Mexico’s modified regulations to assess Mexico’s implementation once the final regulations are published.

G. CANADA - MEASURES RELATING TO EXPORTS OF WHEAT AND TREATMENT OF IMPORTED GRAIN: STATUS REPORT BY CANADA (WT/DS276/20/ADD.2)

· The United States thanks Canada for its status report. We appreciate the additional information that Canada provided in its report and at today’s meeting about the regulatory changes that Canada intends to make by the August 1 deadline for implementation of the DSB’s recommendations and rulings. We also appreciate Canada’s answers to our questions from the June 20 DSB meeting.

· We have additional questions concerning how Canada’s new regulation will work in practice, which we will be pursuing with Canada bilaterally.

Item 3. EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES - MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT

A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE UNITED STATES (WT/DS316/2)

· Mr. Chairman, as discussed at the DSB meeting held on June 13th, the United States is concerned that certain measures of France, Germany, the United Kingdom, Spain, and the European Communities provide subsidies that are inconsistent with their obligations under the SCM Agreement and the GATT 1994. The subsidies at issue benefit Airbus, the European manufacturer of large civil aircraft.

· Over its 35-year history, Airbus has benefitted from massive amounts of EU member State and EC subsidies that have enabled the company to create a full product line of aircraft and gain more than a 50 percent share of large civil aircraft sales, at the expense of its U.S. competitors. And yet Airbus continues to seek and receive new subsidies. It is time for the subsidies to end.

· Therefore, for the reasons discussed at the June 13 meeting, the United States again requests that the DSB establish a panel to examine these matters, in accordance with Article 6 of the DSU, Article XXIII:2 of GATT 1994, and Articles 4, 7, and 30 of the SCM Agreement.

· Further, as described in our panel request of May 31, 2005, we also request that the DSB initiate the procedures provided for in Annex V of the SCM Agreement, pursuant to paragraph 2 of that Annex. We are currently exploring options with the EC for naming the representative that will facilitate the information gathering process pursuant to paragraph 4 of that Annex. In past disputes, the EC has emphasized that the Chair may have an important role to play in identifying appropriate candidates and in developing the procedures and timetable for the Annex V process. We agree, and we may request that the Chair assist us in these matters.

· I would now like to briefly address certain erroneous comments that the EC made when our panel request was discussed at the June 13 DSB meeting.

· First, the EC criticized the United States for allegedly choosing the path of litigation and confrontation instead of negotiation. There is no basis for the EC’s assertion. The United States has been seeking for more than a year to negotiate a new agreement to end subsidies for the development and production of large civil aircraft. We remain ready and willing to negotiate such an agreement. But the EC has only been willing to reduce subsidies, not end them. Even now, certain member States are insisting on providing new subsidies to Airbus that Airbus says it does not even need.

· Second, the EC described launch aid to the new Airbus A350 as a “non-existent measure.” But there is no question that Airbus has applied to the member States for launch aid for the A350. Senior officials in he Airbus member governments have commented favorably on the applications, and the German government has included A350 launch aid in its budget. Moreover, the EC has flatly refused to commit that the member States will forego launch aid for the A350.

· More generally, the EC made various statements at the June 13 meeting that questioned the adequacy of the U.S. panel request. Although the EC did not detail its concerns, the United States considers that its request in fact complies fully with the requirements of Article 6.2 of the DSU. In light of the detailed nature of the request and the detailed consultations that we held on these topics, the EC should fully understand the basis for our claims.

[Second intervention]

· The United States is surprised and disappointed that the EC has chosen to block initiation of the Annex process. We see no justification for this action.

· In fact, we recall that at a previous meeting of the DSB, the EC took an entirely different approach. At the meeting held on April 15, 2003, the EC first quoted paragraph 2 of Annex V at length: "In cases where matters are referred to the DSB under paragraph 4 of Article 7, the DSB shall, upon request, initiate the procedure to obtain such information from the government of the subsidizing Member as necessary to establish the existence and amount of subsidization ¼” The EC then went on to say, “There was no condition, and there was a clear obligation for the DSB to initiate the procedure.”

· We wonder what has caused the EC to reverse its position for today’s meeting.

· Moreover, we recall that paragraph 1 of Annex V says every Member “shall” cooperate in the Annex V process. Given the EC’s asserted preference for cooperation instead of confrontation, we would have expected the EC to agree to allow the Annex V process to move forward.

