INTRODUCTION

On 5 March 2002, pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereafter the “DSU”), Article XXIII:1 of the General Agreement on Tariffs and Trade 1994 (hereafter the “GATT 1994”) and paragraph 4(b) of the Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of the Developing Countries, (hereafter the “Enabling Clause”), India requested consultations with the European Communities regarding the conditions under which the European Communities accords tariff preferences to developing countries under the scheme of generalized tariff preferences formulated under Council Regulation (EC) No. 2501/2001. The request was circulated to Members on 12 March 2002.

Consultations were held on 25 March 2002, but did not lead to a mutually satisfactory resolution of this matter.

On 6 December 2002, India requested the Dispute Settlement Body (“DSB”) to establish a panel pursuant to Articles 4.7 and 6 of the DSU and Article XXIII:2 of GATT 1994. On 16 January 2003, India requested the establishment of a panel for the second time. On 27 January 2003, the DSB established the Panel with the following terms of reference:

On 24 February 2003, India requested the Director-General to determine the composition of the Panel pursuant to Article 8.7 of the DSU.

its request for the establishment of a panel, India made claims not only with respect to the European Communities’ special arrangements to combat drug production and trafficking, but also with respect to the European Communities’ special incentive arrangements for the protection of the environment and labour rights. On 28 February 2003, during the meeting with the Director-General regarding the composition of the Panel, India informed both the European Communities and the Director-General that it had decided to limit the present complaint to the tariff preferences granted by the European Communities under its Drug Arrangements.