· We hope that the EC will reconsider its stance and allow the DSB to take the decision that paragraph 2 of Annex V calls for.

· We also note that the EC has attempted to draw a parallel to the Cotton dispute. The Cotton dispute presented an entirely different situation. There, Brazil’s invocation of the SCM Agreement before expiration of the Peace Clause raised unique questions. In particular, our view was that the United States was (in the words of the Peace Clause) “exempt from actions” under the SCM Agreement provisions invoked by Brazil; in other words, we considered that Brazil could not bring an action based on its SCM Agreement claims unless Brazil first showed that the Peace Clause was inapplicable. The Cotton Panel agreed that it could not make findings on Brazil’s SCM claims unless Brazil first demonstrated that the U.S. measures were not protected by the Peace Clause. (Panel report, para. 7.326.) It was for that reason that the United States proposed that the interests of both Brazil and the United States could be safeguarded if a decision to initiate the Annex V procedure in that dispute be taken only if the panel were first to find that the Peace Clause did not cover the U.S. measures at issue.

· The situation in this dispute does not resemble Cotton at all: the EC has no basis to argue that it is “exempt” from actions based on the provisions of the SCM Agreement that the United States has invoked, and consequently no basis to argue against initiation of the Annex V procedure.

Item 4. UNITED STATES - MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT

A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN COMMUNITIES (WT/DS317/2)

· Mr. Chairman, the United States is disappointed that the EC has again requested a panel on this matter. The EC’s request is broad, but without merit.

· We recognize that a panel will be established today in this dispute. We intend to vigorously defend the measures at issue, but remain open to the possibility that we can resolve our disagreements with the EC before the DSB issues its ruling.

· The United States has received the new request for consultations that the EC filed on June 27th, to which the EC delegate just referred. While it covers several measures that were also covered in the consultations that led to this panel request, it covers several additional measures.

· We have made ourselves available to the EC for consultations regarding the new request and are in the process of finding a mutually agreeable date and place.

Item 7. JAPAN - MEASURES AFFECTING THE IMPORTATION OF APPLES: RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES

· Mr. Chairman, the United States is pleased to request the adoption of the compliance panel report in this matter, and wish to thank the panel and the Secretariat for their hard work in preparing this clear and well-reasoned report.

· We are pleased that the panel agreed that Japan’s revised measures relating to U.S. apple fruit are maintained without sufficient scientific evidence within the meaning of Article 2.2 of the SPS Agreement, and not based on a risk assessment within the meaning of Article 5.1 of the SPS Agreement. We are also pleased that the panel found that Japan’s revised restrictions are in breach of SPS Agreement Article 5.6 because there is a different measure – namely restricting imported fruit to mature, symptomless apple fruit – that meets the requirements of Article 5.6.

· We in particular wish to highlight the thoroughness and clarity with which the panel undertook its analysis. The panel carefully examined and made findings on all aspects of Japan’s revised measures, thereby providing a clear road-map to the further steps Japan must undertake to bring these measures into compliance. In so doing, the panel fully and admirably performed its task of assisting the parties to resolve their dispute through a clearly enunciated explanation of the legal rights of each. In complex disputes involving sanitary and phytosanitary measures, this clarity can be particularly important.

· We hope that Japan will now bring itself into compliance, building on the foundation towards a positive solution established by the panel report. In that connection, we note that the United States and Japan have requested a further suspension of the Article 22.6 arbitration in this dispute until August 31, to allow Japan to undertake necessary domestic procedures.

· Again, the United States wishes to thank the panel and Secretariat for their efforts in producing this very helpful report.

Item 8. UNITED STATES - COUNTERVAILING DUTY INVESTIGATION ON DYNAMIC RANDOM ACCESS MEMORY SEMICONDUCTORS (DRAMS) FROM KOREA

A. REPORT OF THE APPELLATE BODY (WT/DS296/AB/R) AND REPORT OF THE PANEL (WT/DS296/R)

· Thank you, Mr. Chairman. At the outset, on behalf of the United States, I would like to express my gratitude to the members of the Appellate Body and Secretariat for producing a report of very high caliber.

· By way of background, this dispute involved a countervailing duty proceeding in which the U.S. Department of Commerce determined that the Government of Korea subsidized Hynix – a Korean producer of DRAMS – by entrusting or directing Hynix’s creditors to bail out that financially troubled company. The panel found that this determination was inconsistent with provisions of the SCM Agreement, essentially based on the panel’s conclusion that the Commerce Department lacked sufficient evidence.

· The Appellate Body reversed the panel’s finding. While we obviously are pleased with this overall result, we are equally pleased by the thorough and professional manner in which the Appellate Body analyzed the panel’s numerous errors.

· While there is much to talk about in this report, today I would like to mention only two aspects.

· First, there is the Appellate Body’s finding that the panel failed to comply with its obligations under Article 11 of the DSU by engaging in a de novo review. According to the Appellate Body, at paragraph 190 of the report, the panel erred when it “went beyond its role as the reviewer of the investigating authority’s decision, and, instead, conducted its own assessment, relying on its own judgment, of much of the evidence before the USDOC.”

· The Appellate Body’s analysis should serve as an important reminder to future panels in trade remedy disputes that their task is a limited one. They are not to redo the work of domestic authorities, but instead are to ask simply whether the determination made by domestic authorities is one that an objective and impartial decisionmaker could have made – not would have or should have made – based on the evidence before it.

· The second aspect of the report that I would like to mention concerns the Appellate Body’s realistic appreciation of the evidence before the Commerce Department. Unlike the panel, the Appellate Body recognized that evidence of entrustment or direction is likely to be circumstantial in nature, and that this evidence has to be considered in its totality. Any other approach would render the SCM Agreement a nullity in a situation, such as the Hynix bailout, where a government chooses the less transparent method of subsidization through private bodies.

· One example will suffice to illustrate the point. The Commerce Department record included an investment prospectus filed with the U.S. Securities and Exchange Commission by one of Hynix’s creditors – Kookmin Bank – which warned potential investors that the Government of Korea interfered in the Bank’s lending decisions and caused it to make loans that it otherwise would not make.

· However, even though the panel agreed with the United States that there was evidence of a Korean Government policy to save Hynix, the panel discounted the prospectus, essentially because the document did not identify Hynix by name. The Appellate Body correctly noted the panel’s superficial consideration of this rather important piece of evidence, concluding at paragraph 155 that the relevance of the admission in the prospectus should have been considered in the broader context of the government policy to save Hynix, instead of in isolation.

· In sum, the Appellate Body report is eminently worthy of adoption by the DSB.

· Finally, while the Appellate Body found numerous errors regarding the panel's analysis of subsidy identification issues, I should note that the panel's analysis of injury issues was on a much firmer footing. With one exception, the panel rejected Korea's claims that the United States authorities acted inconsistently with the SCM Agreement in determining that imports of subsidized Hynix DRAMS caused injury to the U.S. DRAMS industry. We are also pleased to have the panel’s findings of consistency of the U.S. measure adopted today.

Item 9. UNITED STATES - SECTION 211 OMNIBUS APPROPRIATIONS ACT OF 1998

A. JOINT REQUEST BY THE EUROPEAN COMMUNITIES AND THE UNITED STATES (WT/DS176/16)

· The United States joins the European Communities in requesting that any consideration by the DSB of a request for authorization to suspend concessions or other obligations by the European Communities be in accordance with the documentation submitted to the DSB.

· This documentation provides that, upon request by the European Communities, the DSB shall grant authorization to suspend concessions or other obligations unless (i) the DSB decides by consensus not to do so, or (ii) the United States objects to the level of suspension proposed or claims that the principles and procedures in DSU Article 22.3 have not been followed. The latter action would refer the matter to arbitration under Article 22.6 of the DSU.

· Today’s decision will assist the parties in their efforts to resolve this dispute in a mutually agreeable manner. We appreciate the DSB’s support in this regard.

Item 10. UNITED STATES - ANTI-DUMPING MEASURES ON CERTAIN HOT-ROLLED STEEL PRODUCTS FROM JAPAN

A. JOINT REQUEST BY JAPAN AND THE UNITED STATES (WT/DS184/19)

· The United States joins Japan in requesting that any consideration by the DSB of a request for authorization to suspend concessions or other obligations by Japan be in accordance with the documentation submitted to the DSB.

· This documentation provides that, upon request by Japan, the DSB shall grant authorization to suspend concessions or other obligations unless (i) the DSB decides by consensus not to do so, or (ii) the United States objects to the level of suspension proposed or claims that the principles and procedures in DSU Article 22.3 have not been followed. The latter action would refer the matter to arbitration under Article 22.6 of the DSU.

· Today’s decision will assist the parties in their efforts to resolve this dispute in a mutually agreeable manner. We appreciate the DSB’s support in this regard.

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